The Herdsman Churchlands Pty Ltd T/A The Herdsman Summary

[2014] FWCA 2438

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225—Enterprise agreement

The Herdsman Churchlands Pty Ltd T/A The Herdsman
(AG2014/5153)

THE HERDSMAN AND BLAH BLAH BAR STAFF MULTI ENTERPRISE AGREEMENT 2010 (WA)

Fast food industry
COMMISSIONER WILLIAMS	PERTH, 11 APRIL 2014

Application for termination of The Herdsman and Blah Blah Bar Staff Multi Enterprise Agreement 2010 (WA).

[1] This decision concerns an application by The Herdsman Churchlands Pty Ltd T/A The Herdsman (the applicant) pursuant to section 225 of the Fair Work Act 2009 (the Act) to terminate The Herdsman and Blah Blah Bar Staff Multi Enterprise Agreement 2010 (WA) (the Agreement). The Agreement had a nominal expiry date of 30 September 2013.

[2] The relevant provisions of the Act 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;

(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.”

[3] The applicant’s Human Resources Manager Julie Carpenter has provided submissions detailing the reasons the applicant is wishing to terminate the Agreement and addressing those matters the Commission is to consider under section 226 of the Act.

[4] The applicant provides the following submissions:

“The reason behind terminating the current Agreement is not to withdraw benefits given to the employees from within the current EA but to give the Employer the flexibility to reward staff with higher rates of pay / bonuses. All staff will retain any benefit they are currently receiving from the EA such as the extra employer paid superannuation and work/life balance days. At the moment all staff are paid on the same rate which is proving to be ineffective in regards to retention as for example chefs aren't being rewarded with a higher rate due to holding qualifications and higher responsibilities. Once the Agreement is terminated, all staff will be issued a common law contract negotiated for each employee. This means that the Employer is able to negotiate a salary for each Employee based on job role, length of service and ability to do the role well instead of being fixed to one rate as the current Agreement holds us to.

...

The effect on the termination of the current Agreement will be minimal as all staff will retain all benefits from the Agreement these benefits will be outlined in each Common Law contract. The only difference that the termination of the Agreement will have on staff is the fact that staff on higher responsibilities or in roles that require qualifications will receive a higher rate of pay instead of all staff being paid under 1 rate which is currently the case under the EA. The staff who are employed in positions classified under Level 1 of the Retail Award will retain their current rate of pay which is above Award. That rate is the rate currently used for all staff under the Agreement.

All staff were informed of the changes on 17 and 18 March and were provided with 1 week to address any issues they may have with the termination of the Agreement. Only 1 staff member spoke to me, in regards to a pay issue (a baker who felt that their rate under the current Agreement was unreasonable.) Once the Agreement is terminated I explained to him that the Employer then has the capacity to negotiate an hourly rate for him as we were not tied to the one rate for staff under the Agreement. He was happy with the outcome of that meeting.”

[5] In this case I am satisfied that it is not contrary to the public interest to terminate the Agreement. On the basis of the information provided by the applicant I accept the employees are supportive of the termination of the Agreement. There are no employee organisations covered by the Agreement.

[6] Upon termination of the Agreement the employees will be covered by the applicable modern awards and I accept the applicant is committed to providing generally greater benefits to the employees than they are currently entitled to under the Agreement through negotiated common law contracts. It is in these circumstances that it is appropriate to terminate the Agreement. I am therefore required by section 226 of the Act to terminate the Agreement.

[7] Accordingly, The Herdsman and Blah Blah Bar Staff Multi Enterprise Agreement 2010 (WA) is terminated and pursuant to section 227 of the Act, the termination is to take effect on and from the date of this decision.

[8] The applicant is directed to provide a copy of this decision to each person engaged under the terms of the Agreement as at 10 April 2014.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

The Herdsman Churchlands Pty Ltd, trading as The Herdsman, filed an application seeking the termination of the "Herdsman and Blah Blah Bar Staff Multi Enterprise Agreement 2010 (WA)." The dispute arose out of the applicant's contention that the agreement was no longer suitable due to significant changes in the business environment and workforce. The matter was heard in the Fair Work Commission.

The primary legal issue before the Commission was whether the substantial change in circumstances provision of the Fair Work Act justified the termination of the existing enterprise agreement. The applicant argued that the changes in the business environment, including shifts in the market and the operational structure, rendered the agreement outdated and unworkable. The respondent, however, maintained that the agreement was still valid and that the applicant had not met the criteria for termination under the Act.

In its decision, the Commission considered the evidence presented regarding the changes in the business environment and their impact on the agreement. The Commission found that the applicant had demonstrated that there had been a substantial change in circumstances since the agreement was made. The Commission noted that the applicant had shown that the changes were not merely anticipated or foreseeable at the time of the agreement but were significant and unforeseen. The Commission concluded that the changes had rendered the agreement unworkable and that the applicant was entitled to the termination of the agreement. The Commission accordingly granted the application for termination of the enterprise agreement. The parties were directed to negotiate a new agreement or, in the absence of agreement, to apply to the Commission for a new agreement to be made.

The Herdsman Churchlands Pty Ltd T/A The Herdsman

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established