The Australian Workers’ Union

[2021] FWCA 6651

[2021] FWCA 6651

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225—Enterprise agreement

The Australian Workers’ Union
(AG2019/4859)

D&D TRAFFIC MANAGEMENT & OTHER WORK - ENTERPRISE AGREEMENT 2015

Building, metal and civil construction industries
COMMISSIONER RIORDAN	SYDNEY, 26 NOVEMBER 2021

Application for termination of the D & D Traffic Management & Other Work - Enterprise Agreement 2015

[1] On 13 December 2019 The Australian Workers’ Union (the Applicant) lodged an application (the Application) with the Fair Work Commission (the Commission) to terminate the D & D Traffic Management & Other Work – Enterprise Agreement 2015 (the Agreement) after its nominal expiry date on 30 June 2019, in accordance with section 225 of the Fair Work Act 2009 (the Act). D&D Traffic Management Pty Ltd (the Respondent) opposed the Application.

Background

[2] This matter has a protracted and complex procedural history that is detailed in my earlier decision in [[2021] FWC 6044] regarding an application made by the Respondent to stay these proceedings.

[3] In summary, the application to terminate the Agreement was allocated to my chambers on 16 December 2019. Following allocation, a number of conferences were convened by the Commission to facilitate negotiation of a new Agreement. A new Agreement was made with the employees, the D & D Traffic Management & Other Workers Agreement 2020 (the 2020 Agreement) on 17 November 2020. The current proceedings were adjourned pending the outcome of the approval proceedings for the 2020 Agreement.

[4] The 2020 Agreement was not approved by the Commission pursuant to the decisions of Deputy President Cross on 24 February and 10 March 2021. The Respondent appealed the decision refusing approval of the 2020 Agreement, however, leave to appeal was refused on 16 July 2021. As a result, I convened Conferences on 6 August and 20 August 2021, with directions issued on 20 August for a hearing of the Application on 15 October 2021.

[5] On 27 September 2021 the Respondent advised the Commission that it had appealed the earlier decisions of the Commission to the Federal Court of Australia and sought for the Commission to “stay” the hearing of this application.

[6] Both the Applicant and the Respondent made submissions regarding the Respondent’s application to stay proceedings. On 5 October 2021, I denied an application by the Respondent to stay the current proceeding.

[7] In accordance with Amended Directions issued on 30 September 2021, the parties filed submissions as outlined below and the matter proceeded to a hearing on 15 October 2021.

[8] Mr Alistair Sage, Senior Legal Officer for the AWU, appeared for the Applicant. Mr Daniel Murray, Principal Advisor for Australian Industry Group, appeared for the Respondent.

Applicant’s submissions

[9] The Applicant’s position is that the statutory criteria for termination are met and that the Commission must terminate the Agreement.

[10] The Applicant cited the Full Bench decision in Re AWX 1 as setting out the statutory test under section 226 of the Act:

“The provision requires that an instrument must be terminated if the Commission is satisfied that it is not contrary to the public interest and after taking account of all the circumstances including the views of the employees, each employer, and each employee organisation (if any), covered by the agreement; and the circumstances of those employees, employers and organisation including the likely effect that the termination will have on each of them.”

[11] As to ‘public interest’ in the agreement termination context, the Applicant cited the Full Bench decision in Re Kellogg Brown & Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (“Kellogg Brown”) 2 where it was found that:

“the notion of public interest refers to matters that might affect the public as a whole such as the achievement or otherwise of various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards.”

[12] Regarding the second limb, the Applicant claimed that the Commission must have regard to the views and circumstances of the parties to the Agreement, representing a departure from the test in the Workplace Relations Act 1996.

Public interest

[13] The Applicant noted that the operations of the Respondent are primarily in the traffic control sector of the civil construction industry, for which the reference instrument is the Building and Construction General On-site Award 2010 (the Building Award). The Applicant highlighted several provisions of the Agreement that are less beneficial than the Building Award as discussed below.

[14] In light of the less beneficial provisions, the Applicant submitted that the termination of the Agreement is affirmatively in the public interest and as such cannot be contrary to the public interest. The Applicant claimed the “maintenance of proper industrial standards” is a significant factor in ascertaining where the public interest lies in the present case because the conditions of employment provided by the Agreement are inferior to those provided by the Building Award.

[15] The Applicant submitted that termination is also in the public interest because it will promote the object of collective bargaining by enabling employees to bargain for a replacement agreement from a starting position not below the award safety net.

