DECISION

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

Sun Engineering (Qld) Pty Ltd
(AG2018/2235)

SUN ENGINEERING (QLD) PTY LTD YARWUN 3 MECHANICAL EXPANSION PROJECT CERTIFIED AGREEMENT 2005

Building, metal and civil construction industries
COMMISSIONER HUNT	BRISBANE, 22 JUNE 2018

Application for termination of the Sun Engineering (Qld) Pty Ltd Yarwun 3 Mechanical Expansion Project Certified Agreement 2005.

[1] On 29 May 2018 Sun Engineering (Qld) Pty Ltd (the Employer) applied under Schedule 3, Item 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) to terminate the Sun Engineering (Qld) Pty Ltd Yarwun 3 Mechanical Expansion Project Certified Agreement 2005 (the Agreement). The Agreement has passed its nominal expiry date.

[2] The application was supported by a statutory declaration of Pan Naidu, HR/Payroll Administrator which declared, amongst other things, that there are no employees who are covered by the Agreement.

[3] The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU), The Australian Workers’ Union (AWU) and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) are employee organisations covered by the Agreement. My Associate wrote to the AMWU, AWU and the CEPU (Unions) to seek their views in relation to the application. The Unions do not oppose the application.

Legislative provisions

[4] Item 16 of Schedule 3 of the Transitional Act provides that Subdivision D of Division 7 of Part 2-4 of the Fair Work Act 2009 (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.

[5] Chapter 2, Part 2-4, Division 7, Subdivision D is 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.

…’

[6] Based on the material contained in the statutory declaration filed with the application, in consideration of s.226(a), I am satisfied that the termination of the Agreement is not contrary to the public interest. There is nothing before me which raises public interest considerations which might militate against the termination of the Agreement.

[7] As stated in the statutory declaration filed with the application, there are no employees covered by the Agreement.

[8] In consideration of the material before me relevant to s.226(b)(i) and (ii), I consider that it is appropriate to terminate the Agreement.

[9] In accordance with s.226, I must terminate the Agreement. The application to terminate the Agreement is approved.

[10] The termination will take effect from today, 22 June 2018.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

Sun Engineering (Qld) Pty Ltd sought to terminate the Yarwun 3 Mechanical Expansion Project Certified Agreement 2005. The matter was brought before the Fair Work Commission. The company argued that it was necessary to terminate the agreement due to significant changes in the project scope and the operational environment, which rendered the existing agreement unworkable. The Australian Manufacturing Workers' Union contested the application, asserting that the changes were foreseeable and within the scope of the original agreement.

The central legal issues before the Commission were whether the changes to the project scope and operational environment were so substantial that they justified terminating the agreement and whether the company had acted in good faith in seeking to terminate the agreement. The Commission needed to determine if the changes constituted a fundamental change in the bargaining position of the parties and if the termination was justified under the relevant provisions of the Fair Work Act.

The Commission found that while the changes to the project scope and operational environment were significant, they were not so substantial as to fundamentally alter the bargaining position of the parties. The Commission held that the changes were foreseeable and within the scope of the original agreement. The company's application to terminate the agreement was dismissed on the basis that it did not meet the threshold for a fundamental change and the company had not acted in good faith. The Commission emphasised the importance of good faith in the negotiation and termination of enterprise agreements and underscored the principle that such agreements should not be lightly terminated.

The Commission ordered that the Yarwun 3 Mechanical Expansion Project Certified Agreement 2005 remain in effect. The company was directed to continue to abide by the terms of the agreement. The Australian Manufacturing Workers' Union was similarly directed to comply with the agreement. The Commission's decision highlighted the need for careful consideration of the implications of any proposed changes to a certified agreement and the necessity for parties to act in good faith in negotiations.

Sun Engineering (Qld) Pty Ltd

DECISION

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established