Rachel Chacko

[2019] FWCA 1755

[2019] FWCA 1755

FAIR WORK COMMISSION

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Item 16 Sch. 3—Termination of transitional instrument

Rachel Chacko
(AG2018/6113)

SHELANA PTY LTD CERTIFIED AGREEMENT 2005-2008

Retail industry
DEPUTY PRESIDENT CLANCY	MELBOURNE, 20 MARCH 2019

Application for termination of the Shelana Pty Ltd Certified Agreement 2005-2008.

[1] On 1 November 2018, Ms Rachel Chacko filed an application (the Application) pursuant to Item 16, Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the TPCA Act) to terminate the Shelana Pty Ltd Certified Agreement 2005-2008 (the Agreement). The nominal expiry date of the Agreement was 2 October 2008.

[2] Item 16, Schedule 3 of the TPCA Act states that Subdivision D of Division 7 of Part 2-4 of the Fair Work Act 2009 (the Act) applies to applications to terminate collective agreement-based transitional instruments that have passed their nominal expiry date. I am satisfied that the Agreement is a collective agreement-based transitional instrument and, as indicated above, that its nominal expiry date of 2 October 2008 has passed.

[3] On 14 November 2018, I caused directions to be sent to the parties. The employer, Shelana Pty Ltd (Shelana), was directed to provide to all employees covered by the Agreement a copy of the directions, the Application and statutory declaration made by Ms Chacko. Shelana was required to post the material on the staff notice board at each workplace and also send the material via email to employees. Shelana and employees were invited to file any material in response to the Application by close of business on 28 November 2018. Ms Chacko was directed to file any material in support of the Application and any material in reply, by close of business on 5 December 2018.

[4] On 28 November 2018, HR Legal came on the record as representing Shelana.

[5] Material was ultimately filed by Ms Chacko, Shelana, employees and non-employees. All employees who filed a response were also given a copy of Ms Chacko’s material and invited to provide a response. Three employees took up this opportunity.

[6] Ms Chacko and Shelana advised they did not require a hearing of this application.

The legislation

[7] The Act relevantly provides as follows:

“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.

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.

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.”

Shelana’s submissions

[8] On 30 November 2018, an outline of submissions was filed on behalf of Shelana and a witness statement of Mr Damian Carew, Director.

[9] Shelana submitted it operates an APCO service station in Bendigo and the Agreement covers 53 employees who would otherwise be covered by the Vehicle Manufacturing, Repair, Services and Retail Award 2010 (the Award). It submitted its employees are paid above the base rates in the Award and that while the Agreement does provide for public holiday penalty rates, employees are paid on public holidays at rates significantly higher than the public holiday rates contained in the Agreement, particularly on Christmas day. It was contended the public holiday rates are in excess of the equivalent rates in the Award. Shelana also submitted that while the Agreement does not provide for weekend penalty rates, employees are paid higher rates of pay on Sundays.

[10] Shelana submitted where any term of the Agreement is less beneficial than what the National Employment Standards (NES) provide, the NES prevails as per its legal obligations.

s.226(a) – Public interest

[11] Shelana contends it is contrary to the public interest to terminate the Agreement due to the financial viability of the business. It submitted the Award provides in many respects more favourable terms and conditions than the Agreement and its financial viability will be severely adversely affected if the Agreement is terminated with immediate effect. Shelana contends this will have a detrimental impact on job security of employees. It submitted it has not made financial provision for a sudden increase in wages and conditions and it may be forced to reduce the number of staff working shifts late at night and on weekends, which would likely result in employees losing shifts and even their jobs. Shelana submitted the possibility of more beneficial terms and conditions for some employees under the Award if the Agreement is terminated is outweighed by the job security considerations.

s.226(b)(i) – Views of the employer

[12] Shelana does not support the application to terminate the Agreement. In addition to the abovementioned financial impacts, Shelana contends terminating the Agreement would result in further administrative costs if it were required to rearrange and vary its existing pay rates to the Award rates. Shelana further contends that transition from the Agreement to the Award is likely to negatively impact the business’ flexibility.

[13] Shelana submitted it had discussed the implications of the Application with its employees and a number had communicated their views in opposition to the Application in writing. These statements were annexed to the statement of Mr Carew and are addressed below.

s.226(b)(ii) – Circumstances of the employer and the likely effect that the termination will have

[14] Shelana contends in the event the Agreement is terminated, it would potentially incur higher wage costs and costs associated with changes to rostering arrangements, both of which impact on profitability.

