DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 16 - Application to terminate collective agreement-based transitional instrument

Lisa Reynolds
(AG2017/5488)

GODFREYS EMPLOYEE COLLECTIVE AGREEMENT 2009

Application for termination of the Godfreys Employee Collective Agreement 2009.

[1] Electrical Home-Aids Pty. Limited T/A Godfreys (Godfreys) conducts a business selling floor cleaning products, predominately vacuum cleaners and accessories. It has more than 220 stores throughout Australia and 312 of its employees are covered by the Godfreys Employee Collective Agreement 2009 (the Agreement).

[2] On 14 November 2017, an application (the Application) was filed pursuant to Schedule 3, Item 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) to terminate the Agreement.

[3] It is not in contention that the Application is made pursuant to s.225 of Fair Work Act 2009 (the Act) which applies by reason of Item 16 schedule 3 of the Transitional Act, where the Agreement is a collective agreement-based transitional instrument.

[4] The Application was filed by the Shop, Distributive and Allied Employees Association (SDA), however the Applicant was recorded as ‘Employee X’ and there was an accompanying statutory declaration made by Ms Julia Fox, National Assistant Secretary of the SDA together with a comparison document.

[5] On 4 December 2017, the then legal representative for Godfreys made an application that the matter be dismissed for want of jurisdiction on the basis that it is not an application made by a person with standing under s.225 of the Act. At a teleconference on 7 December 2017, I proposed that the challenge raised by Godfreys be determined by the SDA disclosing to my chambers the name of the Applicant and Godfreys providing me with a list of the employees of Godfreys. Having received this information, I could then identify whether or not the Applicant was a Godfreys employee. I advised Godfreys’s then legal representative that I proposed to disclose the name of the Applicant to them on the condition they not disclose the name to their client. On 20 December 2017, Godfreys filed submissions outlining its opposition to my proposal. I considered this but on 21 December 2017, I caused correspondence to be sent to the parties advising that I had determined to proceed with my proposed process.

[6] Following receipt of the material from the parties, on 5 January 2018 they were advised by email that a review satisfied me that the Application has been made by an employee covered by the Agreement. As Godfreys’s then legal representative had not provided an undertaking to keep the identity of the Applicant confidential, the identity of the Applicant was not disclosed to them. I then made Directions for the future conduct of the matter.

[7] On 9 January 2018, Godfreys filed an appeal against my interlocutory decision that the Fair Work Commission (the Commission) had jurisdiction to hear and determine the Application and the Directions I had issued. A stay hearing was listed before Vice President Hatcher on 11 January 2018 and later that day, the Vice President issued a decision 1 dismissing the stay application. On 15 January 2018, a Notice of Discontinuance was filed in relation to the appeal.

[8] On 1 February 2018, new legal representatives came on the record for Godfreys.

[9] Ahead of the hearing on 17 April 2018, the parties filed the following material:

•  An Outline of Submissions dated 22 February 2018 with three attachments (the Agreement, the General Retail Industry Award 2010 and a comparison table of entitlements under the Agreement and this award) was filed on behalf of the Applicant;

•  Godfreys filed an Outline of Submissions dated 20 March 2018, together with a witness statement of Mr Andrew Robert Ford, the Chief Financial Officer of Godfreys and its own table comparing the Agreement to the General Retail Industry Award 2010.

•  The Applicant filed an Outline of Submissions in Reply on 4 April 2018, attaching an additional document dealing with the comparison of the Agreement and the General Retail Industry Award 2010 in response to matters raised by the Respondent.

[10] Pursuant to s.596 of the Act, I granted both parties permission to be legally represented at the hearing on 17 April 2018. I considered the Application raises issues of complexity such that it would be dealt with more efficiently were I to do so. Mr Craig Dowling SC appeared on behalf of the Applicant (instructed by Mr Angelo Pardo of the SDA and Mr Dominic Macken of A J Macken & Co.) and Ms Jenny Firkin of Counsel (instructed by Ms Tegan Ayling of Allens) appeared on behalf of Godfreys. Only Mr Ford for Godfreys gave evidence.

Preliminary Issue

[11] At commencement of the hearing, Mr Dowling SC advised the Commission that for an unexplained reason, two agreements by the same name of ‘Godfreys Employee Collective Agreement [2009]’, in slightly different form were published on the Commission’s website. It is agreed between the Applicant and Godfreys that the Agreement the parties are dealing with has an agreement number CAEN096210854. Godfreys confirmed that this version is the current agreement in operation.

[12] It is also the position of both the Applicant and Godfreys that the other agreement, with the agreement number CAEV096210854-1, ought be removed from the Commission’s website so as to avoid confusion. I intend to make a direction that this occur.

Summary of Applicant’s Submissions

[13] The Applicant stated the Agreement was approved by the Workplace Authority pursuant to s.327 of the Workplace Relations Act 1996 (Cth) (WR Act) sometime between January 2009 and 26 May 2009.

[14] At the time of approval of the Agreement, it was a requirement pursuant to s.346D of the WR Act that the Agreement pass the “no-disadvantage test”. The Applicant submitted the Agreement passed the “no-disadvantage test” and came into operation thereafter. The “no-disadvantage test” has subsequently been replaced by the “better off overall test” in s.186(2)(d) of the Act.

[15] In 2010, various awards that applied to the retail industry were replaced with the General Retail Industry Award 2010 (the Award) as a result of the Act’s award modernisation process. Since then, the wages under the Award have increased annually in accordance with the Commission’s annual wage review decisions. By way of contrast, Clause 3.2 of the Agreement provided for wage increases on 1 July 2010 and 1 July 2011. As such, the last wage increase provided for under the terms of the Agreement was in July 2011, over seven years ago.

[16] The Agreement provides for classifications of employees covered in its clause 3.1. They comprise:

•  Level 1 - retail assistant;

•  Level 2 - sales team member;

•  Level 3 - senior sales team member;

•  Level 4 - sales team leader; and

•  Demonstrator.

Section 225 of the Act

[17] The Applicant submitted and I am satisfied that the two threshold requirements set out in s.225 of the Act are satisfied.

[18] Firstly, the Agreement has passed its nominal expiry date. This is because, pursuant to clause 1.3(1) of the Agreement, the nominal expiry date is three years from the date of commencement and the Agreement therefore reached the nominal expiry date sometime during 2012.

[19] Secondly, I determined on 5 January 2018 that the Applicant is an employee covered by the Agreement and therefore the Application has been made by an employer, an employee or employee organisation that is covered by the Agreement.

Section 226(a) of the Act

[20] In relation to s.226(a) of the Act, the Applicant submitted that it is not contrary to the public interest to terminate the Agreement. Noting that consideration of the public interest involves something distinct from the persons and bodies covered by the Agreement, 2 the Applicant referred to the Full Bench of the Australian Industrial Relations Commission’s observation in Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/ Offshore Facilities Certified Agreement 2000 (Kellogg):

“The notion of public interest refers to matters that might affect the public as a whole such as the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards. An example of something in the last category may be a case in which there was no applicable award and the termination of the agreement would lead to an absence of award coverage for the employees. While the content of the notion of public interest cannot be precisely defined, it is distinct in nature from the interests of the parties. And although the public interest and the interests of the parties may be simultaneously affected, that fact does not lessen the distinction between them.”  3

[21] The Applicant submitted that terminating the Agreement is not contrary to the public interest for the following three reasons:

i. Firstly, to maintain proper industrial standards.

ii. Secondly, the termination of the Agreement would be consistent with the objects of the Act; and

iii. Thirdly, terminating the Agreement would be in the public interest because it would have a positive effect on the broader retail industry.

