Phillip Arcidiacono T/A Rose Cleaning Service
[2016] FWCA 1769
•22 March 2016
| [2016] FWCA 1769 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.225—Enterprise agreement
Phillip Arcidiacono T/A Rose Cleaning Service
(AG2015/1419, AG2015/1420)
ROSE CLEANING SERVICE AND LHMU CLEAN START UNION COLLECTIVE AGREEMENT 2008
ROSE CLEANING SERVICE AND LHMU CLEAN START UNION COLLECTIVE AGREEMENT 2010 FOR ACT GOVERNMENT SCHOOLS
(AG2015/1430)
PHILLIPS CLEANING SERVICE AND LHMU CLEAN START UNION COLLECTIVE AGREEMENT 2010 FOR ACT GOVERNMENT SCHOOLS
Australian Capital Territory | |
DEPUTY PRESIDENT KOVACIC | SYDNEY, 22MARCH 2016 |
Applications for termination of the Rose Cleaning Service and LHMU Clean Start Union Collective Agreement 2008 - Rose Cleaning Service and LHMU Clean Start Union Collective Agreement 2010 for ACT Government Schools - Phillips Cleaning Service and LHMU Clean Start Union Collective Agreement 2010 for ACT Government Schools – applications dismissed.
[1] On 12 June 2015 Phillip Arcidiacono T/A Rose Cleaning Service (RCS – the first Applicant) filed two applications made under s.225 of the Fair Work Act 2009 (the Act) seeking to terminate the Rose Cleaning Service and LHMU Clean Start Union Collective Agreement 2008 1 (the 2008 Agreement) and the Rose Cleaning Service and LHMU Clean Start Union Collective Agreement 2010 for ACT Government Schools2(the RCS Schools Agreement). On the same day, Phillips Cleaning Service (PCS – the second Applicant) also made an application under s.225 of the Act seeking to terminate the Phillips Cleaning Service and LHMU Clean Start Union Collective Agreement 2010 for ACT Government Schools3(the PCS Schools Agreement). All three agreements have a nominal expiry date of 1 July 2013. For ease of reference, the first and second Applicants will jointly be referred to throughout this decision as the Applicants, while the three agreements will collectively be referred to as the Agreements and the RCS Schools and PCS Schools Agreements will together be referred to as the Schools Agreements.
[2] The application to terminate the 2008 Agreement was accompanied by a petition with 58 signatories. The petition read:
“Dear Fair Work,
Please accept my signature below as full support for the application to terminate the Rose Cleaning Service and LHMU Clean Start Union Collective Agreement 2008.
I have been assured by my employer that while the current contract remains in place at my current job, my rate of pay will not be affected.
I understand that if successful, the Modern Award will apply.”
[3] A petition was also lodged with the application to terminate the RCS Schools Agreement, with that petition referring to that agreement as opposed to the 2008 Agreement. That petition again had 58 signatories. The application to terminate the RCS Schools Agreement was also accompanied by what is described as an audit/survey of RCS employees working at several schools in the ACT as to whether they were correctly paid in respect of wages and a number of other conditions and whether they were treated fairly and with respect by their employer. The audit/survey was signed by a total of 36 RCS employees.
[4] No such material was appended to the PCS application to terminate the PCS Schools Agreement.
[5] United Voice (UV), which is a party the 2008 Agreement and is covered by the Schools Agreements, opposed the Applications.
[6] The Applications were heard by the Fair Work Commission (the Commission) on 29 July and 11 August 2015. At the hearings, Mr Daniel Olsen, a manager with RCS, appeared on behalf of the Applicants, while Mr Stefan Russell-Uren appeared for UV. The Applicants lead no evidence in support of the Applications. Ms Lyndal Ryan, UV’s ACT Branch Secretary, four PCS employees (Julia Dah 4, Jirayu Maneesirawong5, Bo Ra Khay Yu6 and Tar War7) and four RCS employees (Ryvva Marie Caddie8, Sukyana Beckman9, Alex Caldiera10 and Luisa Rodrigues11) all gave evidence for UV. Only Ms Ryan and Ms Rodrigues were required for cross examination.
