Peakzone Pty Ltd T/A Peak Industrial Electrical
[2023] FWCA 716
•28 MARCH 2023
| [2023] FWCA 716 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.222—Enterprise agreement
Peakzone Pty Ltd T/A Peak Industrial Electrical
(AG2023/510)
PEAKZONE PTY LTD AGREEMENT 2017
| Electrical contracting industry | |
| DEPUTY PRESIDENT BEAUMONT | PERTH, 28 MARCH 2023 |
Application for termination of the Peakzone Pty Ltd Agreement 2017
Issue and outcome
On 3 March 2023, Peakzone Pty Ltd T/A Peak Industrial Electrical (the Applicant) applied for the termination of the Peakzone Pty Ltd Agreement 2017 (the Agreement)[1] under s 222 of the Fair Work Act 2009 (Cth) (the Act).
The Agreement is a single enterprise agreement. It covers the work of electrical employees engaged in the electrical contracting industry. The nominal expiry date of the Agreement is 15 June 2021. If the Agreement did not apply to the employees’ employment, the same employees would be covered by the Electrical, Electronic and Communications Contracting Award 2020 (the Award).[2]
The Applicant has standing to apply for the termination of the Agreement under s 222(1) of the Act, the application was accompanied by the requisite documentation under s 222(2) and was made within the prescribed statutory period.[3] Section 222 deals with circumstances where termination of an Agreement is sought on the basis that termination has been agreed to. The Applicant says that a majority of employees have agreed to terminate the Agreement in accordance with the provisions of the Act.
Section 223 of the Act sets out the conditions which must be met for an agreement to be terminated pursuant to s 222 of the Act. Section 223 of the Act is as follows:
223 When the FWC must approve a termination of an enterprise agreement
If an application for the approval of a termination of an enterprise agreement is made under section 222, the FWC must approve the termination if:
(a) the FWC is satisfied that each employer covered by the agreement complied with subsection 220(2) (which deals with giving employees a reasonable opportunity to decide etc.) in relation to the agreement; and
(b) the FWC is satisfied that the termination was agreed to in accordance with whichever of subsection 221(1) or (2) applies (those subsections deal with agreement to the termination of different kinds of enterprise agreements by employee vote); and
(c) the FWC is satisfied that there are no other reasonable grounds for believing that the employees have not agreed to the termination; and
(d) the FWC considers that it is appropriate to approve the termination taking into account the views of the employee organisation or employee organisations (if any) covered by the agreement.
On the facts before me, I am satisfied that a majority of employees voted in favour of the termination of the Agreement, and that there are no other reasonable grounds for believing that the termination was not agreed. Sections 223(b) and (c) have been complied with.
I am further satisfied that it is appropriate to approve the termination and that the employees covered by the Agreement were provided with a reasonable opportunity to decide whether to approve the termination.
It follows that the statutory requirements have been met. Accordingly, the Agreement is terminated and pursuant to s 224 of the Act, the termination will take effect from the date of this decision. An Order[4] to this effect issues concurrently with this decision. My detailed reasons follow.
Background
In support of its application, the Applicant filed a declaration of Mr Steven Smith,[5] in addition to a witness statement of Mr Smith (First Smith Statement).[6] In short, Mr Smith detailed the following:
a) in light of operational changes to the Applicant, in August 2022, he considered obtaining legal advice regarding termination of the Agreement;
b) he broached this prospect of termination with the relevant employees and the prospect of subsequent re-engagement under an Individual Flexibility Agreement (IFA) paying above-Award rates; and
c) employment contracts and IFAs were drafted for re-engaging the relevant employees after termination of the Agreement.[7]
Mr Smith explained that an ‘explanation meeting’ was held on Friday, 3 February 2023, and the employees were provided with a ‘How and When to Vote’ form, which Mr Smith said provided a detailed explanation of the consequences from voting to terminate the Agreement.[8] The explanation as referred to in the ‘How and When to Vote’ form set out:
Explanation
The Peakzone Pty Ltd Agreement 2017 was approved by the Fair Work Commission in 2017 (the ‘Enterprise Agreement’). The Enterprise Agreement covers all electrical workers and reached its nominal expiry date in 2021. It is outdated and under the circumstances the company will request all employees to agree to the termination of the Enterprise Agreement. The employees’ employment will then be covered by the Modern Electrical, Electronic and Communications Contracting Award 2020 and individual Employment Contract.