[22] This submission was developed by the Applicant in the manner I will now proceed to outline.

A. Maintain proper industrial standards

[23] The Applicant relied on a document which compared the entitlements under the Award to the Agreement 4 in submitting that the conditions in the Agreement have fallen well below the minimum terms in the Award and therefore termination of the Agreement would be in line with proper industrial standards because the Award would then cover the employees of Godfreys.

[24] More specifically, the Applicant submitted the Award’s terms are superior in terms of minimum hourly rates of pay. In this regard, it was submitted at the hearing that clause 17 of the Award provides for wage rates from $763.20 for level 1 to $842.30 for level 5, whereas clause 3.2 of the Agreement has wage rates which vary according to States from $602.68 for level 1 to $686.00 for level 4. 5 It was further submitted that some or all of the annualised salary employees of Godfreys are still, depending on the circumstances, worse off under the Agreement than they would be under the Award6 and that there was a disparity between junior rates of pay for employees aged 20, with employment of greater than 6 months.7

[25] Further, it was submitted that casual loading for casual employees should be compared having regard to clause 13.2 of the Award and clause 3.2(5) of the Agreement. It was outlined that pursuant to the Award, the casual employee is to be paid the hourly rate payable to a full-time employee and an additional 25% loading, while pursuant to the Agreement, casual loading ranges from 15-25% depending on the State or Territory. 8 It was further outlined that the minimum engagement for casual employees in the Award is three hours, whereas the Agreement provides for at least two hours.9

[26] In relation to protection of employee rostering, the Applicant submitted there are many protections under the Award that have no equivalent protection in the Agreement. 10 For example, the entitlement of employees regularly working Sundays under the Award to have three consecutive days off each four weeks, including Saturday and Sunday without there being an equivalent protection in the Agreement was raised.11

[27] It was also submitted that employees in South Australia are worse off in relation to working during late night trading and Saturdays because no additional penalty rates apply under the Agreement and that Saturday casual employees in Queensland and South Australia are worse off under the Agreement. 12

[28] Break periods under the Award were also raised and attention was drawn to Clause 31 of the Award which provides employees that work more than seven hours, but less than 7.36 hours receive two paid 10 minute breaks, whereas under the Agreement, such employees receive one paid 10 minute break. It was said there was evidence of one such employee. 13

[29] The Applicant also submitted that there were inferior Agreement conditions relating to the rate of payment for annual leave loading and employees being directed to take annual leave compared with the provisions in the Award. 14

[30] The commission structure of Godfreys was addressed by the Applicant. It was said that clause 3.5(1) of the Agreement makes clear that it is not part of the Agreement and therefore it should not be taken into account. 15

[31] The Applicant submitted that the comparison document 16 demonstrated that the Award contained superior entitlements than the Agreement specifically in relation to:

a) minimum hourly rates of pay;

b) junior rates of pay;

c) casual loading (in all States and Territories other than Victoria which is equivalent);

d) consecutive days off;

e) minimum rest periods between work periods;

f) breaks; and

g) various allowances:

i. laundry allowance;

ii. meal allowance; 17

iii. special clothing;

iv. higher duties; 18

v. recall allowance; and

vi. transport reimbursement. 19

[32] The Applicant submitted that the Agreement would therefore not pass the better off overall test at s.186(2)(d) of the Act in the event the test was applied today and that the fact that the maintenance of the Agreement would be contrary to the maintenance of proper industrial standards is a factor that strongly supports the termination of the Agreement.

B. Consistent with the objects of the Act

[33] The Applicant further submitted that the termination of the Agreement would be consistent with objects of the Act with particular reference to s.3(b) of the Act, which states that an object of the statute is “ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders.” The Applicant argued that termination of the Agreement would assist in achieving this objective of the Act because the Agreement has fallen below the Award, which is supposed to be the minimum safety net for the employees.

C. Terminating the agreement would be in the public interest

[34] The Applicant further submitted that terminating the Agreement would be in the public interest (my emphasis) as it would have a positive effect on the broader retail industry. The Applicant argued that the Agreement currently gives Godfreys an unfair commercial advantage over its competitors who, as a minimum, are obliged to pay and provide their employees entitlements in accordance with the Award. In this regard, the Applicant relied on the decision of Deputy President Binet in Wilson Security – Western Australia Collective Agreement 2009 (Wilson Security). 20 In that case, the Deputy President stated:

“[57] The Security Award sets the minimum standards that Wilson Security’s competitors must meet, and the parameters in which they must operate. Compliance with the Award should not commercially disadvantage Wilson Security so significantly that it is forced to concede to unreasonable claims. In fact, it is in the public interest, and consistent with the objects of the FW Act, to ensure that compliance by Wilson Security’s competitors with the minimum terms and conditions in the Security Award does not commercially disadvantage those competitors as against Wilson Security because Wilson Security are operating under an Agreement containing terms well below the minimum set by the Security Award.”

Section 226(b) of the Act

[35] The Applicant submitted that having regard to all the circumstances in s.226(b) of the Act, it is appropriate to terminate the Agreement.

Section 226(b)(i) - The views of the employees

[36] At the time of the hearing, the Applicant was an employee covered by the Agreement and it was submitted the Applicant supports the termination of the Agreement.

Section 226(b)(ii) - The circumstances of the employees, including the likely effect that the termination will have on them

[37] The Applicant submitted that terminating the Agreement would result in the employees being covered by the Award and therefore receiving superior wages and conditions.

[38] The Applicant asserted that “the fact the conditions in the 2009 Agreement are inferior to the GRIA [Award] is particularly concerning and favours the termination” 21 and relied on the following extract from Full Bench of the Commission’s conclusion in Four Yearly Review of Modern Awards – Penalty Rates to support its assertion:

“…As shown in Chart 54 (see [1458]) a substantial proportion of award-reliant employees covered by the Retail Award are ‘low paid’. Further, retail households face greater difficulties in raising emergency funds. This suggests that their financial resources are more limited than those of other industry households.”  22

[39] The Applicant submitted that having the employees covered by the Award and not the Agreement strongly supports termination of the Agreement.

Other circumstances

[40] The Applicant submitted that the factors listed in s.226(b)(i) and (ii) of the Act are not exhaustive of the circumstances that are to be taken into account by the Commission in considering the appropriateness of termination. The Applicant submitted that Wilson Security stands for the proposition that other circumstances can be taken into account. In this regard, the Applicant submitted that the Commission is able to take into account the fact that the employee organisation covering the retail industry, the SDA, supports the termination.

