| [2015] FWCA 7698 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Item 16 Sch. 3—Termination of transitional instrument
Pinarello Blues Pty Ltd as Trustee for Judds Discretionary Trust T/A Yankalilla Hotel
(AG2014/9355)
YANKALILLA HOTEL/LHMU COLLECTIVE AGREEMENT 2007-2011
Industries not otherwise assigned | |
DEPUTY PRESIDENT BARTEL |
ADELAIDE, 19 NOVEMBER 2015 |
Application to terminate the Yankalilla Hotel/LHMU Collective Agreement 2007-2011
Introduction and Background
[1] Pinarello Blues Pty Ltd ATF Judds Discretionary Trust T/A Yankalilla Hotel (the applicant) has made application to terminate the Yankalilla Hotel/LHMU Collective Agreement 2007-2011 (the Agreement). The Agreement is a collective agreement-based transitional instrument in accordance with the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the TPCA Act). In accordance with this Act, an application to terminate a collective agreement-based transitional instrument is to be dealt with as if it was an application to terminate an enterprise agreement under s.225 of the Fair Work Act 2009 (the Act). 1
[2] The relevant provisions of the Act are as follows:
“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.
227 When termination comes into operation
If an enterprise agreement is terminated under section 226, the termination operates from the day specified in the decision to terminate the agreement.”
[3] The Agreement has a nominal expiry date of 1 May 2011. The relevant modern award for the employees covered by the Agreement is the Hospitality Industry (General) Award 2010 (the HIGA), 2 which will apply in the event that the Agreement is terminated.
[4] The Agreement is based on a template document known as the Top Shelf template that was developed between the Liquor, Hospitality and Miscellaneous Workers Union, as United Voice was previously known, and the Australian Hotels Association (the AHA). United Voice (the Union) is covered by the Agreement and opposes the application to terminate.
[5] The applicant is a member of the RD Jones Group (RD Jones) which encompasses a range of holdings and companies in the hospitality industry in South Australia and interstate. In South Australia, RD Jones includes 13 hotels and taverns, each of which has a separate legal identity.
[6] There are nine hotels and taverns within RD Jones in South Australia covered by a collective agreement-based transitional instrument (referred to hereafter as transitional agreements), including the applicant. In all cases the transitional agreements contain terms and conditions based on the Top Shelf template and are, in substance, in the same terms as the Agreement. RD Jones also includes four taverns and hotels in South Australia where the HIGA applies (the HIGA hotels).
[7] The applicant’s original intention was to terminate all nine of the transitional agreements. Advice of this intention was provided in a letter to employees at the relevant hotels on 12 September 2014. This was followed by a meeting at each location in the period 17 September to 30 September 2014. The meetings were conducted by the Human Resources Manager for RD Jones, Ms Lena Athanasiou. The Union was advised of the meetings and was represented at each of them. The format of the meetings consisted of a slide presentation and questions and answers, including the opportunity for employees to direct questions to the Union. 3
[8] At some point RD Jones decided to pursue only the termination of the Agreement. The intention in respect to the other transitional agreements is unclear. 4
[9] Prior to the approval of the Agreement, the employees were bound by the Hotels, Clubs, Etc., Award, being a Notional Agreement Preserving a State Award (the NAPSA). 5
[10] One of the objectives of the Agreement is to incorporate and preserve certain provisions of the NAPSA. 6 These provisions relevantly include a casual loading of 50% for hours worked on all days of the week, including public holidays. The corresponding provisions of the HIGA are a 25% casual loading for Monday to Friday work with additional penalties applying on Saturdays, Sundays and public holidays. These differential conditions, among others, were the subject of transitional provisions in the HIGA, which ceased to operate on 31 December 2014.7
[11] It is uncontroversial that there are a number of more beneficial provisions in the Agreement when compared to the HIGA, including:
[12] The applicant proposes to enter into arrangements with employees to ameliorate the impact of any reduction in remuneration or benefits that may arise from a move to the HIGA. This is discussed in more detail later in the decision. It is also the case that there are more beneficial terms of the HIGA compared to the Agreement. These include higher penalty payments for casuals on Sundays (175%) and public holidays (275%); broader application of the higher duties allowance; higher payments for work performed on a Rostered Day Off and an entitlement to a meal allowance.
[13] Clause 7 of the Agreement provides that the nominal expiry date of the Agreement is 1 May 2011 or until superseded by a replacement agreement or terminated in accordance with Clause 14. Clause 14 provides:
“CLAUSE 14 - TERMINATION OF AGREEMENT
14.1 Subject to the Workplace Relations Act 1996, this Agreement may be terminated after its nominal expiry date when all parties and the majority of employees covered by this Agreement consent to its termination.
14.2 The parties do not intend to terminate this Agreement in a manner other than as set out in this Clause.
14.3 In the event that this Agreement is terminated, the parties intend to continue to observe the terms and conditions of this Agreement, including the minimum entitlements of employees, until such time as new workplace arrangements come into operation.”
