Royal Automotive Club of Victoria

[2010] FWA 3483

[2010] FWA 3483

FAIR WORK AUSTRALIA

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 16 - Application to terminate collective agreement-based transitional instrument

Royal Automotive Club of Victoria
(AG2010/7729)

Insurance industry
COMMISSIONER ROE	MELBOURNE, 30 APRIL 2010

Application to terminate the R.A.C.V Finance Ltd (Finance Sales Representatives) Collective Agreement 2006-2009.

[1] This decision concerns an application by Royal Automotive Club of Victoria (RACV) Limited pursuant to Item 16 of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act) and s 225 of the Fair Work Act 2009 (the FW Act)to terminate the RACV Finance Ltd. (Finance Sales Representatives) Collective Agreement 2006-2009 (the Agreement).

[2] The Agreement is a collective agreement-based transitional instrument for the purposes of the Transitional Act (Item 2(5)(c)(v)) of Schedule 3 with a nominal expiry date of 12 September 2009. The nominal expiry date is expressed in the Agreement as three years from the date of lodgement. Fair Work on Line shows that the Agreement was lodged on 12 September 2006. The parties had submitted that they were unable to find with certainty the date of lodgement but they believed that it was some time during July 2006. The uncontested submission of the applicant is that Agreement currently applies to eight employees at least one of whom is a member of the FSU. RACV Finance Ltd is a wholly owned subsidiary of RACV Ltd.

[3] The Finance Sector Union of Australia (“FSU”) is a party to the agreement.

[4] At the hearing of this matter RACV was represented by Mr Alan Turnbull, Employee Relations and Remunerations Manager together with Ms Deb Brennan and the FSU was represented by Mr Alex Leszczynski. The FSU opposed the application for termination.

[5] The RACV did not produce any evidence in the proceedings in support of the application other than the results of the employee ballot. However, the Tribunal did have the benefit of Mr Turnbull’s submissions.

[6] The FSU did not produce any evidence in the proceedings in opposing the termination of the Agreement, except for a table comparing the wages and conditions of the Award and the Agreement. However, the Tribunal did have the benefit of Mr Leszczynski’s submissions.

[7] An employee and member of the FSU, Mr Ardino was present at the time of the hearing and Mr Ardino, and the parties, agreed with my suggestion that it would be useful if he gave evidence.

Background and Evidence

[8] RACV Finance Ltd. employs approximately 60 persons but only the 8 Finance and Sales Representatives are covered by a collective Agreement. The other employees are covered by the Banking, Finance and Insurance Award 2010 [MA000019].

[9] In addition to the Agreement which the RACV is seeking to terminate RACV has separate collective agreements under the Fair Work Act or the Workplace Relations Act in respect of its Vehicle Inspectors, its Surveillance and Incident Response Officers, its Retail Network, its Roadside Assistance Centre, its Metropolitan Patrols, its Clubs and Resorts, its Member and Customer Services (Call Centre), and its Customer Administration. Mr Turnbull submitted that a new agreement for more than 500 insurance staff has just been voted on by employees and the majority of those who will be covered by this new collective agreement were not previously covered by a collective agreement.

[10] All of the RACV collective agreements have incorporated a document entitled “RACV Common Conditions Document” which is a comprehensive management policy on conditions of employment including leave entitlements. RACV submitted that it applies this Common Conditions Document to employees including managers who are not covered by the collective agreements.

[11] The RACV submitted that it wanted the 70 RACV Finance Ltd employees to be under one common set of employment arrangements. Those arrangements would be:

• the Modern Award;



• common law arrangements, namely the RACV Common Conditions Document; and



• a policy for wage setting based upon Mercer’s work value assessment of jobs and payment of 95% of the Mercer’s survey rate for the job value.

[12] RACV submitted that the Mercer’s work value assessment of the jobs of the finance and sales representatives would result in wage increases for the finance and sales representatives. However, management had taken a decision that they would not pay employees the pay increases which would result from the implementation of the Mercer system unless it could achieve the cancellation of the RACV Finance Ltd. (Finance Sales Representatives) Collective Agreement 2006-2009. Management saw this as part of a process of simplifying the number of industrial instruments that applied to the RACV as a whole and also ensuring more commonality of employment conditions and policies across the RACV as a whole.

