[2017] FWCA 3980

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.222—Enterprise agreement

Grandstand Scaffold Services Pty Ltd
(AG2017/2181)

GRANDSTAND SCAFFOLDS PTY LTD / CFMEU COLLECTIVE AGREEMENT 2016

Building, metal and civil construction industries
COMMISSIONER PLATT	ADELAIDE, 28 JULY 2017

Application for termination of the Grandstand Scaffolds Pty Ltd / CFMEU Collective Agreement 2016.

[1] On 13 June 2017, Grandstand Scaffold Services Pty Ltd (Grandstand) filed an application pursuant to s.222 of the Fair Work Act 2009 (the Act) to terminate the Grandstand Scaffolds Pty Ltd / CFMEU Collective Agreement 2016 (the Grandstand Agreement).

[2] Directions were issued on 14 June 2017, directing the Employer as follows:

“[3] The Fair Work Commission directs Grandstand Scaffolds Services Pty Ltd (Grandstand) to provide the Form F24A Statutory Declaration provided to the Fair Work Commission together with the application and these directions, to all employees whose terms of employment are covered by the Agreement, prior to 4.00pm on Wednesday 21 June 2017.”

[3] Confirmation of compliance with this direction was provided on 21 June 2017.

[4] The directions further advised:

“[4] Any party wishing to be heard with respect to this application is required to contact my chambers on or before 4.00pm Wednesday 28 June 2017. In the event of such contact being made, the application will be listed for hearing shortly after that date. In the absence of any contact being made, I will determine the application on the material before me.”

[5] On 27 June 2017, Ms Nikki Candy of the Construction, Forestry, Mining and Energy Union (the CFMEU) emailed my chambers advising that the CFMEU, as an employee organisation covered by the Grandstand Agreement, opposed the termination of the Grandstand Agreement and therefore sought to be heard in relation to the application.

[6] On 28 June 2017, directions were issued to the parties. The CFMEU were directed to provide a summary of its objections to the termination of the Grandstand Agreement by 5 July 2017. The Employer was invited to provide any response/material in reply by 10 July 2017.

[7] Grandstand seeks to terminate the Grandstand Agreement as it was having an adverse financial impact on the business and was not compliant with the Code for the Tendering and Performance of Building Work 2016 (the Code). Grandstand contend it has met the requirements contained in s.222 of the Act, that a majority of employees voted in favour of the termination of the Grandstand Agreement and that it is appropriate for the Commission to terminate the Grandstand Agreement.

[8] The CFMEU opposes the termination of the Grandstand Agreement on the basis that:

● the termination was not agreed by the employees;
● some of the persons who participated in the ballot were not covered by the Grandstand Agreement;
● a majority of persons covered by the Grandstand Agreement did not approve the termination;
● a false representation had been made to them to entice employees to approve the termination;
● the Grandstand Agreement has only recently been approved;
● it would result in a massive reduction in remuneration;
● Grandstand should have renegotiated the terms of the agreement rather than seek to terminate it; and
● it would be an unjust and unfair outcome for the employees.

[9] The matter was arbitrated on 12 and 14 July 2017. Mr Tom Earls of Fair Work Lawyers was granted permission pursuant to s.596 of the Act to represent the Employer and Mr Michael Aird represented the CFMEU.

[10] Grandstand submitted witness statements from Elaine Green, Director, and Michael Claxton, Project Manager, Mr Claxton was not required to be cross-examined.

[11] Grandstand’s position is relevantly summarised as follows.

[12] Grandstand provides scaffolding services to the building industry.

[13] In June 2016, at the behest of the CFMEU, it engaged a number of employees from a business known as Vertex Scaffolding (Vertex) which had ‘gone bust’. Vertex had an enterprise agreement called the Vertex Scaffold Pty Ltd / CFMEU Collective Agreement 2015 (Vertex Agreement). Vertex’s clients, Adco and Maxcon, advised Grandstand that they would allow them to take over Vertex’s contracts and the CFMEU advised they needed to have an enterprise agreement. There was no negotiation on the terms and the Grandstand Agreement was approved by the Commission. Soon thereafter, Grandstand determined that the agreement terms and conditions were uncompetitive and uneconomic.