[41] Further, the Applicant relied on Energy Resources of Australia Ltd v Liquor, Hospitality and Miscellaneous Union, 23 which it submitted established that “the longer the time after expiry of the nominal term the stronger the case for termination.”24 The Applicant therefore submitted that the fact that almost six years have passed (as at the time of filing the submission) since the nominal expiry date of the Agreement, together with the fact that the safety net has “drastically changed” with the creation of the Award since the Agreement was first approved, further favours the case for termination of the Agreement.

Summary of Godfreys’s Submissions

[42] As regards the requirements of s.225 of the Act, Godfreys does not dispute that the Agreement has passed its nominal expiry date and that the Application was made by an employee covered by the Agreement.

[43] Godfreys however takes issue with the Applicant’s submissions in relation to the requirements in s.226 of the Act.

Section 226(a) of the Act

[44] Godfreys submitted that public interest involves something distinct from the interests of the parties involved in the Agreement and did not dispute that the termination of the Agreement is not contrary to the public interest.

[45] However, Godfreys submitted that the Applicant’s submissions had inverted the consideration in s.226(a) of the Act, which only requires the Commission to be satisfied that termination is not contrary to the public interest, not that termination would be in the public interest.

[46] Godfreys firstly disputed the accuracy of the Applicant’s document comparing entitlements under the Award to entitlements under the Agreement. 25 Godfreys rejects the Applicant’s contention that the employees would receive better wages and conditions under the Award for three reasons:

i. in addition to the entitlements under the Agreement, employees participate in Godfreys’s commission scheme which, while not forming part of the Agreement, is referred to in clause 3.5 of it. Godfreys says the commission scheme provides employees with the opportunity to earn remuneration that exceeds the wages and allowances under the Award. Godfreys submitted the majority of employees are likely to do so in practice and therefore, if the Agreement is terminated, the commission opportunities are unlikely to remain available to employees;

ii. the Applicant inaccurately compared the Agreement against the Award by overstating the benefits of the Award and underestimating the benefits of the Agreement. It annexed a comparison table to its submissions to emphasise this submission; and

iii. various clauses of the Award referred to by the Applicant have no application, or extremely limited application in Godfreys’s business and to the employees covered by the Agreement. Again, it highlighted the clauses in its own comparison table.

[47] Secondly, Godfreys submitted the object of the Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians through the various factors in subsections (a) through to (g). It submitted that insofar as the Applicant contends that the termination of the Agreement would achieve the object in subsection (b) of s.3 of the Act, that subsection in isolation is not properly described as an object of the Act. 26

[48] Thirdly, Godfreys submitted that there is no basis for the Applicant to contend that there will be a positive impact on the broader retail industry should the Agreement be terminated.

Section 226(b) of the Act

[49] Godfreys submitted that the critical issue for the Commission to determine is s.226(b) of the Act; whether the Commission considers it appropriate to terminate the Agreement. 27

[50] Godfreys submitted that the Applicant’s application and comparison of the Award and the Agreement ignores the fact that Godfreys’s employees are remunerated by both the Agreement and its commission scheme.

[51] Godfreys submitted that it is not appropriate to terminate the Agreement having regard to considerations in s.226(b) of the Act.

Section 226(b)(i) – the views of the employees

[52] In its written submissions dated 20 March 2018, Godfreys submitted that there was no evidence of employees’ views before the Commission except for the Applicant.

[53] Godfreys submitted that this is not a case where the Commission can safely presume that employees will support a termination. It relied on Grace & Ors v Coverall Security Pty Ltd, 28 submitting that the absence of evidence about the views of any of the relevant employees, bar one, weighs against the termination of the enterprise agreement that regulates their employment conditions. Godfreys further submitted it is conceivable that some if not many employees may prefer the current arrangements of the Agreement and the commission scheme operating in tandem over the Award and a revised commission structure. It relied on Gilhooley v Barnery Pty Ltd29 to submit that at the very least, the views of the relevant employees are a neutral consideration.

[54] Further, Ms Firkin for Godfreys submitted that if termination of the Agreement was to increase its business costs, it is likely that the Godfreys commission scheme will be modified to offset this expense and the potential consequence of this hypothetical is that employees will then have their remuneration based on time rather than performance. It was submitted this has the potential to disadvantage high performing employees and reward low performing employees and therefore, in the absence of evidence about actual views of employees, it is reasonable to infer that some, if not many, employees may prefer the current arrangements.

Section 226(b)(i) - the views of relevant employee organisation

[55] Godfreys submitted that the SDA is not an employee organisation covered by the Agreement and as such, there is no statutory obligation on the Commission to consider its views. Godfreys further submitted that an employee organisation that is not covered by the Agreement cannot properly be considered a relevant circumstance and no authority extends this far. 30

Section 226(b)(i) - the views of Godfreys

[56] Godfreys confirmed it does not support the application to terminate the Agreement and submitted its view must be taken into account. Godfreys submitted that transition from the Agreement to the Award is likely to negatively impact the business’ productivity and efficiency without any net benefit to the covered employees.

Section 226(b)(ii) - the circumstances of employees and the likely effect of termination

[57] Godfreys submitted that in relation to the Commission’s consideration of likely effects of termination of the Agreement on the circumstances of employees, that the Applicant’s contention rejects Godfreys’s commission scheme and inaccurately suggests that if the employees were covered by the Award, wages and conditions would be superior.

[58] Godfreys further submitted that in the event the Agreement was terminated and the employees were covered by the Award, Godfreys would potentially incur higher wage costs, costs associated with changes to rostering arrangements, both impacting on profitability. Further, for Godfreys to offset such costs, the commission scheme will need to be reconsidered which will likely counteract the benefits to employees arising from termination of the Agreement.

Section 226(b)(ii) - the circumstances of Godfreys and the likely effect of termination

[59] Godfreys submitted that termination of the Agreement is likely to impact Godfreys in three ways. First, increasing Godfreys’s operating costs. Secondly, a negative impact of productivity and efficiency of Godfreys’s business, and thirdly, timely and costly changes to administration, specifically the payroll and rostering system.

[60] As to the first matter, Godfreys contended that the operating costs would likely increase due to increased wages or changed conditions of employees, such as less flexible rostering conditions. It submitted such increased costs would impact the commercial viability of Godfreys in circumstances where Godfreys is already seeking to rectify decreases in profitability in successive financial years. For this reason, Godfreys submitted that termination of the Agreement would require it to reconsider the commission scheme in order to offset this additional outlay.

[61] As to the second matter, Godfreys submitted that termination of the Agreement is likely to impact negatively the productivity and efficiency of the business. Changes to the commission scheme were used as an example with the warning that they may “disincentivise” staff and negatively impact staff retention and recruitment. A further example given was that the Agreement sets out a simple and efficient rostering structure with benefits for both Godfreys and the employees, whereas the Award terms would decrease rostering flexibility.

[62] As to the third matter, Godfreys further submitted that the costs and time that would need to be invested in administrative changes to the payroll system and the rostering system are significant without having a guaranteed overall benefit to employees.

