Timda Pty Ltd

[2016] FWCA 358

[2016] FWCA 358

The attached document wholly replaces the document with the code [2016] FWC 213 on 18 January 2016.

Any reference made to the Atex Steel Certified Construction Agreement 2003/2006 [AG834433] has been removed and replaced with the correct reference to the Atex Steel Construction Agreement 2006 [AC312761].

Rachel Kimber

Associate to Deputy President Gostencnik

Dated 19 January 2016

[2016] FWCA 358

FAIR WORK COMMISSION

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009

Sch. 3, Item 16 - Application to terminate collective agreement-based transitional instrument

Timda Pty Ltd

(AG2015/4644 and AG2015/4645)

ATEX STEEL CONSTRUCTION AGREEMENT 2006

[AC312761]
ATEX STEEL COLLECTIVE BARGAINING AGREEMENT 2006
(ODN AG2004/2397)  [AG848843]

Building, metal and civil construction industries
DEPUTY PRESIDENT GOSTENCNIK	MELBOURNE, 18 JANUARY 2016

Application for termination of the Atex Steel Collective Bargaining Agreement 2006 Application for termination of the Atex Steel Construction Agreement 2006.

[1] Timda Pty Ltd, trading as Atex Steel (Applicant) is covered by two collective agreement-based transitional instruments titled the Atex Steel Construction Agreement 2006 (On-Site Agreement) and Atex Steel Collective Bargaining Agreement 2006 (Workshop Agreement) respectively (collectively ‘the Agreements’).

[2] The On-Site Agreement was lodged with the Workplace Authority Director as a union collective agreement under s.342 of the Workplace RelationsAct 1996 (WR Act). Pursuant to s.347 of the WR Act, the On-Site Agreement commenced to operate on the day that it was lodged with the Workplace Authority Director. The nominal expiry date of the On-Site Agreement was 3 June 2009.

[3] The Workshop Agreement was certified by the Australian Industrial Relations Commission (AIRC) on 26 April 2006 under Division 2 of Part VIB of the WR Act. The nominal expiry date of the Workshop Agreement was 31 March 2009, but it remained in force because of Schedule 7, Part 2, Item 2(1)(f) of the WR Act.

[4] When the Fair Work Act 2009 (Act) commenced operation, the Agreements became ‘transitional instruments’ and ‘collective agreement-based instruments’ under the Fair Work (Transitional Provisions and Consequential Amendments)Act 2009 (TP&C Act) and continued in operation pursuant to Schedule 3 of the TP&C Act.

[5] Item 16(1) of Schedule 3 of the TP&C Act provides that Subdivision D of Division 7 of Part 2-4 of the Act applies in relation to a collective agreement-based instrument as if a reference to an enterprise agreement included a reference to a collective agreement-based transitional instrument. The Applicant has applied under Subdivision D of Division 7 of Part 2-4 of the Act as it applies pursuant to Item 16 of Schedule 3 of the TP&C Act for approval for the termination of the Agreements.

[6] The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) is also covered by the Agreements and opposes their termination.

Relevant factual context

[7] Much of the factual basis upon which the Applicant relies in support of these applications to terminate the Agreements is not contested by the AMWU. It is readily apparent that the Agreements were both made pursuant to predecessor legislation. They are each well past their respective nominal expiry dates. The Applicant has not sought and has not in fact bargained for any replacement agreement, either with its workforce directly or through the AMWU, for many years. 1 Instead, the Applicant has, for a number of years, reached agreement with its employees, presumably through their respective contracts of employment, about various terms and conditions of employment including wage rates, and as a consequence, has reached agreements about terms and conditions which are superior to both the modern award and the Agreements the subject of these applications.2 However, a number of terms and conditions of employment continue to be set by the Agreements.3

[8] The Applicant does not wish to make or negotiate a new agreement. 4 The AMWU has not until very recently sought to bargain with the Applicant. That step appears to have been taken after these applications came to the attention of the AMWU.5

[9] Commercially, the Applicant faces increasing competitive pressures from competitors who have lower cost structures and the Applicant is also seeking to restructure its business, explore new markets and introduce new products in order to remain competitive and in business. It is examining both its production costs and its productivity. 6

[10] As to the employees who are covered by the Agreements the subject of these applications, the Applicant asserted that some employees but not a majority support the termination of the Agreements. 7 The AMWU asserted that all of the employees or at least a significant majority of them who are covered by the Agreements did not support the termination of the Agreements.8 Neither party led any direct evidence from the employees who are covered by the Agreements, however it seems apparent from the material available that a majority of employees do not support the termination of the Agreements. Moreover, the absence of an application to terminate the Agreements in accordance with Subdivision C of Division 7 of Part 2–4 of the Act is suggestive – and seems consistent with the material before me – of an absence of majority employee support for the termination of the Agreements.