[13] The RACV submitted that around September 2009 they established a consultative process with the 8 employees covered by the Agreement. Mr Turnbull submitted and I accept that the consultative process was a thorough one and was over a number of months. This was confirmed by the evidence of one of the employees, Mr Ardino.

[14] Following that consultation process a ballot of employees covered by the Agreement was conducted by the Australian Electoral Commission on 22 March 2010. Mario Chindamo, Returning Officer for the Australian Electoral Commission, declared that 8 ballot papers were issued, 6 ballot papers were returned, and 6 persons voted in favour and none against the proposition “Do you approve the cancellation of the RACV Finance Ltd. (Finance Sales Representatives) Collective Agreement 2006-2009?”

[15] The Tribunal heard evidence from one of the employees involved in that consultative process, Mr Pat Ardino. The evidence of Mr Ardino and the submissions of the parties were not in conflict on the following points:

• Mr Ardino and I presume the other employees believed that based upon the assurances given by the employer about the nature of the new arrangements and the employees’ assessment of what was being offered that they would be better off under the new arrangements. Mr Ardino gave evidence that he compared the arrangements that were on offer with the status quo under the Agreement and was satisfied they would be better. Mr Ardino also agreed with Mr Turnbull’s submission that the termination of the agreement was also supported so that all the Finance company employees would come under common arrangements. Mr Ardino gave evidence that the process was fair and thorough. 1



• The FSU was not informed of the intention to seek to terminate the Agreement rather than to negotiate a new Agreement until after the RACV applied to Fair Work Australia for the Agreement to be terminated. There has been no opportunity for the FSU to discuss the proposed termination and proposed alternatives to it with the RACV.



• Mr Ardino is a member of the FSU and the RACV was aware of this.



• Mr Ardino did not perceive any barrier to involving the FSU but did not seek to involve the FSU until after the application for termination of the Agreement was made by the RACV.



• Mr Ardino and I presume the other employees were clear that it was the policy of the management that if they wanted the wage increases pursuant to the Mercer’s work value assessment of their jobs then they would have to support the cancellation of the Agreement. Mr Turnbull also confirmed that employees were advised that management had decided that they would not get the wage increases unless the agreement was terminated. 2



• Mr Ardino and presumably the other employees had not fully considered the matters put to Mr Ardino in the proceedings by the FSU (summarised as follows). Mr Ardino was not aware that the arrangements using the RACV Common Conditions Document and the proposed pay adjustment system based upon the Mercer scheme were less certain than if wage fixing arrangements and the RACV Common Conditions Document remained under an Agreement under the FW Act. He was not aware that under the arrangements, without the Agreement, terms and conditions could potentially be changed by the employer in the future. Mr Ardino was not aware that disputes over the application of these new arrangements could be expensive and difficult to settle as they could not be settled by Fair Work Australia as was provided for in the disputes settlement clause of the Agreement. Mr Ardino was not aware that it was technically possible that a new Agreement could be negotiated which incorporated the Mercer job assessment system and consequent pay rises or that the Mercer job assessment system and consequent pay rises could be implemented with the current Agreement still in place. 3



• Prior to the date of hearing of this matter there were no attempts made by the employer, the employees or the FSU to seek to negotiate a replacement for the current Agreement either before or after its nominal expiry date.

The Relevant Legislation

[16] Item 16 of Schedule 3 of the Transitional Act provides:

“16 Collective agreement-based transitional instruments: termination by FWA

(1) Subdivision D of Division 7 of Part 2-4 of the FW Act (which deals with termination of enterprise agreements after their nominal expiry date) applies in relation to a collective agreement-based transitional instrument as if a reference to an enterprise agreement included a reference to a collective agreement-based transitional instrument.

(2) For the purpose of the application of Subdivision D to an old IR agreement, the agreement’s nominal expiry date is taken to be the end of the period of the agreement.”

[17] Subdivision D of Division 7 of Part 2-4 of the FW Act states:

“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 FWA 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 FWA must terminate an enterprise agreement

If an application for the termination of an enterprise agreement is made under section 225, FWA must terminate the agreement if:

(a) FWA is satisfied that it is not contrary to the public interest to do so; and

(b) FWA 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.”