[14] Grandstand accepts that a ‘transfer of business’ took place in respect of employees who came from Vertex and that the Vertex Agreement covered Grandstand.

[15] Grandstand has struggled to win work as their competitors having substantially lower rates. Grandstand has lost in excess of $200,000 on each of the Adco and Maxcon jobs. The Directors are selling personal assets to finance the business losses.

[16] The Grandstand Agreement does not comply with the Code and Ms Green believed this had prevented Grandstand from getting work for Lendlease on the Northern Connector Project.

[17] On 1 May 2017, Mr Claxton met with employees to explain the financial position and seek agreement to reduce the rates of pay. This was not the first occasion such discussions had been held. Robert Crawford was elected employee representative.

[18] On 4 May 2017, Ms Green and Mr Claxton attended the CFMEU office to discuss the financial issue and their view that the Grandstand Agreement was not Code compliant. The CFMEU agreed to work together to resolve these issues. Unfortunately, agreement on an enterprise agreement that was code compliant was not reached.

[19] On 8 May 2017, Grandstand had further discussions with employees who indicated their preference not to have the base rate of pay reduced.

[20] On 17 May 2017, Grandstand met with employees and explained a proposal to terminate the Grandstand Agreement. Employees were given the opportunity to ask questions.

[21] On 22 May 2017, Grandstand emailed letters to employees explaining their intention to terminate the two agreements (the Grandstand Agreement and the Vertex Agreement) that covered Grandstand. The notices in this matter refer to the Grandstand Agreement’s lack of Code compliance and that the terms and conditions were not sustainable for the business and detailed the voting process and date. The letter contained an attachment which detailed the conditions that the letter represented would be preserved if the Grandstand Agreement were terminated. The letter or attachment did not detail how those conditions would be preserved.

[22] On 23 May 2017, the CFMEU was advised of a proposed ballot in respect of the termination of the Grandstand Agreement. The CFMEU encouraged employees to vote against the termination of the agreement and distributed printed material and text messages highlighting loss of pay and conditions.

[23] The ballot was deferred to 2 June 2017. A notice of the new ballot process, date, information about Grandstand’s reason for seeking to terminate the Grandstand Agreement and preserved conditions were sent to all employees on 31 May 2017. Employees were also sent a text message providing the same.

[24] The ballot was held at the Black Bull Hotel which was near the main site that Grandstand employees were working at. Employees could vote in person or by SMS.

[25] A voting roll was made containing 36 names of employees who were covered by the Grandstand Agreement.¹ All of the persons on that roll were classified as scaffolders or labourers. All of the persons worked between 5 May and 1 June 2017. All have, but two, worked for Grandstand after the ballot. One of those persons is in receipt of workers compensation payments.

[26] Mr Aaron Cartledge from the CFMEU attended the ballot and was a scrutineer.

[27] 29 of the 36 eligible Grandstand employees voted and 16 of those employees supported the termination of the Grandstand Agreement.

[28] Applications to terminate the Grandstand and Vertex Agreements were lodged with the Commission on 13 June 2017.

[29] I terminated the Vertex Agreement on 30 June 2017.²

[30] The CFMEU provided witness statements from Robert Crawford³ and Tehira Hetaraka. 4 Mr Hetaraka was not required to be cross-examined.

[31] Mr Crawford is an advanced scaffolder and is the CFMEU delegate.

[32] He estimates that he would lose $150 per week in wages if the Grandstand Agreement was terminated.

[33] On or about 26 May 2017, at an information session about the proposal to terminate the Grandstand Agreement, Ms Green sated “We are all in this together, this change is being forced upon us. We need to be code complaint or we can’t tender for Government jobs. We need to vote to terminate the agreement to become code complaint. We can’t bid for new jobs at the moment. We need to become code complaint so we can bid for jobs and build from there.” Mr Crawford suggested that the employees could put a counter proposal and negotiate. Ms Green responded “We need to act. We need to get this done now. We can then tender for Government jobs and then we can sit down and do a new agreement.”

[34] Mr Crawford did not believe there were 36 employees covered by the Grandstand Agreement, and his concern was that Grandstand employees not covered by the Grandstand Agreement may have voted. He was not consulted as to the composition of the voter roll. The CFMEU was allowed to scrutineer the ballot.

