Fair Work Act 2009
s.222 - Application for approval of a termination of an enterprise agreement

XRF Labware Pty Ltd T/A XRF Labware
(AG2022/4031)

Application for termination of the XRF Labware Pty Ltd and AWU Enterprised Based Agreement 2019-2022 XRF Labware Pty Ltd

[1] On 22 September 2022, XRF Labware Pty Ltd T/A XRF Labware (XRF/Applicant) made an application (Application) pursuant to s.222 of the Fair Work Act 2009 (Cth) (Act) to the Fair Work Commission (Commission) to terminate XRF Labware Pty Ltd and AWU Enterprised Based Agreement 2019-2022 XRF Labware Pty Ltd (Agreement).

[2] The Agreement is a single enterprise agreement. It was approved by Deputy President Young on 17 March 2020. 1

[3] The nominal expiry date of the Agreement was 30 June 2022.

Substantive hearing

[4] At the substantive hearing on 20 December 2022,

a) the Applicant was represented by Danny Verbeeteen, General Manager, and John Girardi from Girardi Human Resources, and

b) the Australian Workers Union (AWU) (who opposed the Application) was represented by Leyal Aksu. Ms Aksu attended with AWU organiser, Fez Riches and AWU delegate, Robert Richings. Mr Richings made himself available for cross-examination. The Applicant decided not to cross-examine him. 2 I accept his evidence.

c) there was no attendance by any of the employees who would be affected by the decision to terminate the Agreement. As a matter of procedural fairness, I provided the Applicant with an opportunity to seek an adjournment to allow it to call evidence from the affected employees 3. It decided not to do so.4

[5] In advance of the substantive hearing the parties filed material. For completeness I set

out below the documents relied upon by the parties. I have had regard to all this material in coming to this decision.

Legislation

[6] The relevant provisions of the Act are as follows:

“220 Employers may request employees to approve a proposed termination of an enterprise agreement

(1) An employer covered by an enterprise agreement may request the employees covered by the agreement to approve a proposed termination of the agreement by voting for it.

(2) Before making the request, the employer must:

(a) take all reasonable steps to notify the employees of the following:

(i) the time and place at which the vote will occur;

(ii) the voting method that will be used; and

(b) give the employees a reasonable opportunity to decide whether they want to approve the proposed termination.

(3) Without limiting subsection (1), the employer may request that the employees vote by ballot or by an electronic method.

221 When termination of an enterprise agreement is agreed to

Single-enterprise agreement

(1) If the employees of an employer, or each employer, covered by a single-enterprise agreement have been asked to approve a proposed termination of the agreement under subsection 220(1), the termination is agreed to when a majority of the employees who cast a valid vote approve the termination.

222 Application for the FWC’s 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 the 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 the FWC considers it fair to extend that period—within such further period as the 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.

224 When termination comes into operation

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 – s.222 of the Act

Is the Applicant a person covered by the Agreement for the purposes of s.222(1)?

[7] The employer covered by the Agreement is XRF Labware Pty Ltd. This is the same as the employer named in the Application.

[8] Having considered the materials before me, I am satisfied that the Application was made by an employer covered by the Agreement and that the Applicant has standing to make the Application.

Is the Application accompanied by any declarations that are required by the procedural rules to accompany the Application as required by s.222(2) of the Act?

[9] The Application is accompanied by a Form F24A – declaration in support of termination of an enterprise agreement (Form F24A). I am satisfied that the Application is accompanied by the material required by the Fair Work Commission Rules 2013 and that the requirements of s.222(2) of the Act have been met.

Has the Application been made within the required timeframe per s.222(3)(a)?

[10] Section 222(3) of the Act sets out the timeframe within which an application must be made, being within 14 days after the termination is agreed to or, if the Commission determines in all the circumstances it would be fair to extend that period, such period as the Commission allows.

[11] It is declared in the Form F24A that the termination was agreed on 14 September 2022.