[14] The following witnesses were called by the applicant:
[15] The following witnesses were called by the Union:
[16] Ms Athanasiou identified five reasons for the application to terminate the Agreement: 8
[17] Ms Athanasiou addressed the advice provided to RD Jones that it would need to undertake a corporate restructure in order to meet the requirements for self-insurance. Achievement of this status would facilitate the adoption of more rigorous health and safety practices because of the strict audit requirements imposed on self-insured employers by the WorkCover Corporation. 9
[18] The impact of the termination of the Agreement on the mobility of staff between sites concerned the circumstances where employees move between hotels on a shift by shift basis to overcome temporary staff shortages. Ms Athanasiou highlighted that employees from the Yankalilla Hotel most frequently assisted at HIGA Hotels and that, currently, the different rates of pay and complicated invoicing arrangements between sites created administrative difficulties.
[19] The process of consultation undertaken with employees at the Yankalilla Hotel consisted of initial correspondence followed by a meeting on 30 September 2014. The differences between the HIGA and the Agreement were outlined using a Power Point presentation. Employees were encouraged to make their own assessment of their position by comparing their current rosters under the Agreement and the HIGA. Union officials were present at the meeting and had access to employees directly afterwards. Union officials were also on site in the days preceding and following the meeting.
[20] Ms Athanasiou detailed the voting process and the outcome of the vote. She stated that 24 employees are covered by the Agreement and each received a voting slip.
[21] Twenty-four voting slips were returned. Seventeen employees supported the termination of the Agreement. Three employees initially opposed the termination of the Agreement, but each subsequently submitted a second vote approving the termination of the Agreement after receiving a written assurance from Ms Athanasiou that their roster patterns and hours of work would not change if the Agreement was terminated. Four employees indicated conditional support for the termination of the Agreement, i.e. they supported the termination subject to their concerns about reductions in pay rates being addressed. Ms Athanasiou subsequently provided written assurances to each of these employees that their pay would not be reduced.
[22] Ms Athanasiou stated that the applicant wished to terminate the Agreement rather than replace it and that it would be prepared to consider the negotiation of a new agreement once the HIGA applied. She stated that the timing of the application to terminate the Agreement was influenced by the cessation of the transitional provisions in the HIGA, which had preserved the 50% casual loading for work performed on Monday to Friday. 10
[23] Ms Athanasiou identified a number of administrative inefficiencies associated with the current corporate structure of RD Jones. For example, she stated that:
“Currently the way the RD Jones Group stands we have 13 different entities, so 13 separate payroll systems. So if I need to run a report I have to run 13 payroll systems, roll them into an Excel and create a report from that. I also have to have 13 different WorkCover registrations. I also have to have 13 different training contract registrations with the Department of Further Education. I also have to have 13 different registrations when it comes to lodging visa applications.” 11
[24] She conceded under cross-examination that the termination of the Agreement will not deliver efficiencies in relation to the matters raised above.
[25] Ms Athanasiou also conceded that if the Agreement was terminated there would be less consistency of industrial regulation across RD Jones and that to achieve consistency all entities would need to be covered by the same industrial instrument. However, she stated that there is no intention at this stage to apply to terminate any or all of the other transitional agreements. 12
[26] In relation to the proposed corporate restructure, Ms Athanasiou said that the inclusion of the Yankalilla Hotel in the group of hotels to which the HIGA applied would enable this proposed corporate entity to meet the minimum number of employees required to attain self-insured status. 13
[27] She conceded that the achievement of self-insured status is independent of the number and nature of industrial instruments that applied and that the corporate structure of RD Jones was the more relevant issue in this regard. Ms Athanasiou indicated that there had been no investigation of potential administrative efficiencies that may flow from the creation of two corporate entities consisting of the hotels covered by the transitional agreements and the HIGA hotels, respectively. 14
[28] Ms Athanasiou also acknowledged that the applicant’s assurances to employees to maintain their remuneration and a proposed Memorandum of Understanding that would preserve the more beneficial terms of the Agreement, would result in different terms and conditions for employees of the applicant compared to employees at other HIGA hotels
[29] Mr Kingsley gave evidence about his discussions with certain employees who were concerned that they may suffer a reduction in pay or conditions if the Agreement was terminated. He encouraged these employees write their concerns on the ballot paper, on the basis that Ms Athanasiou would be in a position to address them, and acknowledged that these employees voted in support of the termination on this basis. 15 He stated that his motivation in having these discussions with staff was to keep them happy and to secure their support for the termination of the Agreement.
[30] Mr Kingsley agreed that five employees who were not covered by the Agreement, including himself, participated in the vote.
[31] Under cross-examination, Mr Kingsley was questioned about attempts to restrict or hinder access of the Union to the employees of the applicant. I will not detail his evidence on this point – it is sufficient to note that I am satisfied that the employees had a number of opportunities to speak with officials of the Union in relation to the termination of the Agreement. As earlier stated, the applicant facilitated the involvement of the Union in the meeting where Ms Athanasiou made her presentation to employees and officials remained on site after the meeting. Officials also attended the Yankalilla Hotel on days before and after the meeting.
