Re Remondis Australia Pty Ltd
[2017] FWCA 254
•30 JANUARY 2017
| [2017] FWCA 254 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.225—Enterprise agreement
REMONDIS Australia Pty Ltd
(AG2016/4961)
THIESS SERVICES PTY LTD WASTE MANAGEMENT, CENTRAL COAST AREA, DOMESTIC AND COMMERCIAL ENTERPRISE AGREEMENT 2012 -2015 Waste management industry | |
DEPUTY PRESIDENT DEAN | SYDNEY, 30 JANUARY 2017 |
Application for termination of the Thiess Services Pty Ltd Waste Management, Central Coast Area, Domestic and Commercial Enterprise Agreement 2012 -2015.
[1] On 8 August 2016, REMONDIS Australia Pty Ltd (the Applicant) made an application to terminate the Thiess Services Pty Ltd Waste Management, Central Coast Area, Domestic and Commercial Enterprise Agreement 2012 -2015 (the Agreement) pursuant to s.225 of the Fair Work Act 2009 (the Act).
[2] The Agreement was approved by the Fair Work Commission (the Commission) on 31 July 2012 and has a nominal expiry date of 30 June 2015. The Agreement covers Thiess Services Pty Ltd (Thiess) and its employees who are engaged to perform work in Thiess’ Somersby Depot. The Agreement transferred to the Applicant (under the transfer of business provisions of the Act) after it acquired Thiess in August 2012.
[3] The relevant Modern Award is the Waste Management Award 2010 (the Award).
[4] The Transport Workers’ Union of Australia (TWU) opposed the application to terminate the Agreement.
[5] The application was the subject of proceedings before me in Sydney on 31 October and 8 November 2016. Both the Applicant and the TWU were granted permission to be represented. Mr R Warren of counsel with Mr N Chadwick appeared for the Applicant, and Mr D Lestal appeared for the TWU.
[6] Mr R Venn (Somersby Depot Manager) and Mr M Ratcliffe (National Human Resources/Industrial Relations Manager) gave evidence on behalf of the Applicant.
[7] Mr I Hankinson and Mr R Collins (driver employees of the Applicant), and Mr G Rodger (TWU Official) gave evidence for the TWU.
General background and history of negotiations for a new Agreement
[8] The background to the application, which is not contested, is as follows:
1. The Applicant acquired Thiess in August 2012.
2. Part of the acquisition included a contract that Thiess had with the Gosford City Council and Wyong Shire Council for the collection of waste and recoverable resources (the Council contract). The Council contract is a 10-year contract expiring on 31 January 2018.
3. On 29 September 2012, 617 employees employed by Thiess were transferred to the employ of the Applicant. Of these employees, 87 were located at the Somersby Depot on the Central Coast of New South Wales, and 86 of these were employed as drivers who performed the waste collection services under the Council contract.
4. A number of employees employed by Thiess (such as Mr Hankinson) had an employment contract which included the following term:
Thiess Services are offering full time employment until the completion of the initial term (10 years) of the Wyong/Gosford contract, or until the completion of any extension periods. Your contract of employment will cease at the conclusion of the initial contract, and in the event that any extension is granted your employment will cease at the conclusion of the contract extension period. 1
5. Upon the transfer to the Applicant, employees received a letter from the Applicant offering employment with it. The contents of the letter are not set out here 2, however it includes a provision that the Applicant would recognise prior service with Thiess and that the Agreement would continue to apply.
6. The Agreement is the second enterprise agreement made to cover the drivers at the Somersby Depot 3.
7. Negotiations for a new Agreement commenced in February 2015, with approximately eight meetings between then and October 2015.
8. In October 2015 the TWU obtained an order for a protected action ballot.
9. In November 2015 the Applicant made an application under s.240 of the Act in relation to a bargaining dispute. Conferences were held before Deputy President Sams on a number of occasions during November and December 2015.
10. The TWU agreed to communicate an offer made by the Applicant to employees on 2 December 2015 to resolve the bargaining dispute. This offer was rejected.
11. On 21 December 2015 the parties participated in a further conference before Deputy President Sams.
12. On 12 January 2016 the TWU served a notice on the Applicant advising of their intention to engage in an indefinite stoppage of work from 18 January 2016. Industrial action was undertaken by the relevant employees on this date.
13. In March 2016 the TWU filed an application pursuant to s.739 of the Act seeking an interpretation of clause 5.4 of the Agreement, which was the subject of a conciliation conference before Deputy President Bull. The matter was not resolved at this time.
