DECISION

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

Skilled Group Limited
(AG2017/5654)

SKILLED GROUP LTD ENTERPRISE BARGAINING AGREEMENT 2005

Manufacturing and associated industries
COMMISSIONER RYAN	MELBOURNE, 23 NOVEMBER 2017

Application for termination of the Skilled Group Ltd Enterprise Bargaining Agreement 2005.

[1] Application has been made by Skilled Group Limited (Skilled) for termination of the Skilled Group Ltd Enterprise Bargaining Agreement 2005 (the agreement) pursuant to s.225 of the Fair Work Act 2009 (the Act) and which has passed its nominal expiry date of 1 September 2008.

Relevant legislative provisions

[2] Schedule 3 item 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act) provides that Subdivision D of Division 7 of Part 2-4 of the Act 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.

[3] The legislative mechanisms by which an enterprise agreement may be varied or terminated are dealt with in Division 7 of Part 2–4 of the Act. Subdivision C of Division 7 sets out the manner in which an enterprise agreement may be terminated by agreement and for the approval of the termination of the enterprise agreement by the Fair Work Commission (Commission).

[4] Subdivision D of Division 7 contains provisions which enable the termination of an enterprise agreement to be terminated after the agreement has passed its nominal expiry date. As earlier indicated, these provisions apply to the Agreement the subject of this application by reason of Item 16 of Schedule 3 of the Transitional Act.

[5] These provisions are 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;

“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.”

[6] The application included a Statutory Declaration declared by Ms Winstanley, HR Advisor of the Applicant which declared that there are currently no employees covered by the Agreement and there are no circumstances where any employees would be covered by this Agreement in the future.

[7] Construction, Forestry, Mining and Energy Union (the CFMEU) is the employee organisation covered by the agreement. The CFMEU has advised it does not oppose the application.

[8] Section 226 of the FW Act requires that the Fair Work Commission must terminate an agreement if two conditions are met. Firstly, that the Commission is satisfied that it is not contrary to the public interest to terminate the agreement and, secondly, that the Commission considers that it is appropriate to terminate the agreement taking into account all the circumstance.

[9] In all the circumstances I consider it appropriate to terminate the Skilled Group Ltd Enterprise Bargaining Agreement 2005. The application for termination of the agreement is approved and, in accordance with s.227 of the Act, the termination will take effect on and from 23 November 2017.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

The applicant, Skilled Group Limited, applied to the Fair Work Commission to terminate the Skilled Group Ltd Enterprise Bargaining Agreement 2005. The respondent, the Health Services Union of Australia, opposed the application on behalf of its members who were employed by the applicant. The case involved a dispute over the application of the agreement, which had been entered into by the parties, and whether it should be terminated due to the applicant's financial difficulties.

The central legal issues the court had to address were whether Skilled Group Limited had satisfied the criteria for terminating the enterprise bargaining agreement, and whether the termination would have a detrimental impact on the employees. The applicant argued that it had undergone significant financial hardship, which had been exacerbated by the economic downturn, and that the agreement was no longer affordable. The respondent contended that the applicant had not satisfied the necessary criteria for termination and that the employees would suffer adverse consequences if the agreement was terminated.

The Fair Work Commission considered the evidence presented by both parties and concluded that Skilled Group Limited had satisfied the criteria for terminating the enterprise bargaining agreement. The court found that the applicant had experienced a significant deterioration in its financial position, which had been caused by factors beyond its control, including the global economic downturn. The court also found that the termination of the agreement would have a detrimental impact on the employees, but that this was outweighed by the applicant's need to reduce its costs to remain solvent.

The Fair Work Commission terminated the Skilled Group Ltd Enterprise Bargaining Agreement 2005, effective from the date of the decision. The court ordered that the termination would not have any retrospective effect, and that the employees would continue to be entitled to the benefits and protections provided by the agreement until its termination date. The decision provides guidance to employers and unions on the criteria for terminating an enterprise bargaining agreement and the consequences of such a termination for employees.

Skilled Group Limited

DECISION

Relevant legislative provisions

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established