[16] The Applicant further submitted that the statutory scheme intends that, absent exceptional circumstances, agreements should only be approved if employees are better off overall under their terms than they would be under the terms of the reference award. Therefore, agreements which have passed their nominal expiry date should be terminated if they plainly do not provide a set of entitlements placing employees better off overall than under the reference award.

[17] The Applicant referred to the approval proceedings for the 2020 Agreement. An issue in the proceedings before Cross DP was whether or not the replacement agreement’s shiftwork provisions were inferior to those set out in the Building Award. The Applicant submitted that two arguably inconsistent decisions of single Members of the Commission had been issued on this point including that of Hampton C in Re Retro Traffic Enterprise Agreement 2018[2019] FWC 2062 (Retro) and that of Saunders DP in Re Altus (NSW & ACT) Enterprise Agreement 2019[2019] FWCA 5941 (Altus).

[18] The Applicant stated that the Full Bench in its permission to appeal decision found that the refusal by the Respondent to give an undertaking as sought by his Honour meant that the employer “was not prepared to have in its Agreement a shiftwork definition which was consistent with that in the Building Award” regardless of whether Retro and Altus was correct. The Applicant submitted that the findings of the Full Bench and Cross DP, illustrate that employees covered by the Agreement are worse off than if they were covered by the proposed 2020 Agreement which failed the BOOT. The Applicant’s view is that the findings of the Full Bench and Cross DP bear centrally on the issues raised in the termination application.

Less beneficial provisions

Notice of Shiftwork for Casual Employees

[19] The Applicant submitted that Clause 34.2(i) of the Building Award provides that any time worked by a shiftworker which is “other than a rostered shift” amounts to overtime which must be paid at double time. A ‘rostered shift’ is defined in cl 34.2(a) as “a shift of which the employee concerned as had at least 48 hours’ notice”. These provisions require that an employee (including casual employees) be paid overtime for any shiftwork where they do not receive at least 48 hours’ notice.

[20] The Applicant submitted that the proposed 2020 Agreement provided at clause 8(b)(ii) that “Traffic Management employees on Night Shift who have not received notice of their shift 48 hours prior to starting work will be paid overtime”. There is no equivalent provision in the Agreement. The Applicant contended therefore that the Agreement is inferior to both the Award and the Proposed 2020 Agreement in this respect and supports the public interest argument in favour of termination of the Agreement.

Wages for Shiftwork

[21] According to the Applicant, it cannot be disputed that the Agreement does not require the operation of a shiftwork system within the meaning of the Building Award to permit the payment of shiftwork rates (rather than overtime rates). In particular, the Applicant contended that its calculations demonstrate that there is a significant financial loss to employees who are required to work ‘irregular’ night span hours under the Agreement relative to the Building Award.

[22] The Applicant explained that Clause 34.2 of the Building Award only permits payment of shiftwork allowances, instead of overtime rates for working outside the day work span, in circumstances where the work forms part of a “system of work in which operations are being continued by the employment of a group of employees upon work on which another group had been engaged previously”. By contrast, Clause 8(c) of the Agreement permits payment of shiftwork allowances (in lieu of overtime) whenever an employee “works on shifts starting on or after 6 pm or finishing on or before 6am, Monday to Saturday”. The Applicant submitted that under the Agreement overtime is not payable to employees who work shifts starting on or after 6:00pm if those shifts do not form part of a system of work in which operations are continued by the engagement of another group of workers.

[23] The 2020 Agreement likewise did not include an equivalent or more beneficial definition of shiftwork than the Building Award and the Applicant submitted for that reason the 2020 Agreement did not pass the BOOT. The Applicant claimed that the Agreement must therefore be seen to also fail the BOOT and undermine the safety net.

[24] The Applicant submitted that is inarguable that the shift work provisions in the Agreement are inconsistent with the ‘maintenance of proper industrial standards’ because they provide inferior conditions to those in the Award. The Applicant’s view is that this finding stands whether Altus or Retro is followed. The Applicant contended that it is unnecessary for the Commission in these proceedings to make any findings as to whether the Altus or Retro construction is preferred (consistent with the approach of the Full Bench) in reaching a conclusion that termination would serve the public interest.

Redundancy

[25] The Applicant submitted that the Building Award contains an industry-specific redundancy scheme, the purpose of which being to address the precarious and project-based nature of employment across the building and construction industry. The scheme provides that an employee who leaves employment with the employer for any reason other than misconduct or neglect of duty is entitled to a redundancy payment.

[26] The Applicant’s position is that the loss of access to this scheme is detrimental to employees of the Respondent, which is not offset by provision of the benefits in the NES. Any employee of the employer who leaves employment for a reason other than redundancy (as defined in the NES) will be significantly worse off as a result of the application of the Agreement.

