Timothy Mcerlane
[2023] FWC 1033
•30 MAY 2023
| [2023] FWC 1033 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.225—Enterprise agreement
Timothy Mcerlane
(AG2022/4879)
OPTUS RETAIL AGREEMENT 2013
| Retail industry | |
| DEPUTY PRESIDENT CLANCY | MELBOURNE, 30 MAY 2023 |
Application for termination of the Optus Retail Agreement 2013
An application was filed by the Shop, Distributive and Allied Employees’ Association (SDA), on behalf of Mr Timothy Mcerlane, seeking the termination of the Optus Retail Agreement 2013[1] (the Agreement) pursuant to s.225 of the Fair Act 2009 (the Act). The Agreement is a single enterprise agreement and has passed its nominal expiry date of January 2017.
The employer party to the Agreement is Optus Retailco Pty Limited (the Employer). On 23 November 2022, a copy of the Form F24B, the Form F24C statutory declaration made by the SDA’s Gerard Andrew Dwyer, and a comparison document directed at the Agreement and the General Retail Industry Award 2020 (the Comparison Document) were sent to the Employer.
Legislation
Section 225 of the Act provides as follows:
“225Application 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.
The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 has amended s.226 of the Act. The amendments took effect from 7 December 2022 and relevantly provide:
“226 Terminating an enterprise agreement after its nominal expiry date
(1) 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 the continued operation of the agreement would be unfair for the employees covered by the agreement; or
(b) the FWC is satisfied that the agreement does not, and is not likely to, cover any employees; or
(c) all of the following apply:
(i) the FWC is satisfied that the continued operation of the enterprise agreement would pose a significant threat to the viability of a business carried on by the employer, or employers, covered by the agreement;
(ii) the FWC is satisfied that the termination of the enterprise agreement would be likely to reduce the potential of terminations of employment covered by subsection (2) for the employees covered by the agreement;
(iii) if the agreement contains terms providing entitlements relating to the termination of employees’ employment each employer covered by the agreement has given the FWC a guarantee of termination entitlements in relation to the termination of the agreement.
(1A) However, the FWC must terminate the enterprise agreement under subsection (1) only if the FWC is satisfied that it is appropriate in all the circumstances to do so.
(2) This subsection covers a termination of the employment of an employee:
(a) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or
(b) because of the insolvency or bankruptcy of the employer.
(3) In deciding whether to terminate the agreement, the FWC must consider the views of the following covered by the agreement:
(a) the employees (unless there are no employees covered by the agreement);
(b) each employer;
(c) each employee organisation (if any).
Note: The President may be required to direct a Full Bench to perform a function or exercise a power in relation to the matter if any of the employers, employees, or employee organisations, covered by the agreement oppose the termination (see subsection 615A(3)).
(4) In deciding whether to terminate the agreement (the existing agreement), the FWC must have regard to:
(a) whether the application was made at or after the notification time for a proposed enterprise agreement that will cover the same, or substantially the same, group of employees as the existing agreement; and
(b) whether bargaining for the proposed enterprise agreement is occurring; and
(c) whether the termination of the existing agreement would adversely affect the bargaining position of the employees that will be covered by the proposed enterprise agreement.
(5) In deciding whether to terminate the agreement, the FWC may also have regard to any other relevant matter.
226A Guarantee of termination entitlements
Guarantee of termination entitlements
(1) A guarantee of termination entitlements is an undertaking given by an employer covered by an enterprise agreement that:
(a) is an undertaking that the employer will comply with subsection (3) if the agreement is terminated under section 226 and the employer terminates the employment of a protected employee for the termination of the agreement:
(i) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or
(ii) because of the insolvency or bankruptcy of the employer; and
(b) is in writing; and
(c) meets any requirements relating to the signing of undertakings that are prescribed by the regulations.
(2) A protected employee for a termination of an enterprise agreement under section 226 is an employee who would, but for the termination of the agreement, be covered by the agreement.
(3) For the purposes of paragraph (1)(a), the employer complies with this subsection, in relation to the termination of the protected employee’s employment, if the employer complies with the terms of the enterprise agreement that, if the agreement were still in operation, would have provided the employee with entitlements that:
(a) relate to a termination of the employee’s employment:
(i) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or
(ii) because of the insolvency or bankruptcy of the employer; and
(b) except if the employee was an award/agreement free employee immediately before the termination of the employee’s employment—are more beneficial than the entitlements under a modern award that covered the employee in relation to the employment at that time.
When guarantee is in force
(4) A guarantee of termination entitlements given in relation to the termination of an enterprise agreement:
(a) comes into force on the day on which the termination of the agreement comes into operation under section 227; and
(b) ceases to be in force at the earliest of the following times:
(i) if the guarantee specifies a period during which the guarantee is to remain in force and the FWC approves that period under subsection (5)—the end of that period;
(ii) immediately before another enterprise agreement that covers the same, or substantially the same, group of employees as the terminated agreement comes into force;
(iii) the end of the period of 4 years beginning on the day the guarantee is given to the FWC.
(5) The FWC may, in its decision terminating an enterprise agreement, approve a period for the purposes of subparagraph (4)(b)(i) if it considers the period to be appropriate.
Employer must comply with guarantee
(6) An employer must comply with a guarantee of termination entitlements given by the employer to the FWC in relation to the termination of an enterprise agreement if:
(a) the agreement is terminated under section 226; and
(b) the employer terminates the employment of a protected employee for the termination of the agreement while the guarantee is in force:
(i) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or
(ii) because of the insolvency or bankruptcy of the employer.