[18] It is therefore necessary to consider each of the matters in s 226 to determine whether Fair Work Australia is required by that section to terminate the Agreement. I do not have a general discretion in this matter. Section 226 specifies the nature of considerations to be taken into account and the test to be applied to determine the matter.

[19] The FW Act is significantly different in two major respects from the WR Act in respect to the termination of agreements after their nominal expiry date where there is not agreement of all the parties covered by the agreement.

[20] Firstly, the WR Act provided that the Tribunal must terminate an agreement in these circumstances unless it was contrary to the public interest. The FW Act retains the public interest requirement in s 226(a) and it is expressed in similar terms to the previous s 170MH(3) of the WR Act. However, the FW Act provides that, in addition to the public interest requirement, the Tribunal must only terminate the agreement if it considers it appropriate after considering all the circumstances, including the views of the parties and the likely effect of the termination on each of them (s 226(b)). This is significant since it is precisely these considerations which the AIRC previously found were distinguishable from the public interest. The AIRC previously found that evidence that termination of an agreement was opposed by employees and or would be likely to have an adverse impact on employees was not necessarily sufficient to activate the public interest. However, it is clear that the legislators have now decided that such matters are relevant considerations in their own right and may lead to a decision to refuse to terminate an agreement.

[21] Secondly, Section 226 concerning the termination of agreements is found in Part 2-4 of the FW Act which deals with Enterprise Agreements. The legislative scheme and objects of the Act and the objects of Part 2-4 in particular in this respect are quite different from the WR Act. Part 8 of the WR Act which dealt with Workplace Agreements did not have separate objects. The FW Act places a strong emphasis on the objective of facilitating and enabling collective bargaining, bargaining in good faith and the making of enterprise agreements. The termination of an agreement without the agreement of all parties covered by the agreement must now be considered in this context. It is clearly a public interest consideration under s 226(a) if the termination of an agreement would be contrary to the objectives and scheme of the legislation in respect to facilitating and encouraging bargaining and agreements. It is also a context within which the interests of and effects on the parties should be considered as required by Section 226(b).

[22] The legislative context created by the FW Act is consistent with the approach taken by Justice Boulton in the Mount Thorley Operations Enterprise Agreement matter 4. Justice Boulton found that:

“It is preferable that the parties negotiate a new agreement to replace the 1996 Agreement rather than having that Agreement terminated by the Commission under Section 170MH. In most cases certified agreements remain in place and the terms and conditions of employment provided thereunder continue to apply until a new certified agreement is negotiated by the parties to replace the agreement (see s 170LX(2)).” 5

[23] It has certainly been the case since the introduction of a legislative scheme for collective bargaining in Australia that the platform for bargaining replacement agreements has been with very few exceptions the old agreement. That is, the terms and conditions provided by the old agreement remain in place until a new agreement is negotiated by the parties. There has never been a drop dead date for agreements. The FW Act reinforces this by making the unilateral termination of agreements more difficult including by the introduction of s 226(b) and by the removal of any equivalent to Section 393 of the WR Act. The FW Act also reinforces this by removing the option of statutory individual contracts and by encouraging and facilitating bargaining in good faith.

[24] The termination of an agreement in many cases will result in a significant shift in the balance of forces in bargaining. The legislature has deemed it fair to restrict the unilateral termination of agreements and to preserve a situation where in most cases collective agreements remain in place until a new agreement is negotiated to replace it. There is nothing in the legislation that suggests that there should be bias towards terminating an agreement because there is a long period since its nominal expiry date or because it is only relevant to a small number of employees.

Is termination of the Agreement Contrary to the Public Interest?

[25] Previous authorities make it clear that the public interest involves something distinct from the interests of the parties although they may be similarly affected. Vice President Watson in a recent decision 6 quoted the following relevant passage in the Full Bench decision in Re Kellogg Brown and Root Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 7:

“[22] 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.

[23] 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.

……..

[26] 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. 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.

[27] 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.”

