[2010] FWA 2434 |
|
DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 16 - Application to terminate collective agreement-based transitional instrument
Energy Resources of Australia Ltd
v
Liquor, Hospitality and Miscellaneous Union
(AG2009/21599)
VICE PRESIDENT WATSON |
SYDNEY, 25 MARCH 2010 |
Application to terminate a collective agreement-based transitional instrument – whether termination of the agreement contrary to the public interest – whether it is appropriate to terminate the agreement – Fair Work (Transitional Provisions and Consequential Amendments Act) 2009- Schedule 3, Item 16 – Fair Work Act 2009- ss 225, 226.
[1] This decision concerns an application by Energy Resources of Australia Ltd (ERA) pursuant to Item 16 of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act) and s 225 of the Fair Work Act 2009 (the FW Act) to terminate the Energy Resources of Australia Ltd Enterprise Agreement 1996 1 (the Agreement).
[2] The Agreement is a collective agreement-based transitional instrument for the purposes of the Transitional Act 2 with a nominal expiry date of 1 July 2000. The Agreement currently applies to three employees, each of whom is represented by the LHMU.
[3] At the hearing of this matter Mr H J Dixon with Mr T Davies of counsel appeared on behalf of ERA and Mr N Swancott appeared for the LHMU.
Background
[4] ERA mines, processes and sells uranium from the Ranger open cut mine near Jabiru in the Northern Territory. The mine is the second largest uranium mine in the world. It has been operating since 1980. The company is the only employer respondent to the Uranium Mining and Processing (Northern Territory) Award, 3 an enterprise award-based instrument for the purposes of Item 2 of Schedule 6 of the Transitional Act.
[5] The Agreement was certified by the Australian Industrial Relations Commission (AIRC) under s 170MC of the Workplace Relations Act 1996 (the WR Act) on 20 December 1996. It is expressed to cover ERA, its employees within the Northern Territory and the Liquor, Hospitality and Miscellaneous Union (LHMU) (formerly the Australian Liquor, Hospitality and Miscellaneous Union). The Agreement was expressed to remain in force until 1 July 2000. Under the WR Act an application could have been made to terminate the agreement under various provisions that have since applied. No such application was made. The Agreement has continued in force pursuant to various provisions of the WR Act, the FW Act and transitional legislation since that time.
[6] The vast majority of approximately 450 ERA employees are employed under Australian Workplace Agreements (AWAs) and Individual Transitional Employment Agreements (ITEAs) containing similar terms and conditions. Only three ERA employees are employed on the terms of the Agreement.
[7] On 14 December 2009 ERA notified each of the employees to whom the Agreement applies of the company’s intention to make an application to terminate the Agreement and provided the employees with a written undertaking that upon termination of the Agreement the employees would maintain their current salaries and other benefits. The terms of that undertaking are as follows:
“If the ERA Agreement is terminated by Fair Work Australia, ERA will:
(a) Continue paying you wages and allowances in accordance with current arrangements;
(b) Ensure that your working hours, breaks arrangements and variations of hours or shift arrangements are managed in the same manner as has occurred under the ERA Agreement;
(c) Pay you for excess hours worked on the same basis and manner as has been occurring under the ERA Agreement;
(d) Continue to apply the same leave arrangements as have been applied to you under the ERA Agreement for annual leave, sick leave, special sick leave, time off in lieu arrangements, public holidays, long service leave, bereavement leave, parental leave and leisure days;
(e) Give notice of termination of the same amount as is provided for in the ERA Agreement and provide redundancy benefits, including relocation of personal effects on termination, equivalent to the redundancy benefits provided for under the ERA Agreement (payable in the same circumstances as would give rise to redundancy benefits if the ERA Agreement had applied);
(f) Continue to provide work clothes and safety footwear as have applied under the ERA Agreement;
(g)Continue to pay for your required licences and certificates to perform your job;
(h) Continue to provide the following benefits (where applicable) consistent with existing arrangements that have applied to you – removal expenses on termination, water and electricity, hospitalisation in Darwin and accrual of annual leave air fares;
(i) Continue to apply current medical benefits plan arrangements; and
(j) Maintain the difference between your pay and any workers compensation or related payments for 12 months (as provided for in the ERA Agreement).
Of course any other pre-existing contractual arrangements will continue to apply.
The undertaking will apply from when the ERA Agreement is terminated by Fair Work Australia. The undertaking will continue to apply until:
(a) you agree to other terms and conditions of employment; or
(b) a new enterprise agreement is made which applies to you.”
The Relevant Legislation
[8] Item 16 of Schedule 3 of the Transitional Act provides:
“16 Collective agreement-based transitional instruments: termination by FWA
(1) Subdivision D of Division 7 of Part 2-4 of the FW Act (which deals with termination of enterprise agreements after their nominal expiry date) applies in relation to a collective agreement-based transitional instrument as if a reference to an enterprise agreement included a reference to a collective agreement-based transitional instrument.