[7] For the reasons set out below and having taken into account all the circumstances, I am not satisfied that it is not the contrary to the public interest or that it is appropriate to terminate the agreements. The Applications are therefore dismissed.
The Statutory framework
[8] Subdivision D of Part 2-4 of the Act deals with the termination of agreements after their nominal expiry date. Subdivision D provides as follows:
“Subdivision D—Termination of enterprise agreements after nominal expiry date
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.
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.
227 When termination comes into operation
If an enterprise agreement is terminated under section 226, the termination operates from the day specified in the decision to terminate the agreement.”
The Applicant’s case
[9] The Form F24C – Statutory declaration in support of termination of an enterprise agreement attached to the Applications state, among other things, that:
“I do not believe that terminating this agreement would be contrary to the public interest.
The agreement relates to cleaners pay and conditions, and as such I do not believe that this is a public matter.
The agreement was made in … and since then many of the conditions have been superseded by the Modern Award.
Many other local and national companies are operating without this agreement, and the federal government has withdrawn their support since this agreement came into effect.” 12
[10] The statutory declarations further state that:
“Terminating the agreement would help my company to be able to tender for contracts on a level playing field with those that are not signatories to the agreement.
Currently we are at a disadvantage due to wages being higher in the agreement than they are in the Modern Award, restricting our ability to obtain new work.
Current employees would be at no disadvantage as they would continue to be paid at the current rate as per the agreement until such time that contract is renewed, at which point the Modern Award rates of pay would apply.
The Federal Government has withdrawn their support for this agreement, however the Union has advised that they will still enforce the rates of pay set out in the agreement, even if we are not paid for them in our contract.” 13
[11] By way of background, the relevant Modern Award is the Cleaning Services Award 2010 14 (the Award).
[12] As noted above, the Applicants lead no evidence in support of the Applications.
[13] The Applicants in their oral submissions contended that:
- their reason for wishing to terminate the Agreements was that they were unaware that they were still bound by them, having assumed the Agreements terminated when they expired 15;
as a result of the repeal of the Commonwealth Cleaning Services Guidelines in March 2014, the Commonwealth Government will not pay the Clean Start rates of pay to cleaning contractors, meaning that for any new contracts that are signed after 1 July 2014 they will be paid and the Award rate 16;
the Applicants were currently paying the correct rate as per the Agreements and for contracts entered into prior to 1 July 2014 were paying above the relevant agreement rate;
- the Applicants were concerned that if they obtained any new contracts that they would be prosecuted for not paying the correct wages as per the Agreements, even if they were paid a lower rate by the Commonwealth Government;
- the Applicants felt they were not on a level playing field with other companies, with this being the reason for wishing to terminate the Agreements;
- the ACT Government currently supports the Schools Agreements, with the Applicants happy to continue paying their wages as they fall due while the ACT Government supports the wage rates in the Schools Agreements;
- as to the public interest, the Applications do not affect the general public because it is to do with Applicants’ employees 17;
the Applicants were looking to terminate the Agreements so that they can gain more work in future, adding that if either of the Applicants tendered for a contract based on their higher rates of pay then another tenderer that is not covered by a Clean Start agreement is likely to win the tender potentially resulting in cleaners being paid according to the Award regardless;
the minimum period before the first of the Applicants’ existing contracts expires was 12 months, with the latest contract having about 20 months remaining;
continuing to operate under the Agreements would be likely to see the end of a local company which has operated for nearly 40 years 18;
since the repeal of the Commonwealth Cleaning Services Guidelines, RCS had unsuccessfully tendered for four large jobs, contending that this was because the successful tenderers operated under the Award 19;
there was no incentive for any Commonwealth government agency to take on a company that is party to a Clean Start agreement, therefore the only people that were gaining anything out of this were UV;
RCS has 94 employees of which 62 were approached and signed the petition to support a termination of the agreement, with the other 32 employees either declining to sign the petition or not having been asked to sign as RCS felt that it had a majority already; and
if the Agreements could not be terminated in the circumstances when might they be terminated, e.g. when the company went into receivership?