[12] The Commission’s records show the Application was filed on 22 September 2022, which means the application was made within 14 days after the termination was agreed to. I am satisfied that the Application was made within the timeframe required by s.222(3)(a) of the Act.

Consideration – s.223 of the Act

[13] I must approve the Application if I am satisfied that the requirements set out in s.223 of the Act are met.

[14] Section 223(a) of the Act requires me to be satisfied that each employer covered by the Agreement complied with s.220(2) in relation to the Agreement. I consider this requirement below.

Did the Applicant take all reasonable steps to notify the employees of the time and place of the vote and voting method before requesting the employees vote to approve the termination as required by s.220(2)(a) of the Act?

[15] It is declared by the Applicant in the Form F24A that it explained the voting process to covered employees and provided them with the voting slip at a meeting held on 7 September 2022. The voting slip contained the following two questions:

“1. Do you wish to negotiate a new EBA? YES/NO

2. If you answered NO to question 1, do you wish to terminate the current EBA, “XRF Labware Pty Ltd and AWU Enterprised Based Agreement 2019-2022? YES/ NO”

[16] I observe that the first question is irrelevant in deciding whether employees want to terminate an existing enterprise agreement. It is not clear why that question was included. XRF have already issued a Notice of Employee Representational Rights. It has indicated an intention to bargain. In another matter before me it submitted it still wanted to bargain with the AWU for a new enterprise agreement (in fact it agreed on a timetable for discussions through until 29 March 2023).

[17] The AWU is a bargaining representative and is entitled to represent its members in bargaining.

[18] Other employees cannot vote to stop bargaining. Of course, they can vote to not approve any resulting agreement from the bargaining. Bargaining stops when all the parties agree to stop bargaining or when a new agreement is approved. One group of employees (even a majority) cannot stop another bargaining representative from bargaining. If some employees do not want to be a part of the bargaining, they do not have to be. But those employees cannot impose their will to not bargain on others who want to bargain.

[19] Mr Verbeeten declared that employees were told that the voting process was private and confidential and that they had 7 days to return their votes to him either directly in an envelope or by taking a picture of (or scanning) their vote and sending it by email or text. 5 I observe that before me the Applicant produced a table of who voted and who voted “yes” to termination. It cannot have been that confidential.

[20] It was also declared by the Applicant that one employee who was absent from the meeting was provided with the same information by telephone. Again, the lack of confidentiality is obvious.

[21] Notwithstanding the concerns I have observed above, having considered the materials before me, I am satisfied that, before requesting that the employees vote to approve the proposed termination of the Agreement, the employer took all reasonable steps to notify the employees of the time, place and voting method that would be used as required by s.220(2)(a) of the Act.

Did the Applicant give the employees a reasonable opportunity to decide whether they want to approve the proposed termination as required by s.220(2)(b) of the Act?

[22] The question as to whether employees have been given a reasonable opportunity to decide if they want to approve the termination of the Agreement should be considered objectively against the particular facts and circumstances of the application. The Explanatory Memorandum to the Fair Work Bill at item 932 provides guidance on the meaning of a reasonable opportunity to decide:

“This may, for example, involve the employer allowing employees sufficient time between making the request and the time of the vote to consider the effect of the termination on their terms and conditions.”

[23] The Applicant submitted that:

a) it used the voting process outlined in the Commission’s Enterprise Agreements Benchbook; and,

b) it gave each employee seven days to consider, question and review the advantages and disadvantages of terminating the Agreement.

[24] The first observation I make is that the Commission’s Enterprise Agreements Benchbook does not deal with the process for how to conduct a vote to:

a) terminate bargaining (there is no such process); or

b) terminate an enterprise agreement.

[25] Accordingly, it seems that the Applicant confused the processes which apply to majority support determinations with what is required to terminate an enterprise agreement. I note that in Mr Verbeeten’s submissions he expressly refers to “majority support”. 6

[26] The second observation I make is that there was no evidence of any information (and certainly no document – Mr Verbeeten confirming no document was produced to this effect 7) being given to employees to explain the advantages and disadvantages of terminating the Agreement.