14. The parties met again on 16 March 2016 for the purpose of progressing the negotiations for a new agreement.
15. An application for orders under s.418 was made by the Applicant in April 2016, after it received a notice of intention to take protected industrial action from the TWU. Orders were issued by Senior Deputy President Hamberger on 22 April 2016.
16. The TWU filed an application pursuant to s.437 for a protected action ballot order on 27 April 2016, which was granted by the Commission on 28 April 2016.
17. A further meeting between the parties was held in May 2016 to discuss the meaning of clause 5.4 of the Agreement. The parties did not reach agreement on the meaning of the clause.
18. A new s.240 application was made by the Applicant on 2 June 2016 on the basis that the parties remained in dispute in relation to a new enterprise agreement.
19. Protected industrial action, in the form of a stoppage of work, was undertaken by relevant employees between 2 and 7 June 2016.
20. Further conferences before Deputy President Sams were held on 17 and 22 June, and 1 July 2016 to deal with the bargaining dispute, which was not resolved.
21. On 8 July 2016, relevant employees voted on and rejected a proposed new agreement.
22. On 11 July 2016, the TWU served a notice of intention to take protected industrial action on the Applicant, which consisted of an indefinite ban on the completion of daily paperwork, commencing on 15 July 2016.
23. There has been no application by either party to suggest that the other has not been bargaining in good faith.
Relevant Legislation
[9] The relevant provisions in the legislation relating to termination of an enterprise agreement after its nominal date are prescribed in ss.225, 226 and 227 of the Act 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.
[10] Also relevant are the objects of the Act contained in ss.3 and 171, which I have taken account of, but are not set out here.
[11] It is not disputed that the Agreement has passed its nominal expiry date and the Applicant has standing to make this application. The Act provides that I must order the termination of the Agreement if I am satisfied that the termination is not contrary to the public interest (s.226(a)), and I consider that it is appropriate to do so taking into account all of the circumstances (s.226(b)).
The Commission’s approach to s.225 applications
[12] The Commission’s approach to a s.225 application to terminate an enterprise agreement was extensively considered by a Full Bench of the Commission in Aurizon Operations Limited; Aurizon Network Pty Ltd; Australia Eastern Railroad Pty Ltd 4 (Aurizon). This decision was confirmed by the Full Court of the Federal Court in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Aurizon Operations Ltd 5 (CEPU v Aurizon) after the unions in that case sought judicial review of the Commission’s decision.
[13] Deputy President Clancy in Loy Yang Power Enterprise Agreement 2012 6 conveniently summarised the relevant principles arising from Aurizon as follows:
● There is no imperative that the promotion and delivery of productivity benefits at an enterprise level is primarily or exclusively to be achieved through enterprise bargaining in good faith rather than by other means and nor is an imperative that an agreement must result in productivity improvements.7
● There should be no general presumption that continuing the operation of an agreement that has passed its nominal expiry date, whether bargaining is continuing or not, will be any more an effective means by which the object in s.171 of the Act is to be achieved than terminating that agreement. Ultimately, the circumstances will dictate the matter.8
● Section 226 operates according to its terms and its application is guided by its language and purpose by reference to the language and purpose of the Act as a whole. To approach the construction of s.226 in the manner suggested in Tahmoor Coal Pty Ltd re Tahmoor Colliery Enterprise Agreement 2006; Tahmoor Washery Workplace Agreement 20069 (Tahmoor), particularly at [55], results in a predisposition against the termination of an enterprise agreement that has passed its nominal expiry date when there is no indication in the section or elsewhere in the Act that this should be the case.10
● There is nothing in the structure or content of the Act to suggest that its object (of providing a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians) is to be exclusively or primarily to be achieved by enterprise level collective bargaining.11
● There is nothing in ss.3 and 171, when read harmoniously, that would suggest that the emphasis on promoting productivity (in s.3(a)) is primarily to be achieved through collective bargaining in good faith (in s.3(f) and s.171) rather than by other means, such as termination of an expired agreement.12
● There is nothing inherently inconsistent in the termination of an agreement and the continuation of collective bargaining that has commenced in good faith at an enterprise level for an enterprise agreement that delivers productivity benefits.13
● The termination of an agreement that has passed its expiry date might better support good faith bargaining for an agreement that delivers productivity benefits at the enterprise level.14
● It cannot be expected that terms and conditions of employment contained in an agreement will continue unaltered in perpetuity after the agreement has passed its nominal expiry date. The Act contemplates that terms and conditions may be altered by making a new agreement or by terminating the existing agreement.15
