Shop, Distributive and Allied Employees’ Association
[2023] FWCA 429
•10 FEBRUARY 2023
[2023] FWCA 429
The attached document replaces the document previously issued with the above code on 10 February 2023.
The date of the Decision has been corrected to 10 February 2023.
Associate to Deputy President Clancy
13 February 2023
| [2023] FWCA 429 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.225—Enterprise agreement
Shop, Distributive and Allied Employees’ Association
(AG2022/3895)
| Retail industry | |
| DEPUTY PRESIDENT CLANCY | MELBOURNE, 10 FEBRUARY 2023 |
Application to terminate the Master Grocers Australia Limited (Michael’s IGA Supermarkets) and Shop, Distributive and Allied Employees’ Association Enterprise Agreement 2014.
An application was filed by the Shop, Distributive and Allied Employees’ Association (SDA) seeking the termination of the Master Grocers Australia Limited (Michael’s IGA Supermarkets) and Shop, Distributive and Allied Employees’ Association Enterprise Agreement 2014[1] (the Agreement) pursuant to s.225 of the Fair Work Act 2009 (Act). The Agreement passed its nominal expiry date of 30 July 2017.
The employer party to the Agreement is Aeroten Pty Ltd T/A Michael’s IGA (the Employer). The SDA confirmed that the Employer was served a copy of the Form F24B application, the Form F24C statutory declaration made by the SDA’s Mr Gerard Dwyer on 14 September 2022, and an attachment comparing the Agreement and the General Retail Industry Award 2022 (the Comparison Document).
Directions I issued on 28 September 2022 were sent via Express Post to the registered address of the Employer and amended Directions on 3 November 2022 via email to the Employers’ representative, Martin Stirling of the Master Grocers’ Association (MGA). The Amended Directions required:
· the Employer to provide a copy of the Form F24B, the Form F24C statutory declaration, the Comparison Document and the Directions to its employees via email and place a copy on a noticeboard at each workplace that is used for communications with staff.
· the Employer to lodge with the Commission and serve on the SDA, and all of its employees any material and witness statements upon which it relied, including material which addresses whether it is or is not contrary to the public interest for the Commission to terminate the Agreement, material which expresses the views of the Employer regarding the application to terminate the Agreement and material which describes the circumstances of the Employer, including the likely effect that the termination of the Agreement would have on it. Further, I required any submissions from the Employer on the impact of the Agreement no longer applying to it and the General Retail Industry Award 2022 (the Award) instead setting the terms and conditions of employment, were invited.
· any employee who wished to do so to send to the Commission, the SDA and the Employer any material addressing the same issues.
· the SDA and any interested employee to lodge with the Commission, and serve on the Employer, any reply material.
· the Employer to provide to its employees via email, any material upon which the SDA relied in reply.
· any employee who wished to be kept updated in this matter to confirm this by email to my Chambers.
MGA filed submissions supporting the termination of the Agreement on behalf of the Employer on 5 January 2023.
Legislation
Section 225 of the Act provides as follows:
“225 Application for termination of an enterprise agreement after its nominal expiry date
If an enterprise agreement has passed its nominal expiry date, any of the following may apply to the FWC for the termination of the agreement:
(a) one or more of the employers covered by the agreement;
(b) an employee covered by the agreement;
(c) an employee organisation covered by the agreement.”
The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 amended s.226 of the Act. The amendments took effect from 7 December 2022 and relevantly provide as follows:
“226 Terminating an enterprise agreement after its nominal expiry date
(1) 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 the continued operation of the agreement would be unfair for the employees covered by the agreement; or
(b) the FWC is satisfied that the agreement does not, and is not likely to, cover any employees; or
(c) all of the following apply:
(i) the FWC is satisfied that the continued operation of the enterprise agreement would pose a significant threat to the viability of a business carried on by the employer, or employers, covered by the agreement;
(ii) the FWC is satisfied that the termination of the enterprise agreement would be likely to reduce the potential of terminations of employment covered by subsection (2) for the employees covered by the agreement;
(iii) if the agreement contains terms providing entitlements relating to the termination of employees’ employment each employer covered by the agreement has given the FWC a guarantee of termination entitlements in relation to the termination of the agreement.