[14] Cross-examining Ms Ryan, Mr Olsen tendered two documents, the first a notice from the Australian National Audit Office (ANAO) 20 and the second an article titled, BSCAA concurs with Government’s decision to abolish Cleaning Services Guidelines, from a magazine called INCLEAN21.
[15] The ANAO notice includes the following:
“Additional Information
Tenderers to note: Changes to ATM documents and extension to closing date.
Please note: The Contract and Request for Tender (RFT) documents for the ANAO cleaning Contract ANA068/2015 make various references to the Fair Work Principles that were repealed on 1 July 2014. The ANAO has therefore repealed all references to the Fair Work Principles in the documents and tenderers will not be required to comply with these requirements in their submissions. The ANAO would like to advise those tenderers who have already submitted their tenders at their submissions will not be adversely affected if the tender responds to the fair work principles criteria.”
[16] The extract from the INCLEAN magazine article cited by Mr Olsen is as follows:
“Building Service Contractors of Australia’s (BSCAA) national officer, Barbara Connelly, contacted INCLEAN to comment “… From 1 July 2014 contractors will be able to submit tenders based on the Award and on Federal Government cleaning contracts …”
[17] With regard to Ms Rodrigues’ evidence (see below), Mr Olsen confirmed that he had spoken to Ms Rodrigues on the evening of 28 July 2015 after receiving the witness statements which UV intended to lead. Mr Olsen submitted that the conversation was to confirm that Ms Rodrigues had signed her statement as her signature was barely legible on his copy of her witness statement. Among other things, Mr Olsen disputed that he had said to Ms Rodrigues that he would terminate her employment, adding that he said that it was against company policy to use a mobile phone during work hours and that there may be repercussions if she continued to do that.
UV’s case
[18] In its written submissions, UV contended that:
- the evidence will suggest that the Applications were a response to UV’s compliance activities in respect of the Applicants, adding that this must lead the Commission to conclude that s.226(a) of the Act is not satisfied;
- the petitions attached to RCS application have no probative value as it is unclear what understanding each signatory had when they signed the petitions;
- in respect of the audit/survey submitted with the RCS application to terminate the RCS Schools Agreement, workers who do not speak English were not given adequate explanations in English or translations into their first language, while other workers were not given the opportunity to consider the petition; and
- each employee will lose all benefits to which they are entitled under the Agreements.
[19] In its oral submissions UV contended that:
- there is no case for the Commission to determine as there was no evidence before it on which it could base its decision, adding that PCS had tendered nothing;
- with regard to the ANAO notice, no detail had been provided regarding the document, how it affected either of the Applicants or indeed whether either of the Applicants were tenderers for the contract;
- as to the INCLEAN article, it was predominantly comprised of opinion and did not say that contractors who have signed Clean Start agreements are “doomed”;
- the Applicants misunderstood the nature of the public interest test;
- UV had disputed that matters put by the Applicants in their opening submissions; and
- contained within the Act is an intent and purpose to ensure that employees continue to receive their lawful entitlements and in the circumstances of this matter, particularly the timing of the applications by RCS, the loss of enforceability of benefits/protections under the Agreements and the absence of any effect in respect of the schools contracts, goes immediately to that consideration.
[20] UV relied upon several authorities in support of its submissions, including R v Commonwealth Conciliation & Arbitration Commission; Ex parte Melbourne & Metropolitan Tramways Board 22; Kellogg Brown and Root Pty Ltd and others v Esso Australia Pty Ltd23; O’Sullivan v Farrer24; Re Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia25; and Re Victorian Employers’ Chamber of Commerce and Industry26.
[21] Ms Ryan provided two witness statements, with her second statement 27 correcting one aspect of her oral evidence of 29 July 2015. In her first witness statement28, Ms Ryan set out compliance activity undertaken by UV in respect of both RSC and PSC in February-March and May/July 2015 respectively and deposed, among other things, that:
- termination of the Agreements would remove the ability of each worker to enforce their current rates of pay and would see workers lose a series of rights provided for in the Agreements, including change of contract specific redundancy provisions, paid public holidays and four hour minimum engagements;
- termination of the Agreements would also impact on UV which has specific rights under the Agreements, e.g. the Schools Agreements require an annual union meeting and provide for delegate’s rights; and
- termination of the Agreements could encourage other employers covered by Clean Start agreements to seek to terminate their agreements.
