Victorian Canine Association T/A Dogs Victoria

[2013] FWC 4260

[2013] FWC 4260

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225—Enterprise agreement

Victorian Canine Association T/A Dogs Victoria
(AG2013/4890)

Sporting organisations
COMMISSIONER LEE	MELBOURNE, 1 JULY 2013

Application to terminate the Victorian Canine Association/ASU Inc. Enterprise Agreement 2005-2010 - ss.225, 226 Fair Work Act 2009

[1] This matter involves an application made by the Victorian Canine Association T/A Dogs Victoria (the Applicant) for termination of the Victorian Canine Association/ASU Inc. Enterprise Agreement 2005-2010 1 (the Agreement) pursuant to section 225 of the Fair Work Act 2009 (the Act) and Sch.3, Item 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the transitional Act).

[2] The agreement is a collective agreement-based transitional instrument and has a nominal expiry date of 31 December 2010. 2

[3] The matter for determination is whether or not to grant the application to terminate the Agreement.

Background to the application

[4] The background to this matter was set out in the Directions that I issued on 1 March 2013 in this matter, which are reproduced below:

“[1] On 7 February 2013, the Victorian Canine Association T/A Dogs Victoria (the Employer) made application under subdivision D of Division 7 of Part 2-4 of the Fair Work Act 2009 (the FW Act)as it applies under item 16 of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 for termination of the Victorian Canine Association/ASU Inc Enterprise Agreement 2005-2010 after its nominal expiry date.

[2] This matter was originally allocated to Senior Deputy President Harrison. Her Honour issued Directions on 11 February 2013.

[3] The Directions indicated that unless there was opposition to the application, the agreement would be terminated.

[4] The Australian Services Union (ASU) advised Senior Deputy President Harrison’s Chambers that it objected to the application for termination and that a separate application had been made by the ASU under s.240 of the FW Act, an application to deal with a bargaining dispute in respect of the Employer (matter number B2013/613). The ASU advised Her Honour that that matter (B2013/613) had been allocated to me.

[5] In light of this advice, Her Honour allocated matter AG2013/4890 to me.

[6] This application was listed for conference before me on 28 February 2013. The matter was heard concurrently with matter B2013/613.

[7] Application B2013/613 (the bargaining application) was considered at first instance. No agreement was reached between the parties and the parties agreed that there was no utility in further conferences pursuant to the bargaining application and the file would be closed.

[8] Application AG2013/4890 (the agreement termination application) was then discussed. The ASU advised that it continues to oppose the agreement termination application and seeks to be heard on the mater.

[9] After discussion with the ASU and the Employer there was consent to the following Directions being issued by me;

1. The Employer is directed to file with the Fair Work Commission and serve on the ASU written submissions, any witness statements and other documentary material on which it intends to rely by close of business 14 March 2013.

2. The ASU is directed to file with the Fair Work Commission and serve on the Employer written submissions, any witness statements and other documentary material on which it intends to rely by close of business 28 March 2013.

3. The Employer is directed to file with the Fair Work Commission and serve on the ASU, written submissions in reply by close of business 11 April 2013.

5. Any affected employee who wishes to provide evidence or supply written submissions in relation to this application is to file with the Fair Work Commission by close of business 15 April 2013.

6. If either party or any affected employee wishes to seek a hearing on the matter they should advise my Chambers by no later than close of business 15 April 2013.

[10] Section 226 of the FW Act requires that I consider the views of the employees.

7. I direct the Employer to post on all employee notice boards and email or post to all employees covered by the Victorian Canine Association/ASU Inc Enterprise Agreement 2005-2010 a copy of the following notice, application made (Form F24 Application for Termination of Enterprise Agreement) and these directions by no later than close of business 6 March 2013.

“NOTICE TO EMPLOYEES

An application has been made by Victorian Canine Association T/A Dogs Victoria to the Fair Work Commission to terminate the Victorian Canine Association/ASU Inc Enterprise Agreement 2005-2010. The application made is attached to this notice.

Attached to this notice are directions issued by me on 1 March 2013.