(references omitted)

[26] In the Tristar case 8 in 2007 the Full Bench followed the principles established in the Kellogg Brown case quoted above. The Full Bench decided that there were not sufficient public interest reasons to decline to terminate the Agreement despite the demonstrable negative effect on employees and the strong opposition of employees and unions to the termination of the agreement. The Full Bench accepted that the failure by the employer to abide by the provisions of the Agreement concerning renegotiation of the Agreement attracted public interest considerations but found that the time when this had a real effect had passed in the particular circumstances of that case.

[27] In respect to the Cochlear Agreement decision 9 Commissioner Cargill also followed the principles in the Kellogg Brown case quoted above and decided in 2008 that it was not in the public interest to terminate the Agreement and her decision was upheld on appeal.10 There were three main public interest grounds in the Cochlear case:

• If the Agreement were terminated the terms and conditions of the employees would be governed by individual contracts of employment underpinned only by the five minimum standards under the Workplace Relations Act 1996 Part 7.



• Given that the majority of employees were female production workers from a non-English speaking background the ability of these employees to bargain effectively would be adversely affected.



• The Agreement included a clause which required the agreement of the parties to terminate it and it would not be in the public interest to allow a party to escape its Agreement obligations.

[28] In the Mount Thorley 11 case Justice Boulton found it was not in the public interest to terminate an agreement because of the likely adverse effect on achievement of the various objects of the Act and the maintenance of proper industrial standards. He found four matters of particular relevance in making his decision as follows:

"Firstly, there has not been a reasonable opportunity provided for the negotiation of a replacement agreement to operate at the Mine. The parties should not be allowed to delay or extend the negotiation process unreasonably either for the purpose of securing the continuation of the present Agreement or providing a basis for the termination of the Agreement….

Secondly, the Act provides a framework for cooperative workplace relations with emphasis on the determination of matters affecting the employment relationship by the employer and employees at the enterprise level and through the making of agreements (see especially s.3(b), (c) and (e)). It is therefore consistent with the public interest that a cooperative approach directed towards, where possible, the reaching of an agreement be pursued rather than one which might encourage unilateral decisions to be made and implemented about such matters. Terminating the Agreement at this stage of the negotiations may remove an incentive for the parties to finalise their negotiations and to conclude a new agreement…..

Thirdly, there is a greater likelihood of industrial disputation occurring if the Agreement is terminated. This is because there is no agreement as to the overaward terms and conditions of employment to apply on termination of the Agreement and some question as to how long the conditions proposed by the Company will be maintained. …..

Fourthly, it has not been established that the continuation of the Agreement will unreasonably hinder or impair the process of change and improvement at the Mine. An analysis of the terms and operation of the Agreement, together with a consideration of the evidence and submissions made regarding the effect of the Agreement, does not warrant a conclusion that the Agreement will unreasonably impede necessary changes being effected at the Mine. In some respects the problems identified by the Company with the implementation of changes and improvements relate more to the attitudes of the workforce and the need to have to negotiate about the changes than to the provisions or operation of the Agreement. Of course the observance of agreements and the need to negotiate about change will constitute an obstacle to unilateral decision-making by management regarding matters affecting the relationship between the employer and employees. However it is preferable, and consistent with the objects of the Act, that such matters be regulated by agreement.

This does not mean that the Agreement should continue forever or that it should be a bar to the implementation of changes and improvements at the Mine. However there should be a proper endeavour made to address these matters through negotiations and by agreement before it would be appropriate to terminate the Agreement under s.170MH of the Act. “

[29] Commissioner Eames took a similar approach in the case of Total Marine Services Pty Ltd. 12

[30] The changes to the legislation and in particular the Objects of the FW Act Clause 3 and the Objects of Part 2-4 Enterprise Agreements, Clause 171, are particularly relevant to the public interest and make the considerations in the Cochlear case and the Mt Thorley case of increased relevance. The provisions for the termination of Agreements are to be found in Part 2-4 and therefore the objects in clause 171 as set out below are of particular relevance.

“The objects of this Part are:

(a) to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits; and

(b) to enable FWA to facilitate good faith bargaining and the making of enterprise agreements, including through:

(i) makingbargaining orders; and

(ii) dealing with disputes where the bargaining representatives request assistance; and

(iii) ensuring that applications to FWA for approval of enterprise agreements are dealt with without delay.”