[22] Key aspects of Ms Ryan’s oral evidence were that:
- with regard to the Schools Agreements, the ACT Government effectively adopts the wage rates contained in the Schools Agreements 29;
the contract between PCS and the ACT in respect of cleaning services at Telopea Park School 30 provided that the hourly rate paid by the ACT to PCS was $39.59 (inclusive of GST) for the period 1 July 2013 to 30 June 201431 and that the Personnel Pay Rate was $25.32 for work carried out Monday to Friday for the same period32, with those hourly rates reviewed annually33;
- every cleaning contractor to ACT Government schools is paid the same rate 34;
she was not aware of any cleaning contractor who had lost a Commonwealth Government tender because they were covered by a Clean Start agreement, though she was aware of instances where workers’ wages had dropped as a result of a change of contract, citing the Department of Foreign Affairs and Trade as an example 35;
UV had taken compliance activity against the Applicants, adding that those activities may have lead the Applicants to make the Applications 36;
Clean Start agreements had not been affected by the repeal of the Commonwealth Government’s Fair Work Principles and Cleaning Services Guidelines 2011 37;
the public interest would not be served by granting the applications because doing so would diminish workers’ rights to be covered by a collective agreement and would have implications more broadly 38;
repeal of the Commonwealth Cleaning Services Guidelines 2011 had no effect in respect of the Schools Agreements 39;
there were other ways of resolving these issues which should be explored as opposed to removing workers’ rights 40; and
the majority of Commonwealth Government cleaning contracts were held by companies with Clean Start agreements 41.
[23] During the course of Ms Ryan’s oral evidence, UV tendered a copy of a letter from the then Minister for Employment, Senator the Hon. Eric Abetz, to the Catholic Archbishop of the Archdiocese of Canberra and Goulburn, which stated, inter alia, that:
“Cessation of the Guidelines [the Commonwealth Cleaning Services Guidelines 2011] will not preclude employers from continuing to pay their employees above award rates of pay or negotiating other terms and conditions through enterprise agreements, something which happened prior to the Guidelines. Government agencies also continue to have the flexibility to engage cleaning companies that provide above award wages and conditions – as was commonly the case prior to the existence of the Guidelines. There were at least 65 such cleaning contracts incorporating higher pay rates prior to the commencement of the Guidelines.” 42 (Underlining added)
[24] Ms Rodrigues provided two witness statements – the first dated 27 July 2015 and the second dated 29 July 2015. In her first witness statement, Ms Rodrigues deposed that she did not support termination of the RCS Schools Agreement, that she had not been asked if she supported termination of the RCS Schools Agreement and that she did sign a document saying that there were no contraventions. In her second witness statement, Ms Rodrigues deposed that on 28 July Mr Olsen came to her workplace and showed her a copy of her first witness statement, asking why she had signed it and if the union had come to her workplace. Ms Rodrigues further deposed that she responded that she signed her witness statement because “I didn’t want to go off my agreement” and that UV had visited her at home. Ms Rodrigues also deposed that Mr Olsen had also said that he had observed her “sitting down on my phone during my shift and if he catches me sitting down again he will terminate my employment.” 43
[25] In her oral evidence, Ms Rodrigues attested, among other things, that when Mr Olsen had given her audit/survey document to sign it was not translated into Spanish and that Mr Olsen had never asked her to leave UV and had always maintained that it was her free choice to be a union member 44.
[26] Key aspects of the evidence given by the various RCS and PCS employees who provided witness statements was to the effect that:
- a number were asked by their supervisor to sign a sheet of paper/petition without the document being translated into their first language;
- a number can speak English but cannot read English fluently, while others deposed that they do not understand English very well;
- one who had signed a document did not know if it related to the termination of the enterprise agreement(s) that covered their employment;
- they did not want to lose the enforceability of the rights under the relevant enterprise agreement, with one employee explicitly stating that he wished to keep the Clean Start agreement;
- some were not asked to sign any document/petition and/or were not asked what they thought, with one employee deposing that he was not asked if he wanted the Clean Start agreement terminated; and
- some were not given any explanation about the enterprise agreement which covered them or the Modern Award.
