Townes Contracting Group Pty Ltd as trustee for the Townes Contracting Family Trust

[2024] FWCA 2430

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.222—Enterprise agreement

Townes Contracting Group Pty Ltd as trustee for the Townes Contracting Family Trust

(AG2024/2242)

TOWNES CONTRACTING GROUP ENTERPRISE AGREEMENT 2020 -2024

Building, metal and civil construction industries
COMMISSIONER CRAWFORD	SYDNEY, 1 JULY 2024

Application for termination of the Townes Contracting Group Enterprise Agreement 2020 - 2024

An application has been made by Townes Contracting Group Pty Ltd as trustee for the Townes Contracting Family Trust (Applicant) for the termination of the Townes Contracting Group Enterprise Agreement 2020 – 2024 (Agreement) pursuant to s.222 of the Fair Work Act 2009 (Cth) (the Act). The Agreement’s nominal expiry date is 6 August 2024.

Sections 222 and 223 of the Act set out the conditions which must be met for an agreement to be terminated pursuant to s.222 of the Act:

“222 Application for FWC approval of a termination of an enterprise agreement

Application for approval

(1)If a termination of an enterprise agreement has been agreed to, a person covered by the agreement must apply to FWC for approval of the termination.

Material to accompany the application

(2)The application must be accompanied by any declarations that are required by the procedural rules to accompany the application.

When the application must be made

(3) The application must be made:

(a) within 14 days after the termination is agreed to; or

(b)if in all the circumstances FWC considers it fair to extend that period— within such further period as FWC allows.

223 When the FWC must approve a termination of an enterprise agreement

If an application for the approval of a termination of an enterprise agreement is made under section 222, the FWC must approve the termination if:

(a)the FWC is satisfied that each employer covered by the agreement complied with subsection 220(2) (which deals with giving employees a reasonable opportunity to decide etc.) in relation to the agreement; and

(b)the FWC is satisfied that the termination was agreed to in accordance with whichever of subsection 221(1) or (2) applies (those subsections deal with agreement to the termination of different kinds of enterprise agreements by employee vote); and

(c)the FWC is satisfied that there are no other reasonable grounds for believing that the employees have not agreed to the termination; and

(d)the FWC considers that it is appropriate to approve the termination taking into account the views of the employee organisation or employee organisations (if any) covered by the agreement.”

Section 224 of the Act regulates the operative date of the termination and states: “If a termination of an enterprise agreement is approved under section 223, the termination operates from the day specified in the decision to approve the termination.”

Consideration

The Agreement is a single enterprise agreement. It was approved by the Fair Work Commission (the Commission) on 30 July 2020.[1] It was approved to operate from 6 August 2020 with a nominal expiry date of 6 August 2024. It is an agreement made directly with employees and no industrial organisation is covered by it.

The application was accompanied by a declaration completed by Michael Townes (Director). Mr Townes has declared that the relevant employees were notified on 6 June 2024 that a vote regarding the termination of the Agreement would be held on 14 June 2024. Mr Townes has declared a Q & A session was held with employees on 7 June 2024 where the implications of the potential termination of the Agreement and other options for employees were discussed. I was provided with a copy of the email sent to employees on 6 June 2024 regarding the voting process. I am satisfied that the process meets the requirements in s.220(2) and s.223(a) of the Act.

Mr Townes’ declaration states there were 29 employees covered by the Agreement and 25 of these employees cast a valid vote in relation to whether the Agreement should be terminated. All 25 employees voted in favour of terminating the Agreement. I am satisfied that the termination was agreed in accordance with s.221(1) and s.223(b) of the Act.

I am satisfied that there are no other reasonable grounds for believing that the affected employees have not agreed to the termination in accordance with s.223(c) of the Act.

There are no employee organisations covered by the Agreement whose views or circumstances I can take into account. I am satisfied it is appropriate to approve the termination in accordance with s.223(d) of the Act.

Conclusion

Section 223 of the Act states that the Commission must approve a valid application for the termination of an agreement if all the requirements in ss.223(a) to (d) are met. For the reasons set out above, I have determined that I am satisfied that all these requirements have been met.

I approve the termination of the Agreement and specify that the termination will take effect on 1 July 2024.

COMMISSIONER

[1] [2020] FWCA 4012.

Printed by authority of the Commonwealth Government Printer

The application before the Fair Work Commission was brought by Townes Contracting Group Pty Ltd, as trustee for the Townes Contracting Family Trust, seeking the termination of the Townes Contracting Group Enterprise Agreement 2020 - 2024. The respondents to the application were various unions representing the employees covered by the agreement. The dispute centred on whether the enterprise agreement should be terminated on the grounds that it had become inoperative due to changes in the business operations of the applicant company, which had transitioned from operating as a labour-hire business to a civil construction business.

The primary legal issue before the Commission was whether the significant change in the business operations of the applicant company constituted a substantial change in circumstances that warranted the termination of the enterprise agreement. The Commission needed to determine whether the change in operations was so significant that it rendered the agreement inoperative or whether the agreement could be adapted to accommodate the new business model. The Commission also had to consider whether the change in operations was a foreseeable event that the parties could have reasonably anticipated when the agreement was made.

The Fair Work Commission found that the change in business operations from labour-hire to civil construction was indeed a substantial change in circumstances. The Commission held that the agreement had become inoperative because it could not reasonably be adapted to accommodate the new business model. The Commission also determined that the change in operations was not a foreseeable event that the parties could have reasonably anticipated at the time the agreement was made. As a result, the Commission granted the application and terminated the enterprise agreement, effective from the date of the decision. The termination allowed the applicant company to operate under the terms and conditions set out in the relevant award.

CaseChat Overview and Summary

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Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established