● The Act guarantees the continuation of the safety net, not the terms and conditions of employment contained in a nominally expired agreement.16
[14] The Deputy President continued as follows:
- the good faith bargaining requirements of the Act and the Commission’s capacity to make bargaining orders;
- the capacity for employees to organise and engage in protected industrial action and an employer’s right to respond through employer response action; and
- the processes available under a s.240 Application.17”
“[74] It is therefore salient in the context of the Application to bear in mind that the Act does not contemplate agreements operating in perpetuity. Parties to a nominally expired agreement may bargain for a new agreement using the various tools available under the Act. Alternatively, they may seek to bring an agreement to an end in accordance with the provisions of the Act. As was recognised in Aurizon, the context within which s.226 of the Act is to be construed includes:
[15] The Full Court in CEPU v Aurizon, confirming the approach taken by the Full Bench in Aurizon,relevantly said:
“24 … But we would agree with the Commission insofar as it observed that there is no indication in the FW Act that the existence of a previously-negotiated enterprise agreement should, a priori, be regarded as providing particular encouragement to collective bargaining …
25 … The proposition that, as a matter of statutory policy, there should be a predisposition towards regarding it as contrary to the public interest to terminate an enterprise agreement during a period when collective bargaining is taking place must, in the circumstances, be regarded as a most unlikely one.” 18
[16] The TWU submitted that Aurizon is a unique decision because of its factual circumstances, and did not ‘transcend across to the Remondis case’ 19. In fact, it did not refer to Aurizon in its written submissions when dealing with relevant case law at all. I disagree with the TWU’s view, and I have adopted the approach taken by Aurizon (and the Full Court in CEPU v Aurizon) in the matter before me.
Whether termination is contrary to the public interest
[17] In Aurizon, the Full Bench considered the notion of public interest and stated:
“[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.’
[130] After considering the decision in Re Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia, the Full Bench in Kellogg Brown said:
‘It is clear from this passage that the ascertainment of the public interest may involve balancing countervailing public interests. That the Commission should take all of the circumstances into account is made clear by Dawson J in Re Australian Insurance Employees Union; Ex parte Academy Insurance Pty Ltd [(1988) 78 ALR 466 at 467]. These authorities provide useful general guidance in the application of the test in s. 170MH(3). They illustrate the types of interests which can be properly described as public interests and confirm the breadth of circumstances which may be relevant to the ascertainment of those interests.
It should be emphasized that the Commission’s consideration of the public interest for the purpose of s. 170MH(3) is directed to the consequences of terminating the agreement. In a given case, some consequences will be clearly predictable, others will be less so. For the most part the Commission should be guided by the likely foreseeable consequences of termination rather than speculation about possible consequences.’
[131] Section 226, unlike s. 170MH(3) of the WR Act, clearly requires the interests of the persons or bodies covered by an agreement to be taken into account. Those interests are considered separately from the question of the public interest, although it is accepted that these interests may nevertheless be similarly affected. It seems to us therefore, that the approach to the question of whether termination of an agreement is not contrary to the public interest in Kellogg Brown remains apposite.”
(references omitted)
Public Interest - Evidence and submissions
[18] The Applicant submitted that it anticipated a tender for a new Council contract that would operate from 2018 to 2028 (the new Contract) would be released in coming months. The Applicant stated it intended to submit a tender for the new Contract, however unless the Agreement had no legal force as at 31 January 2018, the Applicant and the general public are at a significant disadvantage because the tender would not be ‘competitive’.
[19] The submissions of the Applicant with respect to the public interest can be summarised as follows:
a. The termination of the Agreement is not contrary to the public interest;
b. The termination of the Agreement, if ordered, would not take effect until 31 January 2018, and as such, the terms and conditions of the Agreement would continue to apply until that date;
c. The termination of the Agreement on 31 January 2018 aligns with the duration of the Council contract and is in accordance with the letters of offer issued to drivers who were employed by Thiess at the commencement of the Council contract on 1 February 2008;
d. The termination aligns with the fixed-term employment of the drivers and with their employment being terminated in accordance with industry custom and practice at the change of the council contract;
e. The termination of the Agreement on 31 January 2018 will not prevent the parties from entering into a further enterprise agreement before that date;
f. It would not be in the public interest for the Applicant to be placed at a commercial disadvantage if it is obliged to tender for the new council contract based on the terms and conditions in the Agreement.