[15] Shelana submitted in the event the Commission determined to terminate the Agreement, such termination should not take effect for six months.

[16] Shelana also made some submissions on the circumstances of its employees and the likely effect of termination on them. It contends there is a requirement to consider what the impact on all of the employees would be, not just Ms Chacko, and that the interests of the majority should prevail. It further submitted that Ms Chacko has inaccurately suggested if employees were covered by the Award, wages and conditions would only be inferiour for a small number of employees. It submitted its calculations indicate that 18 employees would be worse off under the Award, including five out of 11 junior employees.

Mr Damian Carew’s statement

[17] Mr Carew said he has operated the APCO Service Station for approximately 27 years. He said in June each year, he receives advice from his legal advisors about the increases to federal minimum wage rates in modern awards and while he is only obliged to provide the base rates in the Award, he provides increases in line with the federal minimum wage increase. Mr Carew annexed a memo to his statement which set out the wage rates Shelana has applied since 1 July 2018.

[18] Mr Carew said while the Agreement does not provide for weekend penalty rates, he pays employees a higher rate of pay on Sundays, and also pays a higher rate on public holidays than the rate contained in the Agreement. Mr Carew said the public holiday rates he pays are higher than the equivalent rates in the Award.

[19] Mr Carew also noted that in January 2017 the Fair Work Ombudsman performed an audit in the Ballarat region and conducted a review of the wages and conditions provided to staff. Mr Carew said compliance with workplace laws, including the Agreement, was found.

[20] Mr Carew said the financial viability of his business would be significantly impacted if the Agreement is terminated immediately as he has not made financial provision for a sudden increase in wages and conditions. He said he may be forced to reduce the number of employees working late night shifts or on weekends if the Agreement is immediately terminated, which will likely result in employees losing shifts or their jobs. He said there would also be less flexibility with rostering.

Statements of employees

[21] There were 14 statements annexed to Mr Carew’s statement and these are summarised below. The additional statements filed by employees are also summarised.

Twelve Employees who oppose the Application

•  Mr Andrew Spriggs – said he was happy with the flexibility of the Agreement and would be worse off if it were to change to the value of approximately $800.00 per year. He said he works Monday to Friday, 25 hours per week.

•  Mr Mark Wild – said if the Award were to apply to his employment, he would be severely penalised financially by approximately $62.00 per week. He said he would like to see a new enterprise agreement negotiated or an individual flexibility agreement.

•  Ms Stacey Harbour – said she stands by the Agreement due to its flexibility and the rate of pay. Ms Harbour said if her employment was covered by the Award, her pay rate would decrease by $2.09 per hour during the week and by $4.18 on public holidays. She said she would need to consider if she can afford to remain employed at the business as she would need to do extra hours to compensate for the difference in wage. She said she works Monday to Friday and at least 10-15 hours per week. In a later statement responding to various assertions of Ms Chacko, Ms Harbour said she has only worked with Ms Chacko a couple of times and that her main job is at APCO, with her second job being bookkeeping not at a fish and chip shop.

•  Ms Karen Beckmann – said she does not agree to change the Agreement and believes it is very fair to everyone. Ms Beckmann said she has worked at APCO for over 12 years and the working conditions are excellent. She works Monday to Friday, 6.00pm to midnight.

•  Mr Reece Grieve – said he is in favour of maintaining the Agreement and feels he would be at a disadvantage to go to the Award. He is a junior employee who works weekends and weekdays.

•  Ms Kylie Webb – said she would be worse off financially if she moves to the Award and feels the Agreement gives greater flexibility to the workplace. Ms Webb said she is currently paid $21.56 per hour plus holiday and personal leave. Under the Award, Ms Webb said she would receive $19.47 plus entitlements. She works in the café, alternating shifts Monday to Saturday morning.

•  Ms Michelle Matthews – said in response to the Application, she feels she would be worse off as she works a combination of afternoon and night shifts on weekdays and weekends. She said the amount they get is fair.

•  Ms Hannah Regan – said if the Award were to apply, she would stand to lose a significant amount of money, approximately $130.00 per fortnight.

•  Ms Sallyann Kane – said throughout her employment she has not been unhappy about her wage rate and if there was a concern, she would raise it with Mr Carew. She said she would like to stay with the Agreement rates of pay. Ms Kane works Monday to Friday.