[32] Ms Duke stated that the Union was opposed to the application to terminate the Agreement because some existing workers will lose income and new and existing employees will not have the benefit of certain protections under the Agreement. In addition, the termination of the Agreement will make negotiations for a new agreement more difficult because casual employees are in a weaker bargaining position; there is a lower base of terms and conditions that will apply; and there will be varying conditions among workers as a result of the individual arrangements proposed by the applicant.
[33] The Union had not sought to enter into negotiations for a replacement agreement because of the applicant’s expressed intention to terminate the Agreement and because members were not pressing for its renegotiation. Ms Duke referred to the negotiation of a further template agreement with the AHA (the 2014 template) 16 which was concluded in October 2014 and to certain protocols agreed with the AHA on the promotion of the 2014 template among its members, which includes RD Jones. The 2014 template preserved the regime of casual and part time loadings and other conditions of the Top Shelf template.
[34] Ms Harrison addressed a spread sheet she had created showing the difference in income for casual employees under the Agreement and the HIGA. The spread sheet was prepared using the rosters and classifications of casual employees over the period December 2013 to December 2014, or from commencement to December 2014 where the employee had not completed a full years’ service as at December 2014. I note that the applicant undertook its own calculations using the same source data, with slightly different results due to the inclusion of public holiday rates which had not been factored into Ms Harrison’s calculations. 17
[35] The calculations show that 7 out of 14 casual employees would have been worse off under the HIGA than the Agreement over the period of the calculations, by amounts ranging from $0.55 per week to $72.63 per week.
[36] Ms Hutt, Mr Thompson and Ms Edwards gave evidence about the meeting that took place on 30 September convened by Ms Athanasiou. Their evidence was that Ms Athanasiou responded to concerns raised by employees about loss of income with offers to enter into individual arrangements and that there was some misinformation provided by Ms Athanasiou concerning casual entitlements. It was the evidence of Mr Thompson and Ms Hutt that Ms Athanasiou became upset at the conclusion of the meeting when the Union disagreed with statements she had made about these entitlements.
[37] These witnesses also addressed the steps undertaken by the Union during September 2014 in its campaign to oppose the termination of the Agreement. Nine employees completed a Union form indicating support for the Union’s position. 18
[38] Finally, the evidence of Mr Byrne was that the issue of industrial coverage, including the existence of different industrial instruments applying at different sites, was not relevant to the determination of self-insured status for workers compensation.
[39] The evidence relating to the employees’ attitude to the termination of the Agreement is based on voting forms that were submitted to the applicant and to the Union. Some employees submitted more than one form to the applicant or completed forms to the Union and the applicant indicating contrary positions.
[40] Twenty-four employees completed the voting form distributed by Ms Athanasiou. Of these employees, five are not covered by the Agreement. 19 An additional employee who is covered by the Agreement commenced in mid-October 2014 and did not complete a form. Accordingly, as at the date of the hearing, there were 20 employees covered by the Agreement, 19 of whom completed at least one voting form. The discussion below is limited to these 19 employees unless otherwise specified.
[41] Seventeen employees supported termination of the Agreement on the applicant’s voting slips, including four employees who indicated ‘conditional support’. Ms Athanasiou provided correspondence to each of these four employees in which assurances were given that no roster change would result from the termination of the Agreement or that the employee’s rate of pay would increase to overcome any loss of income arising from a move to the HIGA.
[42] Two employees opposed the termination of the Agreement on the applicant’s voting slips, but subsequently presented voting papers supporting the termination after receiving assurances from Ms Athanasiou concerning their hours of work.
[43] Three of the nine employees who completed the Union’s paperwork opposing termination of the Agreement, subsequently completed the applicant’s form supporting the termination. In the absence of any contrary evidence, I regard the later expression of their position as the relevant indication of their position. The remaining six employees completed the Union’s form and the applicant’s voting slip on the same day. There is no evidence as to the order in which the forms were completed on that day.
[44] I am satisfied that a majority of the employees covered by the Agreement have indicated support for its termination.
[45] The undertakings provided to employees who expressed concerns about their terms and conditions of employment in the event that the Agreement is terminated, were clearly offered with a view to obtaining their support for the termination of the Agreement. In so finding, I do not discount that the applicant has a genuine desire to ensure that its staff are looked after.
[46] The applicant has indicated that it is willing to enter into a Memorandum of Understanding that would (i) confirm that the individual assurances given to employees would remain in force unless terminated or varied by consent of the parties, (ii) preserve certain provisions of the Agreement that are more beneficial than the HIGA and (iii) ensure casual employees will be compensated for any loss of pay arising from the termination of the Agreement. 20
[47] As at the date of the hearing neither the Union nor the applicant had approached the other about renegotiation of the Agreement. The parties appear to be at odds on the penalty regime that should apply to casual employees, in particular. The Union supports the current ‘flat’ penalty provisions of the Agreement while the applicant supports the penalty regime under the HIGA that distinguishes between Monday to Friday work and weekend and public holiday work.