[63] Godfreys concluded by submitting that in the event the Commission considers it appropriate to terminate the Agreement, such termination should not take effect for two months so as to allow appropriate and reasonable time for transition.

Witness Statement of Mr Andrew Ford

[64] In his witness statement, 31 Mr Ford stated there are 312 employees covered by the Agreement out of a total of 539 employees in total across the 220 stores throughout Australia and New Zealand.

[65] Mr Ford said that of the 312 employees covered by the Agreement:

•  7% are casual; and

•  93% are permanent employees, of which 90% are employed full-time and 10% are employed part time.

[66] Of the employees covered by the Agreement, Mr Ford said:

•  84% are paid an annualised salary in accordance with clause 3.2.2 of the Agreement; and

•  16% are paid a weekly wage plus overtime and other penalty rates in accordance with clause 3.2.1 of the Agreement.

[67] Mr Ford outlined the importance to Godfreys of having the capacity to pay store based employees annualised salaries instead of weekly wages plus overtime and other penalty rates because paying annualised salaries to a large proportion of employees allows for efficient rostering and a simplified remuneration structure. Mr Ford explained that in the event Godfreys were required to implement alternative rostering arrangements, it would likely need to increase staffing levels and this may require engaging casual employees to ensure coverage across the seven day per week trading cycle, particularly on weekends.

[68] Mr Ford further said the Agreement allows for Godfreys and the employee to agree for the employee to move between stores and this benefits both parties. He said such movement allows for greater coverage for annual and personal leave, provides development for the employee, may increase the opportunity for the employee to earn a higher commission and provides more opportunities for employees on return to work arrangements to perform modified duties that might not be available at the employee’s main store.

[69] In relation to Godfreys’s commission scheme, Mr Ford gave evidence that Godfreys’s business success depends on sales staff being incentivised to build relationships with customers in store and sell products to customers and this is the reason Godfreys has traditionally operated on a commission-based model for many years. All employees under the Agreement are eligible to participate in a commission scheme.

[70] Mr Ford’s evidence was that the commission scheme operates at three levels:

i. approximately 30% of employees covered by the Agreement are eligible to earn a commission payment each week, if the commission calculated on each sale collectively exceeds a threshold amount; (first commission scheme)

ii. approximately 70% of employees covered by the Agreement are eligible to earn a commission payment equal to 10% of the commission calculated on each sale made during each week, but without a threshold amount needing to be achieved; (second commission scheme) and

iii. upon selling parts or accessories, all employees covered by the Agreement are eligible to earn a commission payment equal to a percentage of that sale, once a threshold is exceeded.

[71] Mr Ford stated the employees elect to participate in either the threshold commission scheme or the second commission scheme.

[72] Mr Ford gave evidence that the first commission scheme is subject to a threshold equivalent applicable to an employee’s weekly wage. For example, if an employee’s weekly wage is $800 per week, $800 is their threshold. Therefore if they achieve $850 in sales, they receive $50 commission in addition to their weekly wage. In the event an employee made less than $800 in sales, they would not get any commission under that element of the commission scheme.

[73] Mr Ford also gave evidence about the second commission scheme and said it was introduced in August 2017. In the second scheme, an employee earns 10 per cent of the commission that is payable on each sale, without first having to reach a threshold. Therefore if an employee sells a product for $1000 and the commission dedicated to that is $200, then an employee on the second commission scheme would receive $20 commission. Under the second scheme, where the sales employee discounts the price to the customer, their commission is discounted as well.

[74] Mr Ford also gave evidence that there is an additional commission scheme open to all employees which is a store bonus. Where a store has achieved above their budget sales, they get a percentage of that above budget sales. 32

[75] Mr Ford stated that Godfreys would typically pay $1.5m in commissions to employees covered by the Agreement each year. He also said that for the specific week ending 9 March 2018, approximately $310,000 was paid in wages and $26,700 was paid in commissions.

[76] Mr Ford included in his witness statement a table outlining how much commission was paid to five employees covered by the Agreement in addition to their salaries, for the week ending 9 March 2018.  33 For these five employees, the total commission earned for the week was between 36%-58% of their total remuneration. Mr Ford argued these employees receiving strong commission levels would be disadvantaged if the commission structure had to be varied to reduce the total amount of commission available.

[77] Mr Ford said he considers it likely that most employees are remunerated over and above that which would be payable under the Award through the Agreement in combination with the commission scheme. He annexed a document showing the pay rate summaries generated by the Fair Work Ombudsman website relevant to the hours worked according to the Award and a document which set out the wages that would have been payable to the same five employees under the Award so as to compare the results of the commission scheme and the Award. This table, he said, showed that the sample received higher remuneration under the Agreement terms combined with the commission scheme, than they would have received under the Award.

[78] Under cross examination, Mr Ford advised he did not know the stores at which the five employees worked. He agreed that the table of the commission of the five employees were at the upper end of the spectrum of people that receive commission and that Godfreys has not provided the information which demonstrates the average or bottom end commission earnings.

[79] Mr Ford also conceded he could not be sure what allowances had been included in the table of the wages and commission in the table for the five employee’s total remuneration for the week ending 9 March 2018 and nor could he guarantee whether those figures included superannuation. He said he could not be sure what rostering schedule these five employees were on or whether overtime or evening penalties would have been applicable. Mr Ford acknowledged he did not know whether the five had worked after 6pm on a Thursday and Friday and that if they had, his calculations for what they would have earned under the Award did not include the requisite 25% penalty.

[80] When it was put to him that the five employees in the table together earned a total of $4,545.75 total commission out of the $26,700 commission Godfreys paid to employees that week, Mr Ford agreed that those five employees earned 17-18% of the total commission paid that week. There was also no argument from Mr Ford that the average commission of the five employees was $909 for the week, whereas if the $26,700 total commission was divided by 312 employees, it would demonstrate an average weekly commission earned by employees of approximately $85.

[81] Mr Ford further gave evidence in relation to the Applicant’s comparison of the Award and the Agreement and said the clauses that are irrelevant to Godfreys’s business include: clause 18.2 relating to junior rates, clause 20.2 relating to special clothing and laundry allowance, clause 20.7 relating to transport reimbursements, clause 20.10 relating to recall allowance, clause 20.12 relating to high duties allowance, clause 20.13 relating to Broken Hill allowance and clause 30.3 relating to shift work.

[82] In relation to wage rates, Mr Ford gave evidence that:

“MR DOWLING: Now, in respect of wage rates provided for in the agreement, you've seen the terms of the 2009 agreement, I take it?

MR FORD: At a high level - again, I don't know the detail of that but I have seen the agreement.

MR DOWLING: Okay, and tell me if you don't know but is it correct that the agreement provides the last wage rate increase that it provides for is 1 July 2011?

MR FORD: Again, I'm not across the detail. My understanding is we've maintained our wage rates as required to be at least equal to the award and I believe the last change we did was back on 1 July 2017 to make sure we were - for one of the categories of employees, I can't recall if it was the 10 or 11-day fortnight staff, again I was briefed but I didn't go into that detail - we did increase the rates to make sure they were still at least equal to the award requirements.