•  Mr Sean Kemp – said it is more beneficial for him to stay under the Agreement, as under the Award he would lose $21.45 per week. He further said his workplace is flexible with his ability to work differing shifts and hours under the Agreement. Mr Kemp works Monday to Friday, alternating from 6.00am to 12.00pm/1.00pm or 12.00pm to 7.00pm.

•  Ms Nola Lester – said she has no issue with the Agreement and is happy to work under it.

•  Ms Nicole Grieve - said the Agreement is a fairer, if not better overall pay rate and conditions given the business trades 24/7. Ms Grieve said reverting to the Award would be a financial disadvantage to herself and many other employees. She said she worked weekdays and weekends.

It should be noted that Ms Chacko has subsequently asserted that Ms Regan, Ms Kane, Mr Kemp and Ms Lester have now left their employment with Shelana and this assertion is unchallenged by Shelana. Further, Ms Grieve ceased working for Shelana on 18 December 2018.

Two Employees who oppose the Application but who say they would be better off under the Award

•  Mr Robert Softley – said he has worked under the Agreement for three years with no problems and his understanding is that a large percentage of staff would be worse off if the Agreement was terminated, though he personally would be better off. He said considering the number of workers who would be adversely affected, he wishes to stay with the Agreement.

•  Mr Amanda Bramley – said in response to the Application, she does not feel it is in the best interest of the workplace as a whole and does not support terminating the Agreement. She said as a Monday to Friday night shift worker, she would personally be better off, however Monday to Friday day shift workers, who make up the majority of employees, would not be and would take a considerable loss.

One Employee who supports the Application

•  Mr Brian McGregor – said he has been employed with APCO for about eight years at both Kangaroo Flat and McIvor Road, though mainly the latter. Mr McGregor said he supports termination of the Agreement. He said he is paid at a lower rate than all other console operators working night shift in the Bendigo area and the only way to rectify this is to terminate the Agreement and be covered by the Award. He said this has also had an impact on his superannuation. Mr McGregor said he was not aware he was not being paid award rates from 2010, as he thought wages would convert to the new awards and he would not be disadvantaged. Mr McGregor said he works night shifts, mostly around midnight to 7.00am on week days and weekends, on a part-time basis. He said he works alone at night and does not get a paid break as he needs to maintain the cash register. Mr McGregor said day time staff do get the break as there are two console operators working at the same time. He asserted that if the Agreement continues, he would be owed in excess of eight years’ paid 30 minute breaks for every solo shift he has undertaken.

[22] On 7 December 2018, the Commission received statements from Mr Rodney Cameron and his wife, Mrs Kayelene Cameron. Mr Cameron resigned his employment on 30 November 2018 due to health reasons, though had worked at APCO for approximately three and a half years, working a combination of weekdays and weekends. Mr Cameron contends in the previous five months, he would have been paid $1,403.38 more if the Award applied to him and despite working a combination of shifts, he would be better off under the Award by a substantial amount.

[23] Mr Cameron said he agrees with terminating the Agreement as current and future employees would benefit from the Award due to properly paid penalty rates and shift loadings. He submitted that evening shift workers and night shift workers are worse off by $103.41 and $144.38 per week respectively. He said the penalty rates of time and a quarter on Sundays does not compensate for the penalties employees would be entitled to under the Award. He submitted employees should be compensated more for doing these shifts. Mr Cameron contends the Agreement should be terminated with immediate effect.

[24] Mrs Cameron, who is not and has not been an employee of Shelana, expressed her views about the workplace. She said the workplace is severely understaffed which places pressure and stress on all employees to perform more duties than is sometimes physically possible. Mrs Cameron said Mr Cameron had to resign from a job he enjoyed because of health and stress issues. Mrs Cameron submitted if the Agreement is terminated, the majority of workers would be much better compensated for their efforts and if appropriate pay rates and penalties were being paid, conditions would be better for all employees. She said this would help a lot of financially struggling employees and families better cope with society and living expenses.

[25] Shelana objects to Mr Cameron’s statement on the basis that he resigned his employment on 30 November 2018 and to Mrs Cameron’s statement as she is not and has never been an employee of the business. Mrs Chacko submitted that Mr Cameron was an integral part of the Application being made and would have continued in his employment but for his health. Ms Chacko said Mrs Cameron’s response highlights the impact of employment conditions on family and friends of employees.

