[2022] FWCA 2437

The attached wholly replaces the document previously issued with the code [2022] FWC 1828 on 20 July 2022 to correct document referencing.

Associate to Commissioner Hunt

Dated 20 July 2022

Fair Work Act 2009
s.225—Enterprise agreement

Application by Employee X
(AG2022/880)

SECUREMETRO EMPLOYEE COLLECTIVE AGREEMENT 2013

Application for termination of the SecureMetro Employee Collective Agreement 2013

[1] On 25 March 2022, an employee (the Applicant) made an application pursuant to s.225 of the Fair Work Act 2009 (the Act) to terminate the Securemetro Employee Collective Agreement 2013 (the Agreement). The employer covered by the Agreement is Securemetro Pty Ltd (the Employer). The nominal expiry date of the Agreement is 30 June 2017.

[2] No employee organisations (unions) are covered by the Agreement. The Applicant is represented by the United Workers’ Union (the Union).

[3] The Applicant wished for their name to be kept confidential. I was satisfied it was appropriate to do so, and on that basis, I required the Employer to provide to my chambers a list of employees covered by the Agreement and employed on 25 March 2022. I satisfied myself that the Applicant was an employee covered by the Agreement on 25 March 2022 when the application was made. Accordingly, the application has been validly made.

Termination of an enterprise agreement after its nominal expiry date

[4] Subdivision D of Division 7 of Part 2-4 of the Act provides for the termination of an enterprise agreement after its nominal expiry date. This subdivision consists of ss.225, 226 and 227, the terms of which 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.”

Views of the Applicant

[5] The Applicant seeks termination of the Agreement. The Applicant regularly works on weekends and public holidays. The Applicant regularly works overtime each fortnight. At the time the Applicant’s statement was made, the Applicant was being paid $30.45 for all hours worked except for public holidays which were paid at $60.90.

[6] The Applicant noted that if the Agreement were terminated, the Security Services Industry Award 2020 (the Award) would apply, providing an hourly rate of $25.08 for the Applicant’s classification for ordinary hours of work. It is noted that this amount is $5.37 per hour less than the rate the Applicant is receiving under the Agreement. The rates nominated are those that applied prior to the Annual Wage Review effective from the first full pay period on or after 1 July 2022.

[7] The Applicant stated that under the Award they would be entitled to $37.62 for the first two hours of overtime Monday to Friday, and $50.16 for overtime beyond two hours, Monday to Friday. The Applicant declared they would be entitled to the rate of $37.62 for Saturday work, $50.16 for Sunday work, and $62.70 for public holiday work.

[8] The Applicant contended they would be approximately $500 per fortnight better off under the Award than the Agreement.

[9] I directed the Employer to communicate in writing to each of the employees covered by the Agreement, inviting them to correspond by email with my chambers in the event they wished to provide their views. On 26 April 2022, I received confirmation from the Employer that it had complied with the above direction and there were 493 employees covered by the Agreement. The employees covered by the Agreement were invited to provide any views relevant to the application.

Views of the Employer

[10] On 28 April 2022, the Employer informed the Commission that Securecorp Pty Ltd, the parent company, has a number of nominally expired enterprise agreements applying to various entities, and in the last 18 months it had been working on having those agreements terminated, where appropriate. Three expired agreements had been terminated.

[11] The Employer stated that given the Agreement covered a large number of employees, and termination of the Agreement would result in the Award applying, the Employer wished to have time to review its commercial contracts. It also wished to allow time for employees affected by termination of the Agreement to look for additional work to compensate for removal of overtime shifts.

[12] The Employer considered that there would certainly be some employees who would be better off covered by the Award, but some employees would not be. The Employer requested a termination date of 1 October 2022.

[13] I requested the Employer to provide evidence in the form of a witness statement. On 11 May 2022, Ms Maria Cianciaruso, General Manager – People and Culture of Securecorp Pty Ltd, filed a witness statement. Securemetro Pty Ltd is a subsidiary of Securecorp Pty Ltd.