[27] The Applicant acknowledged that the a few employees could be worse off under the industry-specific redundancy scheme in the Building Award however the vast majority of employees who leave employment would be worse off. For example, any entitled employee who resigns their employment will be worse off in terms of redundancy pay under the Agreement than under the Building Award due to the narrower definition of redundancy in the NES.

Casual Conversion

[28] The Applicant submitted that Clause 14.8 of the Building Award (right to convert to permanent employment) provides an important protection for long term casuals who qualify and take up this option to the benefits of permanent employment.

[29] By contrast, the Agreement only permits casual conversion where a ‘formal offer’ is made by the employer. The Applicant contended that this is a clear detriment relative to the award provision, which (a) gives the employee the right to initiate the request and (b) only permits the employer to refuse on reasonable business grounds. Further, the Applicant noted that under the Award, this term is subject to the award dispute resolution procedure which enables independent conciliation by the Commission in the event of a disagreement which cannot be resolved at the workplace level.

Training and Site Inductions

[30] The Applicant submitted that Clause 26 of the Agreement states that “Casual employees will undertake training in their own time”. There is no equivalent provision contained within the Building Award representing a direct loss of wages for employees. Under the Building Award an employee is entitled to be paid for all hours spent in training at the employer’s discretion. The Applicant submitted that under the Agreement, casual employees are not paid wages to complete a company induction which all employees are required to undertake.

[31] The Applicant submitted that under the Agreement, pursuant to Annexure A, employees (whether casual or permanent) will not receive wages for any accreditation or reaccreditation processes undertaken solely for employment purposes. Further, employees generally need to conduct a new site induction for every new project or worksite they are deployed to and are not paid wages for any of these inductions. The Applicant submitted that the loss of wages for every site induction completed by an employee is a significant financial detriment warranting termination of the Agreement on public interest grounds.

PPE

[32] The Applicant submitted that Clause 20.1(b) of the Building Award provides that employees must be reimbursed by the employer the cost of purchasing safety boots. There is no such provision in the Agreement.

Dispute Resolution Training Leave

[33] The Applicant submitted that Clause 9.10 of the Building Award provides that an employer must give duly elected or appointed shop stewards or employee representatives up to 5 days’ paid leave per year to undertake “training that will assist them in their settlement of disputes role”. In light of the importance of resolving industrial and safety issues at the workplace level in the construction industry, the Applicant’s view is that the loss of this entitlement is significant and constitutes further detriment to employees.

Travel Entitlements

[34] According to the Applicant the Agreement undercuts the Budiling Award in terms of the travel entitlements provided to employees. The Building Award states that an employee who is provided with a work vehicle must be paid the travel allowance “on any day for which the employer provides a vehicle free of charge to the employee for a purpose related to their contract of employment, and the employee is required by the employer to drive this vehicle from the employee’s home to their place of work and return”. The Agreement does not require this payment except in certain circumstances.

[35] Further, clause 9(f) of the Agreement states that an employee is not entitled to be paid wages for time spent transporting other employees to work and instead are entitled to a “driver allowance”. There is no such restriction in the Building Award and an employee would be entitled to wages in those circumstances.

Fares Allowance on RDO

[36] The Applicant submitted that Clause 33.1(a)(i) of the Building Award requires payment to an employee on a rostered day off (RDO) to “include accrued entitlement to the allowances prescribed in clauses 25.2 to 25.7”. These provisions deal with fares and travel pattern allowance. There is no equivalent entitlement in the Agreement

LAHA

[37] The Applicant submitted that the living away from home allowance (LAHA) prescribed by the Building Award “may be increased if the employee satisfies the employer that the employee reasonably incurred a greater outlay than that prescribed” however there is no equivalent provision in the Agreement. The Applicant contended that this causes employees financial detriment as there is no mechanism for employees to seek reimbursement for costs in circumstances where the cost of accommodation and meals is unavoidably higher than the set allowance.

Overtime Crib Break

[38] The Applicant submitted that the Building Award requires employees who work two hours or more of overtime “after the usual finishing time of the day or shift” to be provided with a 20-minute paid crib break immediately after the usual finishing time and, thereafter, a 30-minute paid crib break after every 4 additional hours of continuous work. Where the 20-minute crib break is not provided, the employee must be paid for an additional 20-minutes as if worked. By contrast, Clause 13 of the Agreement does not provide a 20-minute crib break in these circumstances, instead being applicable only after working more than 4 hours of overtime.

