Odyssey Marine Pty Ltd T/A Odyssey Marine

[2020] FWCA 5101

[2020] FWCA 5101

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225—Enterprise agreement

Odyssey Marine Pty Ltd T/A Odyssey Marine
(AG2020/2061)

GO INSHORE PORT HEDLAND ENTERPRISE AGREEMENT 2016

Maritime industry
DEPUTY PRESIDENT BINET	PERTH, 2 OCTOBER 2020

Application for termination of the GO INSHORE Port Hedland Enterprise Agreement 2016.

[1] Odyssey Marine Pty Ltd (Odyssey) made an application (Application) to the Fair Work Commission (FWC) for the termination of the GO Inshore Port Hedland Enterprise Agreement 2016 (Agreement) pursuant to section 225 of the Fair Work Act 2009 (Cth) (FW Act).

[2] The Agreement is a single enterprise agreement made pursuant to section 185 of the FW Act with a nominal expiry date of 9 May 2020.

[3] The parties to the Agreement are Odyssey and the employees employed by Odyssey in any classification set out in Schedule 1 and 2 of the Agreement when engaged in inshore work as defined in clause 3 of the Agreement (Employees).

[4] The Maritime Union of Australia (now the Construction, Forestry, Maritime and Mining Union) was a bargaining representative for the Agreement (CFMMEU) and is covered by the Agreement.

[5] In support of the Application, the Odyssey filed a Statutory Declaration by Mr Christopher Hedges, Marine Manager of Odyssey (Mr Hedges).

[6] On 22 July 2020, directions were issued with respect to the Application (Directions). Odyssey was directed to file an outline of submissions in support of the Application and any evidence on which they relied. CFMMEU were directed to file an outline of submissions in response to the Application and any evidence on which CFMMEU sought to rely.

[7] In accordance with the Directions on 30 July 2020 Odyssey filed written submissions and a witness statement by Mr Hedges.

[8] On 6 August 2020 the CFMMEU filed written submissions and a witness statement by Mr Paul Brett in accordance with the Directions.

[9] The CFMMEU Submissions submit that Agreement should not be terminated because the FWC has not taken into account the views of all employers and employees covered by the Agreement because Part 2-8 of the FW Act means that the Agreement is a transferrable instrument and continues to cover employees of the Trustee for the Thornett PTDB Family Trust and the trustee for Sycamore Gap Trust (ABN: 27 749 913 245) trading as Category 5 Labour Management and Sycamore Gap Trust and Thornett PTDB Family Trust (Category 5 Trust).

[10] Odyssey assert that Category 5 Trust has never provided labour to it. However, it concedes that it does source additional labour on an as needed basis from Category 5 Labour Management (Cat 5). I have presumed that this is the entity to which the CFMMEU intended to refer in its submissions.

[11] Odyssey were invited to respond to the CFMMEU Submissions. The Odyssey Reply Submissions submit that no transmission of business occurred and that therefore the Agreement does not cover employees of Cat 5 or its employees. Odyssey filed evidence in support of these submissions in the form of a second witness statement by Mr Hedges.

[12] On 21 August 2020 and 24 August 2020 Odyssey and CFMMEU respectively confirmed that they did not wish to make oral submissions, and they were content for the Application to be determined ‘on the papers’.

Background

[13] The Agreement covers Masters, Deckhands and Marine Engine Driver Level 1 (MED1).

[14] The Agreement was recently replaced by the Odyssey Marine Pty Ltd Enterprise Agreement 2020 (2020 Agreement).

[15] During the negotiations of the 2020 Agreement, the Marine Engine Driver Grade 1 (MED1) classification was removed from the classification structure as Odyssey has never employed anyone in this classification and has determined that the classification of MED1 was not relevant for its current operations, nor future scopes of work that would be covered by the 2020 Agreement.

[16] As Masters and Deckhands are now covered by the 2020 Agreement the Agreement now only covers the classification of MED1.

Does the Agreement cover the Employees of the Cat 5

[17] The CFMMEU submit that the Agreement is a ‘transferrable instrument’ for the purposes of Division 2 of Part 2-8 of the FW Act and Cat 5 and its employees.

[18] The CFMMEU submit that there has been a transfer of business between Odyssey and Cat 5 for the purposes of section 311 of the FW Act because Odyssey have outsourced work of its deckhands to Cat 5 (and although not expressly stating so) that pursuant to sections 313 and 314 of the FW Act the Agreement applies to transferring employees and/or new non transferring employees of Cat 5.

