RCR Resolve FM Pty Ltd T/A RCR Resolve FM

[2016] FWC 181

[2016] FWC 181

FAIR WORK COMMISSION

DECISION

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

RCR Resolve FM Pty Ltd T/A RCR Resolve FM
(AG2015/6044)

Cleaning services
COMMISSIONER CLOGHAN	PERTH, 11 JANUARY 2016

Termination of enterprise agreement after its nominal expiry date - application dismissed.

[1] RCR Resolve FM Pty Ltd T/A RCR Resolve FM (Applicant or Resolve) has made application to the Fair Work Commission (Commission) to terminate an enterprise agreement after its nominal expiry date.

[2] The application is made pursuant to s.225 of the Fair Work Act 2009 (FW Act).

[3] The application is to terminate the Union of Christmas Island Workers and Resolve FM Enterprise Agreement 2011 (Agreement) which as a nominal expiry date of 31 May 2015.

[4] The Union of Christmas Island Workers (UCIW) opposes the application to terminate the Agreement.

[5] The application was the subject of a hearing on 8 December 2015.

[6] At the hearing on 8 December 2015, the Applicant was represented by Mr M Ghilardi, Manager, Business Services. The UCIW was represented by Mr G Thomson, General Secretary.

[7] This is my decision and reasons for decision on the application.

RELEVANT LEGISLATIVE FRAMEWORK

[8] The application is considered within the following statutory context.

“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.”

RELEVANT BACKGROUND

[9] The Agreement was approved by Williams C on 13 January 2012.

[10] The Agreement operated from 20 January 2012 with a nominal expiry date of 31 May 2015.

[11] The UCIW was a bargaining representative for the Agreement and gave notice, pursuant to s.183 of the FW Act, that it wanted the Agreement to cover the Union.

[12] The Agreement applies to each employee of Resolve who is employed to perform work on Christmas Island in the classifications described in subclause 20.2 of the Agreement.

[13] Between 2008 and February 2014, Resolve employed employees to perform services under contract on Christmas Island.

[14] On 28 February 2014, all employees employed pursuant to the Agreement had their employment terminated and received their entitlements.

[15] No persons have been employed since 1 March 2014 pursuant to the Agreement.

[16] All of the employees employed by Resolve, pursuant to the Agreement, as at 28 February 2014, were employed by Serco Immigration Services Pty Ltd (Serco). It appears from the information that I have received that there was a transfer of services required from Resolve to Serco. The employees who “transferred” to Serco employment have their employment regulated, in part, by the Agreement.

[17] Although the Agreement has passed its nominal expiry date, the UCIW and Serco have not concluded a replacement enterprise agreement for the relevant employees.

[18] Resolve and UCIW have had discussions on the appropriate time to terminate the Agreement. A fair summary of these discussions is that the UCIW want the Agreement to remain in place until a replacement agreement with Serco had been concluded. Resolve ultimately expressed the position that it would not make application to the Commission to terminate the Agreement, until after the nominal expiry date of the Agreement regardless of the discussions, and has waited approximately a further six (6) months before making this application.

CONSIDERATION

[19] With respect to the statutory provisions in s.225 of the FW Act, I am satisfied that:

• the Agreement has passed its nominal expiry date;



• the relevant employer, Resolve, has properly made application to the Commission for termination of the Agreement.

[20] I now turn to s.226 of the FW Act and the mandatory consideration of:

• whether it is in the public interest to terminate the Agreement; and



• whether it is appropriate to terminate the Agreement taking into account all the circumstances which include the views of the employees, the employer and the UCIW; and



• the likely effect that termination of the Agreement will have on the employees, the employer and the UCIW.

[21] I do not propose to address the provisions of s.226 of the FW Act in seriatim but as follows.

