Shop, Distributive and Allied Employees’ Association
[2022] FWCA 4010
•16 NOVEMBER 2022
| [2022] FWCA 4010 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Item 16 Sch. 3—Termination of transitional instrument
Shop, Distributive and Allied Employees’ Association
(AG2022/3907)
| Retail industry | |
| DEPUTY PRESIDENT CLANCY | MELBOURNE, 16 NOVEMBER 2022 |
Application to terminate the SDA, MGAV and Kevmille Pty Ltd (Former David’s Supermarkets-Portland) Certified Agreement 2004.
An application was filed by the Shop, Distributive and Allied Employees’ Association (SDA) seeking the termination of the SDA, MGAV and Kevmille Pty Ltd (Former David’s Supermarkets-Portland) Certified Agreement 2004[1] (the Agreement) pursuant to Schedule 3, Item 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act). The Agreement is a collective agreement-based transitional instrument and has passed its nominal expiry date of 1 June 2007.
The employer party to the Agreement is Kevmille Pty Ltd T/A Portland Supermarket (the Employer). The SDA confirmed that the Employer was served a copy of the Form F28 application, the Form F24C statutory declaration made by the SDA’s Mr Gerard Dwyer on 13 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 email Express Post to the registered address of the Employer, and required:
· the Employer to provide a copy of the Form F28, 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.
· 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.
Master Grocers Australia Limited (MGA) filed submissions supporting the termination of the Agreement on behalf of the Employer on 4 November 2022.
Legislation
As outlined above, the Agreement is a collective agreement-based transitional instrument to which Item 16 of Schedule 3 of the Transitional Act applies. The effect of Item 16 of Schedule 3 of the Transitional Act is that the termination of agreement provisions found in Subdivision D of Division 7 of Part 2-4 of the Act apply as though a reference to an enterprise agreement includes a reference to a collective agreement-based transitional instrument.
The Act therefore relevantly 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.”
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.”
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 1 June 2007. Further, I note that the SDA is an employee organisation covered by the Agreement.[2] As such, I am satisfied that the SDA has standing to bring the Application under s.225(c) of the Act.
Section 226(a) of the Act – Public Interest
As regards s.226(a) of the Act and the manner in which the public interest is to be assessed, the Full Bench in Aurizon Operations Limited; Aurizon Network Pty Ltd; Australian Eastern Railroad Pty Ltd[3] (Aurizon) cited various passages from the Full Bench of the Australian Industrial Relations Commission’s decision in Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000[4] (Kellogg) which had concerned the corresponding, but not identical, provision from the Workplace Relations Act 1996. Relevantly, these passages included:
“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.”[5]
It is also relevant to highlight the Full Bench in Aurizon concluded that it cannot be expected that the terms and conditions of an agreement will continue unaltered in perpetuity after it has passed its expiry date. This is because the Act contemplates the terms and conditions of an agreement may be altered by making a new agreement or by terminating the existing agreement.[6]
As was also recognised in Aurizon, s.226 of the Act is not limited to circumstances in which an agreement no longer applies to any employee. The Act clearly contemplates an agreement that still applies to employees being terminated and prescribes a safety net upon termination in such circumstances. The prescribed safety net is not a prior agreement and nor are undertakings mandatory. Rather, the prescribed safety net is the relevant modern award created during the Award Modernisation process and the National Employment Standards (NES). In this case, the relevant modern award is the General Retail Industry Award 2020 (the Award).
The Employer submits the termination of the Agreement is not contrary to the public interest. Having regard to the Application, the termination of the Agreement would not lead to an absence of award coverage for the employees. The Award provides for “proper industrial standards” within the meaning given to that term by Kellogg and in circumstances where there was no material before me suggesting otherwise, I am satisfied it is not contrary to the public interest to terminate the Agreement.
Section 226(b) of the Act – Appropriateness
The approach to assessing appropriateness by taking into account all the circumstances, as enunciated by the Full Bench in Aurizon, is to have reference to the construction of s.226 and the contextual matters that bear upon that construction, as well as giving specific consideration to the matters identified in ss. 226(b)(i) and (ii):
“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] (My emphasis, reference omitted)
I intend to adopt this approach.
Section 226(b)(i)
In terms of s.226(b)(i), I note that as an employee organisation covered by the Agreement, the SDA filed the application to terminate the Agreement. Clearly, it supports the Agreement being terminated.
As noted above at [4], the Employer supports the termination of the Agreement.
As for employees covered by the Agreement, I am satisfied they have been on notice that the Application was before me through the Directions I issued on 28 September 2022 and the various requirements outlined therein. I am also satisfied that the employees had reasonable periods of time to file material should they have wished to do so. In the Directions, I outlined that the impact of the Agreement being terminated would be the Award setting the terms and conditions of employment and a hyperlink to the Award was provided. Ultimately, no submissions from any employees have been received. In these circumstances, I consider I can do no more than accord neutrality to the views of the employees when considering the application.
Section 226(b)(ii)
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.
Assessing the likely effect of termination of the Agreement on the Employer and the employees more broadly requires evaluating the impact of the Award applying instead of the Agreement.
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 were 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. liquor licence allowance, Broken Hill allowance);
· provides for a higher meal, transport and first aid allowance;
· provides for a shift loading for both permanent employees and casual employees for ordinary hours worked between 6.00pm – 10.00pm on Monday to Friday 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;
· 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; and
· provides that guaranteed working hours and meal break durations for part time employees are to be agreed in writing whereas the Agreement does not.
As to the likely effect of the termination of the Agreement on the relevant employees, the information provided is such that I consider it is open to me to infer they would not be worse off should the Agreement be terminated, leaving the Award to apply.
Conclusion
Having regard to the material before me and noting the Act contemplates the Award and NES applying as the safety net in the event of termination of the Agreement, I am satisfied that it is not contrary to the public interest to terminate the Agreement. I have noted the views and circumstances of the SDA, and the Employer covered by the Agreement and I have considered the Agreement and have compared it with the Award. Notwithstanding the lack of engagement with the Application from the employees, I consider it is appropriate in the circumstances of this case to terminate the Agreement.
Further to these findings, the Act requires that I terminate the Agreement.[8]
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.”[9]
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 1 June 2007 and the application was not made until over 15 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.
I have taken into consideration the period of time that has elapsed since the Employers were 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 19 December 2022. An order to this effect will be issued with this decision.
DEPUTY PRESIDENT
[1] AG835800.
[2] Ibid at clause 3.
[3] [2015] FWCFB 540.
[4] (2005) 139 IR 34.
[5] Ibid at 40.
[6] [2015] FWCFB 540 at [176].
[7] Ibid at [167].
[8] Fair Work Act 2009 (Cth), s.226.
[9] [2018] FWCFB 4344 at [23].
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