[35] On the night of the vote, he was advised the vote to terminate was successful.

[36] Mr Hetaraka also contended that there were not 36 employees engaged by Grandstand that were covered by the Grandstand Agreement. He heard a rumour that administrative staff got to vote.

[37] He believed that a person known as ‘Gegzy’ who was a truck driver, loader/unloader got to vote. I note in this respect that Ms Green, in a supplementary statement, identified ‘Gegzy’ as Gary Neilson – scaffolder/operator and provided a copy of his building industry certifications which included Construction Induction, Electrical Safety, Confined Space, High Risk Work License, Manual Handling Methods, Flat Roof Edge Protection and Working at Heights.

[38] He was angry and upset by the proposal to terminate the Grandstand Agreement as it would take them ‘massively backwards.’ He thought it was unfair.

[39] On 26 May 2017, he attended a meeting where Ms Green advised him that they were all in this together and they had no choice but to be Code compliant.
[40] In his statement, Mr Hetaraka said that Mr Claxton stated: 5

“Claxton: ‘If we don’t squash the EA none of us will have a job. We can’t tender for jobs, so we just won’t have any work. The 2 jobs underway are 95% done. Within a couple of weeks the ADCO site will be finished and we’ll just have to put people off. There won’t be any more work. We’ve got our 12 permanents we can cover what we need with those guys. If we squash it we can than work together on a new agreement.’”

[41] Mr Hetaraka argued about the conditions and pay rates. Mr Crawford argued that management should sit down and negotiate.

[42] Mr Hetaraka contends that on the day of the vote, 2 June 2017, Grandstand did not advise if anyone else was getting a pay cut or whether their conditions would be cut other than scaffolders.

[43] Mr Hetaraka thought the process was unfair and could not work out how there could be 36 eligible voters. Given that ‘Gegzy’ got to vote, he felt that other non-eligible persons could have voted.

Relevant Law

[44] Section 53 of the Act sets out when an enterprise agreement covers and employer, employee or employee organisation:

“53 When an enterprise agreement covers an employer, employee or employee organisation

Employees and employers

(1) An enterprise agreement covers an employee or employer if the agreement is expressed to cover (however described) the employee or the employer.

Employee organisations

(2) An enterprise agreement covers an employee organisation:

(a) for an enterprise agreement that is not a greenfields agreement--if the FWC has noted in its decision to approve the agreement that the agreement covers the organisation (see subsection 201(2)); or

(b) for a greenfields agreement--if the agreement is made by the organisation.

Effect of provisions of this Act, FWC orders and court orders on coverage

(3) An enterprise agreement also covers an employee, employer or employee organisation if any of the following provides, or has the effect, that the agreement covers the employee, employer or organisation:

(a) a provision of this Act or of the Registered Organisations Act;

(b) an FWC order made under a provision of this Act;

(4) Despite subsections (1), (2) and (3), an enterprise agreement does not cover an employee, employer or employee organisation if any of the following provides, or has the effect, that the agreement does not cover the employee, employer or organisation:

(a) another provision of this Act;

(b) an FWC order made under another provision of this Act;

Enterprise agreements that have ceased to operate

(5) Despite subsections (1), (2) and (3), an enterprise agreement that has ceased to operate does not cover an employee, employer or employee organisation.

Enterprise agreements cover employees in relation to particular employment

(6) A reference in this Act to an enterprise agreement covering an employee is a reference to the agreement covering the employee in relation to particular employment.”

[45] Section 58 of the Act is as follows:

“58 Only one enterprise agreement can apply to an employee

Only one enterprise agreement can apply to an employee

(1) Only one enterprise agreement can apply to an employee at a particular time.

General rule--later agreement does not apply until earlier agreement passes its nominal expiry date

(2) If:

(a) an enterprise agreement (the earlier agreement ) applies to an employee in relation to particular employment; and

(b) another enterprise agreement (the later agreement ) that covers the employee in relation to the same employment comes into operation; and

(c) subsection (3) (which deals with a single-enterprise agreement replacing a multi-enterprise agreement) does not apply;

then:

(d) if the earlier agreement has not passed its nominal expiry date:

(i) the later agreement cannot apply to the employee in relation to that employment until the earlier agreement passes its nominal expiry date; and

(ii) the earlier agreement ceases to apply to the employee in relation to that employment when the earlier agreement passes its nominal expiry date, and can never so apply again; or

(e) if the earlier agreement has passed its nominal expiry date--the earlier agreement ceases to apply to the employee when the later agreement comes into operation, and can never so apply again.