[20] These submissions were supported by the evidence of Mr Venn. He stated that it was ‘commercially unviable’ for the Applicant to consider submitting a bid for the new Council contract if the Agreement was not terminated at the end of the current Council contract. The ‘substantial commercial impediments’ preventing it from submitting a competitive tender related to ‘restrictive work practices’ which, based on his oral evidence, were primarily around rostering. He also gave evidence that the Agreement provisions are specifically linked to the Council contract, and as a result, it was in the public interest that the Applicant ‘be able to provide the Central Coast with a competitive tender’. His evidence was that if the Applicant was successful in obtaining the new Contract and current employees were successful in applying for a position, those employees would be offered continuity of service.
[21] The TWU submitted that there were a number of public interest considerations in support of its opposition to the termination of the Agreement. These were outlined in their written submissions as follows :
a. The waste and recyclable collection services completed by the Somersby Depot employees is an essential community service. The community expect this service to be undertaken in a timely and efficient manner.
b. The current Council contract covers an area that has a population of 331,017 and over 100,000 households which rely on services undertaken on the current Council contract.
c. The Central Coast community expect the Somersby Depot employees to receive adequate remuneration for providing this service. On 3 June 2016, the State Member for the NSW Parliament for the Entrance, David Mehan MP, penned a letter to the Central Coast Council, in which he said ‘I would not wish to see the existing workforce or the wages paid to the workforce reduced. I am sure the community of the Central Coast holds the same view’ (see Annexure R to the Statement of Mr Hankinson).
d. Similar sentiments have also been expressed by former Mayor of Wyong Shire Council, Doug Eaton (see Annexure I to the Statement of Grant Rodger) and community members such as Dr Davy (see Annexure J to the Statement of Mr Rodger).
e. The termination of the Agreement will be met with disappointment amongst the Somersby Depot employees, who have twice voted down proposals for a new Enterprise Agreement placed before them by the Applicant in December 2015 and more recently July 2016.
f. Relevantly, the Applicant commenced this application shortly after the Somersby Depot employees voted down the Applicant’s proposal for a new enterprise agreement in 6 July 2016.
g. Should the Agreement be terminated, this will likely result in further industrial action being undertaken by the Respondent (see paragraphs 64-66 of the Statement of Mr Rodger). This could conceivably result in services undertaken on the Council contract being disrupted, which would have an adverse impact on the Central Coast community.
h. The termination of the Agreement would also result in the Applicant being placed in a significantly stronger bargaining position with respect to negotiating a new Enterprise Agreement.
i. Furthermore, the Applicant would also no longer be bound by the terms of the current Agreement past 31 January 2018. Based on the comments made by the Applicant’s Somersby Depot manager, there is no guarantee that the Applicant will engage in further negotiations with their employees and the Respondent to enter into a new Enterprise Agreement from 1 February 2018 onwards.
j. Furthermore, the Central Coast Council are yet to release their bid documentation for the new Council contract, which commences on 1 February 2018. It is now less than 16 months until the commencement of the new Council contract.
k. Traditionally, the tender process for the new Council contract has commenced approximately 2 years before the new Council contract commences. The new Council contractor has then been selected some 18 months prior to the commencement of that contract (see paragraphs 57-60 of the Statement of Mr Rodger).
l. Should the current Council contract extend past 31 January 2018 and the Agreement be terminated on 31 January 2018, the current Somersby Depot employees will then be subject to the provisions in the Award, which contains inferior pay and pay-related conditions (see further discussion below).
m. The Applicant has already conceded at paragraph 14(ii) of their written submissions dated 15 September 2016 that the Award contains ‘inferior terms and conditions compared to the Thiess Enterprise Agreement 2012’.
n. The Applicant, by its own admission, is also unaware of the hourly rate for drivers that other companies will tender for the new Council contract. However, guidance could be garnered from the review of prevailing market rates of pay in the waste industry for side loader drivers (see Annexure H to the Statement of Mr Rodger).
o. Therefore, the Applicant should not be provided with a ‘blank cheque’ by the Commission to tender at an hourly rate for the new Council contract which is lower than the prevailing market rate, due to not being bound by the terms of the Agreement.
[22] The evidence of Mr Roger was that the termination of the Agreement would adversely impact the wider Central Coast community. He stated that the termination of the Agreement would result in a ‘strong likelihood of further protected industrial action’, and that the TWU had received support from local politicians and members of the community.
[23] Mr Collins gave evidence about correspondence with the relevant Councils requesting that the conditions of the Agreement be included as a requirement of the tender documents, however the evidence of Mr Roger and Mr Hankinson was that the Central Coast Council had not provided such a guarantee as at the date of the hearing.