[48] The preparedness of each party to enter into negotiations appears to hinge on their ability to negotiate from their preferred position on penalty rates.
[49] After the conclusion of the hearing, a Full Bench of the Commission handed down a decision in Aurizon Operations Limited; Aurizon Network Pty Ltd; Australian Eastern Railroad Pty Ltd (Aurizon). 21 Aurizon concerns an application to terminate a number of enterprise agreements which had each passed their respective nominal expiry date. The decision terminated the agreements over the objections of a number of employee organisations, on the basis that the requirements in s.226 of the Act had been met. Aurizon was subsequently confirmed by the Full Federal Court (“the Aurizon Court decision”).22
[50] Aurizon is the first time that the Full Commission considered the operation of s.226 of the Act. In the course of the decision, the Full Bench addressed the differing views as expressed by Watson VP in Energy Resources of Australia Pty Ltd v Liquor Hospitality and Miscellaneous Union (ERA) 23 and by Lawler VP in Tahmoor Coal Pty Ltd, (Tahmoor) 24 when considering applications to terminate an agreement under s.225 of the Act. The differing views related to their Honours respective consideration of the public interest in the context of the object of the Act and the objects of Part 2-4 of the Act. The parties were invited to provide further submissions on Aurizon and the Aurizon Court decision.
[51] Mr Colgrave submitted that Aurizon undermined the Union’s arguments that the termination of the Agreement would be contrary to the public interest because it would inhibit collective bargaining and would be prejudicial to the Union’s bargaining position for a new agreement. In this regard Mr Colgrave referred to the conclusions of the Full Commission in Aurizon that:
[52] It is not in the public interest for the Commission to encourage pattern bargaining by perpetuating the existence of an agreement which has resulted from such conduct. Mr Colgrave referred to the evidence of Ms Duke and Ms Harrison that the Union had negotiated nearly 100 enterprise agreements in identical terms based on the Top Shelf template, including the transitional agreements covering hotels within RD Jones. He contended that the Union’s intention to ‘roll out’ the 2014 template across the hotel industry explained the absence of any attempt by the Union to engage in negotiations for a replacement agreement since the nominal expiry date of the Agreement.
[53] Mr Colgrave relied upon the decisions in John Holland Pty Ltd (John Holland) 26 and Trinity Gardens Aged Care and another27 and submitted that the Union’s conduct met the definition of pattern bargaining because it had engaged in a course of conduct seeking common conditions in two or more proposed enterprise agreements. Such an approach is inconsistent with the object of Part 2-4 of the Act to facilitate enterprise level collective bargaining.
[54] Further, it was submitted that the public interest would be promoted by the termination of the Agreement because it contains anachronistic terms and conditions based on pre-reform industrial instruments. Mr Colgrave relied on the decision in Badman v Altus Traffic Pty Ltd (Badman) 28 in support of his contention that there is no reason in the public interest for the retention of transitional instruments as the Act was implemented to create a new industrial relations system including the development of modern awards.
[55] Badman was also put forward as authority for the proposition that a term of an agreement-based transitional instrument requiring the consent of the parties for its termination should take into account that the provision was negotiated under the previous statutory regime that enabled the unilateral termination of an enterprise agreement.
[56] Mr Colgrave submitted that the applicant wants to be part of the new industrial relations system, and to apply the contemporary industrial standards of the HIGA, particularly in relation to rewarding employees with higher penalty payments for weekend and public holiday work.
[57] In relation to the s.226(b) requirements for termination of an agreement, Mr Colgrave submitted that the appropriateness of the termination was an objective test. The requirement to take into account the views of the parties in s.226(b)(i) of the Act is limited to whether each of them supports or opposes the termination. The validity or legitimacy of the views expressed is not a matter to be considered by the Commission.
[58] In this case the employer supports the termination. The position of the employees is that they support the termination of the Agreement, as evidenced by the voting slips provided to Ms Athanasiou. The Commission should draw a Jones v Dunkel 29 inference that there is no employee opposition to the termination of the Agreement.
[59] As to the circumstances of the employees, it was contended that there were no vulnerable employees who would be adversely affected by the termination. The applicant had committed to entering into arrangements that would preserve the existing remuneration of employees that would otherwise suffer a reduction if the Agreement was terminated and would preserve the operation of the more beneficial terms of the Agreement. Contrary to the submissions of the Union, this was not an inducement offered to employees to gain their support for the termination of the Agreement but a desire to ensure that any adverse consequences upon its employees are ameliorated.
[60] Mr Colgrave relied upon the view expressed in Tahmoor that:
“[43] In relation to the matter specified in s.226(b)(i), if the employees and the employer agree that an expired agreement should be terminated then it would require exceptional circumstances (of which I cannot immediately conceive) before the tribunal could conclude that it was other than “appropriate” to terminate the agreement.”
[61] The length of time that has passed since the nominal expiry date of the Agreement and the absence of any approach by the Union to negotiate a replacement enterprise agreement are relevant circumstances to be taken into account by the Commission in considering the appropriateness of the termination of the Agreement.
