Shire of Victoria Plains

[2020] FWCA 3673

[2020] FWCA 3673

FAIR WORK COMMISSION

DECISION

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

Shire of Victoria Plains
(AG2019/5107)

SHIRE OF VICTORIA PLAINS (EXTERNAL EMPLOYEES’) ENTERPRISE BARGAINING AGREEMENT 2005

Local government administration
DEPUTY PRESIDENT BINET	PERTH, 11 AUGUST 2020

Application for termination of the Shire of Victoria Plains (External Employees’) Enterprise Bargaining Agreement 2005.

[1] The Shire of Victoria Plains (Shire) has made an application (Application) to the Fair Work Commission (FWC), pursuant to Schedule 3 Item 16 of the Fair Work Act 2009 (FW Act), to terminate the Shire of Victoria Plains (External Employees') Enterprise Bargaining Agreement 2005 (Agreement).

[2] The Agreement was approved by Deputy President Blain pursuant to section 170LK of the Workplace Relations Act 1996 (Cth), on 6 May 2005 and, commenced operation on the same day. The Agreement has a nominal expiry date of 5 May 2008.

[3] The parties to the Agreement are the employees engaged in duties covered by the Municipal Employees (Western Australia) Award 1999 (Employees) and the Shire of Victoria Plains.

[4] The Western Australian Municipal, Administrative, Clerical and Services Union of Employees (WASU) is covered by the Agreement.

[5] For the purposes of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act), the Agreement is a Collective Agreement-Based Transitional Instrument. By virtue of Item 16 of Schedule 3 of the Transitional Act, the Agreement may be terminated pursuant to section 226 of the Fair Work Act 2009 (Cth) (FW Act).

[6] In support of the Application, the Shire filed a Statutory Declaration by Ms Glenda Teede, the Chief Executive Officer of the Shire (Teede Declaration). The Teede Declaration asserts that the Agreement is outdated and unsuitable given changes to the Shire’s structure, operations, and local government structural reforms.

[7] On 24 April 2020, directions were issued with respect to the Application (Directions). The Shire was directed to file an outline of submissions in support of the Application and any evidence on which they relied by 4pm. Friday 1 May 2020. WASU were directed to file an outline of submissions in response to the Application and any evidence on which WASU sought to rely by 8 May 2020.

[8] The Directions also required the Shire to provide a copy of the materials filed by the parties in accordance with the Directions and a copy of the Directions to each of the Employees. The Directions contained an invitation for any of the Employees who wished to be heard in relation to the Application to contact Chambers by 29 May 2020. None of the Employees contacted Chambers by this date or by this date of this decision.

[9] On 7 July 2020 and 10 July 2020, the Shire and WASU respectively confirmed that they did not wish to make oral submissions, and they were content for the Application to be determined ‘on the papers’.

Background

[10] The Shire is located in a rural Western Australia, 160 kilometres north of Perth, and has a population of 921 people.

[11] The Shire is the largest single employer wholly within the Shire of Victoria Plains, employing 20 full time employees.

[12] There are ten employees currently covered by the Agreement, including one of a non-English speaking background and one of aboriginal or Torres Strait heritage.

Legislation

[13] Subdivision D of Division 7 of Part 2-4 of the FW Act sets out the mechanism by which an enterprise agreement may be terminated after the agreement has passed its nominal expiry date.

[14] Section 225 of the FW Act provides that:

“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.”

[15] As the Agreement has passed its nominal expiry date and the Shire is an employer covered by the Agreement, I find that the Shire has standing to make the Application pursuant to section 225(a) of the FW Act.

[16] Section 226 of the FW Act states:

“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.”

Is it contrary to the public interest to termination the Agreement?

[17] Section 226(a) requires the FWC to be satisfied that it is not contrary to the public interest to terminate the Agreement.

[18] This requires the FWC to consider how the termination of the Agreement might foreseeably affect the public as a whole, such as theimpact on the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standard. 1

[19] There is no positive onus on the applicant to persuade the FWC that there are positive benefits to the public interest arising from the termination. In Geelong Wool Combing Ltd (AIRC) 5 September 2003, Commissioner Wheelan said:

“… the Commission must be persuaded that termination is contrary to the public interest [and] in the absence of any effect of termination which is contrary to the public interest it is not necessary to persuade the Commission that there are positive benefits to the public interest arising from the termination.”