[14] Ms Cianciaruso stated that in a four-week period in February - March 2022, 241 of the employees covered by the Agreement accessed ‘voluntary overtime’. I understand that to mean that employees elected, pursuant to the Agreement, to work additional hours above ordinary hours at the same base rate, without overtime payments applying.

[15] Ms Cianciaruso stated that if the Agreement is terminated, overtime is unlikely to be offered due to the higher cost. Termination of the Agreement will result in the Employer having conversations with individual employees to ensure they understand likely future rosters which are unlikely to contain overtime. It was suggested that employees who currently rely on the overtime hours worked at the base rate of pay in the Agreement would need to consider working elsewhere, either entirely or for those hours they will not be offered with the Employer.

[16] It was stated that the Employer is experiencing significant workplace challenges and would need to employ a larger number of staff.

[17] Ms Cianciaruso said that she estimated the consultation with employees might take four months, with attempts to speak with approximately 30 employees per week to discuss their particular circumstances.

[18] The parent company employs three payroll staff paying approximately 2,500 employees. Employees covered by the Agreement represent only 20% of the employees within the group of companies.

[19] The Employer has several clients where contracts are priced to the Agreement. Accordingly, the request for termination to occur on 1 October 2022 is sought.

Views of the Union

[20] The Union is not covered by the Agreement but requests that its views be taken into consideration. Mr Damien Davie, National Coordinator for the Union in the Property Services portfolio provided a witness statement. Mr Davie stated that the Union has a “significant number” of members covered by the Agreement.

[21] The Union supports termination of the Agreement. Mr Davie noted that the Agreement provides for a higher base rate than the Award, however employees covered by the Agreement miss out on penalty rates and overtime payments. Allowances and annual leave loading are not paid under the Agreement. Further, the Agreement provides less-beneficial terms with respect to rest breaks, short notice changes to rosters and several more items.

[22] The Union considers that the Agreement provides to the Employer an unfair commercial advantage over the Employer’s competitors as it allows them to pay lower rates overall. It was suggested that this was not in the public interest.

[23] The Union does not support a termination date of 1 October 2022. It considers that an appropriate period would be 28 days from the date the Agreement is terminated.

Views of employees

[24] A large number of employees covered by the Agreement communicated with my chambers their views. A sample of views received include:

(a) Employee A:

“Going to the standard award would not benefit me in any way.

My family and I need the current agreement stay in place.”

(b) Employee B:

“I have never received any overtime, weekend, or night shift rates, because of being disadvantaged by the METRO agreement. 

I have also worked 60+ hours on many occasions (Sometimes shifts as long as 16hours) because of site coverage issues, all of which is paid at a base rate. However, SecureCorp lists this on my payslip as "voluntary additional hours", which I believe results in no sick leave and annual leave accumulation for any overtime hours worked. 

I have engaged SecureCorp management regarding having the award rate instated on site - However this has been unsuccessful for the last 2-3 years. 

Having the award rate instated on site, would mean I could work only 38 hours a week (with weekends on my roster) and make roughly the same amount I am making working 51.5hrs. This will restore balance to my life, as well as allow me the opportunity to work for fair entitlements.”

(c) Employee C:

“Would like to advise you that I am very happy with the current EBA that I have now have with securecorp.”

(d) Employee D:

“I would like to support the move to cancel the securecorp metro agreement 

The reason why support this movement is because I work [number] hours on full-time fortnightly nights shift rosters which includes weekends. I receive no weekends rates, nights rate or overtime rate which I believe is unfair and I hope through farework will change” 

(e) Employee E:

“I have worked under the Metro agreement for [number] years and for my circumstances and many of my work colleagues it would be financially crippling for me and my family as under the current agreement I am able to pick up extra work to boost my wages up to 120hrs @ $27.76 a fortnight $3,997.44 but under the award I would be capped at 36hrs @ $23.50per $3,384.00  and in my past experiences companies rarely offer overtime as it is at a cost to the company not the client.

In Australia today a Family of four estimated monthly costs is around $4,700.00 without rent and as you can see 36hrs @ $23.50 equates to $3,384 if you work Monday to Friday which I do this would place my family and I under financial hardship so I would really like to see Secure Corp stay with a Collective Agreement and an aggregated agreed pay rate.”