(1A) However, the FWC must terminate the enterprise agreement under subsection (1) only if the FWC is satisfied that it is appropriate in all the circumstances to do so.
(2) This subsection covers a termination of the employment of an employee:
(a) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or
(b) because of the insolvency or bankruptcy of the employer.
(3) In deciding whether to terminate the agreement, the FWC must consider the views of the following covered by the agreement:
(a) the employees (unless there are no employees covered by the agreement);
(b) each employer;
(c) each employee organisation (if any).
Note: The President may be required to direct a Full Bench to perform a function or exercise a power in relation to the matter if any of the employers, employees, or employee organisations, covered by the agreement oppose the termination (see subsection 615A(3)).
(4) In deciding whether to terminate the agreement (the existing agreement), the FWC must have regard to:
(a) whether the application was made at or after the notification time for a proposed enterprise agreement that will cover the same, or substantially the same, group of employees as the existing agreement; and
(b) whether bargaining for the proposed enterprise agreement is occurring; and
(c) whether the termination of the existing agreement would adversely affect the bargaining position of the employees that will be covered by the proposed enterprise agreement.
(5) In deciding whether to terminate the agreement, the FWC may also have regard to any other relevant matter.”
Consideration
Section 225 of the Act
An employee organisation covered by an agreement may apply under s.225(c) of the Act to the Commission for the termination of the Agreement if it has passed its nominal expiry date. As noted above at [1], the Agreement nominally expired on 30 July 2017. Further, I am satisfied that the SDA is an employee organisation covered by the Agreement.[2] It follows that I am satisfied that the SDA has standing to bring the Application under s.225(c) of the Act.
Section 226(1), (1A) (3) and (5) of the Act
Section 226 of the Act was amended and the reference to the public interest test in s.226(a) has been removed. However, I observe that s.226 relevantly requires consideration of unfairness to employees covered by the Agreement if the Agreement was to continue in operation,[3] that the Commission must terminate the Agreement only if it is satisfied that it is appropriate in all the circumstances to do so,[4] and the Commission may also have regard to any other relevant matter.[5] While there is an absence of the public interest test, consideration is required of unfairness to employees and other circumstances in the matter.
The approach to assessing appropriateness was laid out by the Full Bench in Aurizon Operations Limited; Aurizon Network Pty Ltd; Australian Eastern Railroad Pty Ltd[6] (Aurizon), which although concerning the termination of an agreement prior to the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022, outlines reasoning also applicable for termination of agreements under the newly amended section 226 of the Act:
“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).”[7] (reference omitted)
Having regard to the application, the termination of the Agreement would not lead to an absence of award coverage for the employees. In this case, the relevant modern award that would apply is the General Retail Industry Award 2020 (the Award).
The Employer submits that the likely effect of termination of the Agreement is that it will experience increased expenses associated with employee remuneration which are accounted for by the difference in employee entitlements between the Award and the Agreement. Nonetheless, the Employer submits the Agreement should be terminated.
There is no direct evidence from employees covered by the Agreement. Mr Dwyer of the SDA completed the requisite F24C Statutory Declaration. In this, Mr Dwyer contends that the terms and conditions provided in the Agreement have fallen below the minimum terms and conditions of the Award and as such, the employees currently covered by the Agreement suffer a disadvantage. Mr Dwyer outlined the following:
“Increases in the rates of pay have not kept up with the rate of increases in the [Award] so that over time the buy-out of penalty rates has been absorbed and the base rate of pay no longer compensates for a lack of allowances, annual leave loading, and penalty rates leaving employees working Evenings, Saturdays, Sundays and Public Holidays worse off than under the [Award].”
Mr Dwyer submits that terminating the Agreement will advantage the employees covered by it as the effect of a termination would be that the employees currently covered by the Agreement will be entitled to the more favourable terms and conditions prescribed by the Award.
The application included a comparative analysis of the rights, entitlements and benefits of the Agreement vis-à-vis the Award. The SDA submitted this analysis supports termination of the Agreement. The Employer does not contend that the comparisons outlined by the SDA are not accurate.