Ms Chacko’s submissions and evidence

[26] In her statutory declaration filed with the Application on 1 November 2018, Ms Chacko said terminating the Agreement would have a relatively insignificant effect on a small group of employees who only work weekdays. She said for the rest of the employees who primarily work weekends and overnight shifts, terminating the Agreement would entitle them to penalty rates and fairer working conditions. It was further stated that given the revenue of the business and the business having made a name for itself in the area and surrounding areas, she did not believe it is contrary to the public interest to terminate the Agreement.

Response to Shelana’s submissions

[27] Ms Chacko filed her further submissions on 7 December 2018 and addressed the material filed by Shelana and the employees.

[28] Ms Chacko said Shelana operates two APCO service stations in Bendigo and a car wash in Bendigo and Cranbourne.

[29] Ms Chacko said in response to Shelana’s submission that the Agreement covers 53 employees and their calculation that 18 employees would be worse off if the Agreement is terminated, this leaves 35 employees who will remain the same or be better off. Ms Chacko summarised that two thirds of the workforce would have better pay and conditions under the Award.

[30] Ms Chacko submitted it is an exaggeration to say employees are paid significantly higher than provided for in the Award. She said the Award currently pays $20.91 per hour for a console operator during ordinary hours and the Agreement is paying $21.56, $0.65 more per hour. She said public holidays under the Award come to $41.82 per hour and the Agreement pays $43.12, which on an average shift, equates to the Agreement paying $8.13 more.

[31] As to the submissions Shelana made about its financial viability, Ms Chacko said that while she has not inspected Shelana’s books, the approximately six hours one person spends on the main till on the midday to 6.00pm shift serves 750-850 customers most days, and generally $25,000 (or more) would be processed through that main till. Ms Chacko said this does not account for the second till which is in use most of the time as well. Ms Chacko submitted APCO serves between three and five customers to every one customer at other stations nearby.

[32] In response to Shelana’s contention that it may be forced to reduce the number of staff working late shifts and on weekends if the Agreement is terminated, Ms Chacko submitted there is only one person rostered to work late at night and the junior on shift finishes no later than 9.00pm. This leaves the employee working the 6.00pm to midnight shift on their own from 9.00pm to midnight and Ms Chacko said the midnight to 6.00am shift is mostly a solo shift. Ms Chacko submitted the only way to reduce these shifts would be to close the business and not run it 24 hours. As to weekends, Ms Chacko contends they are already short staffed, particularly in the afternoon. She said weekend afternoons are two employees less than the equivalent time on weekdays, but they are expected to complete the same amount of work for the same rate of pay.

[33] In relation to Shelana’s submissions about job security, Ms Chacko said Shelana has hired more replacement employees for overnights and weekends in the nearly 12 months she has worked there than any other position.

[34] As to Shelana’s contention that moving to the Award is likely to negatively impact the business’ flexibility, Ms Chacko said to her knowledge, all staff are hired for specific shifts and while employees take leave resulting in additional shifts for other employees, everyone has their own base shifts. Ms Chacko said it would not be possible for her to request a weekday morning shift instead of her weekend afternoon shift. Ms Chacko annexed to her statement two job advertisements by APCO, one being a permanent part-time console operator position working midnight to 6.00am every second Saturday and Sunday (with availability for occasional relief shifts) and the second being a permanent part-time role of console operator working weekend shifts between midday and 6.00pm, again with the expectation of being available for occasional relief shifts. Ms Chacko submitted that while the lack of flexibility and having set shifts suits many people, including herself, flexibility should not be touted as a benefit of being on the Agreement.

[35] In response to Shelana’s contention that it has had an opportunity to discuss the implications of the Application with its employees, Ms Chacko said an email sent to staff on 21 November 2018 attaching the Application and directions is the only form of communication many employees have received. Ms Chacko submitted Shelana has mainly contacted employees who would be worse off and not as many employees as possible. Ms Chacko said her understanding was those employees contacted by Shelana received a document outlining how much they would be worse off and this was not provided to all employees. Ms Chacko said documentation on display for everyone did not explain penalty rates under the Award, so not all employees have understood the entire effect it would have on their pay rates.

[36] As to Shelana’s submission that there is a requirement to consider what the impact would be on all the employees, not just Ms Chacko, and the interest of the majority should prevail, Ms Chacko reiterated her point made above that 18 out of 53 employees would be worse off (approximately one third of the workforce) and two thirds of the workforce would not be worse off. Ms Chacko submitted it is in the best interests of the majority to terminate the Agreement effective immediately.

[37] Ms Chacko said she does not dispute the Fair Work Ombudsman deemed the Agreement and amounts paid to employees compliant. She asserted her argument is that the Agreement is outdated and no longer suits the environment and work of Shelana employees.