[27] The evidence of these RCS and PCS employees was unchallenged.
Consideration of the issues
[28] It was not disputed that the Applicants, as employers covered by the Agreements, were capable of making an application in accordance with s.225 of the Act.
[29] Against that background, I turn to s.226 of the Act which sets out when the Commission must approve a termination of an enterprise agreement after its nominal expiry date. In doing so, I note that that the Commission must be satisfied that it is not contrary to the public interest to do so and consider that it is appropriate to terminate the agreement taking into account all the circumstances. I deal with each of the factors below.
(i) The Commission is satisfied that it is not contrary to the public interest to do so – s.226(a)
[30] The Full Bench in Aurizon Operations Limited; Aurizon Network Pty Ltd; Australia Eastern Railroad Pty Ltd 45 (Aurizon) considered the issue of public interest in the context of s.226(a) of the Act, making the following observations:
“[129] Section 226(a) requires a consideration of whether termination of the agreements is not contrary to the public interest. It seems to us that a consideration of the public interest will involve something that is distinct from the interests of the persons and bodies covered by the agreements. This distinction seems to be reflected in the structure of s. 226. The question of how the public interest is to be assessed was considered by a Full Bench of the Australian Industrial Relations Commission in Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000. The decision in Kellogg Brown concerned an application to terminate a certified agreement pursuant to s. 170MH of the WR Act. The Full Bench observed:
“The absence of any reference to the interests of the negotiating parties in s.170MH(3) is significant. It follows that the views of persons bound by the agreement may be relevant to the exercise of the discretion if they shed light upon the effect of termination on the public interest, but they should not be given any independent weight. To do so would be to import into the application of the section something which on its proper construction it does not include. The notion of public interest refers to matters that might affect the public as a whole such as the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards. An example of something in the last category may be a case in which there was no applicable award and the termination of the agreement would lead to an absence of award coverage for the employees. While the content of the notion of public interest cannot be precisely defined, it is distinct in nature from the interests of the parties. And although the public interest and the interests of the parties may be simultaneously affected, that fact does not lessen the distinction between them.” ” (Citations not included, underlining added)
[31] As previously noted, the Applicants contended that the Applications do not affect the general public because it is to do with Applicants’ employees. Beyond that, the Applicants made no other submissions regarding the public interest. Drawing on the observations of the Full Bench in Aurizon regarding what a consideration of the public interest involves, it is clear that the Applicants’ submissions misconstrue the public interest.
[32] In addition, drawing on the extract from the decision in Kellogg Brown cited in Aurizon, there was no material before the Commission that termination of the Agreements would impact on the public as a whole such as achievement or otherwise of the objects of the Act. For instance, it was not suggested in this case that termination of the Agreements would facilitate bargaining for new agreements. To the contrary, the Applicants’ submissions were premised on a desire to revert to the Award.
[33] For all these reasons, I am not satisfied that it is not contrary to the public interest to terminate the Agreements.
(ii) The Commission considers that it is appropriate to terminate the agreement taking into account all the circumstances – s.226(b)
[34] Section 226(b) of the Act requires the Commission to take into account all the circumstances, including the views of the employees, each employer, and each employee organisation (if any), covered by the agreement and the circumstances of those employees, employers and organisations including the likely effect that the termination will have on each of them.
[35] The Applicants were clearly of the view that the Agreements should be terminated for the reasons cited above.
[36] The petitions attached to the applications by RCS suggest that a majority of RCS employees support the termination of the 2008 Agreement and the RCS Schools Agreement. However, no evidence was lead to substantiate the contention that this was indicative of majority support among employees for termination. For instance, given the diverse ethnic backgrounds of the signatories to the petitions, no evidence was lead regarding whether or not employees were informed of the implications of termination, how that explanation was provided and whether or not they comprehended what those implications meant for them. In the absence of such information, little weight can be attached to those petitions. Further, I note that PCS provided no material indicating the views of its employees regarding its application to terminate the PCS Schools Agreement.