[11] The Applicant, as the employer, clearly supports the termination of the Agreements while the AMWU opposes their termination.

[12] It is also apparent that many of the terms and conditions of employment of the employees covered by the Agreements are superior to the Agreements and operate as a matter of contract. Consequently, the termination of the Agreements will not affect those terms and conditions as the Applicant will continue to be obliged to meet contractual terms as well as applying the relevant modern award and the National Employment Standards (NES) to the employment of the employees.

[13] In addition, the Applicant proffered the following undertaking in the event that the Agreements were terminated:

‘The current employees of the applicant would continue to:

a. Be paid at least $34.44 per hour for work performed in the company’s workshop and $41.39 per hour for work performed on site;

b. Receive payment calculated at double time for overtime worked;

c. Receive an extra pay today before the company closes for Christmas, including a full days meal and entertainment at the company’s expense; and

d. Be eligible to receive discretionary bonuses from the company;

e. Have payments made on their behalf to incur link at the rate that would otherwise be required under the agreements for a period of two years following the termination of the agreements;

f. Have the option to work and be paid for 36 hours per week and accrue and be able to take 26 rostered days off in each year, for to work and be paid for 38 hours per week and accrue and be able to take 12 rostered days off each year; and

g. Have payments made on their behalf for income protection insurance premiums.’ 9

Relevant legislative provisions

[14] The legislative mechanisms by which an enterprise agreement may be varied or terminated are dealt with in Division 7 of Part 2–4 of the Act. Subdivision C of Division 7 sets out the manner in which an enterprise agreement may be terminated by agreement and for the approval of the termination of the enterprise agreement by the Fair Work Commission (Commission).

[15] Subdivision D of Division 7 contains provisions which enable the termination of an enterprise agreement to be terminated after the agreement has passed its nominal expiry date. As earlier indicated, these provisions apply to the Agreements the subject of these applications by reason of Item 16 of Schedule 3 of the TP&C Act.

[16] These provisions are as follows:

‘Subdivision D—Termination of enterprise agreements after nominal expiry date

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.’

[17] As a Full Bench of this Commission observed in Aurizon Operations Limited; Aurizon Network Pty Ltd; Australia Eastern Railroad Pty Ltd (Aurizon), 10 these provisions, and relevantly s.226, must be construed in a manner that is consistent with the language and purpose of the provisions by reference to the language of the Act as a whole, and so the context, general purpose and policy of the provision are an important means by which the meaning and effect of a provision is to be ascertained.11

[18] The Full Bench in Aurizon discussed in some detail, the operation and proper application of s.226 of the Act and the ‘not contrary to the public interest’ consideration contained therein. 12 I adopt that approach without repeating it.

Consideration

[19] The AMWU, properly in my view, accepted that on the material relied on by the Applicant, a case for the termination of the Workshop Agreement had been made out, although a majority of employees apparently do not support its termination. Having regard to the concession and to the material relied on by the Applicant and discussed earlier in these reasons I am satisfied that termination of the Workshop Agreement is not contrary to the public interest and I consider that, taking into account all of the circumstances including those in s. 226(2)(b)(i) and (ii), it is appropriate to terminate the Workshop Agreement.

[20] I turn then to consider the On-Site Agreement.

Section 226(a)

[21] The gravamen of the objection to the termination of the On-Site Agreement raised by the AMWU is that it would be contrary to the public interest to terminate an agreement containing a provision which limits the way in which that agreement may be terminated.

Clause 6 of the On-Site Agreement provides as follows:

‘6 Duration of Agreement

This Agreement operates from its lodgement until replaced by another agreement. The Agreement’s nominal expiry date is 30 June 2009.’