Special rule--single-enterprise agreement replaces multi-enterprise agreement

(3) Despite subsection (2), if:

(a) a multi-enterprise agreement applies to an employee in relation to particular employment; and

(b) a single-enterprise agreement that covers the employee in relation to the same employment comes into operation;

the multi-enterprise agreement ceases to apply to the employee in relation to that employment when the single-enterprise agreement comes into operation, and can never so apply again.”

[46] Section 219 of the Act is as follows:

“219 Employers and employees may agree to terminate an enterprise agreement

Termination by employers and employees

(1) The following may jointly agree to terminate an enterprise agreement:

(a) if the agreement covers a single employer--the employer and the employees covered by the agreement; or

(b) if the agreement covers 2 or more employers--all of the employers and the employees covered by the agreement.

Note: For when a termination of an enterprise agreement is agreed to, see section 221.

Termination has no effect unless approved by the FWC

(2) A termination of an enterprise agreement has no effect unless it is approved by the FWC under section 223.

Limitation--greenfields agreement

(3) Subsection (1) applies to a greenfields agreement only if one or more of the persons who will be necessary for the normal conduct of the enterprise concerned and are covered by the agreement have been employed.”

[47] Section 220 of the Act is 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.”

[48] Section 221 of the Act is as follows:

“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.

Multi-enterprise agreement

(2) If the employees of each employer covered by a multi-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 of each individual employer who cast a valid vote have approved the termination.”

[49] Section 222 of the Act is as follows:

“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.”

[50] Section 223 of the Act sets out the conditions which must be met for an agreement to be terminated pursuant to s.222 of the Act:

“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.”

[51] Section 313 of the Act is as follows:

“313 Transferring employees and new employer covered by transferable instrument

(1) If a transferable instrument covered the old employer and a transferring employee immediately before the termination of the transferring employee's employment with the old employer, then:

(a) the transferable instrument covers the new employer and the transferring employee in relation to the transferring work after the time (the transfer time) the transferring employee becomes employed by the new employer; and

(b) while the transferable instrument covers the new employer and the transferring employee in relation to the transferring work, no other enterprise agreement or named employer award that covers the new employer at the transfer time covers the transferring employee in relation to that work.

(2) To avoid doubt, a transferable instrument that covers the new employer and a transferring employee under paragraph (1)(a) includes any individual flexibility arrangement that had effect as a term of the transferable instrument immediately before the termination of the transferring employee's employment with the old employer.

(3) This section has effect subject to any FWC order under subsection 318(1).”

[52] Clauses 10 and 11 of the Code are as follows:

“10 Unregistered written agreements and other agreements

(1) A code covered entity must not bargain in relation to an agreement, make an agreement, or implement an agreement in respect of building work:

(a) that deals with matters that would be not be permitted by section 11 to be included in the agreement if the agreement were an enterprise agreement; or

(b) that provides for terms, conditions or benefits of employment of employees of the employer or the employer’s subcontractors (which may include above-entitlements payments); or

(d) that either:

(i) will not be registered, lodged or otherwise approved under the FW Act; or

(ii) the code covered entity reasonably believes will not be registered, lodged or otherwise approved under the FW Act.

(2) Subsection (1) does not apply to an agreement that is a common law agreement made between an employer and an individual employee or to an individual flexibility arrangement.

Example: an unregistered site agreement or project agreement between a head contractor and relevant union would be an unregistered written agreement.

11 Content of agreements and prohibited conduct, arrangements and practices

(1) A code covered entity must not be covered by an enterprise agreement in respect of building work which includes clauses that:

(a) impose or purport to impose limits on the right of the code covered entity to manage its business or to improve productivity;

(b) discriminate, or have the effect of discriminating against certain persons, classes of employees, or subcontractors; or

Example 1: clauses that impose a requirement on the code covered entity or a subcontractor engaged by the code covered entity to employ a non-working shop steward or job delegate, or which result in the employment of a non-working shop steward or job delegate.