[62] Mr Blewett addressed the Aurizon decision, noting that the circumstances under consideration in that matter were substantially different from the facts in the present case. In particular, he referred to the following matters in Aurizon:
[63] In the present case, the applicant has applied to terminate the Agreement before any bargaining had taken place. The evidence has not established that any productivity benefits would flow from the termination of the Agreement and the intention of the applicant is to have no enterprise agreement covering its employees.
[64] The finding in Aurizon that termination of the agreements was not contrary to the public interest was required on the facts of that matter, but is of little significance to the present application. Aurizon did not determine that the impact of termination of an agreement on collective bargaining was not a legitimate public interest consideration, rather it proceeded on the basis that this was a significant matter. The Full Bench found that there was no necessary inconsistency between the termination of an agreement and collective bargaining and held that, on the facts before it, there was no relevant impact on collective bargaining.
[65] The Aurizon Court decision emphasised the central position of collective bargaining under the Act in the following passage:
“Secondly, the importance of enterprise agreements in the regulation of terms and conditions of employment under the FW Act cannot be gainsaid. Neither can the central role of collective bargaining in that arena.” 30
[66] Mr Blewett submitted that, in the absence of any significant economic or productivity interests, public interest considerations in the present case should focus on the Act’s emphasis on enterprise level collective bargaining.
[67] He advanced the following arguments in relation to the public interest in the present matter. Firstly, that there is a public interest in parties abiding by their agreements. The applicant is seeking that the Commission relieve it of the requirement under clause 14 of the Agreement that termination will be by agreement of all the parties. The relevant principles are those set out by the Full Bench decision in Cochlear Limited v Automotive Food, Metals, Engineering, Printing and Kindred Industries Union – New South Wales Branch (Cochlear). 31
[68] Secondly, it will be contrary to the public interest to terminate an agreement in circumstances where there has been no attempt at collective bargaining. Mr Blewett submitted that the applicant made a deliberate decision to seek to terminate the Agreement rather than enter into negotiations for a replacement agreement. Having regard to the applicant’s attitude to bargaining; the differing arrangements that would apply to employees performing the same work; and the imbalance in bargaining between the parties due to the predominance of casual employment; the termination of the Agreement is likely to impede collective bargaining.
[69] Thirdly, that it will generally be contrary to the public interest to terminate an enterprise agreement to give effect to one party’s unilateral attempt to impose its preferred type of industrial instrument on the other party or parties (Joy Manufacturing Co Pty Ltd; Mount Thorley Operations Pty Ltd). 32 If the application succeeds the employees will be covered by a combination of the HIGA with individual arrangements. The Aurizon Court decision underscores the central role of collective bargaining.
[70] Fourthly, it will generally be contrary to the public interest for an employer to enter into individual arrangements with employees to induce them to acquiesce in the termination of an existing enterprise agreement. Section 3(c) of the Act provides that statutory individual agreements cannot be part of a fair workplace relations system. It was submitted that the same approach should be taken to non-statutory individual arrangements.
[71] Fifthly, it is contrary to the public interest to terminate the Agreement because this will substantially shift the balance of bargaining between the parties. Mr Blewett acknowledged that the Full Bench in Aurizon accepted that the termination of the existing agreements in that matter would adversely affect the bargaining position of the unions and employees and that this was not contrary to the public interest. However the Full Bench did not accept that this would impede collective bargaining on the facts of that case. Aurizon recognised that the particular circumstances of the case need to be considered, and where a shift in the balance of bargaining impedes collective bargaining the termination of the agreement will be contrary to the public interest.
[72] Mr Blewett submitted that the evidence of the views of the employees is equivocal. He referred to the nine employees who signed the Union form opposing termination of the Agreement; the inclusion of some employees not covered by the Agreement in the vote conducted by the applicant; and the ‘inducements’ offered by the employer gain support for the termination of the Agreement.
[73] The applicant’s stated reasons for the application are not supported by the facts, and will not deliver any productivity benefits. The termination will create more inconsistency of industrial regulation across RD Jones hotels by reducing the number of transitional agreements in operation.
[74] In considering the appropriateness under s.226(b) of the Act, the Commission is required to consider the effects, both positive and negative, arising from the termination of the Agreement. Mr Blewett submitted that there are negative impacts for the employees but there is nothing to weigh on the positive side, as the productivity benefits relied upon by the applicant will not materialise. In addition, the fact that no bargaining has taken place or has been attempted by the applicant stands in contrast to the circumstances in Aurizon, where there had been extensive bargaining which had reached a stalemate.
[75] Mr Blewett submitted that the undertakings in Aurizon were different to that offered by the applicant because the undertakings were common to all employees; they did not lead to differing outcomes for employees who performed the same work; and were not given to induce employees to agree to a termination of the agreements.
[76] Further, it was submitted that there are questions about the enforceability of the proposed Memorandum of Understanding. While some of its contents have been identified, the final form and content were unknown.