The views of the employer and UCIW

Employer

[22] Resolve submits essentially that:

• it no longer performs work or engages employees pursuant to the Agreement since 28 February 2014;



• the Agreement has passed its nominal expiry date;



• it is not responsible, or has any control over negotiations for a replacement enterprise agreement between UCIW and Serco;



• it “signalled” its intention to the UCIW to make this application some time ago and has extended that time by nearly six (6) months; and



• it wishes to “tie up” all loose ends regarding its activities on Christmas Island.

[23] I have taken into account these views in reaching my decision.

UCIW and employees

[24] Because the UCIW was the bargaining representative for the relevant employees at the time of making the Agreement, and that there are no current employees employed by Resolve, I have considered the views of the UCIW and the views of the employees, as one, for the purpose of the provisions of paragraph 226(b)(i) of the FW Act.

[25] UCIW essentially submits that:

• Serco undertook to apply the transfer of business provisions of the FW Act (s.311(1)) to the employment of Resolve’s former employees;



• the effect of this undertaking by Serco, is that the Agreement is a transferable instrument and presently applies to the relevant employees employed by Serco;



• to terminate the Agreement would provoke uncertainty for the relevant Serco employees regarding their conditions of employment; and



• the primary reasons for Resolve making the application to terminate the Agreement, is to “tidy up” administrative arrangements.

[26] I have taken into account these views in reaching my decision.

[27] Having taken into account the view of the employer and UCIW, it is now necessary to consider the likely effect that termination of the Agreement will have on the respective parties (paragraph 22(b)(ii) of the FW Act) and whether, having considered the likely effect on the respective parties and the views of the parties, it is appropriate in all the circumstances, to terminate the Agreement.

Likely effect of termination of Agreement will have on Resolve and the employees

[28] Resolve did not submit that termination of the Agreement would have any negative effect on its business.

[29] It can be appreciated that Resolve wishes to ‘tidy up” its previous activities on Christmas Island. However, for the past 23 months it has not engaged any employees regulated by the Agreement, and consequently, has had no legal obligations pursuant to the industrial instrument. In practical terms, there has been no regulatory impact created for Resolve by the continued existence of the Agreement since 1 March 2014.

[30] In contrast, the employees for whom the Agreement applies, the likely impact of termination of the Agreement, is the uncertainty of what their actual conditions of employment will be. Clearly, this can be described as a negative likely outcome of terminating the Agreement.

[31] Resolve submit that, regardless of the role which the Agreement “plays” for the relevant employees of Serco, the UCIW/employees and Serco, can enter into other enforceable arrangements in the interim, rather than seeking to reach agreement on a replacement enterprise agreement. While this assertion is most probably true, it does not overcome the vacuum or uncertainty should the Commission terminate the Agreement.

[32] Applying the concept of a “cost/benefit analysis”, Resolve has not suggested that it continues to incur costs with the existence of the Agreement; if there is, it would appear to be minimal. Clearly, there is no benefit to the continued existence of the Agreement to Resolve.

[33] However, for the UCIW and the employees, they both initially invested, presumably, considerable time, effort and resources into creating the Agreement. Further, the UCIW, and the employees, have had an ongoing benefit from that effort and wish to extend the benefit of the Agreement, until it is replaced by another enterprise agreement.

[34] Further, should the Agreement be terminated, it would require both Serco and UCIW/employees to extend further time, effort and resources to reach settlement on an alternative arrangement, until a replacement enterprise agreement is reached. If nothing else, this seems an unnecessary expense to both parties for a benefit which may be short lived.

[35] Having taken into account all the circumstances, I am satisfied that it is not appropriate to terminate the Agreement pursuant to s.226(b) of the FW Act. I am not satisfied or agree with the Applicant’s view, that termination of the Agreement will motivate UCIW and Serco to reach agreement on a replacement enterprise agreement or another enforceable instrument. In reaching this determination, I am not endorsing a view that the “door” should remain open indefinitely to the UCIW. The certainty of the “safety net” Agreement cannot last indefinitely and needs to be balanced against Resolve’s desire to “clear” its legacy arrangements on Christmas Island.