On 15 March 2023, directions issued to the Applicant with respect to the materials that had been filed in support of its application. It was observed that at paragraph [5] of the First Smith Statement, reference had been made to an ‘explanation meeting’. However, no detail had been provided regarding the explanation to the relevant employees concerning the impact the termination of the Agreement would have on their terms and conditions of employment at the meeting – except to say that terms and conditions would be set by the Award or to that end, the IFA. It was apparent that the draft contract and accompanying IFA did not provide the hourly rate of pay.
It is apparent from the application and the supporting materials that two consequences would arise for employees covered by the Agreement should its termination be approved by the Commission:
a) first, the employees would have their wages and conditions covered by a common law contract underpinned by a modern award, rather than the Agreement; and
b) second, the employees would, in addition, have their wages and conditions set by IFAs pursuant to the Award.
In response to the directions issued on 15 March 2023, the Applicant provided detailed evidence in respect of the explanation provided to the relevant employees in a second witness statement of Mr Smith (Second Smith Statement).[9] At paragraphs [5]–[8] of the Second Smith Statement, Mr Smith outlined the content conveyed to the relevant employees in the ‘explanation meeting’. Thereafter, Mr Smith said:
a) on 4 February 2023, he emailed each of the employees explaining the consequences of voting for and against the termination of the Agreement. The emails attached the Agreement, Award and provided the employment contract in addition to the IFA (inclusive of hourly rate and the remote allowance);[10]
b) on 13 February 2023, he emailed all relevant employees and provided meeting minutes of the ‘explanation meeting’, in addition to providing verbal communication in the period of 6–10 February 2023 concerning ‘follow-up’ points;[11]
c) further clarification emails were sent to employees in the period of 10–17 February 2023;[12] and
d) individual detailed financial analysis was provided to two employees who requested such information.[13]
Mr Smith detailed that the vote was by way of email, with employees required to send their voting response to the email address of ‘[email protected]’ during the nominated timeframe.[14] Mr Smith explained that initially the vote was scheduled from Friday, 10 February 3:30 PM through to Monday, 13 February 2023 at 7.30 AM.[15] However, following the ‘explanation meeting’, various employees requested an extension of time in which to further consider the termination of the Agreement.[16]
Whilst Mr Smith initially agreed to a new voting timeframe of 13–16 February 2023, the employees did not agree to that proposed revised timeline, requesting further time to consider the proposed vote.[17] Mr Smith stated that on 14 February 2023, he sent to the employees an email tentatively suggesting the new proposed timeline for voting, being 17–20 February 2023. By email dated 16 February 2023, Mr Smith confirmed that this would be the timeframe for voting given the lack of objection from the employees.[18]
Mr Smith reports that five of the six employees voted, with three voting in favour of the termination and two against.[19] Evidence of the same was provided to the Commission.[20]
Consideration
Notwithstanding, the technical glitches with the vote that were purported to have occurred, by Mr Smith (see paragraphs [18]–[22] of the First Smith Statement), I am satisfied that the termination was agreed to by a majority of the employees who cast a valid vote to approve the termination.
However, s 220(2) of the Act provides that before making a request that its employees approve the termination, an employer must:
(a) take all reasonable steps to notify the employees of the following:
(i) the time and place at which the vote will occur;
(ii) the voting method that will be used; and
(b) give the employees a reasonable opportunity to decide whether they want to
approve the proposed termination.