[77] Mr Colgrave submitted that the absence of any attempt by the applicant to bargain for a replacement agreement in advance of the application to terminate is immaterial in the context of the extensive time that has elapsed since the nominal expiry date of the Agreement and the absence of any attempt by the Union to bargain.
[78] The Union’s submissions that the applicant’s intent is to have no enterprise agreement in place ignores the applicant’s submission that if the HIGA applied to the employees the applicant would accommodate any discussions or approaches from the Union regarding a “properly negotiated” enterprise level collective agreement. 33
[79] The Union’s argument that termination of the Agreement would leave employees in an inferior position from which to bargain for a new agreement fails to acknowledge the reasoning in Aurizon regarding the public interest test.
[80] The application before the Commission meets the requirements of s.225 of the Act, being an application to terminate the Agreement after its nominal expiry date by the employer covered by the Agreement. The Commission must exercise the power to terminate the Agreement under s.226 of the Act if it is satisfied that it is not contrary to the public interest and if it considers it appropriate to do so taking into account all the circumstances including those specified in s.226(b)(i) and (ii) of the Act.
[81] Section 226 of the Act involves the exercise of a broad discretion in relation to the mandatory requirements for termination of an agreement. In Tahmoor, Lawler VP expressed the approach of the tribunal as follows:
“[31] Logically, 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) directs attention to whether termination would be contrary to the public interest.
…
[32] Although the opening words of s.226 are mandatory (“...FWA must terminate the agreement if...”), the two preconditions in s.226(a) and (b) involve a degree of subjective judgment, particularly the requirement that FWA considers that it is “appropriate” to terminate the agreement taking into account all the circumstances including the matters specified in s.226(b)(i) and (ii). “Appropriateness” is a broad discretionary standard. Reasonable minds may differ, indeed, differ sharply, on what is appropriate in any given set of circumstances. The power to terminate an agreement turns on what is effectively an exercise of a broad discretion.”
[82] In considering the discussion in Aurizon it is helpful to set out the relevant objects of the Act and of Part 2-4 of the Act:
“3 Object of this Act
The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:
(a) providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations; and
...
(f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and
(g) ...”
“171 Objects of this Part
The objects of this Part are:
(a) to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits; and
(b) to enable the FWC to facilitate good faith bargaining and the making of enterprise agreements, including through:
(i) making bargaining orders; and
(ii) dealing with disputes where the bargaining representatives request assistance; and
(iii) ensuring that applications to the FWC for approval of enterprise agreements are dealt with without delay.”
[83] In considering these objects, the Full Commission held that:
[84] The Full Commission discussed the scheme of the Act in relation to enterprise bargaining and enterprise agreements as follows: 34
“The legislative scheme therefore enables and facilitates good faith bargaining for an enterprise agreement. It also facilitates the making of enterprise agreements but does not mandate that result. Once an enterprise agreement is made and approved by the Commission, it seems clear that the legislative scheme does not intend that such agreements operate in perpetuity. Agreements have a finite nominal life. At the end of the nominal life of an agreement, bargaining parties may bargain for a new agreement utilising all of the tools available under the Act; or a person to whom an agreement applies may take steps to bring the agreement to an end in accordance with the provisions of the Act; or both may occur.”
[85] The Full Commission held that productivity benefits may be achieved by terminating an agreement that has passed its nominal expiry date and that the circumstances of the case will determine whether productivity benefits will flow from the maintenance of an agreement or its termination. 35 The following productivity benefits were held to flow from termination of the agreements in Aurizon:
[86] I turn first to consider the applicant’s arguments concerning pattern bargaining. Pattern bargaining is dealt with in s.412 of the Act as follows:
Pattern bargaining
(1) A course of conduct by a person is pattern bargaining if:
(a) the person is a bargaining representative for 2 or more proposed enterprise agreements; and
(b) the course of conduct involves seeking common terms to be included in 2 or more of the agreements; and
(c) the course of conduct relates to 2 or more employers.
Exception—genuinely trying to reach an agreement
(2) The course of conduct, to the extent that it relates to a particular employer, is not pattern bargaining if the bargaining representative is genuinely trying to reach an agreement with that employer.
(3) For the purposes of subsection (2), the factors relevant to working out whether a bargaining representative is genuinely trying to reach an agreement with a particular employer, include the following:
(a) whether the bargaining representative is demonstrating a preparedness to bargain for the agreement taking into account the individual circumstances of that employer, including in relation to the nominal expiry date of the agreement;
(b) whether the bargaining representative is bargaining in a manner consistent with the terms of the agreement being determined as far as possible by agreement between that employer and its employees;
(c) whether the bargaining representative is meeting the good faith bargaining requirements.
(4) If a person seeks to rely on subsection (2), the person has the burden of proving that the subsection applies.
Genuinely trying to reach an agreement
(5) This section does not affect, and is not affected by, the meaning of the expression “genuinely trying to reach an agreement”, or any variant of the expression, as used elsewhere in this Act.”
