The Trustee For Australian Institute of Management - Victoria Training College T/A Australian Institute of Management Victoria Training College

[2014] FWCA 709

[2014] FWCA 709

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225 - Application for termination of an enterprise agreement after its nominal expiry date

The Trustee For Australian Institute of Management - Victoria Training College T/A Australian Institute of Management Victoria Training College
(AG2013/11963)

AUSTRALIAN INSTITUTE OF MANAGEMENT VICTORIA TRAINING COLLEGE ENTERPRISE AGREEMENT 2011-2012

Clerical industry
COMMISSIONER ROE	MELBOURNE, 30 JANUARY 2014

Application for termination of the Australian Institute of Management Victoria Training College Enterprise Agreement 2011-2012.

[1] An application has been made pursuant to Section 225 of the Fair Work Act 2009 (the FW Act) to terminate the Australian Institute of Management Victoria Training College Enterprise Agreement 2011-2012 (the Agreement). The nominal expiry date of the Agreement was 12 April 2013.

[2] The Application has been made by the employer covered by the Agreement, The Trustee for Australian Institute of Management - Victorian Training College T/A Australian Institute of Management - Victorian Training College IPC Employment Pty Ltd (AIM or the employer) and I am therefore satisfied that the Application has been made in accordance with Section 225 of the FW Act. I must approve the termination if I am satisfied that each of the requirements of Section 226 of the FW Act are met. Section 226 provides as follows:

“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.”

[3] AIM provided information that a ballot of employees was carried out on 11 December 2013 and 33 employees cast a vote in the ballot and 32 of those employees voted in favour of the termination of the Agreement. AIM provided information that 40 employees are covered by the Agreement.

[4] There are five state and territory divisions of AIM and as of 1 January 2014 they will amalgamate into a single legal entity knows as the Australian Institute of Management. Only the Victorian division of AIM is covered by a collective agreement. The employees of the other divisions are covered by the Award supplemented by common law employment contracts.

[5] AIM provided information that if a replacement collective agreement was to be negotiated the interests of the Victorian employees may be outvoted by the majority of employees in other States. The more generous conditions of employment in Victoria may be lost in this process.

[6] The Act encourages employment under collective agreements and this is a factor which will often mean that it is contrary to the public interest to terminate a collective agreement when another collective agreement is not in prospect.

[7] An Agreement must be terminated where there is a majority vote in favour of the termination and the other conditions set out in Sections 220, 221, 222 and 223 of the FW Act are met. Where an Application is made under Section 225 but the other conditions set out under Sections 220, 221, 222 and 223 are met then it would be unusual to find that it was not in the public interest and/or that it was inappropriate to terminate the Agreement.

[8] I am not aware of the involvement of any union and the hearing of this matter was publicly listed. At my request all affected employees were provided with advice of the hearing.

[9] It is appropriate to consider if there are any grounds for believing that the employees have not genuinely agreed to the termination. The key question here is whether or not employees properly understood the effect that the termination would have. That is; were employees aware of the difficulties and costs associated with the enforcement of a common law contract and the absence of access to a disputes settlement process involving the FWC under a common law contract which is available under the Agreement.

[10] I raised this matter at a hearing on 19 January 2014. As a result AIM agreed to provide the following letter to affected employees and to provide them with a further opportunity to express their views:

“I refer to the vote that was held last month to terminate our existing enterprise agreement, the Australian Institute of Management Victoria Training College Enterprise Agreement 2011/2012 (AIM VT Existing Enterprise Agreement). As you are aware, the vote was overwhelmingly in favour of terminating the agreement.

As previously advised, once the agreement is formally terminated, then you will be moving onto individual employment contracts, called common law contracts, that largely reflect the terms and conditions of employment that you have currently under the enterprise agreement. A copy of the proposed contract has already been provided to you.

As noted during discussions with the Joint Consultative Committee, the main driver behind the move to put you onto common law contracts has been to retain some of existing generous terms and conditions of employment that you currently have under the enterprise agreement (e.g. a 35 hour week; access to six months sick leave per calendar year after two years of services; and an entitlement to severance pay on redundancy in excess of minimum statutory entitlements).

This desire to move to common law contracts was driven primarily by the National merger. If AIM VT staff remain under the existing enterprise agreement and a decision is made to negotiate a national enterprise agreement, you may not retain your existing favourable terms and conditions of employment. This is due to the voting process for approval of an enterprise agreement.

To complete the termination of the AIM VT Existing Enterprise Agreement, an application was made to the Fair Work Commission to formally terminate the agreement.

We have now received feedback from the Commissioner hearing the application that a final decision will be made once we ensure you understand two specific matters. These matters relate to procedural issues in the Fair Work Act 2009 that require the Commission to be satisfied that the views of employees, their circumstances and the likely effect of the termination will have on them have been taken into account, in considering whether it is appropriate to terminate the agreement.

Could you therefore please provide me with an email response as to whether you are still in favour of the enterprise agreement being terminated, after considering the following further two points:

(a) Your ability to enforce common law contracts unlike the existing Enterprise Agreement is not under the Fair Work Act and the process involved may be more difficult than under the Fair Work Act; and

(b) Grievances and disputes that may arise under your proposed new employment contracts cannot automatically be dealt with by the Fair Work Commission, unlike the situation under the existing Enterprise Agreement. The Commission does have jurisdiction to deal with various matters, such as unfair dismissal, complaints of adverse action relating to a workplace right or an allegation of bullying. Any other dispute will either need to be dealt with at a workplace level or in a court.

Could you please provide me with a return email indicating either "Yes" or "No" as to whether you are still comfortable with the enterprise agreement being terminated within seven days (i.e. by 5:00pm on 14 January 2014).

If you have any queries or concerns about the issues you are welcome to contact either me or one of your representatives on the Joint Consultative Committee. "

[11] AIM provided the following details of the responses to this correspondence:

“Relevant details are as follows:

(a) Total number of staff now covered by the enterprise agreement – 43 (3 new employees have been engaged in January, increasing the total number of staff from the 40 who were covered at the time the vote was originally taken on the proposed agreement in December 2013).

(b) Responses in relation to the issue of continuing termination of the enterprise agreement, having considered the information in the email:

"yes" - 39 employees

"no" – nil employees

"failure to respond" – 4 employees (2 are on leave and 2 have not responded, despite being followed up a number of times).”

[12] I am not aware of the involvement of any union and I am satisfied that the affected employees have been informed about the application and have had a genuine opportunity to express any views they may have. No opposition to the employer’s Application has been expressed.

[13] Having considered the views of the employer and the affected employees, the effect of the proposed termination on the employer and employees, and the overall circumstances I consider that it is appropriate to terminate the Agreement.

[14] Having considered all of the matters in Section 226 of the FW Act I have decided to approve the termination of the Agreement.

[15] Pursuant to Section 227 of the FW Act the termination of the Agreement will operate from 30 January 2014.

COMMISSIONER

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