Section 223(a) of the Act sets out, amongst other factors, that the Commission must approve the termination of an enterprise agreement if satisfied that the employer complied with s 220(2).
From a statutory construction point of view, the subject of s 223(a) could be said to be the reasonableness of the opportunity to decide not the reasonableness of the employer’s conduct at large.
The Explanatory Memorandum to the Fair Work Bill 2008 (Cth) indicates by way of example that this provision may involve the employer ‘allowing employees sufficient time between making the request and the time of the vote to consider the effect of the termination on their terms and conditions’.[21]
In Carl Zeiss Vison Australia Holdings Ltd, (Zeiss) the Deputy President identified that s 223(a) lends itself to a view that issues relevant under s 223(a) are concerned with the reasonableness of the logistics and process for decision-making and voting rather than the substantive content of material being considered.[22] The Deputy President expressed that while he preferred the narrower construction, some decisions of the Commission had adopted a broader construction suggesting that ‘the lack of any explanation or misleading or incorrect explanations may well be a factor in a consideration as to whether there has been a reasonable opportunity’.[23]
Ultimately, in Zeiss, the Deputy President concluded it unnecessary to determine whether a claim that explanatory material may be misleading fell strictly within the expression ‘reasonable opportunity to decide’ under s 223(a), because it would (if not relevant under s 223(a)) be relevant in the catch-all under s 223(d), which requires the Commission to consider whether termination ‘is appropriate’.[24]
Having considered all the material before me, I am satisfied that the employees were notified of the time, ‘place’ and voting method, and were provided with a reasonable opportunity to decide whether they wanted to approve the proposed termination. The explanatory materials are both expansive and detailed. Mr Smith was responsive to both enquiries about the impact of the termination of the Agreement and to the employees’ request to delay the voting period to provide additional opportunity to consider whether to approve the termination.
Regarding the impact of the termination, all financial modelling has been considered. It is apparent that in some circumstances, depending on the roster worked and employee classification, the impact will result in an increase in remuneration. However, in other circumstances, there may, dependent on hours worked and employee classification, be a slight decrease. Nevertheless, this appears to have been clearly communicated to those employees who requested the detailed financial analysis.
The evidence, on balance, supports the conclusion that it is appropriate to approve the termination. It is observed that no employee organisations are covered by the Agreement.
Conclusion
As observed, having considered the material before me, including the application and Mr Smith’s evidence, I am satisfied that the requirements of s 223 of the Act have been met. Therefore, in accordance with s 223, I must terminate the Agreement. Under s 224 of the Act, a termination operates from the day specified in the decision to terminate the agreement. That date can be found at the commencement of this decision.
DEPUTY PRESIDENT
[1] [2017] FWCA 3271; AE424679.
[2] MA000025.
[3] Fair Work Act 2009 (Cth) s 222(3).
[4] PR760067.
[5] Form F24A – declaration in support of termination of an enterprise agreement.
[6] Witness Statement of Steven Smith dated 14 March 2023 (First Smith Statement).
[7] Ibid [5].
[8] Ibid [5].
[9] Witness Statement of Steven Smith dated 22 March 2023.
[10] Ibid [9].
[11] Ibid [10].
[12] Ibid [11] – [14].
[13] Ibid [16] – [20].
[14] First Smith Statement (n 6) [8].
[15] Ibid [6].
[16] Ibid [7].
[17] Ibid [8].
[18] Ibid [9].
[19] Ibid [17].
[20] Ibid [16]; annexure PEAK11.
[21] Explanatory Memorandum, Fair Work Bill 2008, [932].
[22] [2017] FWCA 5825, [39] (Zeiss).
[23] Ibid [40], citing Barminco Ltd [2015] FWCA 219, [20] (Commissioner Lee); Advanced Plumbing and Drains Pty Ltd [2015] FWCA 8740, [26] (Kovacic DP).
[24] Zeiss (n 22) [41].
Printed by authority of the Commonwealth Government Printer
<AE424679 PR760066>
0
0
0