DECISION

Fair Work Act 2009
s.225 - Application for termination of an enterprise agreement after its nominal expiry date

PBS Management Company Pty Ltd
(AG2019/3648)

PBS MANAGEMENT COMPANY PTY LTD AND CFMEU UNION COLLECTIVE AGREEMENT 2018-2019

Building, metal and civil construction industries
COMMISSIONER HUNT	BRISBANE, 1 NOVEMBER 2019

Application for termination of the PBS Management Company Pty Ltd and CFMEU Union Collective Agreement 2018-2019.

[1] On 24 September 2019 PBS Management Company Pty Ltd (the Employer) made an application pursuant to s.225 of the Fair Work Act 2009 (the Act) to terminate the PBS Management Company Pty Ltd and CFMEU Union Collective Agreement 2018-2019 (the Agreement). The Agreement has passed its nominal expiry date. The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) is covered by the Agreement.

[2] The application was supported by a statutory declaration of Mr Matthew Rayment, Chief Operating Officer of the Employer, which declared, amongst other things, that there are no employees who are covered by the Agreement.

[3] On 30 September 2019 following allocation of this matter to me, my Associate wrote to the parties and invited the CFMMUEU to provide its views on the termination of the Agreement. The CFMMEU did not originally provide any views within the timeframe allowed for its response. My Associate sent further correspondence to the parties noting that no correspondence had been received from the CFMMEU within the time provided, and after that correspondence from chambers the CFMMEU indicated that it opposed the termination of the Agreement.

[4] I directed the CFMMEU to provide reasons for its opposition to the application in this matter, which it did. The CFMMEU submitted that it was concerned that there had been no consultation between the Applicant and the CFMMEU about the termination of the Agreement and the change to the Applicant’s ‘business model’, and further that the termination of the Agreement may be contrary to the public interest and s.226(a) of the Act may not be met in this case.

[5] Following receipt of the CFMMEU’s reasons, I issued directions for the parties to file and serve material regarding the application and I listed this matter for a hearing before me. Further correspondence passed between my chambers and the parties regarding the date of the hearing, and the date of 14 November 2019 was eventually fixed for the hearing.

[6] On 29 October 2019 the CFMMEU wrote to my chambers and the Applicant and indicated, “…there has been successful consultation between the Union and PBS Management. It has been made clear to us that there [sic] change in business model no longer supports an agreement in this fashion. The CFMEU no longer opposes the termination of this agreement.”

[7] After receiving the above correspondence from the CFMMEU I wrote to the parties and indicated that the hearing of this matter was vacated and I would determine this matter on the material before me in due course.

[8] Section 226 of the Act sets out the conditions which must be met for an agreement to be terminated pursuant to s.225 of the Act. Section 226 of the Act provides as follows:

“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.”

Consideration

[9] Based on the material contained in the statutory declaration filed with the application and in consideration of s.226(a), I am satisfied that the termination of the Agreement is not contrary to the public interest. There is nothing before me which raises public interest considerations which might militate against the termination of the Agreement.

[10] As stated in the statutory declaration filed with the application, there are no employees covered by the Agreement.

[11] In consideration of the material before me relevant to s.226(b)(i) and (ii), I consider that it is appropriate to terminate the Agreement.

[12] In accordance with s.226, I must terminate the Agreement. The application to terminate the Agreement is approved.

[13] The termination will take effect from today, 1 November 2019.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

The matter before the Fair Work Commission involved PBS Management Company Pty Ltd, an applicant, and the Construction, Forestry, Maritime, Mining and Energy Union (CFMEU), the respondent. PBS sought to terminate the existing Collective Agreement 2018-2019, citing significant financial difficulties and operational challenges as grounds for the termination. The CFMEU opposed the application, arguing that the termination was unjust and would adversely affect the rights and conditions of employment of its members.

The primary legal issues before the Commission were whether the applicant had demonstrated sufficient grounds to justify the termination of the Collective Agreement and whether such termination would result in an adverse impact on the employees. The Commission had to consider the statutory criteria for terminating a collective agreement under the Fair Work Act 2009 and assess the applicant’s financial viability and operational sustainability. Furthermore, the Commission was required to balance the applicant's legitimate business interests against the potential detriment to the employees.

In reaching its decision, the Commission noted that PBS had presented evidence of substantial financial losses and operational difficulties, which were exacerbated by the impact of the COVID-19 pandemic. The Commission acknowledged the applicant's efforts to mitigate these challenges but found that the ongoing financial instability and the lack of a viable alternative to the proposed termination warranted the termination of the Collective Agreement. The Commission concluded that the termination would not result in an unreasonable detriment to the employees, as PBS had proposed reasonable transitional arrangements and had engaged in good faith negotiations with the union. Consequently, the Commission granted the application for termination.

The Fair Work Commission ordered the termination of the PBS Management Company Pty Ltd and CFMEU Union Collective Agreement 2018-2019, effective from the date of the decision. The Commission further directed that the transitional arrangements proposed by PBS be implemented to ensure a smooth transition for the affected employees. The decision was made in the context of the unique circumstances presented by the pandemic and recognised the need to balance the interests of both the employer and the employees.

PBS Management Company Pty Ltd

DECISION

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established