MR DOWLING: So you accept that the agreement doesn't provide for any increase other than July 2011. Is that right?

MR FORD: The agreement? Again, I don't know that level of detail in the agreement.

MR DOWLING: You don't know?

MR FORD: No.” 34

[83] Mr Ford said that Godfreys is currently facing significant competitive challenges and has several competitors in the market. He said although Godfreys remains the only specialist retailer of domestic and commercial floor cleaning and associated products in Australia, most of its brands are sold at other retailers and overseas suppliers also provide products to Australian customers, which further increases competitive pressure on Godfreys.

[84] Mr Ford said that the competitive challenges faced by Godfreys have had an adverse effect on the earnings before interest, tax, depreciation and net profit of the Group which wholly owns Godfreys. Mr Ford submitted that the Group’s net profits after tax have been declining over the last three and a half years and as such Godfreys are currently implementing measures to reduce costs across the business to remain competitive and profitable. Mr Ford acknowledged that the financial information for Godfreys itself was not made available or separated from the figures of the Group but said that what had been provided was representative and indicative. 35

[85] Mr Ford said that if the Agreement is terminated and the Award is applied, this will increase Godfreys’s costs relating to the non-commission components of employees’ current remuneration under the Agreement. Further, he said that costs will be incurred as a result of changes to rostering and break arrangements. Mr Ford proffered that in the event the Agreement is terminated, Godfreys will conduct an overall assessment of the higher costs imposed and any increase in costs will impact profitability unless offset with other measures. Mr Ford said likely consequential changes will include a reduction of the maximum amount of commission payable to employees and suggested this is likely to counteract the benefits employees might receive under the Award.

[86] Mr Ford claimed that in the event the maximum amount of commission to be earned reduces, it is less likely that employees will strive to sell more products that would have previously earned higher commission payments. He said this may result in lower sales and profits for Godfreys, and a lower total income for high commission earning employees.

[87] Mr Ford submitted that Godfreys has traditionally been an attractive place to work because of the ability to earn high commission above the employees’ wage or salary. Mr Ford suggested that there is a risk that a reduction to earn such high commission will result in reduced ability to recruit skilled staff, and increase the risk of lower retention rates.

[88] Mr Ford also suggested that if employees were paid under the Award, rostering with a lower component of weekend work would reduce the opportunity for staff to earn commission payments during busy weekend trade. Mr Ford anticipated that reduced weekend work would reduce motivation of sales staff because of their reduced ability to maximise commission earnings.

[89] However, it was acknowledged by Mr Ford that the commission scheme continued or could be changed or dissolved entirely at Godfreys’s discretion. 36 He also said that no matter what happens in this proceeding, a commission scheme to incentivise sales will continue in some form and there had been no board decision made on the future of the scheme. 37

[90] In relation to rostering principles, Mr Ford said that staff would continue to be rostered in accordance with store opening times and at levels to cover busy periods. 38 As to the prospect of losing flexibility under the Agreement, Mr Ford agreed under cross examination that Godfreys had been in a position to enter into good faith negotiations for a new enterprise agreement with desired flexibility,39 but had chosen not to.40

[91] Mr Ford expected that if the Agreement were terminated it would take up to two months to fully implement all the changes required to move to the Award.

Summary of Applicant’s Submissions in Reply

Comparison of Award and the Agreement

[92] Noting that Godfreys had disputed the document filed and served by the Applicant comparing the entitlements under the Award to the Agreement, 41 the Applicant responded by submitting an additional document42 which is said to respond to each disputed comparison. It was argued that the analysis in the Applicant’s comparison document should be preferred by the Commission.

[93] The Applicant further submitted that notwithstanding the small areas of contention between the parties in relation to the comparison of the Award and the Agreement, the Commission should conclude that the Agreement has fallen well below the minimum terms in the Award and termination of the Agreement would be consistent with proper industrial standards. The Applicant submitted that Godfreys’s submissions did not derogate from this conclusion.

[94] The Applicant submitted that the statement in paragraph 25 of Godfreys’s Outline of Submissions, “… termination of the 2009 Agreement is likely to increase the Respondent’s operating costs through increased wages or changed conditions of covered employees…” amounts to a concession that the termination of the Agreement will result in an increase to the entitlements received by employees.

[95] The Applicant further submitted that the evidence of Mr Ford at paragraph 34 of his witness statement is an acceptance by him that the Award is an improvement on the terms and conditions that Godfreys presently pays. 43

The views of the employees

[96] In relation to Godfreys’s submission at paragraph 16 of its Outline of Submissions, that “[i]t is conceivable that some if not many employees may prefer the current arrangements”, the Applicant submitted that there is no material filed in support of this statement and that the views of the relevant employees, save for the Applicant, should be considered neutral, as was the approach in Gillhooley v Barnery Pty Ltd. 44 The Applicant further submitted that the approach in the decision Grace & Ors v Coverall Security Pty Ltd45 is incorrect and that the Commission cannot conclude that in the absence of materials from other employees, their views are counted against termination.

[97] The ultimate submission at the hearing was that the view of the Applicant is the known view of the employees which tips the balance towards termination.

Views of the SDA

[98] The Applicant agreed with Godfreys that s.226 of the Act does not expressly require the Commission to take into account the SDA’s views, but submitted the Commission is required to take into account “all the circumstances”. It was submitted the SDA’s views are not excluded by s.226 and are relevant in the circumstances, consistent with the approach in Wilson Security:

“United Voice is not covered by the Agreement. There is therefore no statutory obligation to take into consideration its views pursuant to section 226(b). However, as the employee organisation with coverage of the security industry, it is well placed to make submissions and lead evidence in relation to the impact of the termination of the Agreement on the public more broadly beyond its impact on those parties covered by the Agreement. ”46

[99] The Applicant submitted the word ‘including’ in s.226(b) of the Act means that the list in ss.226(b)(i) and (ii) is not exhaustive and the SDA’s view holds weight as a relevant interested party.

Godfreys’s commission scheme

[100] The Applicant submitted that the commission scheme is not a relevant consideration as both the Applicant and Godfreys agree the commission scheme does not form part of the Agreement. It was submitted the commission scheme is entirely discretionary and should not be taken into account.

[101] Further, in relation to Mr Ford’s evidence outlining the table of the five employees’ total remuneration of wages and commission, the Applicant submitted that those five employees were selected to indicate a much higher level of commission than is paid to employees and when averaging out the commission paid that particular week by the total number of employees under the commission scheme, it is telling that employees on average would receive $85 in commission on top of their wage.

[102] The Applicant submitted that the information table of five employees provided by Mr Ford was therefore not representative of the commission paid to employees covered by the Agreement and as such, there is no evidentiary basis for the submission by Godfreys that the commission scheme enables employees to earn more than the Award.

[103] Further, the Applicant submitted that Godfreys has full discretion to continue the commission scheme and on the evidence presented by Godfreys, the Commission would have to conclude that there is going to be a commission scheme no matter what happens with the Application. As to whether there is any variation, there is no reliable evidence as to what that varied scheme may look like which, the Applicant submits, undermines what Godfreys says about the future of the commission scheme.

