| [2022] FWC 2162 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.222—Enterprise agreement
EF International Language Schools Pty Ltd T/A EF International Language Centres, Sydney
(AG2022/1303)
EF INTERNATIONAL LANGUAGE SCHOOLS (SYDNEY) (TEACHERS) AGREEMENT 2018
Educational services | |
COMMISSIONER MATHESON |
SYDNEY, 15 AUGUST 2022 |
Application for termination of the EF International Language Schools (Sydney) (Teachers) Agreement 2018 – application dismissed.
[1] On 2 May 2022, EF International Language Schools Pty Ltd T/A EF International Language Centres, Sydney (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 the EF International Language Schools (Sydney) (Teachers) Agreement 2018 (Agreement).
[2] The Agreement is a single enterprise agreement. It was approved by Commissioner Johns on 6 December 2018. 1
[3] The nominal expiry date of the Agreement is 30 September 2021.
[4] 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.”
Is the Applicant a person covered by the Agreement for the purposes of s.222(1)?
[5] The employer covered by the Agreement is EF International Language Schools Pty Ltd. This is the same as the employer named in the Application.
[6] 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?
[7] 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)?
[8] 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.
[9] It is declared in the Form F24A that the termination was agreed on 21 April 2022.
[10] The Commission’s records show the Application was filed on 2 May 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.
[11] I must approve the Application if I am satisfied that the requirements set out in s.223 of the Act are met.
[12] 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?
[13] It is declared in the Form F24A that covered employees were notified of the time, place and method of vote at a meeting held on 12 April 2022. The Applicant also provided an email dated 19 April 2022 sent to employees providing a link to a voting form and requiring that employees vote by 20 April 2022.
[14] 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?
[15] 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.”
[16] It is declared in the Form F24A that a meeting was held with covered employees on 12 April 2022 to discuss the proposal to terminate the Agreement, the impacts of the proposal and to provide an opportunity for questions. It is also declared that employees were emailed a copy of the meeting presentation. Voting was conducted between 19 and 20 April 2022.
[17] I sought a copy of the meeting presentation (Presentation) and this was provided by the Applicant on 2 June 2022. The Presentation is not comprehensive and, during a hearing on 6 June 2022, the Applicant provided further information about the content of the Presentation and was also provided with an opportunity to provide further information regarding the explanations provided to employees. Further information was filed by the Applicant on 14 June 2022 and the Independent Education Union of Australia (IEU) filed submissions addressing that further information on 16 June 2022.
[18] I deal with the Presentation provided to employees in further detail below. I have a concern that the information provided to employees via the Presentation may mean that the explanation provided by the Applicant may have been misleading or inaccurate in relation to the effects of the termination of the Agreement on employee terms and conditions. If this is the case, it means that, between 12 and 19 April 2022, employees may not have been provided with a reasonable opportunity to decide whether they want to approve the termination because the information they were asked to consider regarding the effects of the termination on their terms and conditions was inaccurate or misleading. 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.
[19] The Presentation was provided to employees on 12 April 2022. The first page (after the title page) of the Presentation poses the question “Why are we here today?” and sets out the following statements below that question:
• “EBA enterprise bargaining agreement (union) vs Casual contract”
• “Union agreement terminated in September 2021 (Ben)”
• “Casual contract from the beginning of this year”.
[20] It appears from this explanation that employees were told that the Agreement was terminated and that they would move onto a casual contract. Clearly, the Agreement has not been terminated and the question that employees should have been given a reasonable opportunity to consider is whether they wanted to terminate the Agreement, taking into account the effects of this on their terms and conditions.
[21] The next page of the Presentation compares rates of pay for full-time and casual employees in the Educational Services (Post-Secondary Education) Award 2020 (Award). Oddly, it does not compare rates and conditions in the Award with those in the Agreement and does not shed any light on the effects of the termination of the Agreement on employee terms and conditions.
[22] The next page of the Presentation compares the circumstances of a part-time sessional contract employee with an employee on a casual contract.