[22] The AMWU submitted that clause 6 requires that another agreement supersede the On-Site Agreement. It submitted that this term operates as a condition precedent to the On-Site Agreement’s termination and, as the condition precedent has not been met, there is no warrant for the On-Site Agreement’s termination. The AMWU submitted that to depart from the agreed terms in clause 6 would be contrary to the public interest.

[23] The AMWU submitted that in a similar legislative environment, a Full Bench of theAIRC held that analogous terms in an industrial agreement’s expiry clause weighed against the public interest in terminating that industrial agreement. In Re Australasian Meat Industry Employees Union, 13 a certified agreement contained the following:

‘1.3 Duration and Renewal

...

(b) The parties to this Agreement agree that negotiations to renew this Agreement will commence not later than six months prior to the expiration of the Agreement.

(c) Should negotiations not achieve agreement, the wages and conditions of employment shall continue as at the date of expiration.’

[24] The AMWU relied on the following extract from the Full Bench decision:

‘[14] … We consider clause 1.3 of the Castricum Agreement continues the relevant wages and conditions of employment under the Castricum Agreement by the Castricum Agreement remaining in force after its nominal expiry date and until it is replaced by a new Castricum Agreement.

[15] We have come to this view having regard to the decisions in Ryan and Another v Textile Clothing & Footwear Union Australia and Another and United Firefighters' Union of Australia v Metropolitan Fire and Emergency Services Board and the provisions of the Castricum Agreement.

[16] Further, we think our construction of clause 1.3 of the Castricum Agreement makes it a material factor weighing against the Commission considering it would not be contrary to the public interest to terminate the Castricum Agreement.’ 14 [Endnotes omitted]

[25] The AMWU submitted that while the Full Bench in Re Australasian Meat Industry Employees Union went on to consider other factors and then found it not contrary to the public interest to terminate the Castricum Agreement, arguably, the agreement under consideration by the Full Bench left scope for such a course to be taken. Here, however, it was submitted, the condition precedent to the On-Site Agreement’s termination is more absolute. That is there must be a superseding agreement and that absent another such agreement, the Commission would be undermining freely entered terms (terms the parties agreed to) that operate to close down recourse to unilateral termination.

[26] The difficulty with this submission is that in effect, on the AMWU’s construction of clause 6 of the On-site Agreement, the Applicant must not exercise a right under the Act to make an application to terminate that agreement. On that construction, clause 6 is in conflict with s.225 of the Act and is to that extent, invalid.

[27] The issue of invalidity of provisions in an enterprise agreement which conflict with provisions of the Act was discussed by a Full Court of the Federal Court of Australia in Toyota Motor Corporation Australia Limited v Marmara, 15 a case concerning the operation of a no extra claims clause of an agreement and the variation provisions of the Act. Relevantly, the Full Court said:

‘…

90. An enterprise agreement is a statutory artefact made by persons specifically empowered in that regard, and under conditions specifically set down, by the FW Act. It is enforceable under that Act, and not otherwise. There is, in the circumstances, no reason to approach the question of legislative intent with a predisposition informed by notions of freedom of contract.

91. We add two further observations on this subject. The first relates to a section in the reasons of the primary Judge where his Honour noted that it was not uncommon for delegated legislation which purported to restrict the ordinary right of a person to have a matter reviewed by a court to be struck down unless such a restriction were clearly authorised by the relevant enabling Act. His Honour considered, however, that the “access provided by the Subdiv A variation process” was manifestly distinguishable from the exclusion of a person’s rights of access to the courts. His Honour then gave attention to the question whether Subdiv A did involve a “right” the exercise of which was compromised by cl 4 of the enterprise agreement. He said:

There is no right given by the Subdiv A variation process to any person to have a variation of an enterprise agreement made just as no one is given a right by the FW Act to have an enterprise agreement made. Access to the variation process depends upon consent. As s 207(1) provides, the parties to an enterprise agreement “may jointly make a variation of an enterprise agreement”. Employees have no right to insist upon the consent of the employer. There is no right conferred upon employees to require the employer to even consider whether the employer is prepared to consent. Nor is any equivalent right conferred upon an employer. The capacity given by s 208(1) for an employer to request affected employees to vote on a proposed variation is procedural and not, in my view, intended to confer upon the employer a right not correspondingly provided to the affected employees.