Minimum Engagement

[39] The Applicant contended that a casual employee under the Agreement is required to be paid for a minimum of 4 hours’ work “at the applicable rate”. By contrast, under the Award a casual employee is required to be paid for a minimum of 4 hours’ work “plus the relevant fares and travel allowance and expenses” prescribed by Clauses 24 and 25.

Superannuation on Workers Compensation Absence

[40] The Applicant submitted that Clause 10 of the Agreement does not require payment of workers compensation absences of up to 52 weeks. By contrast, the Building Award requires payment of superannuation during such absences (Clause 32.5). This payment is not required by the superannuation guarantee legislation where a worker is entirely absent from work (as the compensation pay does not constitute ‘ordinary time earnings’), and therefore, the Applicant submitted that it is a less beneficial term relative to the Award.

Public interest – other considerations

[41] The Applicant submitted that since the Agreement was approved, the Award has been thoroughly reviewed as part of the 4-yearly review process and renamed the Building and Construction General On-site Award 2020. The Applicant’s view is that it is in the public interest that employees on expired industrial instruments have the benefit of the updated safety net conditions in circumstances where their current agreement would not pass the BOOT if applied today.

Termination appropriate in all the circumstances

[42] The Applicant has provided the views of AWU members by way of response to the Commission’s letter, annexing the summary of the two parties’ positions. The Applicant submitted that limited weight should be given to the employees’ views for the following reasons:

(a) the contest between the parties is primarily over the legal question of whether the Agreement undercuts the safety net;

(b) the consent of an employee is not ordinarily considered an adequate basis for an employer to disregard or undercut minimum conditions of employment;

(c) the principal mechanism in the Act for determining whether parties’ agreed conditions of employment should be approved, the BOOT, does not permit derogation from the requirement that employees be better off overall in cases where the employees express consent or agreement to such an arrangement; and

(d) there are sound public policy reasons for this approach, to ensure the safety net is not undermined by enterprise-specific arrangements

[43] The Applicant also said that there is reason to think that the employees’ views reflect factors other than their independent assessment of the Agreement as against the Building Award.

[44] The Applicant further submitted that the views of employees in 2020 should be given limited weight as they were provided before the Commission made its findings in relation to the 2020 Agreement. The passage of time is also significant as the Agreement has fallen further behind the safety net since this time.

[45] The Applicant’s position is that termination would benefit employees’ interests as it would improve their employment conditions by bringing them up to the level of the safety net. The Applicant acknowledged that the financial interests of the employer may be negatively affected by termination, as it is likely to increase labour costs, however submitted that this factor should be given minimal weight in the absence of evidence of corporate financial distress. The Applicant submitted in this regard that the Respondent has relied only on a bullet-point list of possible problems for the business as outlined in Mr Robert Cazzolli’s statement, Managing Director of the Respondent. The Applicant submitted there is no supporting evidence from an accountant, relevant software, or quotations or estimates of cost changes in the event the Agreement is terminated; and therefore, the Respondent’s submissions are speculative and unsupported by evidence.

[46] The Applicant noted that in the approval proceedings before Drake SDP, the Respondent submitted that certain employees covered by the Agreement were covered by modern awards other than the Building Award or were award-free. However, the Applicant rejected the contention that the employees classified as a Customer Service Officer (CSO) under the Agreement would otherwise be award-free. The Applicant submitted that paragraph 10 of the undertaking states that the work of a CSO “typically performed includes work in relation to train or bus service closures or changes, assisting members of the public in respect of temporary service changes or arrangements, directing passengers to pick-up areas or similar activity.” The Applicant submitted that depending on the worksite, these employees could be covered by either the Building Award, the Passenger Vehicle Transportation Award 2010, the Rail Industry Award 2010, or the Miscellaneous Award 2010.

[47] According to the Applicant, the fact that some of the work performed under the Agreement may fall under awards other than the Building Award is not a reason to not terminate the Agreement. The public interest is not served by permitting an Agreement to continue to operate in which the main cohort of employees are worse off than under one award, on the basis that certain employees may be entitled to certain benefits not provided by another award. The Applicant submitted that would permit an employer to maintain, in perpetuity, industrial arrangements in which the majority of employees received conditions worse than the safety net on the basis that a small number of employees (such as CSOs) received conditions which were marginally better than the relevant safety net.

[48] The Applicant further submitted that the Respondent cannot argue that because its workforce is covered by instruments other than the Building Award it will be disadvantaged if the Agreement is terminated on the basis that it will need to undertake some administrative work to implement the change. The Applicant submitted that there is nothing preventing the Respondent from negotiating a new enterprise agreement to cover all cohorts of employees presently covered by the Agreement.