(f) Employee F:

“…on my circumstances alone that the current agreement I am able to pick up extra hours/ overtime which helps boost my wages up to 120hrs a fortnight. And under the award I would be capped at only 36hrs and I know for fact through my experiences companies rarely offer overtime as its a cost to the company not the client.

Not only myself but also my work colleagues would be impacted financially on the verge to hardship.

I would like to see Securecorp stay with a Collective Agreement and an aggregate pay rate.”

(g) Employee G:

“I would like to change my securemetro contract to Securecorp award rates so I can get my weekend on award rates. Because I work the whole week on flat rate. Which is unfair”

(h) Employee H:

“I have been working as a security guard for [number] years and usually under an award.  Over the past [number] years I have been working under the SecureMetro Agreement and I am at least $175 per week worse off than the current award.

Most security guards work some type of rotating roster and all these guards will be far worse off under the the SecureMetro Agreement.  The only guards who are benefiting from this agreement are those who work dayshift only, without overtime.  Supervisors may work dayshift only but are usually paid differently.  There are not too many security guards who work dayshift only from my experience.

I believe that the SecureMetro Agreement from its inception was not beneficial to most guards working under it.  It often left me pondering how it could ever be approved in the first place.

The termination of this Agreement will give me at least $175 extra per week, including first aid allowance comparing it with the Security Services Industry Award.  It will give me better life – work balance as overtime is often and constant under this agreement.  There are no overtime penalties paid to guards and guards work the overtime so they don’t let the team down (even though its not compulsory)  If overtime came at a cost to Securecorp then they would be more likely to employ more guards to cover extra shifts.

I have worked  weekends and rotating shifts most of time I have been a security guard and believe I should be compensated for this just like everyone else who works these shifts.”

[25] The above views are simply a sample; there were many more views received. It appeared to me that those employees who predominantly work day shifts oppose termination of the Agreement because they receive a higher rate of pay than the Award. Those employees who work weekends or a significant amount of overtime without payment for penalty rates of overtime rates support termination of the Agreement as they are significantly worse off under the Agreement than they would be under the Award.

[26] There was then a third group of employees who prefer the sheer amount of hours they are offered and accept to work for the Employer, even if it is without payment of penalty rates or overtime rates, and fear they will not be offered more than 36 hours per week on account of the Award overtime rates being too expensive for the Employer to pay, and those hours being offered to employees who have not yet worked 36 hours in a week. Some of those employees expressed working 120 hours or more per fortnight for a flat rate of pay. It is not clear why the employees consider 36 hours to be the limit of ordinary hours under the Award; it provides for up to 38 ordinary hours per week.

Consideration

Not contrary to the public interest (s.226(a))

[27] I will first consider whether I am satisfied that termination of the Agreement is “not contrary to the public interest”.

[28] In his decision to approve the termination of the McDonald’s Australia Enterprise Agreement 2013, Deputy President Colman observed that:¹

“Section 226(a) does not require the Commission to be satisfied that the termination of an enterprise agreement is in the public interest. It sets a lower requirement. The Commission must be satisfied that it is not contrary to the public interest to terminate the agreement.” (emphasis is in the original)

[29] The Agreement was made approximately nine years ago and has significantly less beneficial terms and conditions to employees than those contained within the Award. I am satisfied it is not contrary to the public interest to terminate the Agreement.

Appropriate (s.226(b)

[30] I must consider whether it is “appropriate” to terminate the Agreement, taking into account all the circumstances, including the views of the employees, each employer and each employee organisation covered by the Agreement, and the circumstances of those employees, employers and organisations, including the likely effect that the termination will have on each of them.

[31] While I note the Employer now does not directly oppose termination of the Agreement, the jurisdiction requires the Commission to be satisfied it is appropriate to terminate the Agreement taking into consideration the views of the Employer and the employees covered by the Agreement, together with the circumstances and the likely effect the termination will have on each of them.