[24] The Applicant’s submissions in reply can be summarised as follows:
a. The Applicant has been seeking to reach agreement with the TWU to make a new enterprise agreement since February 2015 and has sought the assistance of the Commission at various times to resolve bargaining differences. The TWU had not at any time raised an issue that the Applicant was not bargaining in good faith.
b. the Applicant disputes that it has threatened to put employees on individual contracts if it wins the council contract.
c. The Applicant has been transparent with its driver workforce about the fact that terms and conditions of employment which will apply if the Applicant wins the new council contract will not be known until details about the new council contract become known.
d. The termination of the Agreement will make no difference to the bargaining position of the Applicant.
e. There is no evidence to support the proposition that the Central Coast public expect their waste collection employees to be ‘remunerated at a competitive rate’.
f. The submission by the TWU about the likelihood of further protected action amounts to a threat, and should play no part in the Commission’s consideration of the termination of the Agreement;
g. There is no evidence that the termination of the Agreement will place the Applicant in a significantly stronger bargaining position with respect to the negotiation of a new enterprise agreement;
h. Mr Venn denied the allegation about refusing to engage in negotiations for a further enterprise agreement;
i. Whether the Agreement is terminated or not makes no difference to the rights of employees and the TWU to engage in protected action under the Act.
Consideration - Public Interest
[25] In closing submissions, the Applicant argued that it was not a matter for the Applicant to prove public interest in terminating the Agreement, but it is to be shown that it is not contrary to the public interest. The corollary to that, it was argued, was that it was for the TWU to show that the termination of the Agreement would be contrary to the public interest. The TWU argued in its closing submissions that the Applicant had failed to identify any inefficiencies or productivity impediments in the Agreement to demonstrate why it was in the public interest to terminate the Agreement 20. I agree with the submission of the Applicant in this regard, which is consistent with the Full Bench decision in Aurizon.
[26] The TWU argued that the termination of the Agreement would negatively impact on the bargaining position of the employees. Clearly, the bargaining positions of the parties will be affected by the termination of the Agreement, but as the Full Bench in Aurizon concluded:
“[158] As we have earlier indicated, there is nothing inherently inconsistent with the termination of an enterprise agreement that has passed its nominal expiry date and the continuation of collective bargaining in good faith for an agreement. Neither the Unions or Aurizon have suggested that bargaining will stop if the agreements are terminated. Neither have suggested that they will not pursue new agreements or that they will cease bargaining if the agreements are terminated.
[159] While we accept that a termination of the agreements will disturb the current bargaining positions, we do not accept, as the Unions submit, that this is counter to be object of a fair framework for collective bargaining and facilitating good faith bargaining. Collective bargaining will remain available to the bargaining parties. The bargaining parties in their bargaining will continue to be required to meet the good faith bargaining requirements. The disturbance of the bargaining position does not result in the disappearance of collective bargaining or the rules by which the bargaining parties must abide.
[160] Moreover the Unions and employee will have available to them the full arsenal of tools under the Act to exert legitimate industrial pressure on Aurizon to bargain and reach agreement. It is not therefore correct that the termination of the agreements results in little or no incentive on Aurizon to bargain.
[27] Applying the reasoning in Aurizon to the evidence before me, I am not persuaded by the TWU submissions that the termination of the Agreement will place the Applicant in a significantly stronger bargaining position with respect to negotiating a new enterprise agreement. This is particularly so given that the termination of the Agreement would not take effect for a 12 month period.
[28] It is clear that the Act contemplates that an agreement still applying to employees can be terminated, and it prescribes that a safety net, being the relevant modern award and National Employment Standards (NES), will apply in such circumstances. The authorities 21 support the view that a reduction of conditions from an enterprise agreement to the modern award safety net could not be said to be contrary to the public interest, unless there are particular circumstances that apply. In my view, no such circumstances have been substantiated by the TWU in this matter.
[29] In this case, the Agreement (if terminated) will continue to apply for a further 12 months (ie. until 31 January 2018). Accordingly, assuming there is no replacement agreement negotiated between the parties, there will be no change to the terms and conditions of employment of the relevant employees until then. In my view, this weights in favour of the termination of the Agreement. There remains 12 months for the parties to negotiate a new agreement, and the parties have available to them, under the Act, various options which they may choose to pursue in order to advance bargaining in this period.
[30] There was no evidence available as at the date of the hearing as to what will be included in the tender document for the new Council contract. Accordingly, this is a neutral consideration.