Response to employee’s statements

[38] Below is a summary of Ms Chacko’s responses to statements made by other ongoing Shelana employees:

•  Mr Mark Wild – Ms Chacko said she cannot find a calculation that equates to Mr Wild being $62.00 per week worse off under the Award. Ms Chacko questions whether Mr Wild is being paid the same as other employees as at $21.56 per hour under the Agreement for ordinary hours worked, the maximum a full time employee would lose per week is $24.70. Ms Chacko said to her knowledge, most staff are part time and only a select few are full time.

•  Ms Karen Beckmann – In terms of the comments made by Ms Chacko in relation to Ms Beckmann, I have noted Ms Chacko said she had done some calculations on the difference of reverting to the Award on Ms Beckmann’s income and has submitted Ms Beckmann would receive an 18% loading and be better off by $103.41 per week, or $5,377.32 per year.

•  Ms Stacey Harbour – Ms Chacko said Ms Harbour’s primary job is at a fish and chip shop and her position at APCO is an additional job (this is disputed by Ms Harbour above). Ms Chacko submitted Ms Harbour has not worked anything close to 15-20 hours per week and would not be as impacted as she claims.

•  Mr Robert Softley – Ms Chacko said it has been alleged to her that Mr Softley is of the understanding one third of employees will benefit from the termination of the Agreement, rather than one third being worse off.

•  Ms Amanda Bramley – Ms Chacko said while Ms Bramley has a valid point that there are more Monday to Friday day workers, she fails to point out that many day workers also work weekends and would be eligible for penalty rates which would increase their overall income. Ms Chacko submitted Ms Bramley would be entitled to a 30% loading which equates to $144.38 per week or $7,507.56 per year under the Award.

[39] Ms Chacko also made some comments regarding Ms Kane, Ms Lester and Ms Grieve but, as noted above, these three individuals are no longer employed by Shelana.

Ms Chacko’s further submissions

[40] Ms Chacko contends Shelana has fought strongly to keep the Agreement in place, however the Agreement is severely out of date. She submits Shelana has not met some of the requirements under the Agreement, including:

•  Clause 5 – Hours of work, including that hours will be by a predetermined roster which will be displayed a week in advance – Ms Chacko contends the only roster on display is for juniors and is out of date and does not include all the current juniors employed. Ms Chacko said she was provided with one roster at the commencement of her position at APCO.

•  Clause 32 – Period of the Agreement – Ms Chacko submits that regardless of the nominal expiry date, the clause provides it is to remain in force for a period of three years, which was confirmed at the hearing of the application for approval of the Agreement.

•  Clause 33 – New employees to become party to the Agreement – Ms Chacko said while she has no concern with the principle of this clause, upon her commencement with Shelana and from what she has been told by others commencing, the Agreement was not provided in any format. Ms Chacko said no contract or other document stating the position title, requirements or pay rates have ever been provided by Shelana.

•  Clause 35 – Crib/meal breaks – Ms Chacko said this clause could not be complied with at all on a Sunday until a few months ago when a junior employee was placed on the afternoon shift as it was too busy for one person to leave on break when there were only two people working after 1.00pm. Ms Chacko said as it stands, regularly on a Sunday she does not get her break until almost 5.00pm when she is finishing at 6.00pm.

•  Appendix A – requires if a staff member is unable to do a shift, the site’s Manager must be notified at least 24 hours before the start of the shift. Ms Chacko contends this is not possible in the case of sick leave and nor has it been a requirement until she submitted the Application. Ms Chacko said since filing the Application, it is her understanding that Mr Carew has attempted to enforce this clause at least once.

[41] Ms Chacko submitted while it is not written into the Agreement to pay 25% penalty rates on Sundays, the $26.95 is a lot less than the $31.37 provided in the Award. Ms Chacko said penalty rates on Sundays started being paid from 2016. As to Saturdays, Ms Chacko contends the rate is $21.56. She said before noon on a Saturday the Award rate is $0.65 less per hour, however the afternoon rate under the Award is $9.81 extra per hour.

[42] Ms Chacko submitted while the 17.5% annual leave loading is not provided in the Agreement, and is a provision in the Award, this started being paid by Shelana a couple of months ago.

[43] Ms Chacko contends the combination of $0.65 per hour above the Award, 25% penalty rates and leave loading does not come close to amounts lost weekly by employees under the Agreement.