92. While we agree with his Honour that the ability of an employer to request the affected employees to approve, by voting, a variation to an enterprise agreement is not analogous to the right of a person to make an application to a court, it is a right given by statute nonetheless. There is a sense in which the right arising under s 208(1) of the FW Act may be seen as “procedural”, but so to describe that right is, in our view, to take an unduly limited view of its significance in the scheme of Div 7. Further, we consider that his Honour was in error in stating that s 208 is not “intended to confer upon the employer a right not correspondingly provided to the affected employees”. There is no doubt but that s 208 has precisely that effect. So do ss 181(1) and 220(1). Absent a provision having the effect which his Honour attributed to cl 4 of the Agreement in the present case, it would be both incontrovertible and uncontroversial that the employer bound by an enterprise agreement has a right to make a request of its employees under s 208(1) of the FW Act. There may be a view that it is somehow inappropriate for Div 7 to operate in this way, but to propose that s 208 was intended to give this right to the employer alone is to recognize a fundamental, and undeniable, feature of the provisions in question.

93. The second observation relates to the scope of the legislative policy, as discerned by the primary Judge accepting submissions made on behalf of the respondents, that an employer and its employees, having bargained with a view to reaching agreement, and having finally reached agreement in the form of an enterprise agreement, should be held to their bargain, at least until the arrival of the nominal expiry date. It was, his Honour considered, in harmony with such a policy that the makers of the agreement should be allowed, consensually, to make their bargain a more enduring one by mutual promises to make no further claims. While there is a superficial attractiveness to considerations of this kind, in the setting of the dispute presented by the facts of the present case, they do, in our respectful view, beg the question. Subdivision A of Div 7 expressly permits the employer and the “affected employees” to vary the original bargain. That they should be held to that bargain, or bound by the existing terms of the agreement which they seek to vary to hold to that bargain, cannot be viewed as harmonious with the apparent policy of the subdivision: to the contrary.

94. There does not appear to be any real doubt about the proposition that a subordinate instrument made pursuant to statutory power which is inconsistent with the Act under which it is made will be invalid and void to the extent of the inconsistency. In his reasons in the present case, the primary Judge referred to the dictum of French CJ in Plaintiff M47/2012 v Director-General of Security [2012] HCA 46; (2012) 292 ALR 243, 262 [54]:

Regulations made under s 504 [of the Migration Act 1958 (Cth)] must be “not inconsistent with” the Migration Act. Even without that expressed constraint delegated legislation cannot be repugnant to the Act which confers the power to make it.

The Chief Justice’s authority for that proposition was Federal Capital Commission v Laristan Building and Investment Co Pty Ltd [1929] HCA 36; (1929) 42 CLR 582. That case concerned the validity of an ordinance made for the government of the Australian Capital Territory under a provision which originally read “until the Parliament makes other provision for the government of the Territory, the Governor-General may make ordinances having the force of law in the Territory.” The passage which we have underlined had since been repealed. Sitting as a single Justice of the High Court, Dixon J said (42 CLR at 588):

It is almost impossible to treat the repeal of the limitation with which it began, as anything less than an express declaration that the making of other provision for the government of the Territory shall not impair the power to make ordinances. But even with such an express declaration the power to make ordinances could not, in my opinion, be read as authorizing the Governor-General to make ordinances repugnant to a Commonwealth statute. It is one thing to say that the legislative power of the Governor-General shall continue although Parliament shall establish a means of governing the Territory, and another thing to say that that legislative power may be exercised in a manner incompatible with a law made by Parliament itself.

95. Laristan Building is the only High Court case which the conduct of the present appeal has brought to attention where the power to make a subordinate instrument of regulatory effect was not conditioned by a formula along the lines of that set out in para 76 above. Whether by reference to the need for a regulation to be “necessary”, “convenient”, “expedient” or the like – as in Grech v Bird [1936] HCA 59; (1936) 56 CLR 228 and Shanahan v Scott [1957] HCA 4; (1957) 96 CLR 245 – or by reference to that need, coupled with a requirement that the regulation be not inconsistent with its empowering Act – as in Carbines v Powell [1925] HCA 16; (1925) 36 CLR 88; Gibson v Mitchell [1928] HCA 37; (1928) 41 CLR 275; Broadcasting Company of Australia Pty Ltd v The Commonwealth [1935] HCA 3; (1935) 52 CLR 52 and Morton v Union Steamship Company of New Zealand Ltd [1951] HCA 42; (1951) 83 CLR 402 – the other cases do not deal directly and squarely with a situation where there is no such formula of any kind. In the present case, we were assured by counsel for Toyota that it was uncontroversial as between the parties that the test for the invalidity of the further claims aspect of cl 4 of the Agreement was that articulated by Hayne J in Plaintiff M47, namely, “whether the regulation in question varies or departs from (in other words alters, impairs or detracts from) the provisions of the Act” (292 ALR at 290 [174]), but the fact is that the regulationmaking power under consideration in that case was expressly conditioned by the “not inconsistent with” formula, and his Honour’s remark was made in that context.

