Application to terminate the McDonald’s Australia Enterprise Agreement 2013 – retrospective date of operation sought – jurisdiction prospective only – discretionary considerations bearing on operative date – agreement terminated

[1] This decision concerns two applications made under s 225 of the Fair Work Act 2009 (Act) for the Commission to terminate the McDonald’s Australia Enterprise Agreement 2013 1 (Agreement), which reached its nominal expiry date on 24 June 2017.

[2] The first application was lodged by the Retail and Fast Food Workers Union Incorporated (RAFFWU) on behalf of Mr Xzavier Kelly, an employee covered by the Agreement who therefore has standing to bring the application under s 225(b) of the Act. Mr Kelly asks that the Commission terminate the Agreement with retrospective effect, operative from 25 June 2017. He says that employees covered by the Agreement have been disadvantaged by the continuing operation of the Agreement and that they would be better off under the Fast Food Industry Award 2010 (Award). Mr Kelly contends that s 227 allows the Commission to terminate an enterprise agreement with retrospective effect and that there are strong discretionary reasons for the Commission to do so in this case.

[3] The second application was lodged by the Shop, Distributive and Allied Employees Association (SDA) on 30 September 2019. The SDA is an organisation covered by the Agreement and has standing to make the application under s 225(c). It submits that the Agreement should be terminated with effect no later than 21 days from the date of the Commission’s decision. Alternatively, it says that any longer period between the date of the decision and the day from which the termination operates should be subject to the condition that the respondent employers apply certain terms of the Award from 21 days after the Commission’s decision. The SDA opposes Mr Kelly’s application to terminate the Agreement with retrospective effect. It says that the Commission has no power to do so, and that even if power existed, there would be compelling discretionary reasons for the Commission not to exercise it, in particular because some employees might be exposed to claims from their employers seeking to recoup retrospective overpayments.

[4] The employers covered by the Agreement are McDonald’s Australia Limited (McDonald’s) and the franchisees listed in Schedule 1 of the Agreement (the employers). The Agreement is a single-interest enterprise agreement, made pursuant to a single interest employer authorisation. The employers agree that the Agreement should be terminated but, like the SDA, contend that s 227 does not allow the Commission to terminate the Agreement with retrospective effect, and that there are powerful discretionary reasons not to do so in any event. They submit that the termination of the Agreement should operate from 3 February 2020, so as to allow them sufficient time…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Xzavier Kelly

Details

AGLC: Xzavier Kelly [2019] FWCA 8563
Case: [2019] FWCA 8563
Decision Date: 19 DECEMBER 2019

CaseChat Overview and Summary

The parties involved in the case were Xzavier Kelly and McDonald's Australia. The nature of the dispute was an application to terminate the McDonald’s Australia Enterprise Agreement 2013, with a request for the termination to be effective from a retrospective date. The matter was heard in the Fair Work Commission, with a decision subsequently reviewed by the Full Bench of the Commission. The primary legal issue the court had to decide was whether it had the jurisdiction to order the termination of the enterprise agreement to be effective from a date prior to the date of the decision. Another issue was whether discretionary considerations should influence the operative date of the termination.

The court examined the statutory framework governing enterprise agreements, particularly the provisions that pertain to the jurisdiction of the Commission and the discretion it may exercise in determining the effective date of a termination. The Commission held that, while the statutory language indicated a prospective jurisdiction, this did not preclude the Commission from exercising its discretion in certain circumstances. The court found that it could take into account discretionary considerations, such as the impact of the termination on employees, before deciding on the operative date. The Full Bench concluded that it was appropriate to set the termination date to be prospective from the date of the decision, while acknowledging the potential hardship this may cause to the employees. This approach balanced the need for finality in the legal process with the interests of fairness towards the employees involved.

Orders