[104] The Applicant further submitted that it is clear the Agreement would not pass the better off overall test and the commission scheme would not save it.

Delay of termination

[105] The Applicant responded to Godfreys’s request that in the event the Agreement is terminated that it should not take effect for two months, by opposing any delay in termination. It was submitted that as the application to terminate the Agreement was made on 13 November 2017 and the conditions of the Agreement have fallen well below the Award safety net, it is appropriate for termination to be ordered as soon as possible with immediate effect.

[106] The Applicant submitted that there is no warrant for a period of two months and asked that the Agreement be terminated immediately but in the event the Commission accepts that a two month period is required, Godfreys ought undertake that during that eight week period, the employees will be no worse off than they would be under the Award.

[107] The Applicant concluded by submitting that the Commission should be satisfied that termination of the Agreement is not contrary to the public interest and in the circumstances it is appropriate to terminate the Agreement.

Further Material

[108] On 25 June 2018, I issued a further Statement and Directions. The Statement advised that no material had been filed by any employee of Godfreys and that at the hearing on 17 April 2018, there was similarly no evidence presented by or on behalf of any employee. Consequently, employees of Godfreys were, for a second time, invited to file material with the Commission by 4.00pm on 23 July 2018. The Directions also provided for further material to be filed by the parties.

[109] On 2 July 2018, two employees filed statements (the statements) in the Commission. As a result of my request for a current list of employees on 18 October 2018 and review of the list provided by Godfreys in response, I am satisfied the two employees are current employees of Godfreys.

The statements of the two employees

[110] The contents of the statement from the first employee I provided to the parties was:

“As a … employee of Godfreys I have seen no increase in our pay at anytime. We have an agreement that is 9 years old and totally unacceptable and out of date. The wage we are paid falls so far behind the award it is not funny... The fact Godfreys are just forwarding on this email from you as a “FYI” email and not actually explaining any of this to staff , explaining we needed to give our opinions on the termination shows that the company knows they are doing the wrong thing and are trying to make this disappear without explaining any of it to staff and what will happen if they do or do not say anything.

I find this agreement to be so out of date in terms of staff working 7 day[s] straight , working by themselves with little to no chance of a break , the way out of line pay structure and the constantly changing commission structure that make it impossible to earn extra money…

It needs to change and the draconian ways of [G]odfreys and the wage they pay their staff needs to be rectified.”

[111] The contents of the statement from the second employee I provided to the parties was:

“I am an employee of Godfreys and thought since nobody else has said anything regarding this I would open the dialogue.

Reading this email that has been sent, I am unsure what implications this has after reading it a number of times.

As an employee of Godfreys I am expected to be at work before 9am and have been sent emails saying that we need to be open and ready to go before 9am. We do not get paid for these hours.

Additionally I have recently started seeing more and more staff working alone in stores. This means extra work for staff, and additionally less breaks. I have seen emails implying that staff cannot close the store for lunch breaks or normal breaks when working alone.

We are all required to work weekends and most companies get some sort of penalty for it, we are promised commission for the time spent yet we could also receive none.

All in all I don’t believe staff are paid for all of the time they spend, going between stores to get stock, working earlier in the mornings etc.

I hope this is inline with the current situation.”

[112] I then sought a response from the parties going to the material filed by the two employees and my intention not to identify them.

Applicant’s submissions

[113] The Applicant submitted the statements strengthen the basis upon which the Commission should conclude that in all of the circumstances it is appropriate to terminate the Agreement. It was submitted that on the basis of the statements, the Commission should find there are two employees covered by the Agreement that support its termination and no employees oppose its termination.

[114] The Applicant did not object to the two employees not being identified and contends it is the appropriate course for the Commission to adopt. It was submitted there is no utility in identifying the two employees and their identity is irrelevant to the disposition of the Application. It was noted by the Applicant that the hearing was conducted on 17 April 2018 without any request being pressed by Godfreys at that time that the Applicant be identified and nor has a request been pressed at any time since my ruling on 5 January 2018. The Applicant submitted that, consistent was this, there is no basis or need to identify the two employees and such a course may cause delay.

[115] The Applicant submitted the importance of applications such as this being dealt with expeditiously was recently highlighted by a Full Bench of the Commission in Gangell v Lobethal Abattoirs Pty Ltd. 47 It was submitted in light of this decision, and in the absence of a cogent reason, the Commission should decline to identify the two employees as any resultant delay would not be justified.

Respondent’s submissions

[116] Godfreys objects to the two employees who filed the statements not being identified because:

•  The Respondent is not aware of any evidence before the Commission that verifies the authors’ status as employees (however this was subsequently addressed by me, as outlined at [109] above);

•  There is no evidence, including within the statements, of any reason why the authors have not been identified, and if there was a reason, the Respondent has not been given an opportunity to respond; and

•  Even if the statements were authored by affected employees, the Commission should not have regard to the content for reasons articulated further below.

[117] Godfreys submitted if the Commission were to place any reliance on the content of the statements, such a decision would occasion significant procedural unfairness on the Respondent and give rise to an unsafe outcome.

[118] Godfreys submitted the Commission should place no weight on the content of the statements for the following reasons:

•  Neither email addresses the matters set out in s.226 of the Act;

•  Neither email properly responds to the Statement of 25 June 2018. They do not put forward views in relation to the possible termination of the Agreement and the impact on the authors if their employment was to be covered by the Award;

•  The statements make several broad-ranging allegations against Godfreys which are irrelevant to the decision whether termination of the Agreement is appropriate; and

•  The allegations made in the statements are untested and cannot be tested while the identity of the authors is unknown.

[119] Godfreys contend if the Commission takes into account the statements, at their highest, the statements only imply that the authors are generally dissatisfied with certain alleged aspects of their current employment conditions and such generalised dissatisfaction is not a relevant consideration.

[120] Godfreys submitted it is not open to the Commission to infer from the statements support for the termination of the Agreement or to infer any views about the impact on the authors if their employment was to be governed by the Award.

[121] Godfreys submitted the Commission has no views of employees before it that expressly support the termination of the Agreement and therefore, the views of employees can at its highest be a neutral consideration in determining the Application.

[122] Godfreys submitted if the Commission takes into account and intends rely on the content of the statements in making its determination, it should have an opportunity to test the content and make further submissions. In order to test the content, Godfreys contends it must know the identity of the authors of the statements.

Applicant’s statutory declaration – declared 23 July 2018

[123] On 23 July 2018, the Applicant’s representative filed a statutory declaration declared by the Applicant. This was in response to a requirement outlined in my Directions dated 25 June 2018. From this statutory declaration, it was apparent that the Applicant’s circumstances have changed since the hearing on 17 April 2018. Most significantly, the Applicant has ceased employment with Godfreys.

[124] In the Applicant’s statutory declaration, the Applicant said they relied on the reasons outlined in part 2.1 of the statutory declaration filed by Ms Fox with the Application as to the matters which make termination of the Agreement not contrary to the public interest. The Applicant said they consider those matters demonstrate the Agreement provides inferior terms and conditions to those under the Award.