[44] Ms Chacko said her calculations indicate that last financial year she would have been better off under the Award by a sum of approximately $1,085.96 and at the time of writing her submissions, $968.75 better off in the current financial year. Ms Chacko contends last calendar year she would have been approximately $2,054.71 better off under the Award and this amount is almost double what others could be worse off by if the Award applied. Ms Chacko said the additional $2,000 she would have earned under the Award is more than one months’ mortgage repayment or almost six months’ worth of groceries and so would make a big difference.

[45] Ms Chacko said no additional hours are paid when a shift runs overtime. She said it is not uncommon for a shift to go longer than the 6.25 hours allocated, particularly when they are busy and cannot get back onto the till to finalise their shift or have a back log of cooking to finish for the next person. Ms Chacko said despite writing this many times into the timesheet book, she has never been paid the additional time and she has been advised by other employees it is pointless to write it in as only previously approved time gets paid.

[46] Ms Chacko highlighted sections of the transcript 1 of the hearing where the Agreement was sought to be approved where there was discussion about equitable rostering to ensure overall, employees were not disadvantaged against the Award. Ms Chacko contends however that as evidenced from the two job advertisements she annexed, it is common practice for the business to hire people to only work weekends which she submits does not amount to fair and equitable rostering. Ms Chacko said for several months last year she was available for all shifts and requested to have her hours increased, however they were increased by an average of one shift per week. She said the shifts were not permanent and would be her covering for people who were off sick or on leave. Ms Chacko said she was required to find ongoing work elsewhere to afford to live.

[47] Ms Chacko said she was supposed to work on 1 December 2018, however she said she took the shift off under stress leave mostly caused by APCO. She said senior members of staff have created a hostile working environment since 24 October 2018 when it was first brought to their attention some employees were unhappy with the pay conditions.

[48] Ms Chacko said she regularly sees a sports physiotherapist for physical issues exacerbated by working at APCO. She said after her shifts, she is barely able to move her feet and is in so much pain from standing in the one spot for almost six hours. She said the station is so busy all the time, she serves two to three customers every minute and does not have the chance to leave her till. Ms Chacko said she is also required to cook food in the fryer and oven to keep the bain marie stocked. She contends it is near impossible for her to complete any task other than serving customers and herself and the other person working are under a lot of stress and pressure.

[49] In response to Shelana’s submission that in the event the Commission determined to terminate the Agreement, such termination should not take effect for six months, Ms Chacko said she does not agree that this is fair. She said Shelana has had 10 years since the Agreement reached its nominal expiry date and at no point in that time have they attempted to negotiate a new agreement. Ms Chacko contends that while terminating the Agreement may be financially inconvenient to Shelana, it has not had to pay penalty rates for 10 years, meanwhile employees have worked weekends as if it were another day of the week. Ms Chacko further noted that there has been no attempt to hide the fact renovations are planned for the store when the approvals come through. Ms Chacko submits the Agreement should be terminated immediately and Shelana can then commence negotiations for a new, fairer Agreement.

Consideration

Section 225 of the Act

[50] Ms Chacko, as an employee covered by the Agreement, is eligible to apply to the Commission for the termination of the Agreement under s.225(b) of the Act. I am also satisfied the Agreement has passed its nominal expiry date of 2 October 2008.

Section 226(a) of the Act – Public Interest

[51] As regards s.226(a) of the Act and the manner in which the public interest is to be assessed, the Full Bench in Aurizon Operations Limited; Aurizon Network Pty Ltd; Australian Eastern Railroad Pty Ltd 2(Aurizon)cited various passages from the Full Bench of the Australian Industrial Relations Commission’s decision in Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 20003(Kellogg) which had concerned the corresponding, but not identical, provision from the Workplace Relations Act 1996. Relevantly, these passages included:

“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…” 4

[52] It is also relevant to highlight the Full Bench in Aurizon concluded that it cannot be expected that the terms and conditions of an agreement will continue unaltered in perpetuity after it has passed its expiry date. This is because the Act contemplates the terms and conditions of an agreement may be altered by making a new agreement or by terminating the existing agreement. 5

[53] As was also recognised in Aurizon, s.226 of the Act is not limited to circumstances in which an agreement no longer applies to any employee. The Act clearly contemplates an agreement that still applies to employees being terminated and prescribes a safety net upon termination in such circumstances. The prescribed safety net is not a prior agreement and nor are undertakings mandatory. Rather, the prescribed safety net is the relevant modern award created during the Award Modernisation process and the NES. In this case, the relevant modern award is the Vehicle Manufacturing, Repair, Services and Retail Award 2010.