96. Notwithstanding those qualifications, Laristan Building is authority for the proposition that the power to make a federal ordinance cannot be exercised in a manner incompatible with a law made by the Parliament itself (and, one might add, especially not the law under which such an ordinance would have been made). In Plaintiff M47, French CJ took the view that Laristan Building stood for the general proposition that “delegated legislation cannot be repugnant to the Act which confers the power to make it”. And we may see the same general proposition in the reasons of Jordan CJ in Ex parte Reid [1943] NSWStRp 14; (1943) 43 SR (NSW) 207, 215.

97. An enterprise agreement made under Pt 2-4 of the FW Act is not, of course, a regulation. But, as stated above, it is something more than a mere agreement in the way of a contract. It is a specific instrument made only under the detailed regime for which Pt 2-4 provides and enforceable only as provided by the FW Act. To this extent, we consider that the general principle applicable to the invalidity of regulations on account of repugnancy with their authorising statute is relevant to the issue presently for resolution. At base, the question which arises under that issue is essentially one of the rule of law. Parliament having said that an enterprise agreement may be varied, and that the employer may put a request to its employees in that regard, a term of the agreement which states, or has the effect, that the employer may not so proceed must necessarily be inconsistent with or repugnant to the FW Act to that extent. Subject to his view as to the significance of Toyota’s ability to initiate, and to carry through, a variation of the Agreement by removing the no further claims provision itself, the primary Judge took that view of the matter, and we agree with him.

98. Turning then to the second main line of argument deployed on behalf of the respondents against Toyota’s case on the repugnancy point, the emphasis here was on the different treatments given by the FW Act to the processes of making and varying an enterprise agreement. In the case of the making of an agreement under Divs 2, 3, 4 and 8 of Pt 2-4, the broad principle of majoritarian outcomes had been qualified to ensure that the legitimate industrial interests of minority groups were not suffocated. By contrast, under Div 7 an existing agreement might be varied on the vote of a majority of the affected employees without any such protection. In an extreme case, it might be apprehended that, in order to attract the support of minority groups, an employer and the bargaining agent representing the majority of its employees might make an agreement which is beneficial to those groups, and then, a few weeks after approval by the Commission under s 186, put through a variation which was detrimental to them. As we understand the argument, it is said that the legislature cannot have intended that this would be possible, and cannot have intended, therefore, that, at the point of the making of an enterprise agreement, the makers would be incapable of binding themselves not to have recourse to Div 7 before the nominal expiry date.

99. In a scenario such as that posited in the previous paragraph, there are only two points at which the interests of the minority group might be brought forward for consideration during the process of the approval of a new enterprise agreement which has been recently made. The first is the requirement in s 186(3) that the Commission be satisfied that the group of employees covered by the agreement had been “fairly chosen”. That expression is not defined in the FW Act. It seems to have been assumed that there must have been a “choice” by someone as to the range of employees that would be covered, and it may be that this necessarily follows from the highly discretionary definition in the FW Act of what amounts to being “covered” by an enterprise agreement: see s 53(1). Subdivision A of Div 4 seems to be based on an assumption that the initiative for the making of an enterprise agreement will come from the employer, and it may be that s 186(3) should be read against such an understanding. Nonetheless, there are no indications in the FW Act that the Commission should, or even might, regard a group constituted by all of the employer’s employees as not having been fairly chosen. Indeed, the terms of s 186(3A) seem to imply that such a group constitution is to be regarded as the norm.