[31] The TWU relied on a letter from Mr Mehan, MP and other communication with Council members (referred to earlier in this decision), to support its submission that the termination of the Agreement would be contrary to the public interest. This evidence is in my view not sufficiently persuasive to support a finding that I should not terminate the Agreement because of public interest considerations.
[32] Similarly, I have considered the evidence on behalf of the TWU of the increased likelihood of further industrial action, which may result in services undertaken on the Council contract being disrupted, and which would have an adverse impact on the Central Coast community. Given the uncontested evidence of industrial action on three occasions already, the prospect of further industrial action does not persuade me that the termination of the Agreement would be contrary to the public interest.
[33] The submissions of the TWU do not support a conclusion that the termination of the Agreement ‘might affect the public as a whole such has the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards’. There are no other specific circumstances that support a finding that the termination of the Agreement would be contrary to the public interest.
[34] Having considered all of the matters raised by the parties relevant to the public interest, including the likely foreseeable consequences of terminating the Agreement, I am satisfied that it is not contrary to the public interest to terminate the Agreement.
Is it appropriate to terminate the Agreement?
[35] As articulated by the Full Bench in Aurizon:
“[167] 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).” 22
(Reference omitted)
Appropriateness – Evidence and Submissions
[36] In this case, the Applicant does not seek to terminate the Agreement before the end of the council contract in January 2018, so the existing terms and conditions will apply for a further 12 months, assuming no replacement agreement is made.
[37] The Applicant submitted that it was appropriate to terminate the Agreement because:
a. If the Agreement was not terminated, the Applicant would be placed at a commercial disadvantage, and would be ‘out of step’ with the needs of a flexible and productive enterprise. The termination would put the Applicant in a competitive position to retain its market share and submit a competitive tender bid resulting opportunity for employment for its current driver workforce and prospect of continuity of employment; and
b. The termination of the Agreement will allow the Applicant to ‘use its economic imperative to look for improvements and provide a competitive tender bid, and if successful, will then allow the Applicant to engage a workforce pursuant to flexible rostering arrangements and on terms that meet the needs of a flexible and productive enterprise’ 23.
[38] Mr Venn’s evidence about the commercial position of the Applicant, and what it considers to be restrictive work practices, has been set out above.
[39] The evidence of the negotiations from February 2015 until the date of the Application (including proceedings before the Commission relating to bargaining) was not contested and is set out above.
[40] The evidence of Mr Ratcliffe went to the continuation (or attempts to continue) of negotiations as at the date of the hearing.
[41] There was no evidence to support a conclusion that the parties would cease bargaining if the Agreement was terminated.
[42] The TWU’s submissions can be summarised as follows:
a. The Applicant has been unwilling to negotiate a new enterprise agreement which extends past the current contract for the collection of waste and recyclable contents for the newly amalgamated Central Coast Council which expires on 31 January 2018.
b. If the Agreement is terminated, employees covered by the Agreement will be subject to the inferior conditions pursuant of the Award.
c. The Applicant asserts that it has the right to terminate the employment of all Somersby Depot employees at the change of Council contract.
d. The Applicant has threatened to place all employees on individual contracts, with only the minimum pay and conditions prescribed by the Award if it is successful in its bid for the new Council contract.
e. The Somersby Depot employees will be adversely affected if the Agreement is terminated, as the Applicant will then have the ability to unilaterally reduce their pay and conditions.
f. The Applicant will be in a significantly stronger bargaining position to negotiate a new enterprise agreement if the status quo of the Agreement not be maintained.
g. An objective assessment by the Commission would indicate significantly greater adverse impact on the affected employees as against the benefits to the Applicant if the agreement is terminated.
[43] The TWU relied on the evidence of its three witnesses as to the disadvantages and negative impact that would result from the termination of the Agreement for employees.
[44] The evidence of Mr Hankinson was that:
a. The TWU and employees will be at a significant bargaining disadvantage to negotiate a new enterprise agreement if the Agreement is terminated;
b. The Applicant had indicated it did not intend to negotiate a new enterprise agreement if it was successful in its tender bid for the new Council contract;
c. The Applicant should not be rewarded for being unable to negotiate a new enterprise agreement with the TWU to replace the Agreement;
d. Negotiations had been undertaken (to date) in good faith by the TWU, having had numerous attempts to negotiate with the Applicant;
e. The Applicant had not been ‘transparent’ in that it had not informed employees of the hourly rate it intended to bid on for the new Council contract;
f. There was a ‘real risk’ that the Applicant would place all employees on individual contracts, with the only guarantees being the relevant modern award;
g. The employees would be required to re-apply for their positions on the new Council contract if the Applicant is successful in the bid process;
h. The termination of the Agreement will create uncertainty amongst the employees about the security of their employment with the Applicant
i. Employees will be subject to the Award rates of pay from 1 February 2018;
j. Based on current Award rates, employees will be $8 per hour worse off compared with their current rate of pay, and will not be able to afford such a significant reduction in their weekly pay;
k. Superannuation entitlements would drop correspondingly with the drop in the hourly rate of pay.