[20] The public interest is distinct in nature from the interests of those covered by the Agreement. The views of those covered by an agreement may be relevant to the exercise of the discretion if they shed light on the effect of the termination on public interest but those views should not be given any independent weight. 2

[21] The object of the FW Act is set out in section 3 of the FW Act, as follows:

“3. Object of this Act

The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:

…

(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders;

…

(f) achieving productivity and fairness through an emphasis on enterprise level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action;

…”

[22] The specific objects in section 171 of the FW Act inform how the general object in section 3 of the FW Act is to be satisfied in the context of matters dealt with in Part 2-4 of the FW Act:

“171. Objects of this Part

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 the FWC to facilitate good faith bargaining and the making of enterprise agreements, including through:

(i) making bargaining orders; and

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

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

[23] The ascertainment of what is not in the public interest does not involve the mere identification of a consequence of the termination of the agreement that is arguably contrary to the public interest. The ascertainment of the public interest may involve balancing countervailing public interests. 3

[24] The Shire submits that there are no matters contrary to the public interest in terminating the Agreement and that, rather, there are factors that are in the public interest in terminating the Agreement that may be considered by the Commission.

[25] For example, the Shire says that the termination of the Agreement will improve the financial position of the Shire, by reducing the contingences the Shire must maintain for the generous redundancy, and sick leave bonus schemes contained in the Agreement, leading to an improved financial position which will allow the Shire to engage additional employees.

[26] In relation to the maintenance of proper industrial relations standards, the Shire submits that the Agreement should not have been registered and approved, given the nature and purpose of local government and the inadequate trading and financial activities of the Shire at the time the Agreement came into effect, and at the time the Application was made. The Shire says that in light of the recent ministerial review of the Western Australian industrial relations system, it is likely that in the foreseeable future, local governments such as the Shire will revert to the state system of industrial regulation. The Shire submit that terminating the Agreement and reverting to a State regulated agreement now will provide certainty for its workforce for the future.

[27] The ASU has not submitted any evidence to suggest that the termination of the Agreement is contrary to the public interest.

[28] Based on the submissions of the parties and the evidence before me, I am satisfied that it is not contrary to the public interest to terminate the Agreement.

What are the views of the Employees covered by the Agreement?

[29] The Shire tendered evidence of the consultation which it is has undertaken to ascertain the view of the Employees covered by the Agreement. This consultation included the Chief Executive Officer of the Shire, Ms Glenda Teede (Ms Teede), holding a meeting attended by all employees covered by the Agreement. In a statutory declaration filed in support of the Application, Ms Teede stated, that at the meeting, she explained the difference between the Agreement and the State Award. She also says that she explained that Employees could express their objection to the Application to her by email, telephone or in person. She says that the information discussed at the meeting was also provided to each of the Employees in writing. She says that none of the Employees have raised with her any concerns about the termination of the Agreement.

[30] The Directions also required the Shire to provide a copy of the materials filed by the parties in accordance with the Directions and a copy of the Directions to each of the Employees. The Directions contained an invitation for any of the Employees who wished to be heard in relation to the Application to contact Chambers by 4pm, 29 May 2020. None of the Employees contacted Chambers by this date or by this date of this decision.

[31] On 8 July 2020 the Shire informed Chambers that the parties had reached an in principle agreement for a new industrial agreement to be registered in the State jurisdiction (Proposed State Agreement).

What are the views of the Employee Organisation covered by the Agreement?

[32] The ASU does not oppose the Application.

What are the views of the Employer covered by the Agreement?

[33] The Shire believes that the Agreement is outdated and unsuitable given the changes to the Shire’s structure and operations and pending local government structural reforms.

What are the circumstances of the Employees covered by the Agreement?