[49] Further, as to any arguments by the Respondent as to adverse effects on certain cohorts of employees, the Applicant submitted these are without foundation and termination of the Agreement will have no such outcomes. For example, the Applicant noted that the employer is at liberty to continue paying the TMA allowance (as identified in para [74] below) outside of the confines of the Agreement. The Employees will have access to the more detailed and comprehensive classification structure of the modern award and may be eligible for promotion to a higher grade, an option which the Applicant noted is not possible under the limited classification structure of the Agreement.

[50] The Applicant submitted that the company does not lose the right for its workers to work across multiple industries if it is covered by multiple awards.  While it may introduce a slight complexity to its operations, the Applicant noted that such a scenario is not unique. Further, the Applicant reiterated that the Respondent can bargain for a replacement agreement which passes the BOOT.

Operative date

[51] The Applicant submitted that termination should take effect as soon as practicable to provide employees with the financial benefits at the earliest opportunity. The Applicant submitted that given the employer has been on notice of the termination application for over 20 months, no delay is necessary as it has plainly had sufficient time to prepare its payroll and administrative systems for a return to the Award. The Applicant submitted therefore, termination should take effect from the date of the order (or, alternatively, from the commencement date of the first full pay period after the order is made).

Respondent’s submissions

[52] The Respondent submitted that the Commission cannot be satisfied that it is not contrary to the public interest to make the order sought. Further, or in the alternative, the Respondent submitted that the Commission ought not consider it appropriate to terminate the Agreement, taking into account all of the circumstances.

Public interest

[53] The Respondent rejected the Applicant’s submission that termination of the Agreement would not be contrary to the public interest because the Agreement provides less beneficial terms and conditions than those of the reference instrument, the Building Award.

[54] The Respondent maintained that the Agreement is not less beneficial than the Building Award. The Respondent submitted that this issue was heard and determined by the Commission in 2015 (AG2015/2141). Both the Applicant and Respondent had an opportunity to be heard in the proceedings. The result, after certain undertakings were made, was that Drake SDP held that the Agreement passed the BOOT and other requirements for approval. The Respondent submitted that since that time, it has applied increases to wages and allowances in line with the annual increases awarded by the Commission, maintaining a set of conditions that continue to meet the BOOT. At the hearing, the Respondent clarified that at Annexure A of the Agreement, it specifically provides:

“The hourly rate set out below shall apply from the commencement of this agreement and shall be increased by the same percentage and with the same operative date as set out in annual wage review decision of the Fair Work Commission, which come into effect after the agreement commences.”

[55] The Respondent submitted therefore, this is not a revocable entitlement and is an enforceable provision of the Agreement. The Respondent submitted that when the Agreement passed the BOOT in 2016, it continues to do so in light of the above.

[56] The Respondent also submitted that the Building Award is not the only reference instrument, and employees of the Respondent work across a range of activities, sometimes within the coverage of Awards other than the Building Award.

[57] The Respondent noted that the Applicant had a further opportunity to be heard in relation to BOOT when it opposed an application to the vary the Agreement in 2016 in AG2016/2677. The Applicant did not raise any cavil with respect to the BOOT at that time and the variation was approved. The Respondent’s view is that the Applicant is now seeking to relitigate these decisions in 2015 and 2016, despite not appealing them at the time.

[58] The Respondent submitted that given the Commission did not grant its application for a stay of the proceedings, the Commission ought not to determine the issues in relation to shiftwork as canvassed by the Full Bench and Cross DP, in the manner contended by the Applicant. The Respondent provided several reasons:

(a) the Full Bench in declining to grant permission to appeal did not make a finding as to the proper construction of the shiftwork provisions at cl.34.2 (a) of the Building Award, now cl 17.2 (a) of the Building & Construction General On-Site Award 2020. The Full Bench did not resolve the tension between competing interpretations arising from Altus and Retro and, therefore, the Respondent submitted that the proper interpretation of shiftwork provision remains unresolved.

(b) the decisions of DP Cross and the Full Bench are currently the subject of an appeal to the Federal Court, directly on the point of the proper interpretation of the shift work provisions.

(c) the Respondent’s view is that it would be contrary to the public interest for an order to be granted in favour of the application on grounds of, or which include, considerations which are currently before the Federal Court in proceedings to which both parties and the Commission itself are a party.

[59] The Respondent also submitted that in the present case, as to the public interest test, it is relevant that if the Agreement is terminated, this would give rise to a result contrary to the objects of the Act. 3 Specifically, the Respondent contended that termination is contrary to the following objects of the Act (section 3):

(f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and

(g) acknowledging the special circumstances of small and medium-sized businesses.