The directions allow you to make any submissions you may want to in support of or in opposition to the application.

You can do so by email to [email protected], by fax [phone] or by post to Commissioner Lee, Fair Work Commission, GPO Box 1994, Melbourne, Victoria 3001. If you choose to, you must submit your response so that it is received by close of business 15 April 2013.

If you have any queries in relation to this matter, please contact Erin Bulluss, my associate at the Fair Work Commission on [phone].

COMMISSIONER LEE”

[5] As described in my Directions above, there were endeavours on the part of the Australian Services Union (ASU) to negotiate a replacement enterprise agreement for the one that is now sought to be terminated. These negotiations have thus far failed to conclude an agreement. The Applicant moved to sign employees onto individual common law contracts and seeks the termination of the Agreement in that context. They no longer wish to bargain with the ASU for a new enterprise agreement.

Law to be applied:

[6] In making a decision whether to grant the application, the Fair Work Commission is required to comply with section 225 and section 226 of the Act.

“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.”

[7] With respect to section 225 of the Act, the Applicant is entitled to make the application as an employer covered by the agreement (s.225(a)). 3

[8] Guidance on how the public interest is to be assessed in the context of s.226(a), as well as the requirement that termination of the agreement is appropriate (s.226(b)), was considered in the decision of Vice President Lawler in Tahmoor Coal Pty Ltd 4 (Tahmoor).

[9] When considering the requirement that the termination not be contrary to the public interest 5 his Honour refers to a decision of the Full Bench in Re Kellogg Brown and Root Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 20006 where it was observed:

“[22] The absence of any reference to the interests of the negotiating parties in s.170MH(3) is significant. It follows that the views of persons bound by the agreement may be relevant to the exercise of the discretion if they shed light upon the effect of termination on the public interest, but they should not be given any independent weight. To do so would be to import into the application of the section something which on its proper construction it does not include.

[23] The notion of public interest refers to matters that might affect the public as a whole such as the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards. An example of something in the last category may be a case in which there was no applicable award and the termination of the agreement would lead to an absence of award coverage for the employees. While the content of the notion of public interest cannot be precisely defined, it is distinct in nature from the interests of the parties. And although the public interest and the interests of the parties may be simultaneously affected, that fact does not lessen the distinction between them.”

[10] His Honour Vice President Lawler concludes, “[t]hus, the public interest involves something distinct from the interests of the parties although they may be similarly affected”. The termination of a given agreement may be in the public interest, may be contrary to the public interest or may be neutral in terms of the public interest. Section 226(b)(i) of the Act directs attention to whether termination would be contrary to the public interest.

[11] In Tahmoor, his Honour considers the meaning of the word “appropriate” in the context of section 226 of the Act. 7 He concludes that judicial interpretations of the word do not deal with the problem that reasonable minds may differ, indeed sharply, on what is appropriate in any given set of circumstances8, and further that, “[i]t goes without saying that what is effectively a discretion conferred by s.226 must be exercised judicially, that is, in accordance with the intent of the legislation and any principles emerging from the authorities, and not on the basis of any personal whim or ideologicial predisposition.”9

[12] His Honour further states that the objects of the Act are clearly relevant to a judicial exercise of the power in section 226. If termination will promote the objects of the Act then that is a material factor in favour of considering termination appropriate and if termination will work against the objects of the Act then that is a material factor against considering termination appropriate. 10

Submissions and evidence:

[13] The Applicant submitted, in accordance with my directions, various documents including:

• Letter dated 7 March 2013 from “Employees at Dogs Victoria”



• Letter dated 7 March 2013 from Peter Frost – President Dogs Victoria



• Copy of Dogs Victoria HR Policy and Procedures Manual – dated January 2013



• Copy of Dogs Victoria Employee Handbook – dated January 2013



• Copy of General Letter of offer



• Copy of General Employment Agreement – including Schedules 1 and 2



• Copy of the Victorian Canine Association/ASU Inc Enterprise Agreement 2005 – 2010



• Copy of Employment Agreement between Victorian Canine Association and one particular employee.