[31] There is now a general objective to “facilitate good faith bargaining and the making of enterprise agreements” and hence where the termination of an agreement would be contrary to this objective it is likely that it would not be in the public interest. This is also repeated in the overall objects of the FW Act found in s 3(f).

[32] The general object of the FW Act s 3(e) is also relevant to the public interest in considering termination of Agreements:

“(e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms.”

[33] Where the termination of an agreement would have a significant effect on the right of employees to be represented or achieving accessible and effective procedures to resolve grievances and disputes then this would not be in the public interest.

[34] The general principles set out in the Kellogg Brown and Root decision quoted above still apply. The previous cases together with the changed context created by the new legislation suggest that the following factors are now particularly relevant to a finding that it is not in the public interest to terminate an agreement:

• Whether the safety net will be significantly undermined?



• Whether vulnerable employees will be affected?



• Whether the objective of good faith bargaining and the making of agreements will be harmed?



• Whether the provisions of the Agreement itself in respect to renegotiation of the agreement would be compromised as this would undermine the integrity of bargaining and agreements?



• Whether the right of employees to be represented and or have access to effective dispute resolution procedures would be significantly affected?



• Whether there are any specific circumstances concerning the impact on the economy or the business, productive work, the maintenance of respect for observance of the terms of agreements, fair industrial relations, or work and family balance?

[35] In this case the safety net will be the Modern Award. The employer has assured the affected employees and the Tribunal that overaward conditions in the Common Conditions Document will be maintained and that wages will be maintained and will increase on a regular basis. I accept the submission of the FSU that such assurances are not legally binding or enforceable in the same manner as the Agreement is. The FSU also submitted that the Modern Award safety net for these insurance employees is lower than the previous awards. The legislation envisages that Agreements may be terminated and the normal consequence of this will be to reduce the safety net from the Agreement to the Modern Award. Therefore, the reduction of safety net for employees from an Agreement to the Modern Award safety could not be said to be contrary to the public interest unless there are particular circumstances that apply. None have been suggested in this case.

[36] In this case there is no evidence that vulnerable employees will be affected.

[37] In this case there is also no evidence before me as to adverse effects the termination would have on good faith bargaining or on the prospects of the making of a new agreement. Given that the FSU has not made any efforts to negotiate a new Agreement or use the provisions in respect of good faith bargaining it is difficult to come to such a conclusion. This is particularly the case given that the rights of employees and of the FSU to initiate bargaining and to represent workers are not affected by the termination of the Agreement.

[38] It is arguable that the termination of an Agreement will almost always make the achievement of a new Agreement more difficult but to attract the public interest there must be some evidence that this is likely to occur because of the particular circumstances of the case. It is the nature of bargaining that the balance of forces between bargaining parties may change, so a change in the balance of forces is not in itself automatically a matter of public interest absent particular circumstances. The only matter which might raise relevant circumstances put by the FSU was a submission that the RACV was intending to move away from collective agreements generally and wanted to spread the arrangements in the finance area of the business more generally. Given the size of the RACV workforce and the broad coverage by collective agreements at the RACV this might be a matter of public interest. However there was nothing in the submissions of the RACV or in the evidence before the Tribunal to suggest that this is the case. In fact the RACV submitted that a new group of insurance employees were about to be covered by a collective agreement under the FW Act for the first time. The RACV submissions suggested that management wanted to reduce the number of its agreements and to have the Mercer pay fixing system spread more widely and to ensure that common conditions applied to all employees as far as possible but it was not suggested that the RACV would be opposing future collective agreements.

[39] In this case there is nothing in the terms of the Agreement which places an obligation on the parties to renegotiate the Agreement or to not act to terminate it.

[40] The termination of the Agreement would reduce employees’ access to dispute resolution processes. Under the Agreement disputes may be conciliated and arbitrated by Fair Work Australia. Also the termination will affect the ability of employees to be represented effectively by the FSU in such proceedings. However, the employees will have access to the Modern Award dispute settlement processes and also to the general protections of the FW Act. Given that the termination of an agreement will almost always have these consequences, in the absence of evidence that the particular circumstances of this case are likely to result in harm to employees’ capacity to be represented or to have access to effective disputes resolution the public interest is not activated.