100. Stronger support for the respondents’ present argument may be seen in the terms, and significance, of s 238 of the FW Act. Under that section, the Commission is empowered to make a “scope order” specifying the employer that, and the employees who, will be covered by a proposed enterprise agreement. A bargaining representative may apply for such an order if he or she “has concerns that bargaining for the agreement is not proceeding efficiently or fairly” because “the agreement will not cover appropriate employees, or will cover employees that it is not appropriate for the agreement to cover”. There are several criteria for the making of a scope order specified in s 238, but it may be accepted that it would provide, at least in some circumstances, an avenue for a bargaining representative who has been appointed by a minority group of employees to have the coverage of a proposed enterprise agreement adjusted by the Commission so as to exclude that group. It may also be accepted that, as a practical matter, the employer and the bargaining representative for the majority of employees might, in order to avoid Commission proceedings for a scope order, ensure that the terms of the proposed enterprise agreement were not disadvantageous to the minority group. On the submission of the respondents, the FW Act should not be understood to have excluded the capacity of all – the majority, the minority and the employer – to put their names to a covenant not to use the purely majoritarian provisions of Div 7 to vary the terms of an agreement made in such circumstances.

101. The difficulty with the respondents’ argument, in our view, is that it does not speak the language of legitimate statutory interpretation. It goes no further than to identify what might, on one view, be regarded as an anomaly in the way the legislature has treated different processes under Pt 2-4. As a matter of legal analysis, the argument encounters difficulties of the same kind as did the unsuccessful argument of the applicants in JJ Richards & Sons Pty Ltd v Fair Work Australia [2012] FCAFC 53; (2012) 201 FCR 297. However the matter is looked at, there can be no question but that Subdiv A of Div 7 provides for a simpler process, and one which is less set about with qualifications demonstrating a concern for the interests of minority groups, than do the main agreement-making provisions of Pt 2-4. The legislature must be taken to have meant what it said in this respect. However sympathetic one might be to the situation in which a minority group of employees might find itself in the circumstances postulated by the respondents (and we note that there was no suggestion that this represented the facts of the present case), there is not the slightest support in the FW Act for the submission that the legislature not only anticipated a situation of this kind but intended that it might be avoided by permitting the makers of the enterprise agreement in question to insert a term that was directly inconsistent with a provision of the Act itself – a provision which the legislature is known to have adopted and, it must be assumed, intended to be observed.

102. We turn next to the critical consideration by reference to which the primary Judge decided the case in favour of the respondents. Although his Honour accepted that a term of an enterprise agreement which purported to exclude the employer and its employees completely from having access to the process of variation under Subdiv A would be repugnant and invalid, he said:

121. That is not to say however that the scheme of the FW Act has set its face against the prospect that by their agreement, parties to an enterprise agreement may impose restrictions on their capacity to agree to a variation without ousting their capacity to do so. Those restrictions may take the form of a range of required steps. A requisite period of consultation prior to a proposal for variation being pursued provides one possible example. A facility for employees to meet and consult with their union as a prerequisite step may provide another example. So long as, practically speaking, the capacity for parties to access the Subdiv A variation process is not ousted, a term imposing restrictions is not necessarily inconsistent with the FW Act.

122. It is then necessary to consider whether the terms of the no extra claims component of cl 4 foreclose the capacity of the parties to the Agreement to consensually access the Subdiv A variation process. The terms of cl 4 preclude any further claims “in relation to wages or any other terms and conditions of employment”. Those terms do not exclude the capacity of the parties to effectuate a variation to cl 4 itself including by removing it. That can be done without breaching the enterprise agreement and if it is done, the parties will have unfettered access to the Subdiv A variation process in relation to desired variations to wages or any other terms or conditions of employment.

Thus the primary Judge took the view that cl 4 had not “ousted the capacity of Toyota or its employees to access the Subdiv A variation process in order to vary wages and other terms and conditions of employment specified by the Agreement”. The clause imposed “an extra step in the process of achieving a desired variation, but [did] not foreclose access in either a technical or practical sense to the Subdiv A variation process.” His Honour held that there was, therefore, no inconsistency between the no further claims component of cl 4 and the FW Act.

103. For the purposes of considering this point, we are prepared to accept, contrary to the premise upon which the cross-appeal is based, that a claim to remove cl 4 would not be a claim “in relation to wages or any other terms and conditions of employment”, and that cl 4 would not, therefore, set up an embargo on a claim for its own removal. Nonetheless, we do not, with respect, consider that this compartment of his Honour’s reasons withstands examination.