[14] As set out above, the documents filed included a letter from Mr Peter Frost, President of the Applicant, which seeks to explain the move to individual contracts. The letter refers to the history of bargaining, with his understanding being, “...that organizing this Enterprise Agreement has been (sic) very difficult task to finalise, which has caused a significant amount of unrest with DOGS Victoria employees”. The letter continues that in October 2012, a consultant was engaged to “look at the structure of the office and define the risk factors of having no human resource presence”. The consultant identified that among other things, the Enterprise Agreement was out of date. The consultant also identified that, there were no “employment agreements” in place. Subsequently, the consultant was given authority to put employment agreements and other matters in place. The letter concludes with the following paragraph;

“[f]inally, it has become apparent that the decision to terminate the Enterprise Agreement has been accepted by the majority of the employees and that this agreement in no longer required by the employees at DOGS Victoria.”

[15] Also included in the documents filed by the Applicant is a letter signed by seven of the nine employees of the Applicant. That letter reads as follows:

“Dear Commissioner Lee

As employees of DOGS Victoria and as signed below, we would like to acknowledge that we do not wish to have an Enterprise Agreement and wish to have Individual Workplace Agreements which have already been signed off by us, the General Manager and President of DOGS Victoria.

Our Enterprise Agreement expired in December 2010 and the Australian Services Union has not supported us in the negotiations of a new Enterprise Agreement. We have not been represented by any one else in the Union nor had regular contact with Sean Williams, our assigned Australian Services Union representative, in fact most have never met him.

Following a lack of communication from the Union, we were pleased to have Anna Lane from Access HR come in and offer a Human Resources (HR) perspective as we have not had any Employment Agreements, HR policies and Procedures, Staff Handbooks or Position Description in place since December 2010. As employees we ask that we are treated fairly and in accordance with government regulations.

We now feel that there are policies and procedures in place which support us, the employees of DOGS Victoria and we are not at a disadvantage for not having an Enterprise Agreement. We do understand that if there are disputes, that we can inform the Fair Work Commission, in reference to the Fair Work Act 2009, the Modern Awards and our Individual Workplace Agreements.

We now look forward to working and servicing our members in a positive workplace knowing that were are secure in our employment and happier in our roles.

Please see below our signed signatures supporting our Individual Workplace Agreements.”

[16] The ASU filed submissions in line with my directions. In summary, those submissions are:

● That the ASU opposes the application;

● That it is not in the public interest to terminate the Agreement;

● That it appears some staff are comfortable with the introduction of individual contracts, but other staff are not and clearly prefer the application of an enterprise agreement over individual contracts;

● That the Applicant did not bargain in good faith for a replacement enterprise agreement;

● That the ASU believed only a small number of matters where outstanding for a replacement agreement before the employer moved to introduce individual contracts;

● That the ASU did not know of the move to individual agreements until they were offered to employees in February 2015;

● That two employees do not support the termination of the Agreement;

● That the Agreement underpins the ASU objective of trying to have members covered by a enterprise agreements;

● That termination of the agreement would prevent their members from having access to the Fair Work Commission to resolve disputes including disputes over award entitlements;

● That the current Agreement provides a number of entitlements that are not contained in the individual contracts.

● That the maintenance of an enterprise agreement provides the basis on which to seek to pursue a further agreement which is in the best long term interests of ASU members.

[17] The Applicant filed submissions in reply. In summary, those submissions are:

● That the Applicant believes that terminating the Agreement is in the public interest;

● That the majority of employees (8 out of 9 employees) support the termination of the agreement;

● That the ASU have not demonstrated that terminating the Agreement is not in the public interest;

● That the employees have terms and conditions in excess of the National Employment Standards and include conditions that have previously been negotiated in the enterprise agreement;

● That the ASU did not bargain in good faith as they did not contact the Applicant from 26 July 2012 to 16 October 2012;

● That the Applicant no longer wants to conclude negotiations for an enterprise agreement;

● That the implementation of the individual agreements has increased productivity in the office area significantly;

● That only one employee has declared support for not terminating the enterprise agreement, by not signing the individual agreement;

● That one of the two employees who supported the ASU position has now signed an individual agreement and withdrawn support for the ASU position;

● That the individual agreements address the National Employment Standards, the modern awards, the national minimum wage orders and agreements made from the previous agreements so that employees are not disadvantaged.