[23] Under the heading “Part-time sessional contract”, the Presentation sets out:
• “Pros” as being “paid prep time” and “sick leave and annual leave (83.33%, 66.67% or 55.56%)”; and
• “Cons” as being:
• “less flexible, admin, pd and meetings are not paid extra”
• “only 10-15 blocks for most teachers”
• “not allowed to take other jobs from other colleges”.
[24] Under the heading “Casual contract”, the Presentation sets out:
• “Pros” as being:
• “more cash in hand”
• “more shifts”
• “can take jobs from other colleges”
• “don't have to stay in the school for the whole day”
• “paid for PDs, long meetings and any admin tasks”; and
• “Con” as being “no paid annual leave and sick leave”.
[25] It is perplexing as to why the Presentation is comparing part-time sessional contract employees with casual employees as it is declared in the Form F24A that 7 employees are covered by the Agreement and all 7 employees are casual. If this is the case, it would have been more appropriate for the Presentation to compare the entitlements of these casual employees under the Agreement and the Award. It is possible that employees were told that they would only be engaged on a part-time sessional contract under the Agreement whereas, if the Agreement was to be terminated, they would be engaged as a casual. If so, this is problematic as the method of engagement is not driven by the Agreement but rather, the agreement between the parties regarding the method of engagement. It would not flow from the termination of the Agreement that the Applicant would be able to unilaterally vary an employee’s mode of engagement. I am unable to establish why the Presentation turned to a comparison between part-time sessional employees and casual employees.
[26] The content of the comparison in the Presentation is also problematic in other respects. For example, I can see no terms in either the Agreement or Award that would prevent or enable employees from taking on “jobs from other colleges” and it would be misleading to suggest that a casual contract of employment or termination of the Agreement would give rise to “more cash in hand” or “more shifts”. Having considered the Presentation, it is apparent that employees were provided with confusing and likely inaccurate and misleading information as to the effect of the termination on their terms and conditions of employment.
[27] I raised concerns about the content of the Presentation at the hearing on 6 June 2022 and provided the Applicant with the opportunity to supply further information about the explanation provided to employees regarding the termination of the Agreement. While the Applicant indicated it recorded the Presentation that was given to employees, it elected not to file a copy of this recording and instead provided a further three documents on 14 June 2022 being:
• a document comparing key terms in the Award and the Agreement;
• statements of five employees stating that:
• on 12 April 2022, they attended an information session at which the Applicant presented teachers with a proposal to terminate the Agreement;
• the Applicant provided information at the session on the pros and cons for terminating the Agreement and allowed teachers to ask questions;
• on 20 April 2022, they were asked to vote on the proposal to terminate the Agreement;
• a copy of the Presentation was provided to them;
• a copy of the notice of a hearing with the Commission on 6 June 2022 in relation to the application to terminate the Agreement was provided to them;
• a copy of the document comparing the Agreement and Award was provided to them; amd
• they have considered the documents, have been given a reasonable opportunity to consider the documents and confirm their vote to terminate the Agreement.
[28] The IEU filed submissions on 16 June 2022 addressing these materials and submitted:
• it is not satisfied that the Presentation provided a balanced view of the positive and negative implications of the Applicant’s employees moving from the Agreement to the Award;
• the document comparing the Award and Agreement is an improved representation of the implications, however there is concern whether the document was explained in the Presentation;
• certain entitlements within the comparison document are not sufficiently explained. For example:
• the entitlement to family and domestic violence leave is not specified as 5 days’ ‘paid’ leave under the Agreement;
• in relation to ‘Special Responsibilities’, the document provides an explanation of higher duties under the Award however there is no explanation of how this will compare to the figures provided for a Head Teacher and Senior Teacher allowances under the Agreement.
[29] While the comparison between the Agreement and the Award may have been provided to employees, I am still unable to reconcile this with the content of the Presentation given to employees on 12 April 2022. As noted above, I find the Presentation content confusing and consider it is likely that inaccurate and misleading information was given to employees as to the effect of the termination on their terms and conditions of employment. Further, I can see no evidence in the Presentation that the comparison document was explained to employees and agree with the IEU that the comparison document itself should include more detailed explanations of the differences in entitlements between the Agreement and Award so that employees are able to make an informed decision.