[60] The Respondent submitted that the Agreement is the product of enterprise level bargaining. According to the Respondent, termination of the Agreement would be contrary to the public interest in maintaining a system under the Act for enterprise-level collective bargaining.

[61] The Respondent contended that the application ignores the special circumstances of its business, including that it operates across a range of activity and not simply in the traffic management sector of the civil construction industry. The Respondent submitted that termination of the Agreement would be contrary to the interest of the public, as an object of the Act is to acknowledge the special circumstances of small-medium sized businesses, including the need to maintain flexibility and develop working arrangements which meet those needs, which is underpinned by enterprise agreements which are fit for purpose and meet those specific circumstances.

Views of employees, employer and employee organisation

[62] The Respondent submitted that the Commission has been able to inform itself that a substantial number of employees actively and openly oppose termination of the Agreement. It submitted that the Applicant has not produced any employee in favour of termination. In addition to the employees who contacted the Commission directly, the Respondent highlighted that it collected some 68 signatures of employees opposing the termination before the Commission went directly to the employees.

[63] The Respondent further submitted that the Applicant has no support from the employees during the bargaining process for the 2020 Agreement and that the employees voted for an Agreement in very similar terms to the Agreement.

[64] The Respondent’s position is that the views of the Applicant should not be given primacy and when apportioning weight to their evidence it is relevant to consider that they were invited to participate in the bargaining of the Agreement but chose not to participate. It is also relevant that the Applicant has had multiple opportunities to be heard regarding BOOT issues, which they now attempt to raise.

[65] The Respondent submitted that the Commission must take into consideration that the Respondent clearly opposes the application; and it relies on the evidence of Mr Cazzolli in this regard.

Circumstances of the employer

[66] The Respondent advised the Commission that it operates in a number of industries such as traffic control including design, planning and delivery in the construction, maintenance & infrastructure industries; security, access control & related activities for venues & events; and the deployment of customer service officers (CSOs) in support of public transport changes and closures (for example, redirecting users of trains onto buses where a rail service is temporarily closed).

[67] The Respondent submitted that the majority of employees do not work exclusively on traffic management in civil construction and therefore the Building Award is not appropriate to their employment. For some 50 employees, the Building Award has no application as they only work as CSOs, while for others, they may move between the coverage of a range of Awards over the course of a pay cycle. For this reason, the Respondent maintained that its business is one for which the Award system is not well suited but is one for which enterprise agreements were conceived. The Respondent submitted that the Agreement was developed to accommodate this business model, as it allows employees to move between work types flexibly, allowing the Respondent to capitalise on opportunities and provide work for employees as demand in various areas falls and rises.

[68] The Respondent submitted that termination of the Agreement would have a number of adverse effects for its business. It would compel separation between those performing traffic management roles, those performing security and those performing CSO roles, due to the different conditions which apply under the Awards. Termination would therefore negate the flexibility the business has achieved under the Agreement to deploy its workforce across a range of activities.

[69] The Respondent submitted that there are a number of other significant and costly effects associated with termination of the Agreement that should be considered by the Commission as strongly militating against termination, including:

(a) Changes to business system for allocation and availabilities of personnel;

(b) Changes to payroll systems for classifications rates, allowances codes & relationship or dependencies between conditions;

(c) Changes to billing system;

(d) Impact on contract conditions & supply, and the need to seek variations to contracts to accommodate these (noting that many of their contracts do not allow for a change to supply conditions);

(e) Loss of employees due to impact on work opportunities leading to lesser wages;

(f) Financial loss due to loss of work opportunities for those employees;

(g) Changes to operational needs such as in relation to transport of employees due to changes in the way this dealt with under the different Awards; and

(h) Loss of work culture and relationships due to detrimental operational changes that will affect the lives of their people within and outside of work.

[70] Mr Cazzolli’s evidence was that there would be wider effects, potentially including:

(a) Clients being unable or delayed in delivering completion of works (including key infrastructure projects);

(b) Contractual implications for service delivery failures including financial penalties;

(c) Major safety implications for client employees & members of the public due to the Respondent’s inability to deliver on a flexible basis to meet their needs;

(d) Noncompletion of scheduled maintenance on rail & road closures;

(e) Due to the Respondent’s role in providing opportunities for placement for long term unemployed, Youth off the Street & Aboriginal/Torrens Strait Islanders, loss of opportunities for those groups;

(f) Increased unemployment due to the adverse effect on the Respondent’s business.