[87] The applicant’s primary argument concerns the conduct of the Union some eight years ago in the lead up to the Agreement being made. I am satisfied that the Union initiated bargaining with the applicant based on the Top Shelf template and that the Agreement reflects the terms of the template. However, there is no evidence that the Union was not genuinely trying to reach an agreement within the meaning of subsection 412(3) of the Act or that there was any complaint to this effect by the applicant at any time prior to the hearing.
[88] A further argument by the applicant was that the Union intends to pattern bargain with respect to the 2014 template. I accept the evidence of the Union, which was not challenged, that there are agreed protocols around the 2014 template which contemplate agreements on terms that are different from, or in addition to the terms of the 2014 template depending on the views of the relevant employees and the particular employer. As far as I am aware there has been no complaint of pattern bargaining against the Union in respect to the negotiations for agreements based on the 2014 template. More relevantly, the Union has not commenced negotiations with the applicant as at the date of the hearing. The existence and promotion of a template agreement is not of itself pattern bargaining.
[89] I have considered the decisions of John Holland and Trinity Gardens. In my view neither of these decisions provides any assistance to the applicant. John Holland concerned appeals against decisions of the Commission to issue protected action ballot orders and considered the relationship between s.443(1)(b) of the Act and the terms of s.412(3) of the Act.
[90] In Trinity Gardens the Full Commission considered the interpretation of the phrase “common terms” and concluded that there was no pattern bargaining by the Australian Nursing Federation on the basis that it was prepared to negotiate different phasing in arrangements for the wage increases pursued at two enterprises. 36
[91] Badman is relied upon in support of the applicant’s submission that there is no public interest in maintaining the Agreement having regard to its transitional status and the years that have elapsed since its nominal expiry date. I do not regard Badman, as support for this proposition given that Senior Deputy President O’Callaghan rejected the application to terminate a collective agreement-based transitional instrument (the Altus Agreement), 37 which had passed its nominal expiry date. In so deciding, the Senior Deputy President cited uncertainty as to the award coverage for a part of the workforce covered by the Altus agreement and held that this was a potential public interest consideration which weighed against termination of the Altus agreement.38
[92] The fact that the Agreement is a transitional instrument is a relevant matter. However I do not accept the broad proposition that there will never be a public interest in maintaining a transitional instrument. All relevant circumstances need to be taken in to account.
[93] I now turn to the Union’s arguments that it is contrary to the public interest to terminate the Agreement. The Union does not assert that clause 14 ousts the statutory provisions enabling termination of an agreement under section 226 of the Act. This position is clearly correct and is supported by Badman. The Union relies on the decision in Cochlear, where the Full Commission held that:
“It is self-evident that it is in the public interest that parties to an agreement abide by the terms upon which they had agreed. The principal object of the Act, as was the case with the pre-reform Act, is to provide a framework for cooperative workplace relations. Nothing could be more inimical to that object than to have parties reneging on their commitments as embodied in agreements made under the Act. It follows that it is, at the least, likely to be contrary to the public interest to encourage or facilitate the breaching of an agreement by one of the parties to it.
In this matter, the very clause of the Agreement in issue is the clause that deals with its termination. The appellant, having agreed that the Agreement would only be terminated by the agreement of the parties, by its very application to the Commission seeks to have the Agreement terminated against the will of the union party to it.
To allow a party to use the machinery of the Act and the auspices of the Commission to terminate an agreement that it said it would not terminate unilaterally would be obviously contrary to the public interest.” 39
[94] I do not take Cochlear to stand for the proposition that a termination of an agreement contrary to its terms can never be justified. However, given the Full Commission’s consideration as above, there would need to be compelling public interest considerations in support of the termination of an agreement that outweighs the public interest in parties abiding by the terms they have agreed. The requirement in s.226(a) that the Commission be satisfied that the termination is not contrary to the public interest involves a determination of where the public interest lies. This can involve a balancing of interests including competing public interests and is a question of fact and degree. 40
[95] In the present case, the time that has elapsed since the nominal expiry date of the Agreement and the fact that it is a transitional instrument made under a previous statutory regime are relevant issues. The scheme of the Act contemplates that Agreements will not continue in perpetuity but will be renegotiated or terminated. This is especially the case in relation to transitional instruments. At the same time, the Act does not require that transitional agreement-based instruments have a finite life or distinguish between the requirements for termination of an agreement-based transitional instrument and an enterprise agreement.
[96] No productivity considerations are evident in this matter either in terms of the benefits of moving to the HIGA or current restraints on productivity in the Agreement. The improved productivity relied upon by the applicant is in fact independent of the nature and number of industrial instruments applying across RD Jones’ hotels or will not materialise unless consistent industrial coverage across these hotels is achieved. The evidence before the Commission is that the employer has stable and competent employees, there is no problem filling shifts on unsociable days and there is no problem attracting and maintaining staff. 41
[97] If there are productivity benefits in moving to the casual loadings and penalty payments under the HIGA they have not been articulated. I accept that the HIGA regime is the applicant’s preference as I accept that the current regime of casual loadings under the Agreement is the Union’s preference. It would in my view generally be contrary to the public interest for the Commission to intervene to deliver one party’s preferred outcome over the objections of other parties covered by an agreement where there has been no attempt to bargain. However in this case a majority of the employees support the applicant’s position. This is a feature that distinguishes this application from the decisions relied upon by the Union.