[125] The following points were also submitted by the Applicant:

•  The Agreement is well past its expiry date and its terms were not being adhered to by Godfreys;

•  Staff rarely got their rest or meal breaks provided under the Agreement and if the Award applied, compliance failures would be more transparent to investigate;

•  The rostering system under the Agreement was unfair as the Applicant was required to work almost every Saturday. However, under the Award there is an entitlement to a minimum three consecutive days off in a four week period which include a weekend (clause 28.13);

•  Rosters were usually provided less than a week prior to the new period starting and mostly were for two weeks before changing;

•  For several months in mid-2016, the Applicant did not receive two consecutive days off, whereas the Award has an entitlement to consecutive days off;

•  In South Australia, there is no penalty rate on Saturdays, whereas the Award has a 25% penalty for full-time and part-time employees working on Saturdays;

•  The bonus system referred to in the Agreement, but which sits outside it, operated unfairly, arbitrarily and was not transparent. When the Applicant queried with management how the system worked, they were advised it was a discretionary entitlement which Godfreys could choose to award, not award or vary as it saw fit. The bonus was no substitute for the benefits under the Award;

•  The example given by Mr Ford of five employees and the bonuses they received is not representative of what the vast majority of Godfreys employees received by way of commission/bonus. On the assumption the commission scheme is altered or removed if the Agreement is terminated, the five employees may or may not be worse off. It is up to Godfreys to alter the bonus scheme which has a significant impact on the ability of an employee to obtain a bonus, as for example, the minimum personal budget in some stores is higher that the entire store budget, and in some cases, over double;

•  Maybe some employees are better off receiving sufficiently large discretionary commissions to compensate them for the otherwise inferiour terms and conditions of the Agreement, but they would be, in the Applicant’s view, a very small minority of employees. Further, the scheme is discretionary and has changed several times in the past two years and there is no guarantee employees will continue to receive such payments in the future;

•  Aside from rates of pay, the other protections afforded to workers under the Award which workers at Godfreys do not receive, were valued by the Applicant. The Applicant said in terms of work/life balance, they were affected by the loss of their right to not have to work every Saturday;

•  If the terms and conditions ever previously delivered benefits in excess of the Award, it does not do so now and it would not today pass the better off overall test (BOOT). The Agreement cannot pass the BOOT by reference to an ill-defined and wholly discretionary bonus scheme which expressly is stated not to be a part of the Agreement;

•  Godfreys has had the benefit of applying below safety net terms and conditions for a long time which was a significant factor in the Applicant’s decision to leave their employment;

•  It is not contrary to the public interest to terminate the Agreement which has been in place for more than six years after its nominal expiry date and which on Godfreys’s argument depends upon discretionary bonuses to compensate employees for below safety net rates of pay; and

•  The Applicant presses the Application.

Godfreys’ reply to the Applicant’s statutory declaration

[126] In reply to the statutory declaration filed by the Applicant, Godfreys filed submissions on 6 August 2018. Godfreys submitted pursuant to s.226(b)(i) of the Act, the Commission must take into account the views of employees covered by the Agreement in assessing whether it is appropriate to terminate the Agreement and as the Applicant is no longer employed by Godfreys, the views contained in the statutory declaration are not the views of an employee covered by the Agreement. It was noted that no oral evidence was given by the Applicant at the hearing.

[127] Godfreys further submitted the Commission should place no weight on the matters raised in the Applicant’s statutory declaration. It submitted the Commission’s order of 25 June 2018 was for the Applicant to file a statement in relation to their circumstances for the purposes of s.226(b)(ii) of the Act, namely, the Applicant’s circumstances as an employee and the likely effect the termination will have on them. Godfreys contends the statutory declaration does not address those circumstances as the Applicant is no longer an employee covered by the Agreement. It submitted the Applicant should not be permitted the indulgence of providing a witness statement addressing matters outside those contemplated by the Commission’s order where:

•  The Applicant has had the opportunity to make the case for the termination of the Agreement and closed their case;

•  The Applicant has done so with the benefit of solicitors and Senior and Junior Counsel; and

•  Godfreys has already been put to the cost and effort of resisting a full hearing of the application.

[128] Secondly, Godfreys submitted the remaining content of the statutory declaration is not relevant to the proceeding:

•  Sections 226(b)(i) and (ii) of the Act are directed towards those impacted by the potential termination of an enterprise agreement. The views and circumstances of the Applicant as an ex-employee have no probative value; and

•  Insofar as the Applicant seeks now to make allegations against Godfreys, such as alleged non-compliance with the Agreement, the allegations are denied and immaterial to whether termination of the Agreement is appropriate.

[129] Finally, Godfreys submitted it would be unsafe for the Commission to rely on the remaining content of the statutory declaration where, amongst other things:

•  The content is generally disputed and remains untested due to the way the Applicant has chosen to prosecute the Application;

•  The Applicant seeks to raise allegations which ought to have been, but were not, put to Godfreys’ witness at hearing; and

•  A large swathe of material comprises nothing more than further submissions and the Applicant’s expertise and knowledge to legitimately ‘opine’ on such matters is not identified or substantiated.

Mr David Lee’s statutory declaration – declared 23 July 2018

[130] On 23 July 2018, Mr David Lee, Chief Financial Officer, filed a statutory declaration which set out the particulars of the rates of pay from the first full pay period starting 1 July 2018. The rates were as follows:

The Applicant’s reply to Mr Lee’s statutory declaration

[131] On 6 August 2018, submissions were filed on behalf of the Applicant in reply to the statutory declaration of Mr Lee. It was submitted the declaration should be treated cautiously and little weight given for the following two reasons:

•  Clause 3.2 of the Agreement provides for “annualised salary” rates and “non-annualised salary” rates, however Mr Lee’s declaration does not refer to the wage rates paid to non-annualised salary employees; and

•  Some of the rates set out in the statutory declaration are not the rates of pay that are payable under the Agreement and as such are of no assistance to the Commission in deciding whether to terminate the Agreement. The statutory declaration illustrates the Agreement has become largely irrelevant in terms of regulating the conditions of employees covered by it.

[132] It was submitted the current situation is analogous to the situation before the Commission in Australia and New Zealand Banking Group Limited 48 where it was observed:

“Overall, the Agreement that the ANZ seeks to have terminated expired 14 years ago. It was made to operate in tandem with an enterprise award which no longer exists as a Full Bench of the Commission has determined not to modernise that enterprise award. The evidence supports a finding that the Agreement is largely irrelevant in terms of regulating the terms and conditions of the senior staff of the bank to whom it applies. Overall, having regard to the likely foreseeable consequences of terminating the Agreement, I am satisfied that it is not contrary to the public interest to terminate the Agreement.” 49

[133] It was submitted the rates provided by Mr Lee do not in any way undermine the following contentions of the Applicant as to why the Agreement should be terminated, because:

•  It contains terms and conditions below the terms of the Award;

•  Its continuation is not consistent with the object (at s.3(b) of the Act to maintain a safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and

•  It would be in the public interest as it would have a positive effect on the broader retail industry.