[36] I now turn to the public interest provisions set out in s.226(a) of the FW Act.

Would it be contrary to the public interest to terminate the Agreement?

[37] The concept of what constitutes the public interest was recently considered by a Full Bench of the Commission in Aurizon Operations Limited and Others (Aurizon) [2015] FWCFB 540, which was also considering an application for termination of an enterprise agreement after its nominal expiry date.

[38] In considering the proper construction and application of s.226 of the FW Act, the Full Bench stated:

“[127] In construing a provision of an enactment, an interpretation that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) is to be preferred to a construction that would not promote that purpose or object.”

[39] Further, the Full Bench stated:

“…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…” 1

[40] The Full Bench cited, and adopted with approval, the assessment of a Full Bench of the Australian Industrial Relations Commission in Re Kellogg Brown and Root, Bass Strait (ESSO) Onshore/Offshore Facilities Certified Agreement 2000 (2005 139 IR 34) (Kellogg).

[41] Specifically in Kellogg, the Full Bench stated:

“…the notion of the 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…While the content of the notion of the public interest cannot be precisely defined, it is distinct in nature, from the interests of the parties. And although the public interest of the parties may be simultaneously affected that does not lessen the distinction between them.” 2

[42] The Full Bench drew attention in Kellogg to, Re Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia where “the Commission should be guided by the likely foreseeable consequences of termination rather than speculation about possible consequences…” 3

[43] It can be safely said that s.226(b) of the FW Act is concerned with the views of the parties and likely consequences on those parties should an enterprise agreement be terminated by the Commission. These factors are distinct from the public interest from a statutory perspective.

[44] In view of the narrowness of the unusual circumstances resulting in the application, I propose to consider the public interest primarily within the context of the object of the FW Act which is to provide a “balanced framework for cooperative and productive workplace that promotes national economic prosperity and social inclusion for all Australians”. 4

[45] Accordingly:

• for the most part, enterprise agreements remain in place until replaced by another enterprise agreement;



• the object of a “balanced framework for cooperative and productive workplace relations” is to be achieved through an emphasis of “enterprise-level collective bargaining”, resulting in enterprise agreements;



• in this case, through no fault of the employees, the bargaining between Resolve and the employees resulting in the Agreement, ceased to have any regulatory effect on 28 February 2014;



• for, presumably reasons of fairness, as well as efficiency, Serco undertook to continue to apply the Agreement notwithstanding that they were not “party principal”;



• the actions of Serco and UCIW in undertaking to continue to apply the Agreement are consistent with the Object of Part 2-8 Transfer of business and, in particular, Division 2, Transfer of instruments of the FW Act. The object of Part 2-8 is to provide a “balance” between “protection of employees’ terms and conditions of employment under enterprise agreements” and “the interests of employers in running their business efficiently”;



• Serco and UCIW are in bargaining to achieve a replacement to the Agreement; and



• the consequences of termination of the Agreement would result in immediate uncertainty for Serco, UCIW and employees and require an alternative enforceable arrangement. Such an alternative; may or may not depart from the status quo which has existed since 1 March 2014 for the employees and the UCIW.

[46] In conclusion, and on balance, having regard for all the unusual circumstances, I am satisfied that it would be contrary to the public interest to terminate the Agreement at this time.

CONCLUSION

[47] For the above reasons, the application is dismissed. An Order to this effect is attached to this Decision.

COMMISSIONER

Appearances:

M Ghilardi on behalf of the Applicant.

G Thomson on behalf of the UCIW.

Hearing details:

2015:

Perth,

8 December (via telephone)

 1   Aurizon paragraph [129]

 2   Kellogg at paragraph [129]

 3   Kellogg at paragraph [130]

 4 section.3 of the FW Act

Printed by authority of the Commonwealth Government Printer

<Price code C, AE890857  PR575990 >