[27] There are a number of non-award benefits/enhancements in the Agreement. These were not explained to the employees. Before me, Ms Aksu asked Mr Verbeeten “When you gave … voting forms to your employee, did you explain to them the benefits of the current enterprise agreement?” Mr Verbeeten replied “No….” 8

[28] In his submissions Mr Verbeeten submitted that,

“If the current EA is removed, it is not my intention to remove the underlying conditions or reduce their salaries, and all of our employees understand that. Yes, all those employees will revert back to the relevant award … but their current conditions and wages will remain.”

[29] No evidence was led about how “all of our employees understand that.” Further, if that is the case, it becomes obvious to question the utility of terminating the Agreement.

[30] Further, there was no evidence that XRF intended to protect EA terms and conditions in employment agreements once the Agreement is terminated. Removing these benefits from an enterprise agreement would make it difficult for the employees to enforce them in the future. Mr Verbeeten conceded before me that he did not explain this to employees before they voted. 9

[31] The Applicant filed statements from 6 employees dated between 9 to 14 November 2022 (i.e. after the vote was counted and the present application was made), purporting to state reasons why they do not wish to be covered by an enterprise agreement.

[32] However, the Applicant did not call the employees to attest to their purported statements. Consequently, the Australian Workers’ Union (AWU) was denied the opportunity to cross-examine the employees. In order to remedy this procedural unfairness, I invited the Applicant to ask for an adjournment so that it could call the employees to give evidence. It decided not to do so. Therefore, I decided not to receive the statements consistent with well-established principles. 10

[33] I have significant concerns about what information may have been provided to employees. Although I did not formally receive the employee statements submitted by the Applicant, I observe that the employees variously seem to be under the mistaken belief that being covered by an enterprise agreement means:

a) they have to be member of the union;

b) they cannot be paid more than what is in the enterprise agreement;

c) they are somehow precluded from negotiating better terms with their employer;

d) they cannot be rewarded for individual performance;

e) their skill development would go unrecognised.

[34] In the hearing I put this to Mr Verbeeten. He conceded that he understood that employees had misapprehensions (as per above), but that he did nothing to correct their misunderstandings. 11 The following exchange12 occurred:

Commissioner: “You understood that [the employees] misunderstood certain things, didn’t you?”

Mr Verbeeten: “Yes.”

Commissioner: “And you didn’t correct them, did you?”

Mr Verbeeten: “I did not correct them.”

[35] It was an extraordinary admission.

[36] Likely Mr Verbeeten contributed to the misapprehension that voting to continue enterprise bargaining meant employees had to be a member of the union. Mr Verbeeten conceded 13 that, on 31 August 2022, he said,

“It’s not compulsory to vote, but if you don’t fill it out, it means you want to stay with Fez and the union.”

[37] That was a highly prejudicial statement to make. It is just plain wrong. At anytime an employee can appoint themselves as their own bargaining representative for an enterprise agreement. This was not explained to employees. Mr Verbeeten’s statement was misleading.

[38] What this means is that, more likely than not, employees exercised their vote with misleading or inaccurate information about the range of matters referred to above. If this is the case, it means that, when they voted, employees may not have been provided with a reasonable opportunity to decide whether they want to approve the termination because of the misinformation they had or misapprehension they were under.

[39] A vote based on an inaccurate belief about what will occur when a person votes in a particular way, cannot be a valid vote. The misapprehension vitiates the validity of the vote.

[40] This impacts not only the consideration under s.220(2)(b) of the Act, but also the subsequent questions regarding whether the termination of the Agreement was agreed.

[41] I am deeply troubled by the conduct of the Applicant in allowing employees to vote, knowing that its employees were under such serious misapprehensions.