[30] 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 to have been provided with inaccurate and/or misleading information as evident by the Presentation.
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))?
[31] 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.
[32] Having considered the materials before me, I am satisfied that a majority of the employees who cast a valid vote approved the termination and no submissions or objections to the application were filed by any employee
[33] 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 actually agreed to the termination.
Consideration of the views of the employee organisation or employee organisations (if any) covered by the Agreement – s.223(d)
[34] The IEU is an employee organisation covered by the Agreement. The IEU filed submissions opposing the application, submitting the termination of the Agreement would be unreasonable taking into account the adverse effect termination of the Agreement will have on employees covered by the Agreement, in particular, employees who may be reemployed in the near future. In particular, and by way of summary, the IEU submitted:
• An enterprise agreement can only be approved where it passes the better off overall test” in comparison to the applicable modern award(s). The Award sets minimum wages and conditions and is not meant to supplant the provisions of the Act that deal with enterprise bargaining or s.3(f) of the Act, which provides that one of the objects of the Act is:
“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”.
• The Agreement nominally expired as recently as 30 September 2021. It has been noted in other matters that “[t]he longer the time after expiry of the nominal term the stronger the case for termination” 2. That the Agreement expired so recently is a factor that weighs against terminating the Agreement now and the Application is premature.
• Termination of the Agreement would have an immediate financial and wider impact on employees, as the Agreement provides pay and conditions that are more beneficial than the Award, including but not limited to:
(a) significantly higher rates of pay;
(b) $3110 and $6223 annual allowance for Seniors Teacher and Head Teachers respectively (clause 13.3 of the Agreement);
(c) 5 days’ paid Family, Partner and Domestic Violence Leave (clause 26 of the Agreement);
(d) $400 for Special Interest Class material development (clause 11.4 of the Agreement);
(e) Examination and Study Leave (clause 25 of the Agreement); and
(f) minimum 28 days’ notice of annual close down (clause 18.3 of the Agreement).
• According to the Application, there are now seven employees covered by the Agreement. Prior to the COVID-19 pandemic, there were approximately 30 employees covered by the Agreement. The Applicant has recently recommenced its operations post the COVID-19 pandemic and had indicated it would, through a gradual process, reemploy its previous teachers, whose employment ceased around March 2021. It is alarming that the Application is being made when there are only seven employees covered by the Agreement, whilst the employment of approximately 30 employees who would be covered by the Agreement, including former employees, is likely in the near future. If this application was made in a few months’ time, for example, the Applicant would likely be required to take into account the views of significantly more employees covered by the Agreement. The Application to terminate the Agreement is therefore opportunistic and premature.
• If the Agreement was terminated, employees who are reemployed when the Applicant’s operation is scaled up will be subject to pay and conditions that are lower that what they were entitled to just over a year ago when they were covered by the Agreement.
• The IEU and the Applicant have a history of bargaining for enterprise agreements and it would be more appropriate if the Applicant commenced bargaining for a new enterprise agreement in order to alter the terms and conditions of employment of its employees.
• In terms of bargaining itself, termination of the Agreement will also have the obvious effect of weakening the IEU’s bargaining position for the next enterprise agreement as the Award would be the starting point, as opposed to the current negotiated Agreement. This factor is particularly significant in circumstances where the reemployment of former employees who may have voted for the current Agreement is likely.
• The IEU is not aware of the Applicant providing undertakings to the employees covered by the Agreement to retain the current salaries and benefits of the Agreement until, for example, a new enterprise agreement is made, or other terms of employment are agreed to. In other matters, such undertakings were provided by the employer. 3
[35] The Applicant filed submissions in response to the concerns raised by the IEU. In particular, and by way of summary, the Applicant submitted:
• A vote was held. Seven employees were eligible to vote, seven employees voted and all seven employees voted to terminate the Agreement. All seven employees are new employees. That is, they were all employed by the Applicant within the last 6 months (i.e. since the Applicant recommenced its business operations following hibernation during the COVID-19 pandemic). No employees who were previously employed have been rehired. All previous employees have secured work in other organisations.