104. At all relevant times, the no further claims element of cl 4 has been, and remains, part of the Agreement. The question which arose had to be confronted against the facts as they existed. With respect to his Honour, we do not consider that the answer to the question was to be found in an analysis of the law that would be applicable to a different set of facts. There was no proposal to remove the no further claims provision from the Agreement. Had it previously been removed, of course, the question which has occupied the court, both at first instance and on appeal, would never have arisen. However, the provision was there, and the respondents sued on it. If, as the respondents submitted and still submit, the operation of the clause was both absolute and categorical, it is no answer to Toyota’s challenge to its validity to propose that Toyota might have, in effect, arrived at the desired destination by a different route, one which involved first requesting its employees to agree to the removal of the provision itself.

105. We also consider that the primary Judge’s conclusion that the no further claims term in cl 4 of the Agreement is valid to the extent that it imposes restrictions on (but does not wholly exclude) Toyota and its employees having access to the provisions of Subdiv A of Div 7 cannot stand alongside a line of cases which have struck down regulations which placed preconditions to, or qualifications upon, the exercise of rights granted or assumed by the relevant empowering statutes. The principle here, on a reading of the cases, is that the setting up of such a precondition or qualification gives rise to repugnancy no less than the imposition of a complete prohibition. This principle has to do with the quality of the inconsistency and is not, in our view, applicable only to statutes which use the “not inconsistent with” formula, the “necessary or convenient” formula, or both.

106. In Wells v Finnerty [1910] WALawRp 10; (1910) 12 WALR 41, it was held that a regulation imposing a requirement to register, within a stated period, a charge or lien which arose under a provision of the relevant empowering statute, and for the charge or lien to lapse if not registered within that period, was beyond power. The case of In re The Metropolitan Abattoirs Acts 1908-1930 [1932] SAStRp 19; [1932] SASR 184 concerned a regulation which required any person who brought meat of a certain description into a particular area to obtain a permit. The empowering statute had dealt with the subject of the sale of meat within the area, but had not required a permit for merely bringing meat into the area. It was held in the Full Court that the regulation was beyond power, Piper J (with the concurrence of Murray CJ) stating ([1932] SASR at 193-194):

It cannot be said that any of the sections now referred to shews any object or purpose justifying interference by regulation with conduct which the Act leaves perfectly lawful – the mere transport of meat into the area, it not being carried “for delivery on sale” and not being exposed for sale, or in possession of a person apparently for the purpose of sale for human consumption.

107. We have mentioned these cases specifically because they were not complicated by the presence of either of the now conventional formulae to which we have referred. However, as mentioned above, we do not think that the presence of any such formula affects the principle involved in this aspect of the present case. For cases which did involve a formula of the now conventional kind, we refer to Ex parte Lawes [1908] SALawRp 15; [1908] SALR 130, to IRA, L & AC Berk, Ltd v The Commonwealth [1930] NSWStRp 4; (1930) 30 SR (NSW) 119 and to R v Commissioner of Patents; Ex parte Martin [1953] HCA 67; (1953) 89 CLR 381.

108. Under a slightly different, but harmonious, line of authority, the no further claims term in cl 4 of the Agreement is to be regarded as repugnant to the FW Act because the Act itself has given detailed, and specific, attention to the matter of the conditions under which a variation to an enterprise agreement may be approved by the Commission. It is true, as the respondents stressed, that the making of such a variation is a much simpler undertaking than the making of an enterprise agreement in the first place. But there are many conditions specified nonetheless: see s 211. On any view, the legislature has given specific attention to the question of the conditions which should be so imposed, and to the discriminations appropriate to be made as between Divs 2, 3, 4 and 8, on the one hand, and Div 7, on the other hand. The situation is, in our view, one in which the approach articulated in Morton v Union Steamship (83 CLR at 813) and Ex p Martin (89 CLR at 406-407) should be taken.

109. In the light of the authorities to which we have referred, we do not, with respect, agree with the primary Judge that “[a] requisite period of consultation prior to a proposal for variation being pursued” is a restriction that could lawfully become part of an enterprise agreement made under Pt 2-4. Such a restriction would too closely intrude into the area governed by s 180 in its application to a proposed amendment under s 211(3) to be regarded as anything other than repugnant to the scheme of the FW Act. The no further claims term in cl 4 of the Agreement is, of course, a fortiori: as construed by his Honour, it goes further than merely to defer the taking of steps otherwise available under Div 7. Subject only to it not having been removed by a separate, anterior, process of variation, it prohibits the taking of those steps.