[98] I respectfully adopt the approach of VP Watson in ERA 42 that the section 226(b) requirement to take into account the views and circumstances of the parties involves far more than the expression of their views in support or opposition to termination. It should involve a consideration of the reasons for their views and the validity of their concerns.
[99] A majority of employees support the termination of the Agreement. It is relevant that the support of some employees is based on their income and/or rosters being maintained so that they are effectively quarantined from the negative impact of the termination of the Agreement upon their income. This is hardly unequivocal support for the HIGA. However, even discounting these votes, I am satisfied that a majority of employees support the termination of the Agreement. In reaching this view I have included the employees who completed the Union form on the same day as they completed the applicant’s voting slip. It would be unsafe to conclude that these employees opposed the termination of the Agreement in the absence of any evidence to this effect.
[100] The consequence of the applicant’s assurances and the proposed Memorandum of Understanding is that there will be variable terms and conditions applying to employees performing the same work. Such circumstances are not ideal but also not unheard of in various industrial relations settings. Employer undertakings to maintain wages and/or conditions are often used to transition to new arrangements. More importantly, the provision of undertakings by employers has been a feature of other cases where agreements have been terminated, including the precedent decision of Aurizon.
[101] Despite the persuasive arguments presented by Mr Blewett as to the reasons why it is not appropriate to terminate the Agreement, it appears that the majority of employees either do not share these views or are not concerned by the consequences of the termination of the Agreement that he has advanced before the Commission. I am satisfied that the Union had the opportunity to discuss and/or publicise its concerns among the employees. No doubt the applicant’s presentation to employees at the Yankalilla Hotel was designed to present the termination of the agreement in a positive light. Nonetheless I am satisfied that the employees exercised an informed vote, freely given.
[102] While I have reservations about the arguments advanced by the applicant in support of the termination for the reasons set out earlier, the views of employees are a significant consideration, some of whom will be better off financially under the HIGA. If a majority of employees opposed the termination of the Agreement I would be inclined to the view that termination was not appropriate under s.226(b) of the Act and that it would be contrary to the public interest. However it is a serious step to override the common position of the applicant and a majority of its employees. The object of the Act is to provide a balanced framework for cooperative and productive workplace relations and in the circumstances of this case, I consider that the object is facilitated if the Agreement is terminated. An order to this effect is attached to this decision.
DEPUTY PRESIDENT
Appearances:
Mr I Colgrave for the applicant
Mr S Blewett for the respondent
Hearing details:
2015:
Adelaide,
19, 20, 25 February and 30 March.
1 Sch 3 of the TPCA Act.
3 At PN523 and Ex A1 Attach LA-2, LA-3 and LA-5.
4 At PN202-204.
5 In accordance with the TPCA Act.
6 At Cl 8.
7 See Sch B “Transitional Provisions in respect of South Australia”. Sch B also applied to the 10% loading payable to part time employees under the NAPSA.
8 Ex A1 at para 11.
9 Since the case commenced before the Commission the Workers Rehabilitation and Compensation Act 1986 has been repealed and the Return to Work Act 2014 has been enacted.
10 At PN664; PN670-2; PN1892-3.
11 At PN119.
12 At PN176-8.
13 Ms Athanasiou’s evidence was not conclusive that the required number of employees would be achieved: PN 344-72; PN271.
14 At PN377; PN379-80.
15 At PN1512-46.
16 Ex A6.
17 Ex UV 5, Attach LH 1; Ex A4; PN1868-9.
18 Ex UV 2, Attach NT 2.
19 Filipe Santos, Kingsley Smith, Andrew Caire, Billie-Jo Hunt; Adam Hunt.
20 Applicant’s Written Submissions at para 36.
22 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Aurizon Operations Ltd, [2015] FCAFC 126.
23 [2010] FWA 2434 at [24] – [27].
25 At [158] and [159].
26 John Holland Pty Ltd v “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union and The Australian Workers’ Union, [2010] FWAFB 526.
27 PR973718, 21 August 2006, per Watson SDP, Acton SDP, Smith C.
29 (1959) 101 CLR 298.
30 At para 24.
31 (2009) 178 IR 244 at 249 paras 35 – 37.
32 Print T113, 25 September 2000, per Munro J at [60]-[61]; Print R7850, 4 August 1999, per Boulton J, at [45], respectively.
33 Applicant’s Written Submissions in Response, 21 October 2015 at para 4.
34 At [126].
35 At [140], [141].
36 Trinity Gardens at [29].
37 Altus Traffic (SA) Employee Collective Agreement 2009.
38 Badman at [54] - [55].
39 Cochlear at paras 35 – 37.
40 Queensland Electricity Commission: Ex parte Electrical Trades Union of Australia (1987) 61 ALJR 393 at 395, per Mason CJ, Wilson and Dawson JJ.
41 PN1408-22.
42 Supra, at [16].
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