● That terminating the Agreement will not prevent members from having access to the Fair Work Commission;

● That all employee entitlements have been put into their individual agreements and no employee is disadvantaged in any way;

● That in response to the ASU claim that the Agreement provides a number of entitlements that are not contained in the individual contracts, that all entitlements that were included in the Enterprise Agreement are integrated into the individual agreements, the Employee Handbook and the HR Policies and Procedures;

● That the ASU had unrealistic expectations regarding the enterprise negotiations;

● That the ASU, upon being told that the Applicant did not accept that wages would be added to the classifications in the agreement being negotiated, failed to respond for nearly four months;

● That the Applicant does not believe that an Enterprise Agreement serves the interests of their employees or members now or in the future.

Consideration

Will terminating the agreement be contrary to the public interest?

[18] The Applicant has made submissions that there has been an improvement in productivity that has come about as a result of the implementation of the individual agreements. The submissions from the Applicant make clear that the productivity improvements have come from changes to the Human Resources environment generally such as through the introduction of Human Resources policy and procedures, as well as the introduction of the individual agreements themselves.

[19] The ASU claim that it is against the public interest to terminate the Agreement. However, the ASU did not refer me to any evidence as to why this would be the case.

[20] It is evident that a focus of the Applicant is on their preference to maintain the individual agreements as opposed to enter a new collective agreement. The decision for the Applicant as to whether to enter a new collective agreement and if so, on what terms, is a matter for them, subject to the operation of the relevant provisions and objects of the Act.

[21] The question at issue here is whether terminating the Agreement would be contrary to the public interest. The ASU have not articulated a particular public interest consideration that would lead me to conclude that it was contrary to the public interest to terminate the agreement. Overall, I am satisfied that is not contrary to the public interest to terminate the Agreement.

The views of the employees, employer and union?

[22] The view of seven of the employees is reflected in the letter sent and attached to the Applicant’s first submission (as referred to above). There is an eighth employee who has withdrawn their support for the ASUs position; however they are not a signatory to the letter. The ninth employee remains committed to the ASU position of opposing termination and has not signed the letter that the seven employees have signed.

[23] In considering the views of the employees, it is clear that at least seven of the employees “do not wish to have an enterprise agreement” to cover them. It is not entirely clear from the terms of the letter whether that wish is in reference to a prospective agreement or the current enterprise agreement. However, they should have been clearly advised, in accordance with my directions, of the application to terminate the Agreement. In light of the involvement from the ASU in the workplace and their trenchant opposition to the termination, I consider it unlikely that employees are unaware that this matter involves termination of the Agreement.

[24] The view of the Applicant is that they do not want a further enterprise agreement and prefer to regulate employment through individual agreements into the future. They want the Agreement to be terminated. Their view is reflected in the submissions above.

[25] The ASU view is similarly clear. They oppose the application.

What are the circumstances including the likely effect the termination will have on each of them?

[26] The Applicant claims that the circumstances and likely effect for the seven, and probably eight employees who have signed individual employment agreements, should the Agreement be terminated, is that they will not be disadvantaged in terms of their terms and conditions of employment, that their terms and conditions will be regulated through common law contracts that will maintain conditions contained in the enterprise agreement and that they will, in accordance with those contracts, receive pay increases.

[27] The ASU claims that the individual agreements do not contain all of the terms and conditions that are contained in the Agreement but did not direct my attention to any particular condition. Further, a number of the claims from the ASU are not supported with evidence. The claim that termination of the Agreement will lead to a loss of ability to have disputes over award entitlements dealt with in the Fair Work Commission is incorrect. All modern awards contain dispute settlement clauses that allow for disputes to be referred to the Fair Work Commission once the required dispute resolution steps are followed.