[32] The Union is not covered by the Agreement. In Australian Concert & Entertainment Security Pty Ltd t/a ACES Group v Mapledoram [2020] FWCFB 7032, the Full Bench determined that while the applicant employee could competently bring the application to terminate the agreement, the member at first instance should have detailed how much weight was given to the views of the applicant employee as he was no longer working for the employer and therefore not covered by the agreement. The Full Bench said the following:

“[26] Appeal ground two contended that the Deputy President had regard to an irrelevant consideration or misapplied s 226(b)(i) of the Act in the Decision by taking into account the views of the Respondent, who was, at that stage no longer an employee covered by the Agreement. The ACTU relied on the Respondent’s submissions in relation to grounds 2 and 3 of the appeal.

[27] Appeal ground two is made out on two bases. Between [51]-[56] in the Decision, the Deputy President makes reference to the views of the Respondent under the heading “S.226(b)(i) - Views of the employees, employer, and any employee organisation covered by the Agreement”. The Respondent was not, at the time of the second and third hearing (13 February 2020 and 22 July 2020 respectively) nor at the time the Decision and Order were issued, an employee of the Appellant who was covered by the Agreement. Accordingly, as an ex-employee, the Respondent was not “a person whose views fell expressly within the class of persons set out at s.226(b)(i)”. We see no basis upon which the Deputy President should have taken into account the views of the Respondent under s 226(b)(i) of the Act.

[28] Second, in any event, that the Deputy President did not distinguish his consideration of the views of employees from that of his consideration of the Respondent’s evidence, means that the Full Bench is unable to discern how the Respondent’s evidence was taken into account under s 226(b) of the Act. This is clear when the Deputy President’s observations at [51]-[56] are read together with the Deputy President’s observation at [77] that regard was had “to all of the material and evidence provided” and “the views of the employer and employees who expressed a view”. We are unable to assess the weighting ascribed by the Deputy President to the Respondent’s views; the Deputy President did not make a direct finding about the substance of the Respondent’s evidence in the context of his consideration of the evidence before him. The inability for the Full Bench to disaggregate the evidence taken into account by the Deputy President gives rise to appellable error.

[29] The Respondent contended that the Deputy President was entitled to take into account the Respondent’s evidence in evaluating whether it was appropriate to terminate the Agreement in the broader context of taking into account “all the circumstances”. Whilst we agree that it was open for the Deputy President to consider such evidence in this context, the Full Bench cannot disaggregate from the Decision what weight the Deputy President ascribed to the Respondent’s evidence or how such evidence was considered. Having regard to the way in which the Deputy President aggregated the evidence and made his conclusion, the Full Bench is unable to determine what weight the Deputy President gave to the evidence of the Respondent and whether it was appropriate. For the above reasons, appeal ground two is made out.”

[33] Accordingly, the Union is not a person whose views fell expressly within the class of persons set out at s.226(b)(i), and therefore there is no obligation to consider the views of the Union in that context. I have decided, however, to consider the views of the Union in the context of taking into account all of the circumstances. The Union has given evidence that it has members covered by the Agreement. I consider it capable of expressing, on behalf of those members, their views in relation to the application. I have given relevant weight to the view of the Union, on behalf of its members, supporting termination of the Agreement for the reasons given.

[34] I have received many views from a significant group of employees covered by the Agreement. Some support termination of the Agreement and as many oppose termination of the Agreement.

[35] It is also necessary to have regard to the circumstances of employees in the event the Agreement is terminated. No doubt the employees who predominantly work day shifts, may, if the Employer reduces the hourly rate to the Award rate only, suffer a significant decrease in their remuneration. Currently day work employees experience a $5 or so per hour over-award payment. Whether the Employer decides to reduce the day rate to the Award rate is a matter for the Employer.

[36] I accept and understand how suffering a reduction in the hourly rate of this magnitude would affect relevant employees after having enjoyed a decent over-award payment pursuant to the Agreement.

[37] It is necessary, however, to consider all of the employees covered by the Agreement. There are many employees working weekends and overtime without penalty rates applying. Those employees are significantly disadvantaged as against Award rates, and the disadvantage is enormous. Employees working on Sundays can be disadvantaged by around $20 or so per hour. The variance is $10 or so per hour on a Saturday. Employees working night shifts are also significantly disadvantaged.