[42] As I have explained above, I provided the Applicant with an opportunity to ask for an adjournment so that it could call its employees to give evidence about their understanding. Had the Applicant done so, my fears about the employees’ misapprehensions may have been allayed. However, the Applicant chose not to do so. I am entitled therefore to draw the inference that the evidence of the employees would not have assisted the Applicant. 14

[43] On 30 November 2022 the AWU filed submissions opposing the Application. The AWU submitted that:

•  “…The information provided to the employees is, at various points, inconsistent, ambiguous, inaccurate, incomplete or misleading. As such, the AWU respectfully submits that the Commission should not be satisfied that the Applicant has complied with s.220(2).

•  The Applicant has sought to rely on evidence after the vote to show the intent of the voters during the voting period. The statements of those employees who purportedly voted to terminate the Agreement between the 7 September and 14 September period, have been produced some two months later.

•  The Applicant has sought to rely on evidence after the vote to show the intent of the voters during the voting period. The statements of those employees who purportedly voted to terminate the Agreement between the 7 September and 14 September period, have been produced some two months later.

•  It is clear from the statements of the employees that they were unclear or confused about the purpose of the vote or they were given unclear or confusing instructions from the Applicant as to why the vote was taken.

•  It is also apparent that the employees have been misled as to the breadth and subject matter which can be topics for enterprise agreement negotiations and not necessarily only subjects for individually negotiated contracts.”

[44] The AWU’s submissions are well founded.

[45] In the circumstances of this matter, I am not satisfied that employees had a reasonable opportunity to decide whether they want to approve the proposed termination as required by s.220(2)(b) of the Act, particularly as they were likely operating under the influence of inaccurate and/or misleading information.

Was the termination of the Agreement agreed in accordance with whichever of s.221(1) or (2) applies and are there other reasonable grounds for believing that the employees have not agreed to the termination (s.223(c))?

[46] Section 223(b) of the Act requires me to be satisfied that the termination was agreed in accordance with whichever of s.221(1) or (2) applies. The Agreement is a single enterprise agreement and therefore s.221(1) applies.

[47] Ordinarily, the wishes of the employees covered by an Agreement will carry significant weight in relation to an application of this nature. However, as I have noted above, I consider it likely that employees relied on inaccurate and/or misleading information that may have influenced their decision such that I cannot be satisfied that the employees agreed to the termination.

Consideration of the views of the employee organisation or employee organisations (if any) covered by the Agreement – s.223(d)

[48] The AWU is an employee organisation covered by the Agreement. The AWU filed submissions opposing the application, submitting the termination of the Agreement would result in the loss of a number of benefits in the Agreement.

[49] I have considered the submissions of the parties and consider that the views of the AWU weigh against the granting of the Application.

Conclusion

[50] In the circumstances of this matter, I am not satisfied that the Applicant complied with s.220(2) of the Act as employees were likely provided with misleading and/or inaccurate information that meant that they did not have a reasonable opportunity to decide whether they want to approve the proposed termination. I am not satisfied that termination was agreed to in accordance with s.221(1), in that it is likely the misleading and/or inaccurate information was relied upon in casting their vote. The views of the AWU also weigh against the granting of the Application.

[51] Based on the material before the Commission, I am not satisfied that the requirements of s.223 of the Act have been met and the Application is dismissed.

COMMISSIONER

Appearances:
Mr. D Verbeeteen for the Applicant
Ms L Asku for the Respondent

Hearing details:
20 December 2022, Melbourne.

Printed by authority of the Commonwealth Government Printer

<AE507435  PR749524>

 1   [2020] FWCA 1407.

 2   Transcript PN320.

 3   Transcript PN298-299.

 4   Transcript PN303.

 5   Returning the vote by email or text would not have been confidential.

 6   Digital Tribunal Book, page 19.

 7   Transcript PN166.

 8   Transcript PN193

 9   Transcript PN174.

 10   Jones v Dunkel (1959) 101 CLR 298 at 320

 11   Transcript PN134

 12   Transcript PN195-196.

 13   Transcript PN230.

 14   Jones v Dunkel (1959) 101 CLR 298 at 320.