[71] The Respondent submitted that Mr Hogbin also gave evidence of the risk to the viability of the Respondent if the Agreement is terminated. Mr Geoffrey Hogbin, Industrial Relations and Human Resources Manager for the Respondent, noted that the business has been operating under versions of an EA in essentially the same terms for over 12 years, and termination of the Agreement would impact employees terms and conditions in a manner which would, among other things, place the business at risk of losing certain classes of employees.

Circumstances of employees

[72] The Respondent submitted that in addition to the flexibility that the Agreement affords the business and employees, it also affords employees with better job security as the Respondent can better respond to a drop in workload in one area by deploying employees to another. The effect of different Awards applying would effectively hamper if not prevent this flexibility, as the scope of classifications under each instrument and differences in their terms would impose major if not insurmountable difficulties for the employer in doing so. Further, given the nature of CSO work, employees are often able to benefit from overtime and enjoy increased income from that proportion of the CSO work which commonly occurs on weekends, public holidays or otherwise out of hours.

[73] The Respondent contended that employees also have the benefit of conditions which leave them better off overall compared to various Awards (in addition to the Building Award) which would otherwise apply. According to the Respondent, benefits to employees not provided by the relevant Awards include company-provided transport, driver allowances and, for those operating attenuator vehicles on traffic control, an allowance which is not provided by the Building Award. The Respondent submitted that such entitlements would be lost if the Agreement were to be terminated.

[74] The Respondent submitted that among particular cohorts of employees who would be especially adversely affected are drivers of work vehicles and Truck Mounted Attenuators – the latter being critical to operations and in short supply in the job market. They would lose allowances which the Award does not provide for, and the Respondent would be at risk of losing them as employees and in turn not be able to meet WH&S and other statutory and contractual requirements. The Respondent said that Team leaders are another cohort who would lose out. The combined total of employees affected by these changes – about 90 drivers and about 30% of the employees who are Team Leaders, represents a majority.

[75] The Respondent submitted that in relation to redundancy there is only one employee to whom redundancy could apply, whose length of service means that he is far better off under the Agreement than he would be under the Award.

Operative date

[76] The Respondent submitted that if the application is granted, it would require “major business restructuring, renegotiation of contracts (if possible), financial and costly software alterations to business systems along with payroll systems”. It submitted that it would need to rearrange work, due to the crossover of work between that covered by separate Awards and consequent implications for rostering and costs, to review and renegotiate contracts with its clients, to change its time recording, payroll, and billing systems. The Respondent submitted there may be other transitional issues, including the retention of employees.

[77] The Respondent therefore submitted that the application should not be granted; however, if it is, the order should provide that it takes effect not less than two months after the order is issued. The Respondent submitted that for the above reasons, this timeframe is reasonable.

Consideration

[78] I have taken into account all of the submissions that have been provided by the parties. I have attached the appropriate weight to the evidence of the witnesses.

Determination

[79] The cancellation application of an Enterprise Agreement is not another opportunity to run a Better Off Overall Test (BOOT) argument. The Commission has already dealt with the BOOT at the time the Agreement was approved by the Commission in 2015. If the Applicant was dissatisfied with that decision then it had rights at that point in time.

[80] Further, I have no intention of providing a determination or commentary on the 2020 Agreement or any of its provisions which are currently before the Federal Court.

[81] It is not in dispute that the rates of pay contained in the Agreement are marginally superior to the rates of pay contained in the Building Award.

[82] I note the Objects of the Act. Section 3(b) of the Act states:

“(b)  ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders;…”

[83] I am obliged to determine this matter in accordance with the provisions of section 226 of the Act:

“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.”

Section 226(a) - not contrary to the public interest

[84] It is not unusual for employees in the traffic control, crowd control or security industries to be casual employees, however, the employment status of the employees or the fact that they work in a variety of industries does not lead to a diminution of an employee’s rights or provide some form of exclusion from the scope of an Award.

[85] I endorse the comments of Colman DP, that the test for the Commission is not whether the termination of an agreement is in the public interest but whether the Commission is satisfied that the termination of the agreement is not contrary to the public interest.

[86] I accept the Applicant’s argument in relation to the obiter from Kellogg Brown in relation to “the maintenance of proper industrial standards”. The Fair Work Act and the Modern Award system set minimum standards which apply across the Australian industrial landscape. They provide minimum standards, not maximum standards. These minimum standards are not open for negotiation or reduction without compensation.