[38] There was enough information provided in the views of employees to understand that for some employees, they might work the majority of their hours on the weekends or at night. That is understandable given the industry in which the work is performed.

[39] I have also had regard to the views of employees where they work a large number of overtime hours, and they wish to retain those hours at the base rate of pay because of the volume of the work they can perform, even at lower rates. Regrettably, this is not a practice I can condone. Employees requesting to work large numbers of overtime hours without penalty rates is not a social or economic answer to employees desiring more in their bank account on pay day. It provides the Employer with an unfair advantage over competitors, by significantly undercutting its cost of providing a service at those times of the day and week. An employee should not have to work 120 hours per fortnight to become entitled to a large fortnightly payment where there is no compensation on account of the unsociable or extraordinary hours performed by them.

[40] Employee E, above is the most striking example of this. For hours greater than 38 in any week, this employee is being paid $27.76 per hour. The Award would now provide that this be approximately $35 - $48 per hour, depending on whether the overtime is paid at time and a half or double time. I cannot continue to allow an employee, working their 50^th or 60^th hour in a week to be paid at such a significantly lower rate of pay.

[41] I accept that the Employer has made appropriate concessions on this issue and understands that if it is faced with the payment of Award penalty rates and overtime rates, it will be necessary to restructure its arrangements, probably by ceasing to offer employees large amounts of overtime, and instead employing a larger number of employees to share the work between them. Termination of the Agreement will put the Employer on an even keel with other employers in the industry operating pursuant to the Award.

[42] Taking into account the views of the persons (including the Employer) referred to in s.226(b) that have been presented to the Commission, and the circumstances of those persons, as well as the effect that termination will have on each of them, I consider that it is appropriate to terminate the Agreement.

The operative date of the termination

[43] The remaining issue for determination in this application is: when should the Agreement be terminated?

[44] Section 227 provides that, if an enterprise agreement is terminated under s.226, the termination ‘operates from the day specified in the decision to terminate the agreement.’

[45] I accept it is a significant change for the Employer to accommodate in its business; to pay penalty rates pursuant to the Award. The Employer has nominated 1 October 2022 for the termination to take effect on account of the impact this decision will have on a large number of employees, their personal circumstances, the staffing of the Employer if some employees choose to work elsewhere, and the commercial impact relevant to clients and customers.

[46] A small number of employees provided views as to the date of termination, mostly opposing 1 October 2022 as being too long a period. The Union seeks a period of 28 days from the date of the decision.

[47] Effective from the first full pay period on or after 1 July 2022, the Award rates have gone up by approximately 80 cents - $1.00 per hour due to the Annual Wage Review. When employees provided their views, they might have been concerned that their base rate would reduce to approximately $22.84 - $23.50 per hour. Those rates are now $23.89 - $24.58, so there has been some “catch up” on account of the Award rate increasing.

[48] Having regard to the views of the Employer and employees and giving appropriate weight to the view of the Union on account of its representation of members covered by the Agreement, I consider it suitable for termination of the Agreement to take effect on 22 August 2022. This is a suitable period of time for the Employer to communicate to its workforce the rates it wishes to pay to its employees, noting that the Award is the minimum rate of pay, and it may elect, at its discretion, to make over-award payments to employees.

[49] This is also a suitable period of time for employees to turn their mind to the work they wish to perform for the Employer, having regard to their new entitlement to penalty rates for work performed at night, on weekends and when working overtime, against any reduction in remuneration that might apply when day work is performed.

Conclusion

[50] For the reasons given above, in consideration of s.226(a), I am satisfied that the termination of the Agreement is not contrary to the public interest. There is nothing before me which raises public interest considerations which might militate against the termination of the Agreement.

[51] For the reasons given above, in consideration of the material before me relevant to ss.226(b)(i) and (ii), I consider that it is appropriate to terminate the Agreement.

[52] In accordance with s.226, I must terminate the Agreement. The application to terminate the Agreement is approved.

[53] For the reasons given above, the termination will take effect from 22 August 2022.

COMMISSIONER

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1 [2019] FWCA 8563 at [16].