• The Applicant has entered into new contracts of employment with its employees on conditions that both parties are satisfied with. All employees are aware that the Applicant has sought to terminate the Agreement and they all support this decision. This is due to the fact that:
• they are happy with the entitlements which they have each negotiated in their contract of employment;
• they do not believe the Agreement provides them any additional benefits which are important to them and which they have not negotiated or are in the Award; and
• they are aware of the benefits and working conditions of their colleagues in Brisbane and Perth who are not subject to an enterprise agreement (and which better reflect the benefits and working conditions they prefer).
• The Applicant understands that no employee is a member of the IEU and that the IEU has not engaged with any employee to ascertain their views before making submissions.
• It is expected that the Applicant will return to pre-COVID-19 pandemic numbers (i.e. 30 employees) shortly and that current staff numbers will triple within the next three to four months. Given that all employees eligible to vote did vote and that all employees voted to terminate the Agreement, it is the Applicant’s view that the passage of time will only result in additional time and cost to all parties involved.
• The passage of time would not affect the views of the Applicant or the collective view of the employees and the result of an employee vote would not change.
• The IEU’s submission that employees are paid “significantly higher rates of pay” does not relate to all rates of pay. The Agreement includes 12 classification levels for employees. Some levels are currently paid above the Award and some levels are paid below the Award. As these pay rates are fixed, with each annual increase under the Award, the difference in pay narrows and, with time, the Award will be greater than all levels in the Agreement.
• In light of the demand for teachers in the industry, the low unemployment rate and the competition among employers for staff, it is not uncommon for teachers to be paid above the Award in order to secure their services.
• In relation to the inclusion in the Agreement of entitlements to five days paid Family, Partner and Domestic Violence leave (clause 26 of the Agreement), $400 for Special Interest Class material development (clause 11.4 of the Agreement), and Examination and Study Leave (clause 25 of the Agreement), many of these benefits have never been used by staff. For example, a search by the Applicant has identified that, over the last five years, no staff member has ever requested “$400 for Special Interest Class material development”.
• Employees believe the terms of their new arrangements far outweigh the notional benefits they do not utilise.
• While the Applicant recognises the role of the IEU, it is the view of the Applicant and its employees that a new enterprise agreement is not in their best interests.
• The views of the Applicant and the employees within the organisation have changed since the Agreement (and earlier agreements) came into effect. The Applicant has expanded its operation to Brisbane and Perth and teachers at these locations are not covered by an enterprise agreement and prefer to be employed under a contract and the Award. Sentiment among Sydney teaches is a preference for similar working conditions.
• In the current environment, teachers are seeking less full-time work and more contract work so as to allow greater flexibility in working arrangements. The effect of the Agreement means that full-time roles are the preferred status of employment and contract work is discouraged. While this was the view many years ago, this is not the preference for employees today.
• There is no requirement for the Applicant to give undertakings in the event an enterprise bargaining agreement is terminated.
• The Applicant and employees have unanimously requested that the Agreement be terminated and the Commission should find that termination of the Agreement is reasonable. Dismissing the Application would have a greater adverse impact on employees than retaining the Agreement.
[36] I have considered the submissions of the parties and consider that the views of the IEU weigh against the granting of the Application, particularly its views in relation to the content of the Presentation made to employees on 12 April 2022 and its concern in relation to the whether the comparison of entitlements between the Award and Agreement were sufficiently explained.
[37] In the circumstances of this matter, I not am 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 and 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 IEU also weigh against the granting of the Application.
[38] 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.
[39] I note that the Applicant appears to have recently obtained legal advice in relation to the Application. I would observe that it remains open to the Applicant to commence a new process and make a new application that complies with the requirements in s.223 of the Act or to commence bargaining for a replacement agreement in an attempt to address its concerns in relation to the current Agreement.
COMMISSIONER
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2 Energy Resources of Australia Ltd v Liquor, Hospitality and Miscellaneous Union [2010] FWA 2434, [31].
3 See, for example, Energy Resources of Australia Ltd v Liquor, Hospitality and Miscellaneous Union [2010] FWA 2434, [30].