[28] The ASU’s submission that a number of the entitlements that are in the current Agreement are not contained within the individual agreements was not supported by any evidence provided by them, nor were any examples pinpointed. I do note that the example of the individual agreement supplied by the Applicant does not provide any particular pay rates. The Agreement does not include classifications and/or wage rates. However, it does incorporate “...existing award and over award payments and conditions of employment...” and applies wage increases to actual rates of pay. 11

[29] Notwithstanding this change, it is clear that the seven employee signatories to the letter do not consider themselves at a disadvantage by signing the individual agreements. The submission of the Applicant is that “The individual agreements address the National Employment Standards, the Modern Awards, the national minimum wage orders and agreements made from the previous enterprise agreement so that employees are not disadvantaged”. 12 This weighs in favour of a determination that it is appropriate to terminate the agreement.

[30] However, this is not the case for the ninth employee. It is not clear what the effect will be for this employee. The Applicant’s submissions do not deal with the likely effect on the ninth employee. When the Agreement is removed, that employee’s statutory entitlements will revert to the applicable modern award. It is not contested that the terms and conditions in the Agreement sought to be terminated are in excess of the modern award. The likely affect is to place the ninth employee at a disadvantage.

[31] While the Act is clear that I need to consider the effect on each of employees, employers and organisations, it is not clear that I need to consider the effect on each employee. However, the fact that there is only one employee who opposes the application and has not signed an individual agreement does not mean that the employees’ circumstances and the likely effect on them assumes a lesser significance. Section 226 of the Act refers to employees generally not a majority of employees. Indeed, the provisions in Subdivision C of Part 2-4 the Act (namely section 219) deal with applications for terminations of agreements where employers and a majority of employees have agreed. Therefore, my concern as to the circumstances and likely effect on that employee weigh against a determination that it is appropriate to terminate the Agreement.

[32] For the Applicant the circumstances and likely effect of terminating the Agreement is not immediately apparent. The Applicant’s submissions make it clear that the beneficial changes in the human resources environment have been achieved with employees happier and productivity improved. The terms and conditions of employees are said not to be inferior relative to the Agreement. The Applicant’s submissions do not make out how the termination of the Agreement will affect the change in human resources practice already undertaken. Much of the Applicant’s submission focuses on their desire not to enter into a new collective agreement but does not indicate how the current Agreement operates to impede their current human resources objectives.

[33] For the ASU, the key issue in terms of circumstances and likely effect relates to the enterprise bargaining environment. A key plank of the opposition of the ASU to the termination is that that the agreement underpins the ASU objective of “trying to have our members covered by a collective agreement” 13 and that “the maintenance of an enterprise agreement provides the basis on which to seek to pursue a further agreement which is in the best long term interests of members”.14

[34] It is clear that the ASU opposed the introduction of the individual agreements 15 and that this had become a key issue in the bargaining dispute between the ASU and the Applicant. In this context, the terms of clause 8 in the current Agreement are noteworthy:

“CLAUSE 8 COLLECTIVE BARGAINING

8.1 The Victorian Canine Association Inc is committed during the life of this Agreement and in its renegotiations to negotiate collectively with the union party to this Agreement and in respect of all its employees who are eligible to be members of this union and are covered by this Agreement. Specifically, this excludes the employer from offering and the employees from accepting, Australian Workplace Agreements (AWA’s) or any other form of individual contract, such as under common law or state legislation.

The Victorian Canine Association Inc also agrees to negotiate and certify subsequent certified agreements with the unions signatory to this agreement, and will not seek to negotiate or certify a non-union agreement.”

[35] To the extent this clause acts as a constraint on the employer achieving its objective of entering into common law contracts it is a significant issue in the bargaining dispute. The termination of the Agreement will remove that constraint.

[36] It is also clear, on the submissions of the Applicant, that a further key stumbling block to achieving an enterprise agreement was the reluctance from the Applicant to include rates of pay in the Agreement. 16 It was claimed by the Applicant that employees did not want wages added to the classifications. It was put by the Applicant that the Chief Executive Officer did not want grades added into the agreement.17 The Applicant submits that the ASU were slowing down the process as they were not willing to accept the conditions stating the staff did not want wages added to the classifications.