Example 2: clauses permitting officials, delegates or other representatives of a building association to undertake or administer induction processes.

Note: Subsection (3) provides a non-exhaustive list of clauses that are not permitted to be included in enterprise agreements.

(2) Subsections (1) and (3) are subject to Schedule 5.

(3) Without limiting the generality of subsection (1), clauses are not permitted to be included in enterprise agreements that:

(a) prescribe the number of employees or subcontractors that may be employed or engaged on a particular site, in a particular work area, or at a particular time;

Note: this does not prevent the inclusion of clauses in an enterprise agreement that encourage the employment of apprentices.

(b) restrict the employment or engagement of persons by reference to the type of contractual arrangement that is, or may be, offered by the employer;

Example: an agreement or practice that prohibits or limits the employment of casual or daily hire employees.

(c) require, or result in, discrimination between classes of employees because of the basis on which they are lawfully entitled to work in Australia;

(d) require a code covered entity to consult with, or seek the approval of, a building association or an officer, delegate or other representative of the building association in relation to the source or number of employees to be engaged, or type of employment offered to employees;

(e) require a code covered entity to consult with, or seek the approval of, a building association or an officer, delegate or other representative of the building association in relation to the engagement of subcontractors;

(f) prescribe the terms and conditions on which subcontractors are engaged (including the terms and conditions of employees of a subcontractor);

(g) prescribe the scope of work or tasks that may be performed by employees or subcontractors;

(h) limit or have the effect of limiting the right of an employer to make decisions about redundancy, demobilisation or redeployment of employees based on operational requirements;

Example: an arrangement or practice whereby employees are selected for redundancy based on length of service alone.

(i) prohibit the payment of a loaded rate of pay (whether or not expressed as an annual amount);

Example: an amount paid that nominally incorporates payment for ordinary time and other matters such as overtime and allowances in one loaded rate.

(j) require, or have the effect of requiring, the allocation of particular work to individual employees only if that allocation is extended to all other employees in the class of employees to which the individual employee belongs;

Example: a clause or practice that prevents an individual employee being selected to perform overtime unless other employees are similarly provided overtime.

(k) provide for the monitoring of agreements by persons other than the employer and employees to whom the agreement applies;

(l) include requirements to apply building association logos, mottos or indicia to company supplied property or equipment;

(m) directly or indirectly require a person to encourage, or discourage, a person from becoming, or remaining, a member of a building association;

(n) directly or indirectly require a person to indicate support, or lack of support, for persons being members of a building association or any other measure that suggests that membership is anything other than a matter for individual choice;

(o) limit the ability of an employer to determine with its employees when and where work can be performed to meet operational requirements or limit an employer’s ability to determine by whom such work is to be performed;

(p) provide for the rights of an official of a building association to enter premises other than in compliance with Part 3-4 of the FW Act;

(q) provide for the establishment or maintenance of an area which is intended to be designated to be used by members, officers, delegates or other representatives of a building association in that capacity.

Note 1: this section does not authorise the taking of action that would constitute a contravention of the FW Act, and should be read in a manner that ensures consistency with that Act. For example, paragraph (d) does not override section 205 of the FW Act which provides that an enterprise agreement must include a consultation term that provides for consultation on major changes at the workplace.

Note 2: clauses of an enterprise agreement that are inconsistent with this section will impact on a code covered entity’s eligibility to tender for or be awarded Commonwealth funded building work, see subsection 23(1)(a) of this code of practice.

Note 3: subsection 15(1) contains additional requirements for enterprise agreement content in relation to dispute settlement terms.

Conduct by parties

(4) A code covered entity must not engage in conduct, or implement a procedure or practice (howsoever described) in respect of building work which has, or is likely to have, any of the effects described in subsections (1) or (3) if the conduct, practice or procedure was contained in an enterprise agreement.

Example: a contractor must not attempt to circumvent the code by agreeing to run a redundancy process on the basis of a ‘last on first off’ rule or agree to set a schedule for rostered days off that does not allow for flexibility around operational requirements.

(5) Subsection (4) does not apply if the conduct, practice, or arrangement is:

(a) expressly permitted or required by a Commonwealth industrial instrument; or

(b) necessarily linked to the code covered entity’s compliance with, or conduct expressly permitted by, an industrial instrument.