(2) For the purpose of the application of Subdivision D to an old IR agreement, the agreement’s nominal expiry date is taken to be the end of the period of the agreement.”
[9] Subdivision D of Division 7 of Part 2-4 of the the FW Act states:
“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 FWA 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 FWA must terminate an enterprise agreement
If an application for the termination of an enterprise agreement is made under section 225, FWA must terminate the agreement if:
(a) FWA is satisfied that it is not contrary to the public interest to do so; and
(b) FWA 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.”
[10] It is therefore necessary to consider each of the matters in s 226 to determine whether Fair Work Australia is required by that section to terminate the Agreement. The formulation of s 226 directs the Tribunal to the nature of considerations to be taken into account and the test to be applied to determine the matter. It displaces any general discretion in the matter.
Is termination of the Agreement Contrary to the Public Interest?
[11] The public interest requirement in s 226(a) is expressed in similar terms to previous s 170MH(3) of the WR Act. That section was subject to consideration by a Full Bench of the AIRC on a number of occasions. Those authorities make it clear that the public interest involves something distinct from the interests of the parties although they may be similarly affected. In Re Kellogg Brown and Root Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 4 a Full Bench said (at [22-27]):
“[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.
[24] We were referred to a number of authorities concerning the ascertainment of the public interest. It is sufficient to refer to two. The first is the decision of the High Court of Australia in Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia (the QEC case). In that case the Court was considering the exercise of the discretion conferred on the Conciliation and Arbitration Commission by s.41(1)(d)(iii) of the Conciliation and Arbitration Act 1904. A similar discretion is now conferred upon this Commission by s.111(1)(g)(iii) of the Act. That section reads:
"111 Particular powers of Commission
. . .
(1) The Commission may:
. . .
(g) dismiss a matter or part of a matter, or refrain from further hearing or from determining the industrial dispute or part of the industrial dispute, if it appears:
. . .
(iii) that further proceedings are not necessary or desirable in the public interest;"
[25] The QEC case was concerned with whether or not the Commission had failed to exercise its jurisdiction in upholding an application by the Queensland Electricity Commission to refrain from further hearing or from determining an industrial dispute between it and the Electrical Trades Union of Australia. The following passage appears in the joint judgement of the majority:
". . . Ascertainment in any particular case of where the public interest lies will often depend on a balancing of interests, including competing public interests, and be very much a question of fact and degree. In this case the Commission was called upon to weigh in the balance two competing public interests. One was the importance of settling in its entirety the dispute initiated by the E.T.U.'s log of claims. The other was the importance of leaving the dispute to be resolved by the State tribunal despite the limitations on its jurisdiction if that course was likely to maintain the marked improvement in industrial relations in the industry that had occurred since the dispute arose and thereby contribute to industrial peace and an efficient power supply.”
[26] It is clear from this passage that the ascertainment of the public interest may involve balancing countervailing public interests. That the Commission should take all of the circumstances into account is made clear by Dawson J in Re Australian Insurance Employees Union; Ex parte Academy Insurance Pty Ltd. These authorities provide useful general guidance in the application of the test in s.170MH(3). They illustrate the types of interests which can be properly described as public interests and confirm the breadth of circumstances which may be relevant to the ascertainment of those interests.
[27] It should be emphasized that the Commission's consideration of the public interest for the purpose of s.170MH(3) is directed to the consequences of terminating the agreement. In a given case, some consequences will be clearly predictable, others will be less so. For the most part the Commission should be guided by the likely foreseeable consequences of termination rather than speculation about possible consequences.”
(references omitted)
[12] ERA submits that the operation of its undertakings, the underpinning award and the National Employment Standards lead to the conclusion that proper industrial standards will be maintained for the employees subject to the Agreement and that there are no other public interest matters that could lead to the conclusion that termination of the Agreement is contrary to the public interest.
[13] The LHMU and its members opposed the termination of the agreement on a range of grounds concerning the undertakings, the effect of termination, the ongoing utility of the Agreement and the prospect that the terms of AWAs would be effectively forced on employees who had consistently rejected them over many years.
[14] In my view the matters raised by the LHMU do not lead to the conclusion that it would be contrary to the public interest to terminate the agreement. The matters raised are legitimate interests of the employees and should properly be considered as such. However they do not attract the public interest. There is nothing that affects the public as distinct from the interests of the employees directly concerned. I therefore find that terminating the agreement is not contrary to the public interest.
Is terminating the Agreement appropriate in the circumstances?
[15] Section 226(b) is a new requirement for termination of agreements enacted in the FW Act. It has not as yet been subject to any Tribunal consideration. In my view the requirement calls for an overall consideration of the context and all of the relevant circumstances involved and the exercise of an overall judgment based on those circumstances.
[16] As with other broad judgements under the Act there will often be competing considerations which will need to be balanced. The specific matters raised in s 226 will need to be given full consideration. Taking 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.
[17] Section 226 requires a positive conclusion that termination of the Agreement is appropriate before the requirement for termination is satisfied. It is not desirable to attempt to formulate a test in substitution of the words of the section itself.