[37] On the other hand, a number of RCS and PCS employees gave evidence that they did not wish to lose the enforceability of rights under the relevant agreement which covered their employment. For a number of these employees, their evidence was that their command of written English was not good and that the implications of termination were not explained to them. As previously noted, that evidence was not challenged by the Applicants. In other words, the only evidence before the Commission from employees is the unchallenged evidence of a small number of RCS and PCS employees.
[38] UV opposes termination of the Agreements.
[39] As to the effect that termination will have on the parties, termination may strengthen the Applicants competitive position in some respects regarding future tenders for Commonwealth Government cleaning contracts. While the Applicants contended that since the repeal of the Commonwealth Cleaning Services Guidelines, RCS had missed out on the tenders for four large jobs because the successful tenderer operated under the Award, they adduced no evidence to substantiate that contention. Further, based on the abovementioned letter from the then Minister for Employment, I note that cleaning companies that pay above award rates of pay are not precluded from tendering for Commonwealth Government cleaning contracts. In addition, I note that the ACT Government continues to specify the rates to be paid to employees which are above those set out in the Award in its tender documentation. As a result, termination of the Schools Agreements is unlikely to have any impact on the competitive position of the Applicants in respect of ACT Government schools cleaning contracts.
[40] For employees termination of the Agreements is unlikely to have any impact on their take home pay in the short/medium term. However, this is likely to change should the Agreements be terminated and the Applicants commence to work under a new contract for a particular site that employees currently work at or at a new site. Further, in the absence of any specific form of undertaking having been canvassed or put before the Commission, questions remain regarding the issue of enforceability of existing terms and conditions despite the Applicants willingness to give undertakings to that effect.
[41] With regard to UV’s contention that the Applications were a response to its compliance activities, other than the timing of the applications being coincidental, I am not satisfied that this serious allegation has been made out. It is worth noting that termination of the Agreements would have no effect on UV’s rights under the Act to enter premises to investigate suspected contraventions or for discussion purposes.
[42] Having taken into account all the circumstances, and noting that the Applicants did not adduce any evidence to support the Applications, the above analysis supports a finding that it would not be appropriate to approve the termination of the Agreements in the circumstances.
Conclusion
[43] For all the above reasons and having taken into account all the circumstances, I am not satisfied that it is not the contrary to the public interest or that it is appropriate to terminate the agreements. The Applications are therefore dismissed.
Appearances:
D. Olsen for the Applicants.
S. Russell-Uren for United Voice.
Hearing details:
2015.
Canberra:
July 29.
August 11.
1 AC323332
2 AE885390
3 AE885385
4 Exhibit RU4
5 Exhibit RU5
6 Exhibit RU6
7 Exhibit RU7
8 Exhibit RU8
9 Exhibit RU9
10 Exhibit RU10
11 Exhibits RU11 and RU12
12 Form F24C at Item 2.1
13 Ibid at Item 2.3
14 MA000022
15 Transcript of 29 July 2015 at PN26
16 Ibid at PN28
17 Ibid at PN42
18 Transcript of 25 August 2015 at PN205.
19 Ibid at PN206
20 Exhibit O1
21 Exhibit O2
22 (1965) 113 CLR 228
23 (2005) 139 IR 34
24 (1989) 168 CLR 210
25 (1987) 72 ALR 1
26 (2012) 224 IR 73
27 Exhibit RU13
28 Exhibit RU1
29 Transcript of 29 July 2015 at PN127
30 Exhibit RU2
31 Ibid at Schedule 1, Item 4
32 Ibid at Schedule 1, Item 5
33 Transcript of 29 July 2015 at PN127-131
34 Ibid at PN132
35 Ibid at PN135-136
36 Ibid at PN146-149
37 Ibid at PN172
38 Ibid at PN193
39 Ibid at PN197
40 Ibid at PN200
41 Ibid at PN204
42 Exhibit RU3
43 Exhibit RU12 at paragraph 7
44 Transcript of 11 August 2015 at PN136 and PN166-167
45 (2015) 249 IR 55
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