[19] For there to be transfer of business for the purposes of section 311 of the FW Act the following requirements must be satisfied:

a. the employment of an employee of the old employer has terminated;

b. within 3 months after the termination, the employee becomes employed by the new employer;

c. the work the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;

d. there is a connection between the old employer and the new employer as described in any of subsections 311(3)-(6).

[20] The CFMMEU submit that there is a connection between Odyssey and Cat 5 as described in sub section 311(4) of the FW Act.

[21] Sub section 311(4) of the FW Act provides that:

“There is a connection between the old employer and the new employer if the transferring work is performed by one or more transferring employees, as employees of the new employer, because the old employer, or an associated entity of the old employer, has outsourced the transferring work to the new employer or an associated entity of the new employer.”

[22] The evidence is that from 2018 onwards Odyssey chose not the renew the contracts of deckhands whose fixed term contracts had concluded. From around February 2018 Cat 5 began providing supplementary deckhand labour to Odyssey on an as needed basis. Since that time Odyssey say there have only been four employees that were engaged by Odyssey that have become employed by Cat 5 after their employment with Odyssey was terminated and who have subsequently provided services to the Odyssey in their capacity as employees of Cat 5.

[23] Odyssey admit that in relation to these four employees that the work they perform is the same, or substantially the same as the work they performed when they were employed by Odyssey. However, Odyssey deny that these employees were employed by Cat 5 within three months of their termination by Odyssey. The CFMMEU have not provided any evidence to the contrary.

[24] Odyssey also deny that Odyssey has ‘outsourced work’ to Cat 5 for the purposes of section 311(4) of the FW Act.

[25] The term ‘outsource’ as relevant to Part 2-8 of the FW Act is not defined within the FW Act. However, as the authorities have developed, clarity surrounding its meaning has appeared.
[26] As recently noted by Williams C, there is a distinction between an employer engaging supplementary labour through a labour hire company, and an outsourcing of work. 1

[27] It is not sufficient for the purposes of sub section 311(4) of the FW Act that an employee simply be terminated by one employer, and then commence work for another employer, at the same location, some time later; especially where the employees were engaged as casual workers. 2

[28] For there to be a connection for the purposes of sub section 311(4) of the FW Act “something more than an employee ceasing to perform particular work for one employer and commencing to perform the same or substantially the same work at the same location for another employer is required”. 3

[29] The evidence before me is that some fixed term employees’ contracts expired and were not renewed because Odyssey did not require their services at that point in time. Odyssey continues to employ deckhands on a fixed term and permanent basis. Cat 5 merely provide supplementary labour on as needs basis to supplement Odyssey’s permanent workforce.

[30] On the evidence before me I am not satisfied that a transmission of business has occurred for the purposes of section 311 of the FW Act. Consequently, I am not satisfied that there are any transferring employees for the purposes of section 313 or 314 of the FW Act which might result in the Agreement covering Cat 5 or employees of Cat 5.

Legislation

[31] Subdivision D of Division 7 of Part 2-4 of the FW Act sets out the mechanism by which an enterprise agreement may be terminated after the agreement has passed its nominal expiry date.

[32] Section 225 of the FW Act provides that:

“225 Application for termination of an enterprise agreement after its nominal expiry date

If an enterprise agreement has passed its nominal expiry date, any of the following may apply to the FWC for the termination of the agreement:

(a) one or more of the employers covered by the agreement;

(b) an employee covered by the agreement;

(c) an employee organisation covered by the agreement.”

[33] As the Agreement has passed its nominal expiry date and Odyssey is an employer covered by the Agreement, I find that the Odyssey has standing to make the Application pursuant to section 225(a) of the FW Act.

[34] Section 226 of the FW Act states:

“226 When the FWC must terminate an enterprise agreement

If an application for the termination of an enterprise agreement is made under section 225, the FWC must terminate the agreement if:

(a) the FWC is satisfied that it is not contrary to the public interest to do so; and

(b) the FWC considers that it is appropriate to terminate the agreement taking into account all the circumstances including:

(i) the views of the employees, each employer, and each employee organisation (if any), covered by the agreement; and

(ii) the circumstances of those employees, employers and organisations including the likely effect that the termination will have on each of them.”