I have noted that, amongst other things, the Award:
· provides for a range of allowances that are not contained in the Agreement and some of these may be relevant to the workplace of the employees (e.g. recall allowance, liquor licence allowance, high duties allowance);
· provides for a higher meal, travel and first aid allowance;
· provides for a shift loading for ordinary hours worked between 6.00pm – 9.00pm on Monday to Friday whereas the Agreement does not;
· provides for penalty rates for ordinary hours worked between 7.00am – 8.00pm on Saturdays whereas the Agreement does not;
· includes a right to request casual conversion whereas the Agreement does not;
· provides for a right to refuse to work on a public holiday if the request to work is unreasonable or the refusal is reasonable whereas the Agreement does not;
· provides for a longer rest period between the completion of ordinary hours on one day and the commencement of ordinary hours on the following day;
· provides for a public holiday overtime rate of pay, whereas the Agreement does not;
· provides leave to deal with Family and Domestic Violence whereas the Agreement does not;
· provides that guaranteed working hours and meal break durations for part time employees are to be agreed in writing whereas the Agreement does not; and
· provides for consultation about changes to rosters or hours of work for part time employees whereas the Agreement does not.
The information provided is such that I consider it is open to me to infer that the employees would be better off should the Agreement be terminated, leaving the Award to apply. I am satisfied that the continued operation of the Agreement would be unfair for the employees covered by the Agreement.[8]
Section 226(4) of the Act
There is no evidence before me suggesting that the parties are engaged in bargaining for a new enterprise agreement. It follows that the termination of the Agreement would not have any detrimental impact or result in a shift in bargaining power, in relation to enterprise bargaining, for the relevant employees or other relevant party.
Conclusion
I have had regard to the views and circumstances of the SDA, and the Employer covered by the Agreement (s.226(3)) and have also considered the Agreement and have compared it with the Award. For the reason that employees are better off under the Award as opposed to the Agreement, I am satisfied that it would be unfair for employees to remain covered by the expired Agreement (s 226(1)(a)). In view of the reasons outlined above and notwithstanding the lack of engagement with the Application by the employees, I consider it is appropriate in the circumstances of this case to terminate the Agreement (s.226(1A)).
I am also satisfied that none of the criteria in s.226(4) apply and that there are no other relevant matters to take into account in deciding whether to terminate the Agreement (s.226(5)). For the sake of completeness, s.226A of the Act is irrelevant the circumstances of this matter.
Further to these findings, the Act requires that I terminate the Agreement.[9]
Operative Date of Termination
Section 227 of the Act affords the Commission a discretion as to the operative date of a termination of an agreement.
The SDA relies on what was stated by the Full Bench of the Commission in Gangell v Lobethal Abattoirs Pty Ltd:
“We would also observe that the need to deal with an application expeditiously is particularly important in cases where, as here, there are assertions that employees to whom the agreement applies are at times earning less than under the relevant modern award.”[10]
The SDA submitted that in the absence of any demonstrated proper reason why termination should be deferred or delayed, any order that the Agreement be terminated should operate forthwith. The Employer did not make a submission.
The application has been dealt with in a relatively expeditious manner, noting that the Agreement reached its nominal expiry date on 30 July 2017 and the application was not made until over 5 years after this. All relevant parties with an interest in the application then had to be notified and required an opportunity to put material before the Commission. New legislative requirements came into operation during the currency of this matter.
I have taken into consideration the period of time that has elapsed since the Employer was first notified of the application but having regard to the differences between the Agreement and the Award, I consider it is appropriate to specify a date from which the termination will operate that allows for a period of time for the Employer to prepare and make adjustments to its store budget, rostering and payroll in order to apply the Award. As such, I believe it is appropriate to allow a period of approximately four weeks from the date of this decision before the termination of the Agreement commences to operate.
The termination will operate from 13 March 2023. An order to this effect will be issued with this decision.
DEPUTY PRESIDENT
[1] AE409224.
[2] Ibid at clause 4(c).
[3] Fair Work Act 2009, s.226 (1)(a).
[4] Ibid s.226 (1A).
[5] Ibid s.226 (5).
[6] [2015] FWCFB 540.
[7] Ibid at [167].
[8] Fair Work Act 2009, s.226 (1)(a).
[9] Fair Work Act 2009 (Cth), s.226.
[10] [2018] FWCFB 4344 at [23].
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