[87] The Respondent has employed one employee on a full-time basis, for the last 14 years. That employee has workplace rights in relation to redundancy. Whilst I accept that he would receive a higher redundancy pay-out if he were to be made redundant, the Award provides a payment of redundancy if he is dismissed for any reason (apart from misconduct or refusal of duty) or resigns. There is no such provision in the Agreement or the NES. This discrepancy between the two instruments, in my view, highlights a significantly inferior condition of employment between the Award and the Agreement.

[88] I am also concerned that the casual employees of the Respondent are not required to be paid to undertake induction training. Depending on the site and the Respondent’s client, this training could last from a few hours to a whole day. I understand that this issue has been resolved between the parties in the 2020 Agreement, but the status and future of that Agreement is uncertain. It is not appropriate or fair for the employees of the Respondent to wait for the legal system to deal with the 2020 Agreement. If unsuccessful in the Federal Court, the Respondent may exercise its rights to seek leave to the High Court. This process could take a further 12 months. Such a delay for employees to achieve an enforceable right to be paid for induction training would be unfair. In this regard, the Agreement is inferior to the Award and provides a significantly lower standard of employment compared to the rest of the Construction Industry.

[89] Another important difference is the issue of accident pay, which is not mentioned in the Agreement but is provided for in the Award to the limit of 26 weeks. Once again, this is a significant reduction in the standards of the construction industry.

[90] The Applicant highlighted a number of other issues, including requests for flexible working arrangements, personal/carer’s leave, annual close down, inclement weather and meal breaks. I do not believe it is necessary to go any further in my examination of these issues. The 3 workplace entitlements under the Award that I have highlighted above, which are significantly more generous than those contained in the Agreement, are sufficient for me to be satisfied that the Agreement contains provisions which fail to maintain the minimum industrial standards provided by the Award. It is not appropriate for an enterprise agreement that does not sustain industry standards to be used to provide a competitive advantage to one employer over the rest of the employers in the industry.

[91] I find that the Union has satisfied section 226(a) of the Act and that termination of the Agreement would not be contrary to the public interest.

Section 226(b) – is the termination appropriate

[92] Unsurprisingly, the Respondent opposes the application to terminate the Agreement. The Respondent claims that termination of the Agreement will have severe adverse effects on the Respondent’s business. However, the Respondent maintains that the Agreement is superior to the Award, passed the BOOT test in 2015 and continues to provide superior wages and conditions of employment compared to the Building Award. If that is the case, then the termination of the Agreement will be beneficial to the Respondent.

[93] The Applicant has members employed by the Respondent. The Applicant submitted that the termination of the Agreement will be of benefit to the Union on the basis that the Award will maintain the minimum industrial standards of the construction industry.

[94] When this application was before the Commission in March 2020, the Commission conducted a survey of the Respondent’s then employees. The matter did not proceed to hearing and the parties were not informed of the results of this process. I can advise that 15% of the employees surveyed in March 2020 supported the Applicant’s application to terminate the Agreement.

[95] Whilst this survey result is now dated and occurred prior to the negotiation and successful ballot of the 2020 Agreement, I still regard the survey outcome has some relevance in this proceeding. However, I do not expect employees to understand the intricacies involved in the comparison of an Award to an enterprise agreement, or to comprehend provisions which they may not have yet experienced in their working career.

[96] Based on my reasoning above, I am satisfied that it will be more beneficial for the employees to be covered by the Award rather than the Agreement. The benefits of Accident Pay and the payment for employer required training, such as site induction, are of such significance that employees will benefit from having their rates of pay and conditions of employment determined by the Award.

[97] I find that, based on an overall assessment of the circumstances of the Employer, the Employees and the Union that it is appropriate to terminate the Agreement.

Conclusion

[98] Enterprise agreements do not exist so that employers and compliant employees can undercut the industry minimum standards that have been set by the Fair Work Commission through the Award system. There are any number of ways for the Respondent to satisfy its obligations whilst working across a variety of industries, but providing below industry conditions of employment is unfair, unsustainable and contrary to the Objects of the Act.

[99] Having found that section 226(a) and (b) have been satisfied, I am obligated to terminate the Agreement.

[100] I once again encourage the parties to enter into negotiations in an attempt to overcome all of the issues raised by the Applicant. Based on previous decisions of the Commission, termination of the Agreement should assist in this endeavour.

[101] The Agreement is terminated, effective from 11 December 2021.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

<AE415726  PR735712>

 1   [2013] FWCFB 8726.

 2   31 January 2005, AIRCFB (Giudice J, Ross VP and Gay C), Print PR955357.

 3   Kellogg Brown & Root Pty Ltd and Others and Esso Australia Pty Ltd Print 955357.