Note: section 11 does not require, permit or authorise a code covered entity to fail to comply with an enterprise agreement. A failure to meet the requirements of section 11 by a code covered entity, however, renders the entity ineligible to tender for, or be awarded, Commonwealth funded work—see subsection 23(1)(a).”

Discussion

[53] I will now discuss and consider the arguments put in opposition to the application.

Reasonable opportunity to decide (s.223)

[54] No party contended that the process used by Grandstand was such that s.220(2) of the Act was not complied with. Based on the material before me I find that the requirements of s.223(a) of the Act have been met.

Was the Termination of the Grandstand Agreement agreed to

[55] In respect of this ground the CFMEU contends that:

● the voter roll contained the names of employees who were not covered by the Grandstand Agreement because they were not scaffolders or labourers;
● the voter roll contained the names of employees who had transferred from Vertex and who were covered by the Vertex Agreement and were not eligible to vote;
● a majority of employees covered by the Grandstand Agreement did not support the termination; and
● the employees were misled that the termination of the Grandstand Agreement would result in Code compliance and that the preservation of conditions was an agreement in breach of clause 10 of the Code.

[56] The CFMEU contended that Mr Gary Neilson was not entitled to vote as he was not a scaffolder or a labourer and thus not covered by the Grandstand Agreement. Based on the evidence given by Ms Green, I accept that the work performed by Mr Neilson was covered by the Grandstand Agreement.

[57] The CFMEU contended that the hourly rates on the pay slips of Stephen Mills and Adam Haak 6 were significantly higher than the Grandstand Agreement rate and, accordingly, they must be Supervisors or otherwise not covered by the Grandstand Agreement. Whilst the hourly rate was not disputed, Ms Green gave evidence that the two employees performed scaffolding work that was covered by the Grandstand Agreement. I accept Ms Green’s evidence and find that the work performed by Mr Mills and Haak was covered by the Grandstand Agreement.

[58] The CFMEU contends that the Vertex Agreement covered Grandstand in relation to the work performed by the transferring employees, and while the Vertex instrument covers Grandstand and the transferring Vertex employees in relation to the work, no other enterprise agreement that covers the work at the transfer time covered the transferring employee in relation to the work. The CFMEU contends that only one agreement can cover an employee at a time and relies on s.53(4)(a) and s.313(1)(b) of the Act for this proposition.

[59] The CFMEU contends that s.53(4)(a) of the Act has the effect that the Grandstand Agreement will not cover an employee as a result of another provision of the Act. The other provision relied upon was s.313(1)(b) of the Act.

[60] There is no dispute that a transfer of employment occurred at the end of June 2016 between Vertex and Grandstand in respect of a number of employees. Accordingly, at the end of June 2016 the Vertex Agreement applied to transferring employees. The Grandstand Agreement was made on 8 July 2016, was approved on 28 July 2016 and commenced operating on 4 August 2016.⁷ At the time that the Grandstand Agreement commenced to operate, it covered the transferring Vertex employees but it did not apply to them until the Vertex Agreement had passed its nominal expiry date on 30 September 2017.⁸ The effect of s.58 of the Act is that at the time the ballot for the approval of the Grandstand Agreement took place (8 July 2016)⁹ the Vertex Agreement covered and applied to the Vertex transferring employees and as at 4 August 2016 the Grandstand Agreement also covered (but did not apply) to the Vertex transferring employees. The termination vote occurred on 2 June 2017, at that time the Vertex transferring employees were covered by the Grandstand Agreement in addition to the Vertex Agreement. The fact that the Grandstand Agreement did not apply to them does not remove the obligation under s.220(1) of the Act to seek approval of employees covered by the Agreement. On that basis, I find that the Vertex transferring employees were entitled to vote on the termination of the Grandstand Agreement.

[61] The CFMEU contend that a majority of employees covered by the Grandstand Agreement did not support its termination. The evidence before me is that 36 Grandstand employees were covered by the Grandstand Agreement, 29 of those employees voted and 16 of those employees supported the termination of the Grandstand Agreement. The CFMEU were concerned that some of the votes were submitted by text message, however, s.220(3) of the Act contemplates both ballot and electronic methods. Section 221(1) of the Act states that a proposed termination is agreed when a majority of employees who cast a valid vote approve the termination. I find that such a majority agreed to approve the termination.