110. For the above reasons, we take the view that the operation of the no further claims provision in cl 4 in a context in which Toyota proposed no more than that the Agreement be varied under Subdiv A of Div 7 of Pt 2-4 of the FW Act was and is in conflict with the provisions of that subdivision, and pro tanto invalid. The proceeding below should have been dismissed.

113. ’ 16

[28] It seems to me that this analysis applies with equal force to the effect of clause 6 of the On-site Agreement.

[29] However, the AMWU submitted that it does not suggest that clause 6 prevents the application to terminate being made. Rather, the AMWU’s case is that when the Commission turns its mind to whether the On-Site Agreement’s termination in this application is contrary to the public interest, it should take on board how the public interest would be offended by a party repudiating an agreement — that agreement being that undertaking contained in clause 6. The AMWU submitted that agreements should be upheld and that if a collateral attack on an agreement was to prevail this would injure the public interest.

[30] There can be little doubt that agreements should be upheld. However, once it is accepted that clause 6 is in conflict with s.225, there is with respect, nothing to uphold. Moreover, it is not in my view contrary to the public interest to terminate an agreement notwithstanding it contains an invalid provision which might otherwise have prevented its termination.

[31] There are no other matters raised by the AMWU or of which I am aware that would cause the termination of the On-Site Agreement to be contrary to the public interest. I am therefore satisfied that it would not be contrary to the public interest to terminate the On-Site Agreement.

Section 226(b)

[32] Turning then to the considerations set out in s.226(b) of the Act, I have already observed that a majority of employees to whom the On-Site Agreement applies do not support its termination. It is clear that the Applicant supports the termination of the Agreement and the AMWU, as the employee organisation covered by the Agreement, opposes its termination.

[33] Whilst I accept that the termination of the On-Site Agreement might have some impact on the employees’ terms and conditions of employment, I am satisfied that the impact will be marginal. This is because certain terms and conditions which presently apply to the employees are to continue by reason of the employee’s contract of employment. Furthermore the undertaking proposed by the Applicant gives further protection to particular terms and conditions of employment.

[34] It is not necessary for me to determine whether the undertaking will be legally binding and enforceable as terms of an employment contract or otherwise. For my part there is no reason to suppose that the undertaking has not been given or proposed in good faith or that the Applicant is not genuine in giving or proposing the undertaking. I am satisfied that the Applicant intends to and will, if the Agreements are terminated, make good on its undertaking. The undertaking is given to the affected employees, not to the Commission. As such the question of the power of the Commission to accept the undertaking is moot. However, the fact that the Applicant has or proposes to give the undertaking, and the terms of that undertaking are matters relevant in my assessment of whether it is appropriate to terminate the Agreements. I therefore take the undertaking into account for that purpose.

[35] The AMWU did not, properly in my view, make any submission to the effect that it would be adversely affected by the termination of the On-Site Agreement in the circumstances.

[36] Taking these matters into account, I consider that it is appropriate to terminate the On-Site Agreement.

Conclusion

[37] I propose to terminate the Agreements because I am satisfied for the reasons given that termination of the Agreements is not contrary to the public interest, and for the reasons given I consider that it is appropriate to terminate the Agreements. The termination operates from the day after the date of this decision.

[38] Orders giving effect to this are separately made in PR576194 and PR576196.

DEPUTY PRESIDENT

Appearances:

N. Segbedzi of the AI Group for Atex Steel

B. Terzic for the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)

Hearing details:

2015.

Melbourne.

November 30.

1 Exhibit 1 at [48].

2   Ibid at [48] – [50].

3   Ibid at [19] – [24].

4 Ibid at [53].

5   Ibid at [51] – [52].

6   Ibid at [9] – [18].

7   Ibid at [33] – [47].

8   see Exhibit 3.

9   Exhibit 2.

10   [2015] FWCFB 540.

11 Ibid at [120].

12   Ibid at [118]-[152]; See also Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Aurizon Operations Ltd [2015] FCAFC 126 at [22]–[25].

13   (2004) PR952544.

14   Ibid at [14]-[16].

15   [2014] FCAFC 84.

16   Ibid at [90]-[110].

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