[34] The Shire submits that there are three main areas where the State Award differs from the Agreement that are potentially less favourable to the Employees. In the case of the first two areas (sick leave bonus scheme and redundancy), the entitlements under the Agreement are only contingent entitlements. In the third area (rates of pay), a comparison prepared by the Shire indicates that Employees will not be worse off under the State Award.

[35] An entitlement to the sick leave bonus scheme only arises if an employee resigns or retires. The Shire has given an undertaking that it will honour the scheme for six months from the date of the termination of the Agreement. Given that the scheme discourages employees taking sick leave when they are eligible in light of the current pandemic, it is not in the public interest for the scheme to continue beyond that period.

[36] The redundancy provisions contained in the Agreement are far in excess of the common industry standards reflected in the State Agreement. They act to hamper the Shire’s ability to restructure its business and operations, as well as, make efficiency gains to secure the financial viability of the Shire as a significant employer in the region. The Shire has agreed to honour the redundancy pay scheme as set out in clause 23 of the Agreement for the 6 month period from the date of the termination of the Agreement. Beyond this period the Proposed State Agreement will still provide enhanced severance entitlements but at a level which creates less restriction on the ability of the Shire to adapt to change.

[37] The Agreement provides for higher base rates of pay than in the State Award. However, the pay rates under the Agreement provide an "all in" rate, including industry allowances, special allowances, meal allowances, leave loading and bonuses. As the Agreement passed its nominal expiry date on 5 May 2008, the current rates paid by the Shire to the Employees exceeds the rates under the Agreement or under the Award. The Shire has undertaken not to reduce the total take home pay of Employees if the Agreement is terminated.

[38] Under the Agreement, the Employees have worked a 9 day fortnight. The proposed State Agreement also provides for 9 day fortnight.

What are the circumstances of the Employee Organisation covered by the Agreement?

[39] The ASU says that the termination of the Agreement will have no effect on the ASU.

What are the circumstances of the Employer covered by the Agreement?

[40] The Shire says that the termination of the Agreement will improve the financial position of the Shire by reducing the contingences the Shire must maintain for the redundancy, and sick leave bonus schemes contained in the Agreement. The Shire also submit that terminating the Agreement and reverting to a State regulated agreement now will provide certainty in light of the foreshadowed changes to the industrial regulation of local government in Western Australia.

Is it appropriate to terminate the Agreement taking into all the circumstances?

[41] In assessing the views and circumstances of the parties it is important to remember that:

“Taking into account the views and circumstances of the parties involves far more than an expression of their views in support or opposition to termination. It should involve a reason for their views and the validity of their concerns.” 4

[42] The Agreement came into effect over 13 years ago and is now more than 10 years past its nominal expiry date. It does not reflect current industry standards or prevailing market conditions. It currently negatively impacts on the capacity of the Shire to remain financially viable and to employ more employees. The Shire has engaged in extensive and lengthy consultation and negotiation to replace the Agreement with an instrument which is better suited to the current financial and industrial environment it faces.

Conclusion

[43] For the reasons enunciated above, I am satisfied that it is not contrary to the public interest to terminate the Agreement.  On the contrary, based on the submissions of the Shire, the termination of the Agreement may, in fact, generate employment opportunities. 

[44] Taking into account all the circumstances, including the views and circumstances of the Shire, its employees and the ASU, I am satisfied that it is appropriate to terminate the Agreement.

[45] Accordingly, the Agreementis terminated. The termination is to take effect on and from Wednesday 12 August 2020. An Order to this effect will be issued in conjunction with this Decision.

[46] The Shire has requested that I also order that all documents served on Employees in accordance with the Directions are returned to the Shire for destruction. An Order to this effect will also be issued in conjunction with this Decision.

DEPUTY PRESIDENT

 1   Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (2005) 139 IR 34 at 40 – 41.

 2   Ibid.

 3 Kellogg Brown & Root Pty Ltd & Ors and Esso Australia Ltd (2005) 139 IR 34 referred to the decision of the High Court of Australia in Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia (1987) 61 ALJR 393

 4   Energy Resources Australia Ltd v Liquor, Hospitality and Miscellanous Union[2010] FWA 2434 at [16].

Printed by authority of the Commonwealth Government Printer

<AG839929  PR720949>