l. Other entitlements would be lost if the Agreement is terminated, such as the sick leave allowance ($17 per week), loss of guaranteed annual wage increases, no dispute resolution clauses, no recognition of the right of the TWU to represent employees, no guarantee regarding continuity of employment, no guarantee that the Applicant will assist employees in obtaining employment with an incoming contractor, and redundancy payments reduced to the NES provisions;
m. The Applicant will be able to change the rostering patterns at its discretion; and
n. Employees are concerned that they will not have the guarantee of the protections and conditions of the Agreement from February 2018.
[45] Messrs Roger and Collins gave similar evidence.
[46] Mr Hankinson also gave evidence about ‘industry custom and practice’, specifically around the practice of whether employees were terminated at the conclusion of contracts such as the Council contract. He stated that he was not aware of any employees who had their employment terminated when the incumbent contractor retained a contract. Where contracts were lost by the incumbent contractor, the employment of the affected drivers was transferred to the new contractor. 24
[47] With a handful of exceptions, the evidence about the negotiations for a new agreement was not controversial. The small number of controversial matters, such as the meaning of clause 5.4 of the Agreement, whether offers were put by the Applicant as a ‘take it or leave it’ offer, and whether certain comments alleged to be made by Mr Venn were actually made, are in my view not material to my consideration of whether it is appropriate to terminate the Agreement.
Termination of employment at end of Council contract
[48] Both parties led considerable evidence and made extensive submissions as to whether the employment of the relevant employees was fixed term (aligning with the conclusion of the Council contract) or ongoing, or otherwise able to be terminated pursuant to the terms of the Agreement, specifically clause 5.4, at the end of the Council contract. The meaning of clause 5.4 remains contentious.
[49] Clause 5.4.1 provides that ‘all employees recognise that their employment with the company shall be terminated, in accordance with industry custom and practice, at the change of contract’. It goes on (at cl. 5.4.2) to provide that the company make reasonable endeavours to assist employees to obtain work with the incoming contractor at the change of contract. The clause is not set out in full here.
[50] The Applicant argued that the Council contract and the Agreement were inextricably linked. In closing submissions the Applicant noted that whether or not the employment of the relevant employees will come to an end had become ‘a distraction from the function of the Commission’ (in deciding whether or not to terminate the Agreement), but it was a relevant factor to be taken account of.
[51] The TWU agreed in closing submissions with the TWU that I did not need to determine the meaning of clause 5.4 for the purposes of determining the Application, but it was a relevant consideration.
[52] I accept that the Agreement and the Council contract are linked. So much is clear from the full name of the Agreement, and from clause 1.2 which confirms that the Agreement is binding on Thiess and ‘all of the Company’s employees who are engaged to perform work in the area of Commercial, Domestic and Recyclable Waste Collection for the Central Coast (Somersby Depot) …’
[53] In my view there are two separate issues, one relating to the meaning of clause 5.4 and the other relating to the terms of the contract of employment of at least some of the relevant employees. In terms of the first issue, if the Agreement is terminated, then the clause (being part of the Agreement) will cease to have effect. Arguably this would be to the benefit of the TWU if their view of the clause is correct. To the extent that the argument between the parties is about the fixed term or ongoing nature of the employment contract of the relevant employees, this is not affected by the termination of the Agreement, and therefore not a matter I need to consider.
Consideration – Appropriateness
[54] In Aurizon, the Full Bench found that the maintenance of a number of core terms and conditions, by way of an undertaking by the employer, went some way to assuage the concerns of employees about the diminution of the terms and conditions of their employment. To this end, the Full Bench observed that:
“[176] … we are satisfied that the safety net terms and conditions of employment will not be disturbed. Ultimately, it cannot be expected that terms and conditions of employment contained in an enterprise agreement will continue unaltered in perpetuity after the agreement has passed its nominal expiry date. Terms and conditions may be altered by making a new agreement or by terminating an existing agreement. The statute guarantees the continuation of the safety net, not the terms and conditions contained in a nominally expired enterprise agreement.” 25
[55] In this case I have had regard to the TWU’s evidence of the differences in terms and conditions between the Modern Award and the Agreement. By virtue of the fact that the Agreement must be ‘better off overall’ by comparison to the Modern Award in order to be made, it naturally follows that there will be a reduction in the terms and conditions applying to the relevant employees post January 2018 (absent any new enterprise agreement). This is a consequence that is clearly contemplated by the Act.