[41] There is no evidence of any relevant issues concerning the economic effect of the decision to terminate or not to terminate the Agreement on the business or the economy or on the other general objects of the FW Act.

[42] The fact that the employer has made this application only six months after the nominal expiry date of the Agreement is certainly a factor I would have considered if there was other evidence that good faith bargaining and the making of a new agreement was significantly undermined by the termination of the Agreement.

[43] For these reasons I find that there are not sufficient public interest grounds to refuse to terminate the Agreement.

Is terminating the Agreement appropriate in the circumstances?

[44] As discussed earlier Section 226(b) of the FW Act makes it clear that the views of the parties and the effect on the parties is now a relevant consideration in addition to and separate from the public interest. This requirement calls for an overall consideration of the context and the circumstances involved and then an exercise of an overall judgment based on those circumstances.

[45] I am required by Section 226(b) to make a positive finding that it is appropriate to terminate the Agreement after taking into account all the circumstances.

[46] The employer wishes to terminate the Agreement. The fact that the majority of employees in the finance section of the company are not currently covered by an Agreement and that the employer wants to achieve common conditions of employment for the employees in the finance section and wishes to reduce the number of applicable industrial instruments in the business as a whole is a reason for the employer to wish to terminate the Agreement which I must take into account.

[47] The most relevant considerations in a case where an employer is unilaterally seeking to terminate an agreement such as in this case are likely to include one or more of the following:

• Are the employees opposed to the termination?



• Is the employees’ opposition well founded?



• Will there be an adverse effect on wages and conditions of employment or rights of employees?



• Will there be an adverse effect on good faith bargaining and or on the making of collective agreements?



• Will there be an adverse effect on the rights of employees to be effectively represented?



• Where employees do not oppose the termination are there reasons to believe that they did not have access to relevant information or were subject to unfair bargaining practices?



• Are there vulnerable employees involved and are they likely to be adversely affected?

[48] In the circumstances of this case the employees have supported the termination. There is no strong evidence and there were no strong submissions which demonstrated adverse consequences for wages and conditions of employment, adverse consequences for vulnerable employees or adverse effect on good faith bargaining or on the making of collective agreements. The FSU submitted a table 13 which demonstrated that the wages and conditions in the Award safety net are significantly inferior for employees than those provided for in the Agreement particularly in respect to wages and redundancy payments. However, there is no evidence that the RACV intends to reduce wages and conditions and there is no evidence that the threat of such a reduction is being used as a tactic in bargaining. There is no evidence that employees are apprehensive about this. If the FSU and or employees had been pursuing the renegotiation of the Agreement then there may well have been a real impact on good faith bargaining or the making of collective agreements. However this is not the case.

[49] The FSU submitted that I should not give more weight to the views of employees and employers than I do to the views of the FSU. The FSU is correct that section 226 does not suggest any prioritisation. However, in my opinion considerable weight should be given to the views of the majority of employees given that their approval is required for the making of any agreement and for its variation or termination during its term. Notwithstanding this it is the actual effect or likely effect of termination on employees, employers and the union which is more relevant than their views.

[50] In my analysis of the matters put to me there are only three factors which in the circumstances of this case could weigh in favour of a finding that it is not appropriate to terminate the agreement.

[51] Firstly, it is clear that employees were not aware of some of the implications of the cancellation of the Agreement identified by the FSU when they voted for it. It is also clear that the employees were told that if they wanted a wage increase then they needed to support the termination of the Agreement. The option of renegotiation of an agreement to cover the finance business as a whole with a new wage fixing process was not considered. The option of new wage increases on top of the agreement whilst the agreement was still in place was not considered. However, there is no evidence that the employees were denied access to the FSU. Further, the evidence of Mr Ardino suggested that employees would not have reached a different decision even if they had been aware of the implications of the cancellation of the Agreement. On balance the evidence is not strong enough to discount the evidence of the positive vote of employees to support the Agreement termination.