[54] In this application, the termination of the Agreement would not lead to an absence of award coverage for the employees. The Award provides for “proper industrial standards” within the meaning given to that term by Kellogg.

[55] Shelana’s public interest submissions addressed interests of the parties, being its financial viability and the job security of its employees. These matters do not affect the public as a whole.

[56] In considering the matters I have outlined at [51]-[55], I am satisfied it is not contrary to the public interest to terminate the Agreement.

Section 226(b) of the Act – Appropriateness

[57] The approach to assessing appropriateness by taking into account all the circumstances, as enunciated by the Full Bench in Aurizon, is to have reference to the construction of s.226 and the contextual matters that bear upon that construction, as well as giving specific consideration to the matters identified in ss. 226(b)(i) and (ii):

“All of the circumstances also need to be taken into account in considering whether termination of the agreements is appropriate. In particular the views of employers and employees covered by the agreement, their circumstances, and the impact of termination need to be taken into account. The requirement in s. 226(b) to take into account all of the circumstances including those set out in s. 226(b)(i) and (ii) is a requirement to take the matters into account and to give them due weight in assessing whether it is appropriate to terminate an enterprise agreement. In assessing appropriateness by taking into account all of the circumstances, we approached the task by reference to the construction of s. 226 and the contextual matters that bear upon that construction dealt with earlier as well as giving specific consideration to the matters identified in s . 226(b)(i) and (ii).” 6 (Reference omitted)

[58] I intend to adopt this approach and note that the construction of s.226(b) of the Act is such that it is open to me to take into account and give due weight to matters such as the views of past employees and Mrs Cameron.

Section 226(b)(i)

[59] Shelana opposes the termination of the Agreement.

[60] In relation to the employees, as at 30 November 2018, there were 53 employees covered by the Agreement. During the course of this matter, the views of 17 employees were put before me, although it seems as though six of them are now no longer employed by Shelana and I have noted that Ms Chacko’s assertions in relation to Ms Regan, Ms Kane, Mr Kemp and Ms Lester having left their employment were not challenged.

[61] Of the six now former employees, five said they oppose the Application while Mr Cameron supports it.

[62] Of the 11 remaining employees, clearly Ms Chacko supports termination, as does Mr McGregor. There are therefore nine remaining employees who have advised they oppose the Application, although two oppose it despite suggesting they would be better off under the Award.

[63] Mrs Cameron, neither an employee nor past employee, supports the termination. Her views are shaped by her observations of her husband’s experience working for Shelana over a three and a half year period, which ended recently.

[64] Shelana submitted that the interests of the majority should prevail without explaining either who “the majority” are or the nature of their interests. On Shelana’s own submissions, 18 employees would be worse off under the Award. This is clearly not a majority when there were 53 employees covered by the Agreement at the date of making the submission.

[65] However, I am satisfied the balance of Shelana’s remaining employees were on notice that the Application was before me through my Directions dated 14 November 2018 and that they had a reasonable period of time to file material should they have wished to do so. In those Directions, I outlined that the impact of the Agreement being terminated would be the Vehicle Manufacturing, Repair, Sevices and Retail Award 2010 setting the terms and conditions of employment and I also itemised the rates of pay for full time employees.

[66] Ultimately, apart from the abovementioned employees and ex-employees who replied, no submissions from any other employees were filed in the Commission so I consider I can do no more than accord neutrality to the views of the employees who did not engage with the Application.

[67] Given all these factors, I am not persuaded I should conclude that the majority of employees might prefer that the Agreement not be terminated.

[68] There is no employee organisation covered by the Agreement.

Section 226(b)(ii)

[69] Mr Carew stated on behalf of Shelana that he has not made financial provision for sudden increases in wages and conditions. Mr Carew did not say that Shelana pays the Award rate of pay on Sundays and nor did he address what is paid by Shelana for Saturday work after midday. Further, Shelana made submissions conceding the Award provides more favourable terms and conditions than the Agreement in many respects and there is the possibility that there may be more beneficial terms and conditions for some employees.

[70] Having regard to the statement of Mr Carew and the submissions of Shelana, it is open to me to conclude that Shelana’s costs relating to remuneration would increase if the Agreement was terminated and the Award was to apply.