[18] In this matter the views and circumstances of the employees directly affected, other employees, the employer and the LHMU will clearly need to be taken into account. The proposed termination will need to be considered in the context of the current legislation including its objects and regard will need to be paid to the role and effect of the Agreement if it is to be terminated and if it is to continue.
The Views of the Parties
[19] ERA is the applicant and supports termination of the Agreement. It seeks to maintain its current staff arrangements currently applying to the vast majority of its employees for reasons including:
[20] The LHMU and the employees covered by the Agreement oppose termination for reasons which include:
[21] ERA submits that employees other than the three employees whose terms and conditions reflect those in the Agreement have chosen to remain on alternative arrangements and that this is an indication of their views on the matter. It is not clear whether the views of employees other than the three employees whose terms and conditions are expressly based on the Agreement need to be taken into account. There is some basis to find that they are covered by the Agreement even though it is displaced by other instruments to which they are party. I am prepared to assume that their views are relevant. However I do not believe that there is clear evidence of their views as to termination of the Agreement. Nor do I believe that the nature of their interest is such that significant weight should be given to their purported views.
The Circumstances of the Parties
[22] This factor is related to the reasons for the views of the parties outlined above. The three employees covered by the Agreement submit that they will lose their guaranteed entitlement to wage adjustments in accordance with CPI. ERA submits that the Agreement does not guarantee movements in accordance with CPI beyond the nominal life of the Agreement. It also submits that undertakings it has given will provide the employees with an avenue to seek performance based increases which will take into account economic factors and the performance of the business.
[23] ERA submits that the Agreement is outdated and out of step with the needs of its operations and the staff terms and conditions that have applied to the vast majority of its workforce for the past decade. It seeks to have the ability to continue the staff arrangements for new employees. The continuation of the Agreement would effectively preclude this occurring.
The Legislative Scheme
[24] In my view this is an important consideration. Enterprise bargaining lies at the heart of the workplace relations system and has done so since the early 1990s. Enterprise instruments have had different titles and have been subject to different rules, but there is nevertheless consistency in many respects.
[25] Enterprise Agreements made and approved under the FW Act, Workplace Agreements made under the WR Act, and Certified Agreements made under the Industrial Relations Act 1988 have all been required to have a specified duration with an upper limit on that duration.
[26] The prevailing legislative provisions have provided for the continuation of agreements after their nominal expiry date subject to an ability to make application to terminate the Agreement. Different tests have applied, some more limited than the current provisions and some less restricted. It is clear that enterprise agreements are intended to apply for a limited period and either be renegotiated, renewed, varied, replaced, terminated or left unaltered depending on negotiations between the parties and the operation of the legislative provisions.
[27] The primary object of the FW Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion. The means by which this is to be achieved include providing workplace relations laws that are fair to working Australians, are flexible for business and promote productivity and economic growth and achieving productivity and fairness through an emphasis on enterprise level collective bargaining.
Conclusion on Appropriateness
[28] I have considered all of the circumstances of this matter and have reached the conclusion that, on balance, termination of the Agreement is appropriate. The agreement has long since passed its nominal period of operation. It has marginal relevance at the workplace level. It applies to less than 1% of employees. The benefits it provides to employees are primarily intended to be retained for those employees and are subject to an undertaking to that effect.
[29] In my view it is unreasonable to lock such an agreement in place indefinitely. The legislative scheme supports the ending of agreement obligations at or after the nominal period of the agreement. Termination of the Agreement does not preclude further enterprise bargaining. Regular revisions and renewal of enterprise arrangements is desirable.
[30] I acknowledge the understandable concerns of employees at the loss of entitlements. The loss of some employee entitlements is almost inevitable when an agreement is terminated. In this case the undertakings given by ERA are not insignificant. In my view the loss in this case is not such as to outweigh the other factors which support the notion that a party to an expired agreement should be entitled to withdraw from it.
[31] The longer the time after expiry of the nominal term the stronger the case for termination. This agreement passed its nominal expiry date almost ten years ago. Where the continuation of the Agreement could have detrimental affects on the operation and the level of consistency of terms and conditions of employment the case for preventing termination is further diminished. I find that this circumstance exists in this case.
Conclusion
[32] I have reached the conclusions for the reasons outlined above that termination of the Agreement is not contrary to the public interest and that it is appropriate to terminate the Agreement having regard to all of the circumstances of the matter. I am therefore required by s 226 of the FW Act to terminate the Agreement. I issue an order to that effect in conjunction with handing down this decision.
VICE PRESIDENT WATSON
Appearances:
Mr HJ Dixon and Mr T Davies of counsel for Energy Resources of Australia Ltd
Mr N Swancott for the Liquor, Hospitality and Miscellaneous Union
Hearing details:
2010.
Sydney
March 8
1 AG780414
2 Item 2(5)(c)(v) of Schedule 3
3 AP821320
4 139 IR 34
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