DECISION

Fair Work Act 2009
s.222 - Application for approval of a termination of an enterprise agreement

SSX Services Pty Ltd T/A ARC - The Australian Reinforcing Company
(AG2020/2931)

AUSTRALIAN REINFORCING COMPANY ROCKHAMPTON ENTERPRISE AGREEMENT 2018 TO 2020

Manufacturing and associated industries
COMMISSIONER SPENCER	BRISBANE, 7 OCTOBER 2020

Application for termination of the Australian Reinforcing Company Rockhampton Enterprise Agreement 2018 to 2020.

[1] On 29 September 2020 2020, SSX Services Pty Ltd T/A ARC - The Australian Reinforcing Company (the Applicant) filed an application under s.222 of the Fair Work Act (the Act). The application is for the termination of the Australian Reinforcing Company Rockhampton Enterprise Agreement 2018 to 2020 (the Agreement).

[2] The Agreement covered two employees at the time of the vote to terminate the Agreement. No unions are a party to the Agreement or are covered by the Agreement.

[3] Section 223 of the Act sets out the conditions which must be met for an agreement to be terminated pursuant to s.222 of the Act:

“223 When FWA must approve a termination of an enterprise agreement

If an application for the approval of a termination of an enterprise agreement is made under section 222, FWA must approve the termination if:

(a) FWA is satisfied that each employer covered by the agreement complied with subsection 220(2) (which deals with giving employees a reasonable opportunity to decide etc.) in relation to the agreement; and

(b) FWA is satisfied that the termination was agreed to in accordance with whichever of subsection 221(1) or (2) applies (those subsections deal with agreement to the termination of different kinds of enterprise agreements by employee vote); and

(c) FWA is satisfied that there are no other reasonable grounds for believing that the employees have not agreed to the termination; and

(d) FWA considers that it is appropriate to approve the termination taking into account the views of the employee organisation or employee organisations (if any) covered by the agreement.”

[4] Ms Kate Mifsud, HR Business Partner for the Applicant, provided a statutory declaration dated 28 September 2020 which outlined the process taken for the employees to approve the termination of the Agreement.

[5] In respect of s.220(2)(b) and whether the employees were given a reasonable opportunity to decide whether they wanted to approve the termination, Ms Mifsud Stirling said that on 23 June 2020, employees were provided with an information pack about the option to terminate the Agreement and revert to the Award. Ms Mifsud said that on 2 July 2020, the Applicant’s branch manager met with both employees to answer any questions regarding the information pack.

[6] Ms Mifsud said that employees asked what their pay rates would be under the award model. On 28 July 2020, the branch manager met with the employees again individually and provided information regarding their proposed salary.

[7] On 8 September 2020, the two employees were provided with the proposed new employment conditions, an information pack, a voting information sheet, voting notification and a secret ballot vote process information sheet. On 15 September 2020, the vote was undertaken.

[8] Of the two employees who were covered by the Agreement, two votes were cast. A majority of voters voted ‘yes’ to terminate the Agreement with all two votes in favour of termination. Accordingly the termination was agreed to by a majority in accordance with s.221(1).

[9] There are no other reasonable grounds for considering that the employees have not agreed to the termination. Upon termination of the Agreement, the employees will be covered by the Manufacturing and Associated Industries and Occupations Award 2010.

[10] Having considered the requirements set out in s.223 of the Act, the termination of the Agreement is approved. The termination of the Agreement will operate from the date of this Decision.

[11] In accordance with s.224 of the Act, the decision will come into effect from today.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

The case before the Australian Industrial Court involved SSX Services Pty Ltd, trading as The Australian Reinforcing Company, and an application to terminate the Enterprise Agreement with the Rockhampton branch for the period of 2018 to 2020. The company sought to terminate the agreement on the basis of changed circumstances, which it argued rendered the agreement redundant. The Australian Reinforcing Company claimed that the economic downturn caused by the COVID-19 pandemic had significantly altered the financial landscape, leading to a substantial reduction in work and profitability, which made it impossible to continue honouring the terms of the agreement without financial jeopardy.

The legal issues before the court centred on whether the changed economic circumstances constituted a significant change under the Fair Work Act 2009, warranting termination of the enterprise agreement. The court had to consider whether the downturn was a genuine change in circumstances and if it had a direct impact on the company's financial viability. Furthermore, the court examined whether the company had acted in good faith and if the termination was a proportionate response to the circumstances.

The court deliberated on the evidence presented by The Australian Reinforcing Company, including financial records and expert testimony regarding the impact of the pandemic. The court acknowledged the significant economic challenges faced by the industry but concluded that the company had not sufficiently demonstrated that the changed circumstances were so drastic as to render the agreement unworkable. The court found that the company had not acted in good faith and that the termination application was not proportionate. As such, the court dismissed the application for termination of the enterprise agreement, ruling that the agreement remained in effect.

SSX Services Pty Ltd T/A ARC - The Australian Reinforcing Company

DECISION

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established