Is it contrary to the public interest to termination the Agreement?

[35] Section 226(a) requires the FWC to be satisfied that it is not contrary to the public interest to terminate the Agreement.

[36] This requires the FWC to consider how the termination of the Agreement might foreseeably affect the public as a whole, such as the impact on the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standard.⁴

[37] The public interest is distinct in nature from the interests of those covered by the Agreement. The views of those covered by an agreement may be relevant to the exercise of the discretion if they shed light on the effect of the termination on public interest but those views should not be given any independent weight.⁵

[38] The object of the FW Act is set out in section 3 of the FW Act, as follows:

“3. Object of this Act

The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:

…

(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders;

…

(f) achieving productivity and fairness through an emphasis on enterprise level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action;

…”

[39] The specific objects in section 171 of the FW Act inform how the general object in section 3 of the FW Act is to be satisfied in the context of matters dealt with in Part 2-4 of the FW Act:

“171. Objects of this Part

The objects of this Part are:

(a)  to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits; and

(b)  to enable the FWC to facilitate good faith bargaining and the making of enterprise agreements, including through:

(i) making bargaining orders; and

(ii) dealing with disputes where the bargaining representatives request assistance; and

(iii) ensuring that applications to the FWC for approval of enterprise agreements are dealt with without delay.”

[40] The ascertainment of what is not in the public interest does not involve the mere identification of a consequence of the termination of the agreement that is arguably contrary to the public interest. The ascertainment of the public interest may involve balancing countervailing public interests.⁶

[41] There is no positive onus on an applicant to persuade the FWC that there are positive benefits to the public interest arising from the termination. In Geelong Wool Combing Ltd (AIRC) 5 September 2003, Commissioner Wheelan said:

“… the Commission must be persuaded that termination is contrary to the public interest [and] in the absence of any effect of termination which is contrary to the public interest it is not necessary to persuade the Commission that there are positive benefits to the public interest arising from the termination.”

[42] Odyssey submits that there are no matters contrary to the public interest in terminating the Agreement. To the contrary they submit it is in the public interest to do so as this will allow for the terms and conditions of employees who may, at some point in the future become employed as MED1 to be appropriately governed, and not restricted by an expired, out of date enterprise agreement. This is consistent with the objects of the FW Act to ensure fair and relevant employment conditions.

[43] In addition, Odyssey submit that the removal of the unnecessary burden of maintaining an enterprise agreement that has expired, to maintain one classification, which does not currently cover any employees will improve business efficiency, consistent with objects of the FW Act.

[44] Odyssey also submit that the termination of the Agreement will ensure that the industrial instruments that cover it are relevant to its workforce, and the types of work that it completes.

[45] The CFMMEU submit that termination of the Agreement is contrary to the public interest because it is likely to have a substantial effect on the overall wages for employees within the inshore maritime services industry.

[46] As the Agreement has been replaced in relation to all classifications other than MED1 the termination of the Agreement will have an impact on the salaries, and industrial terms and conditions of MED1 classified employees only.

[47] As demonstrated by the table in the CFMMEU Submissions setting out the annual wage rate for deckhands in each enterprise agreement in the industry there has been a downward trend in wages in subsequent agreements since the registration of the Hedland Launch Services – Pilbara Inshore Agreement in 2012. The CFMMEU have not articulated how the termination of this Agreement even if it did still apply to deckhands might be responsible for a further decline in market wages not otherwise associated with the historically sustained downturn in the industry more broadly.

[48] The CFMMEU also submits that Cat 5’s failure to comply with the Agreed is contrary to the public interest associated with the parties complying with agreed outcomes of bargaining. Given my findings in relation to the coverage of the Agreement I do believe this submission has merit.

[49] Based on the submissions of the parties and the evidence before me, I am satisfied that it is not contrary to the public interest to terminate the Agreement.

What are the views of the Employees covered by the Agreement?

[50] There are no employees covered by the residual classification employed by Odyssey nor does Odyssey plan to employ any employees who would be covered by this Agreement in the future. For the reasons set out earlier in this decision I am not satisfied that the employees of Cat 5 are covered by the Agreement.

What are the views of the Employee Organisation covered by the Agreement?