[62] The final issue in respect of the vote was that the primary reason represented to employees by Grandstand in support of the vote was to achieve Code compliance. The CFMEU contend that the proposal by Grandstand to preserve some entitlements provided by the Grandstand Agreement was in breach of clause 10(1)(c) of the Code which requires that a Code covered entity must not bargain in relation to an agreement, make an agreement, or implement an agreement in respect of building work which provides for terms, conditions or benefits of employment of employees of the employer or the employer’s subcontractors (which may include above-entitlements payments). The Code provides an example of an agreement which would offend the provision ‘Example: an unregistered site agreement or project agreement between a head contractor and relevant union would be an unregistered written agreement.’

[63] As a result of Grandstand’s breach of the Code, the CFMEU contend it was impossible to achieve Code compliance by terminating the Grandstand Agreement and, accordingly, it made a false representation to employees which enticed them to vote to terminate the Grandstand Agreement.

[64] Clause 10(2) of the Code provides that clause 10(1) does not apply to an agreement that is a common law agreement made between an employer and an individual employee or to an individual flexibility arrangement.

[65] The preservation proposal detailed in Grandstand’s communication dated 31 May 2017 only applied in ‘some cases’. I have no information as to which cases it applied. There is no information before me as to how Grandstand proposed to implement the preserved conditions detailed. I am uncertain if the preservation proposal was an agreement for the purposes of clause 10(1) of the Code. It is possible Grandstand would have entered into common law agreements.

[66] On the evidence before me, I am unable to conclude that the proposal would be in breach of the Code. Accordingly, I am unable to find that the representations concerning the Code compliance made to employees in the lead up to the ballot were a misrepresentation.

[67] I am satisfied that Grandstand complied with s.220(2) of the Act and that the termination was agreed to in accordance with s.221(1) of the Act.

[68] I am satisfied that there are no other reasonable grounds for believing the employees have not agreed to the termination.

Is it appropriate to terminate the Agreement?

[69] The CFMEU contend that the Commission should not terminate the Grandstand Agreement because:

● the Grandstand Agreement was the product of extensive negotiations and is relatively new having been approved on 28 July 2016;
● the considerable reduction in the wages and conditions that would result would be unjust and unfair; and
● Grandstand should negotiate with the employees, reach agreement and then apply to the Commission to amend the Grandstand Agreement.

[70] Ms Green gave evidence that as a result of the comparatively high wages and conditions provided in the Grandstand Agreement and its lack of Code compliance, Grandstand was unable to win work and the Directors had been forced to inject cash into the business. These more recent events are a consideration to be balanced against the fact that the Grandstand Agreement was approved less than a year ago.

[71] The undisputed evidence of Mr Crawford was that he would lose approximately $150 per week, and Mr Hetaraka contended he would lose between $95-$110 per week if the Grandstand Agreement was terminated. Against that, I have to consider the potential loss of employment of some or all of the employees if Grandstand continues to be unable to win work.

[72] The CFMEU contend that Grandstand should negotiate a variation to the Grandstand Agreement rather than terminate it. I observe that the parties commenced negotiations but were unable to agree on an agreement that would meet the requirements of the Code. From Grandstand’s perspective, it needs Code compliance urgently to enable it to bid for work and the fastest way to achieve that goal is to terminate the Grandstand Agreement. I also accept that the negotiation of an agreement takes time and is not guaranteed and thereafter the approval of an agreement will add to the delay and Code compliance is not guaranteed.

[73] I have considered the matters above and have determined that it is appropriate to approve the termination of the Grandstand Agreement taking into account the views of the CFMEU.

[74] I note that the parties are presently bargaining and I propose to allow a period before the Grandstand Agreement will terminate to afford the parties an opportunity to reach agreement on a replacement agreement that meets their needs.

Conclusion

[75] Based on the material that is before me, I am satisfied that the requirements of s.223 of the Act have been met.

[76] I encourage the parties to try and reach agreement on a replacement agreement and in order to facilitate this, in accordance with s.224 of the Act, the termination will come into effect on 25 August 2017.

al of the Fair Work Commission with member’s signature.