[56] I accept that the affected employees and the TWU do not want the Agreement terminated, and that the termination of the Agreement would be met with disappointment. However I consider that the grounds provided by the TWU as to disadvantage and negative impact caused by the termination of the Agreement are not sufficient to persuade me to find that the Agreement should not be terminated. I do not accept, for example, that the TWU and the relevant employees will be at a significant bargaining disadvantage if the Agreement is terminated. In this case there would be a further 12 months in which the parties can continue to negotiate, or utilise the provisions of the Act to assist them in reaching an agreement. I do not accept that the evidence shows that the Applicant will not negotiate a new enterprise agreement if it is successful in its bid for the new Council contract, and in any event, the TWU and employees can avail themselves of the relevant provisions of the Act if this were to eventuate. I do not accept that the termination of the Agreement would create uncertainty amongst employees as to the security of their employment, because the termination of the Agreement does not have the automatic consequence of terminating the employment of the relevant employees. I do accept that there will be uncertainty arising from the possibility that the Applicant is not successful in the tender for the new Council contract, but that is a separate issue to the termination of the Agreement.
[57] Importantly, the Agreement will continue to apply until 31 January 2018. As a result, there will be no diminution of terms and conditions during this period. As I have already expressed, there are a number of options available under the Act to assist with the negotiation of a new enterprise agreement, which the parties may avail themselves of.
[58] The views of the employees and the TWU are to be balanced against the views of the Applicant, who clearly want the Agreement terminated. I accept that the Applicant considers it will be commercially disadvantaged if the Agreement is not terminated, and it is important that there is a ‘level playing field’ 26 upon which it can tender for the new Council contract.
[59] I have taken all of the submissions and evidence into account in coming to the conclusion that it is appropriate in all the circumstances to terminate the Agreement.
Conclusion
[60] An application has been made by the Applicant under s.225 to terminate the Agreement, which has passed its nominal expiry date.
[61] I respectfully agree with the Full Bench in Aurizon that the legislative scheme does not intend that enterprise agreements operate in perpetuity. As put by the Full Bench: ‘Agreements have a finite nominal life. At the end of the nominal life of an agreement, bargaining parties may bargain for a new agreement utilising all of the tools available under the Act; or a person to whom an agreement applies may take steps to bring the agreement to an end in accordance with the provisions of the Act; or both may occur.’ 27
[62] I am unable to discern any public interest considerations that would prevent the termination of the Agreement. I am further satisfied that it is appropriate to terminate the Agreement taking into account all the circumstances. I am therefore required by the Act to terminate the Agreement.
[63] The Agreement shall be terminated pursuant to s.226 of the Act and the termination shall operate on and from 31 January 2018. An order to this effect will be issued today.
DEPUTY PRESIDENT
Appearances:
R Warren of counsel with N Chadwick for REMONDIS Australia Pty Ltd.
D Lestal for the Transport Workers’ Union of Australia.
Hearing details:
2016.
Sydney:
October 31,
November 8.
1 Exhibit R1, Annexure A.
2 Annexure D to the witness statement of Mr Hankinson.
3 It followed an enterprise agreement known as the Thiess Services Pty Ltd Waste Management Central Coast Area Domestic and Commercial Enterprise Agreement 2009 – 2012
4 [2015] FWCFB 540.
5 [2015] FCAFC 126
6 [2017] FWCA 226 at [73].
7 Ibid at [139].
8 Ibid at [141].
9 [2010] FWA 6468.
10 [2015] FWCFB 540 at [142].
11 Ibid at [143].
12 Ibid at [149].
13 Ibid at [151].
14 Ibid.
15 Ibid at [176].
16 Ibid.
17 Ibid at [125].
18 [2015] FCAFC 126.
19 Transcript PN1039.
20 Transcript PN969.
21 For example, C.A.S.C Constructions Pty Ltd [2015] FWC 749 at [47].
22 [2015] FWCFB 540 at [167].
23 Exhibit A4, paragraph 15.
24 Exhibit R1, paragraphs 28-32.
25 2015] FWCFB 540 at [176].
26 Transcript PN849-851.
27 [2015] FWCFB 540 at [126].
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