[52] Secondly, the capacity of the employees to be effectively represented by the FSU is likely to be impacted by the termination of the Agreement. The existence of the Agreement does give the FSU and employees rights to be represented particularly in respect to disputes and workplace change which will be reduced through the termination of the Agreement. However, this is a natural consequence of the termination of most Agreements and so there would need to be particular circumstances which would make such a consequence of greater significance or more likely to occur to support a decision to not terminate the agreement. There was no evidence to establish this.

[53] Thirdly, this application has been brought six months after the nominal expiry date of the Agreement. For the reasons explained earlier the Tribunal is expected by the legislation to encourage and facilitate the making of collective agreements. I am concerned that the termination of the Agreement so soon after the nominal expiry date is denying the employer, employees and the FSU the opportunity to explore the option of renegotiation of the Agreement. As the FSU submitted there is no reason why the objectives of the RACV to have common conditions and industrial instruments for all the employees of the finance business and also to have a wage fixation system based upon the Mercer review could not be achieved through a collective agreement. Mr Turnbull also conceded this: 14

“THE COMMISSIONER: But the Tribunal could make a decision, "No it's not appropriate to terminate the agreement" and RACV could do everything that you've talked about. You could bring the salaries and the salary adjustments into line across the RACV Finance group.

MR TURNBULL: Yes.

THE COMMISSIONER: You could also use the M.R.S.A. system for adjustment of salaries.

MR TURNBULL: Yes.

THE COMMISSIONER: The common conditions document would still apply, as it does now. There's no change there. That already applies now.

MR TURNBULL: Correct.

THE COMMISSIONER: So I'm assuming, based on what you've said, that the reason the employees and the employer felt that the agreement should be removed was because there's a management policy - and the employees were aware of the management policy - that if you wanted to get the wage increase, "We want to get that agreement out of the way because we want to simplify our arrangements".

MR TURNBULL: That's correct. In a nutshell that's basically it.”

[54] Of course it is a matter for the RACV to determine whether this is something they are ultimately prepared to consider or not but I am concerned that the parties should have a reasonable period of time in which to exhaust the bargaining options open to them under the FW Act before an Agreement is terminated. Against this is the fact that neither the employees nor the FSU have taken any steps during the six months since the nominal expiry date to avail themselves of the opportunities under the FW Act. On balance the circumstances of this case do not provide sufficient basis to deny the application on the grounds that it is premature and may undermine the objective of facilitating collective bargaining. However, this factor is a relevant one in considering when termination of the agreement should take effect.

[55] I therefore find that it is appropriate to terminate the Agreement taking into account the views of the parties and the likely effect on them as required by Section 226(b).

Orders.

[56] I am required having considered the matters in Section 226(a) and (b) to order the termination of the Agreement. There is one final factor to consider and that is from when the termination of the Agreement should operate. Section 227 provides that “if an enterprise agreement is terminated under section 226, the termination operates from the day specified in the decision to terminate the agreement.”

[57] For the reasons I have dealt with earlier I am satisfied that the employees, the FSU and the RACV did not have the opportunity to fully consider other options which might have achieved the RACV’s objectives but would also have been consistent with the objectives of the FW Act to encourage and facilitate good faith bargaining and collective enterprise agreements.

[58] The RACV have the opportunity they have sought as a result of my decision to terminate the Agreement to be able to implement the new wages system they want and to implement common arrangements for the employees of the finance section of the company. This has been supported by the affected employees. The timing of this is a matter for the RACV and is not affected by the date of the termination of the Agreement.

[59] I have therefore decided that the termination of the Agreement shall operate from 28 May 2010. The four week period between the date of this decision and the date that the termination of the Agreement will take effect will give the parties further opportunity, should they wish to make use of it, to avail themselves of the options under Part 2-4 of the FW Act.

COMMISSIONER

 1   PN223-254.

 2   PN12, PN176 and PN226.

 3   PN238 to PN254.

 4   Print R7850 (4 August 1999).

 5   Ibid at 13.

 6   PR995425.

 7 139 IR 34, PR955357.

 8   PR977415 and PR976734.

 9   PR982556.

 10   PR985266.

 11   Print R7850.

 12   Print Q6511 (December 1999).

 13   Exhibit FSU- 1.

 14   PN205 to PN212.

Printed by authority of the Commonwealth Government Printer

<Price code C, AC301859  PR996690 >