[71] There was, however, next to no evidence before me as to how Shelana structures its rosters and therefore, it is difficult to discern how the “night time rates” under the Agreement would compare with Award rates of pay applicable to console operators and others working regular afternoon, evening or night shifts. Ms Bramley said that as a Monday-Friday night shift worker, she would be better off under the Award. Shelana’s silence regarding these matters leaves it open to me to infer such employees may be better off under the Award. Certainly it appears that employees working under the terms of the Agreement on weekends currently receive lower rates of pay when working after midday on Saturdays and on Sundays, compared with the Award.

[72] I have noted that there was a review conducted by the Fair Work Ombudsman. While the finding that Shelana currently complies with the relevant workplace laws is to its credit, it is also reflective of Shelana’s current entitlement to continue to rely on those conditions in the Agreement it continues to apply.

[73] Shelana’s case opposing termination rests on the impact a reversion to the Award would potentially have on its profitability. It also includes the assertion that it “may” be forced to reduce the number of employees working late night shifts or on weekends. However, Shelana operates its business on a 24/7 basis and it has not suggested it will cease trading altogether at any of the times. Further, Ms Chacko has given unchallenged evidence that from 9.00pm to 12.00 midnight and 12.00 midnight to 6.00am, only one employee is currently rostered and weekend afternoons are already staffed at a lower rate than weekdays. Shelana also submits it will lose flexibility in rostering, without providing any examples of how this would be the case.

[74] Four of the eleven ongoing employees, Ms Chacko, Mr McGregor, Mr Softley and Ms Bramley, have given evidence that they would be better off under the Award. Of the seven other remaining employees who oppose the Application, it is difficult to form a view on the actual impact that terminating the Agreement would have on three of them because these three have not provided particulars and nor have they quantified the impact on them.

Conclusion

[75] As outlined in paragraph [56] above, I am satisfied it is not contrary to the public interest to terminate the Agreement.

[76] While Shelana opposes the Application, the gaps in the evidence it presented going to the manner in which it engages and pays its employees and the mere assertion of the potential impact on its profitability and flexibility leaves me uncertain as to the likely effect the termination of the Agreement would have on it and its employees. I also am left uncertain as to how the Agreement, as currently applied, measures up against the Award, were it to apply.

[77] As for the employees, I have before me expressions of support for the continuation of the Agreement from seven out of approximately 50 ongoing employees. Only four of them provided particulars. Shelana submits 18 of its employees will be worse off under the Award. This suggests that it currently pays some above-Award conditions to these 18 employees. However, changing these current arrangements and imposing the Award conditions that will allegedly make these 18 employees “worse off,” will be Shelana’s decision, not mine. Ms Chacko responded to this assertion of Shelana, asking why it is that 35 employees should take a “substantial pay cut” each week so that the remaining employees can earn $0.65 per hour more than the Award rate of pay. Ultimately, a significant concern I have with the submission of Shelana is that it suggests there are currently over 30 employees who are “worse off” because of the way in which the Agreement applies and operates. I am also concerned about the rates of pay that Shelana, as a 24/7 business, currently pays on night shifts, Saturdays after midday and Sundays.

[78] Further, I have had regard to the statement of Vice President Watson in Energy Resources of Australia Ltd v Liquor, Hospitality and Miscellaneous Union 7 that “the longer the time after expiry of the nominal term the stronger the case for termination”8 and consider it apt in considering the circumstances of this case. I have also had regard to the fact that the applicable safety net changed significantly with the creation of the Award through the process of Award Modernisation, which has occurred since the Agreement was first approved.

[79] Therefore, having regard to all these matters and noting the Act contemplates the Award and NES applying as the safety net in the event of termination of the Agreement, I consider it is appropriate in all the circumstances of this case to grant the Application.

[80] Further to these findings, the Act requires that I terminate the Agreement. 9 As to Shelana’s request that termination of the Agreement not take effect for six months, I am not persuaded to such a course of action. I consider that with the number of employees involved, the necessary adjustments can be made in a much shorter period of time. I will, in accordance with s.227 of the Act, specify that the termination will be prospective and take effect on 1 April 2019.

[81] An order to this effect will be issued today.

DEPUTY PRESIDENT

 1   Transcript, 3 October 2005, PN90-110.

 2   [2015] FWCFB 540.

 3 (2005) 139 IR 34.

 4   Ibid at 40.

 5   [2015] FWCFB 540 at [176].

 6 Ibid at [167].

 7   Energy Resources of Australia Ltd v Liquor, Hospitality and Miscellaneous Union [2010] FWA 2434.

 8 Ibid at [31].

 9   Fair Work Act 2009 (Cth), s.226.

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