[51] The CFMMEU oppose the termination of the Agreement on the grounds that the views of Cat 5 and its employees have not been considered and that the termination of the Agreement would be contrary to the public interest.

What are the views of the Employer covered by the Agreement?

[52] Odyssey believes that the Agreement should be terminated. For the reasons set out earlier in this decision I am not satisfied that Cat 5 is covered by the Agreement.

What are the circumstances of the Employees covered by the Agreement?

[53] There are no employees covered by the residual classification employed by Odyssey. For the reasons set out earlier in this decision I am not satisfied that the employees of Cat 5 are covered by the Agreement.

What are the circumstances of the Employee Organisation covered by the Agreement?

[54] The CFMMEU say that the termination of the Agreement will negatively impact the wages of its members in the industry.

What are the circumstances of the Employer covered by the Agreement?

[55] By terminating the 2016 Agreement, Odyssey submit that it will be able to better manage its employee relations and workforce and continue operating under a single enterprise agreement that covers its entire workforce.

Is it appropriate to terminate the Agreement taking into all the circumstances?

[56] The question of appropriateness requires an overall judgment based on all the relevant circumstances of the application. 7

[57] There is no right or expectation that an enterprise agreement continues in perpetuity after its nominal expiry date. 8

[58] In assessing the views and circumstances of the parties it is important to remember that:

“Taking into account the views and circumstances of the parties involves far more than an expression of their views in support or opposition to termination. It should involve a reason for their views and the validity of their concerns.”9

[59] The Agreement has expired and has been replaced in relation to all categories of employees which Odyssey employs with new arrangements relevant to the prevailing conditions which a majority of employees have agreed to and which the FWC has determined passes the Better Off Overall Test.

[60] Odyssey do not currently and do not propose in the foreseeable future to employ anyone in the residual classification. Terminating this Agreement allows for appropriate and relevant conditions to apply if in the future Odyssey does decide to employ employees in this classification.

Conclusion

[61] For the reasons enunciated above, I am satisfied that it is not contrary to the public interest to terminate the Agreement. 

[62] Taking into account all the circumstances, including the views and circumstances of the Odyssey and the CFMMEU, I am satisfied that it is appropriate to terminate the Agreement.

[63] Accordingly, the Agreementis terminated. The termination is to take effect on and from the date of this Decision. An Order to this effect will be issued in conjunction with this Decision.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<AE418827  PR723006>

 1   Maxwell v Alcoa of Australia Limited[2020] FWC 962 at [91] (citing with approval Abbot v Acconia Infrastructure Pty Ltd[2018] FWC 5609 (Asbury DP).

 2   Gausden v Silvan Pty Ltd [2014] FWC 5337.

 3   Abbot v Acconia Infrastructure Pty Ltd [2018] FWC 5609 at [44]

4 Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (2005) 139 IR 34 at 40 – 41.

5 Aurizon Operations Limited; Aurizon Network Pty Ltd; Australia Eastern Railroad Pty Ltd [2015] FWCFB 540 at [129] citing with approval Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (2005) 139 IR 34 at 40 – 41

6 Kellogg Brown & Root Pty Ltd & Ors and Esso Australia Ltd (2005) 139 IR 34 referred to the decision of the High Court of Australia in Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia (1987) 61 ALJR 393

 7   RA v LHMU [2010] FWA 2434 at [15]; Re Allen & O’Brien Pty Ltd [2016] FWCA 1906 at [22]; Re Project Coordination (Australia) Pty Ltd [2016] FWCA 5465 at [19]; Re AGL Loy Yang Pty Ltd [2017] FWCA 226, [78], [115]; Re Remondis Australia Pty Ltd [2017] FWCA 254 at [4], [35]; Re Murdoch University [2017] FWCA 4472 at [396]; Re Pinarello Blues Pty Ltd as trustee for Judds Discretionary Trust t/as Yankalilla Hotel [2015] FWCA 7698 at [98].

 8   Re Aurizon Operations Limited [2015] FWCFB 540 at [126], [176]; Re AGL Loy Yang Pty Ltd [2017] FWCA 226 at [73], [74], [104]; Re Remondis Australia Pty Ltd [2017] FWCA 254 at [13], [14]; Re Viterra Operations Pty Ltd [2018] FWCA 1161 at [55].

9Energy Resources Australia Ltd v Liquor, Hospitality and Miscellaneous Union[2010] FWA 2434 at [16].