[37] Therefore, the circumstances and likely effect of terminating the Agreement for the ASU will be to deliver the key aspects of what the Applicant has sought from bargaining. That is, the removal of a barrier to the introduction of individual common law agreements and avoiding the regulation of rates of pay through a collective instrument.

[38] The approach of Vice President Lawler in Tahmoor is highly relevant in this context:

“[55] It seems to me that under the scheme of the FW Act, generally speaking, it will not be appropriate to terminate an agreement that has passed its nominal expiry date if bargaining for a replacement agreement is ongoing such that there remains a reasonable prospect that bargaining (in conjunction with protected industrial action and or employer response action) will result in a new agreement. This will be so even where the bargaining has become protracted because a party is advancing claims for changes that are particularly unpalatable to the other party. While every case will turn on its own circumstances, the precedence assigned to achieving productivity benefits through bargaining, evident in the objects of the FW Act, suggests that it will generally be inappropriate for FWA to interfere in the bargaining process so as to substantially alter the status quo in relation to the balance of bargaining between the parties so as to deliver to one of the bargaining parties effectively all that it seeks from the bargaining.”

[39] The alteration of the status quo is precisely what will occur here. There will be an alteration in the balance of bargaining such that two key issues, the removal of the prohibition on individual agreements and the removal of the regulation of rates of pay will be delivered to one of the bargaining parties.

[40] I do have concerns as to whether there is a reasonable prospect of an agreement being reached given the current circumstances surrounding the bargaining. However, I have to consider that the current circumstances have been in place for a short period of time and have to be considered against the long period of time that the workplace was regulated by enterprise agreements. It is also clear that until the introduction of the individual agreements there had been considerable progress in bargaining though the bargaining was very protracted.

Conclusion:

[41] As already stated above, I do not think it is contrary to the public interest to terminate the Agreement.

[42] There are a number of significant factors that weigh in favour of a determination that it is appropriate to terminate the agreement as I have outlined above. This includes the views of a significant number of employees that they want the Agreement terminated and the claim of the Applicant that employees conditions will be protected through the signing of an individual agreement and the application of other human resources policy instruments such that the likely effect for the majority of employees who have signed up will be no disadvantage.

[43] Against this, I have concerns that the ninth employee who continues to support the ASU position and has not signed an individual agreement may be disadvantaged if the Agreement is terminated.

[44] I also have concerns that terminating the Agreement will fundamentally alter the status quo in the bargaining process, delivering in effect all that Applicant now seeks from the bargaining. Consistent with the approach adopted in Tahmoor, this weighs against a determination that it is appropriate to terminate the agreement.

[45] For the reasons outlined above, and considering section 226(b) of the Act as a whole, I do not consider that it is appropriate to terminate the Agreement. Having reached that decision, the application must be dismissed.

COMMISSIONER

 1   AG839997  

 2   Sub-clause 6.1 of the Agreement

 3   See clause 5 of the Agreement - “Parties Bound”

 4   [2010] FWA 6468

 5   See Tahmoor Coal Pty Ltd [2010] FWA 6468, [27] - [29]

 6   PR955357

 7   See Tahmoor Coal Pty Ltd [2010] FWA 6468, [32] - [37]

 8   Tahmoor Coal Pty Ltd [2010] FWA 6468, [37]

 9   Tahmoor Coal Pty Ltd [2010] FWA 6468, [39]

 10   Tahmoor Coal Pty Ltd [2010] FWA 6468, [46]

 11   See clauses 4.2 and 15 of the Agreement

 12   Applicant’s response to submissions made by the ASU, filed 11 April 2013, [19]

 13   Submissions by the ASU, filed 28 March 2013, [19]

 14   Submissions by the ASU, [24]

 15   Submissions by the ASU, [13]

 16   Attachment 2 to Applicant’s response to submissions made by the ASU, filed 11 April 2013

 17   Applicant’s response to submissions made by the ASU, filed 11 April 2013, [7]

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