Note: This subsection is a civil remedy provision (see Part 4-1)
Guarantee is a governing instrument for employment
(7) To avoid doubt, a guarantee of termination entitlements is a governing instrument for employment for the purposes of the Fair Entitlements Guarantee Act 2012.”
Procedural Background
The Commission must be satisfied that the requirements in s.225, s.226 and s.226A of the Fair Work Act 2009 (the Act) are met prior to approving the termination of the Agreement.
A mention was held on 9 December 2023, where the parties advised that negotiations for a new agreement were going to commence and agreed to a report back to me on 25 January 2023. On 25 January 2023, the SDA advised that significant progress had been made in bargaining and requested a further adjournment of the matter so that there could be a report back in early March 2023. When subsequently reporting, the SDA advised that the parties had been meeting on an almost weekly basis and bargaining was still progressing. A further opportunity for a report back in the last week of April was requested and granted.
On 28 April 2023, the SDA advised that bargaining between the parties had concluded and an enterprise agreement had been put to the employees, the majority of whom voted in favour of the new agreement. This being the case, it was the SDA’s position that this application could be resolved by way of termination by consent, to be operative on the same day on which the new agreement is to take effect.
Consideration
Section 225 of the Act
Pursuant to s.225(b) of the Act, an employee covered by the agreement may apply to the Commission for the termination of the Agreement if it has passed its nominal expiry date. As noted above at [1], the Agreement nominally expired on January 2017. Further, I am satisfied that Mr Timothy Mcerlane is an employee covered by the Agreement. It follows that I am satisfied that Mr Mcerlane has standing to bring the Application.
Section 226 of the Act
Section 226(1)(a) of the Act states if an application for the termination of an enterprise agreement is made under section 225, the Commission must terminate the agreement if it is satisfied that the continued operation of the agreement would be unfair for the employees covered by the agreement.[2]
Mr Dwyer of the SDA, declared that the termination of the Agreement is not contrary to the public interest and has made the following uncontested declarations, which are claimed to weigh in favour of a finding that the continued operation of the Agreement would be unfair for the employees covered:
a)The terms and conditions provided in the agreement have fallen below the minimum terms and conditions of the General Retail Industry Award 2020 (the Award).
b)Increases in the rates of pay have not kept up with the rate of increases in the Award so that over time the buy-out of penalty rates have been absorbed and the base rate of pay no longer compensates for a lack of allowances, annual leave loading, and penalty rates, leaving employees who are working evenings, Saturdays, and Public Holidays worse off than under the Award.
c)Upon consideration of all the rates of pay and the terms and conditions of employment, employees presently covered by the Agreement suffer a disadvantage when compared with the rates of pay and terms and conditions of employment under the Award.
d)The Award provides for certain allowances and payment of higher duties, annual leave loading, certain penalty rates, certain superannuation payments and rostering provisions, while the Agreement has either no corresponding provisions or provisions which leave employees at a significant disadvantage when compared to the Award.
Section 226(2) and Section 226A of the Act do not fall for consideration on the facts of this case.
As regards s.226(3) and (4), the circumstances are such that I can be satisfied that Mr Mcerlane, the SDA, the covered employees and the Employer support the termination of the Agreement because the parties have agreed to enter into the new enterprise agreement.
Section 226(1A) provides that the Commission must terminate the Agreement only if it is satisfied that it is appropriate in all the circumstances to do so, while s.226(5) outlines that the Commission may also have regard to any other relevant matters.
I consider the following approach to assessing appropriateness laid out by the Full Bench in Aurizon Operations Limited; Aurizon Network Pty Ltd; Australian Eastern Railroad Pty Ltd,[3] while addressing the termination of agreements prior to the commencement of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022, remains apposite for applications to terminate agreements:
“All of the circumstances also need to be taken into account in considering whether termination of the agreements is appropriate. In particular the views of employers and employees covered by the agreement, their circumstances, and the impact of termination need to be taken into account. The requirement in s. 226(b) to take into account all of the circumstances including those set out in s. 226(b)(i) and (ii) is a requirement to take the matters into account and to give them due weight in assessing whether it is appropriate to terminate an enterprise agreement. In assessing appropriateness by taking into account all of the circumstances, we approached the task by reference to the construction of s. 226 and the contextual matters that bear upon that construction dealt with earlier as well as giving specific consideration to the matters identified in s. 226(b)(i) and (ii).”[4] (reference omitted)
Conclusion
Having regard to the matters and conclusions outlined above, I am satisfied that the continued operation of the Agreement would be unfair for the employees covered (s.226(1)(a)) and that it is appropriate in all the circumstances of this case to terminate the Agreement (s.226(1A)). Further, I note the parties agreed to enter into the Optus Retail Agreement 2023, which has now been approved by the Commission and will commence operation on 4 July 2023. I do not consider there are any other matters relevant to consider (s.226(5)). Having made these findings, s.226 of the Act requires that I terminate the Agreement.
Operative Date of Termination
Section 227 of the Act affords the Commission a discretion as to the operative date of a termination of an agreement. I have determined that the termination will operate from 4 July 2023, being the date when the Optus Retail Agreement 2023 comes into force. [5]
An order to this effect will be issued with this decision.
DEPUTY PRESIDENT
[1] AE405224.
[2] For completeness, neither s.226(1)(b) nor s.226(1)(c) of the Act apply in the circumstances of this case.
[3] [2015] FWCFB 540.
[4] Ibid at [167].
[5] [2023] FWCFA 1502, AE 520124.
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