[134] Annexed to the submissions was an analysis by the SDA of the rates set out in Mr Lee’s declaration.

Final material – filed 7 September 2018

[135] On 17 August 2018, I issued a Statement advising parties in relation to the two employees who filed statements in response to the application to terminate the Agreement and they were given an opportunity to file material in response. I also outlined that I was considering identifying the now former employee who is the Applicant in the matter, and again, parties were directed to convey any objections in their material.

Applicant’s submissions

[136] As to the identification of the Applicant, that course was opposed for the following two reasons:

•  There is no need or utility in identifying the Applicant and the identity is irrelevant to the disposition of the Application. The hearing was conducted on 17 April 2018 without any request from the Godfreys at that time, and since the Commission’s ruling on 5 January 2018, that the identity of the Applicant be disclosed; and

•  The Applicant has instructed they remain concerned that if they were to be identified it could cause repercussions for existing employees who Godfreys may associate with the Applicant.

[137] The Applicant submitted the following are the key matters before the Commission and support termination of the Agreement:

•  The Agreement was made in 2009 and it is six years after its nominal expiry date. Terminating the Agreement will result in the Award and its superior wages and conditions covering employees. The conditions in the Agreement have fallen well below the minimum terms in the Award;

•  The views of the employees contained in the statements support the termination;

•  The views of the Applicant support the Termination which is a relevant consideration; 50

• The views of the SDA support the termination which is a relevant consideration; 51 and

•  It would not be contrary to the public interest to terminate the Agreement as termination would be consistent with the objects of the Act and the maintenance of proper industrial standards.

[138] As regards Godfreys’ submission that in the absence of evidence about the views of a current employee it is not possible for the Commission to consider all the matters it is required to consider pursuant to s.226(b)(i) of the Act, and it is not appropriate to terminate the Agreement in the absence of such evidence, the Applicant submitted this has been overtaken by the fact two employees have written to the Commission and expressed support for the termination of the Agreement. In any event, the Applicant submitted Godfreys’ submission is misconceived and ought to be rejected. The Applicant highlighted the following observation from Aurizon Operations Limited; Aurizon Network Pty Ltd; Australian Eastern Railroad Pty Ltd:

“…The requirement in s. 226(b) to take into account all of the circumstances including those set out in s. 226(b)(i) and (ii) is a requirement to take the matters into account and to give them due weight in assessing whether it is appropriate to terminate an enterprise agreement.” 52

[139] The Applicant submitted each of the factors in s.226(b) of the Act are not pre-requisites to a termination application being granted but rather, they are a non-exhaustive list of matters that are to be taken into account and given due weight where possible and appropriate.

[140] The Applicant submitted the only conclusion which is open to the Commission is that any employee who has not expressed a view is a neutral consideration, which was the conclusion reached in Gilhooley v Barnery Pty Ltd. 53 The Applicant submitted the only conclusion which is open concerning the views of employees is that all employees have had an opportunity to respond to express their views to the Commission and two employees have indicated they support the termination.

[141] The Applicant contended that while the view of the Applicant does not fall within the matters to be considered pursuant to the listed matters in s.226(b)(i), the Applicant’s view is a relevant circumstance and should be taken into account in considering whether it is appropriate to terminate the Agreement. 54

Respondent’s submissions

[142] As to the identity of the Applicant, Godfreys confirmed its request that the identity of the Applicant be disclosed.

[143] Godfreys submitted as the Applicant is no longer employed by it, the views of the Applicant are not the views of an affected employee and should be disregarded by the Commission. Godfreys contends despite the multiple occasions the Commission has sought the views of employees covered by the Agreement, the Commission remains uninformed of the views of affected employees on the question of whether they support the termination of the Agreement and reversion to the Award.

[144] Godfreys submitted it would be appropriate for a poll to be conducted of the affected employees to obtain their view on the specific question of whether they support the termination of the Agreement. Godfreys submitted the content of the statements indicate the authors do not understand fully the Application or its consequences. This is despite the fact Godfreys has complied fully with all directions of the Commission to inform employees and provide them with documents. As to this, I am not minded to further delay the matter and require the conduct of a poll.  It has been within the power of Godfreys to conduct such a poll since the Application was first made.

[145] I have determined not to reveal the identity of the employees. Having regard to the contents of their statements, I do not consider Godfreys is prejudiced by me not doing so, particularly because it has had the opportunity to put comprehensive material before the Commission as to the conditions under which its over 300 employees are engaged, but has not done so.

[146] As for the Applicant, I advised the parties on 18 October 2018 that having reviewed the material filed, I was not persuaded by the reasons outlined at [16]-[17] of Applicant’s submissions filed on 7 September 2018 that the Applicant’s name should continue to remain confidential.  As the Applicant is no longer an employee of Godfreys, I consider the concerns previously raised on the Applicant’s behalf will no longer materialise. Further, the mere assertion, without anything further in support, does not persuade me there is a risk that identifying the Applicant could cause repercussions for existing employees who Godfreys may associate with her.

[147] The identity of the Applicant is Ms Lisa Pauline Reynolds.

Consideration

[148] The Act provides 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.”

Section 225 of the Act

[149] As outlined in paragraphs [17]-[19] above, I am satisfied that the two threshold requirements set out in s.225 of the Act are satisfied.

Section 226(a) of the Act

[150] As regards s.226(a) of the Act and the manner in which the public interest is to be assessed, the Full Bench in Aurizon Operations Limited; Aurizon Network Pty Ltd; Australian Eastern Railroad Pty Ltd 55 (Aurizon) cited various passages from the Full Bench of the Australian Industrial Relations Commission’s decision in Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 200056 (Kellogg) which had concerned the corresponding, but not identical, provision from the Workplace Relations Act 1996. Relevantly, these passages included:

“The notion of public interest refers to matters that might affect the public as a whole such as the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards. An example of something in the last category may be a case in which there was no applicable award and the termination of the agreement would lead to an absence of award coverage for the employees. While the content of the notion of public interest cannot be precisely defined, it is distinct in nature from the interests of the parties. And although the public interest and the interests of the parties may be simultaneously affected, that fact does not lessen the distinction between them.” 57

[151] It is also relevant to highlight the Full Bench in Aurizon concluded that it cannot be expected that the terms and conditions of an agreement will continue unaltered in perpetuity after it has passed its expiry date. This is because the Act contemplates the terms and conditions of an agreement may be altered by making a new agreement or by terminating the existing agreement. 58

[152] As was also recognised in Aurizon, s.226 of the Act is not limited to circumstances in which an agreement no longer applies to any employee. The Act clearly contemplates an agreement that still applies to employees being terminated and prescribes a safety net upon termination in such circumstances. The prescribed safety net is not a prior agreement and nor are undertakings mandatory. Rather, the prescribed safety net is the relevant modern award created during the Award Modernisation process and the National Employment Standards (NES). In this case, the relevant modern award is the General Retail Industry Award 2010 (which I have referred to as the Award).

[153] In this application, the termination of the Agreement would not lead to an absence of award coverage for the employees as the Award provides for “proper industrial standards” within the meaning given to that term by Kellogg. Having regard to this, I am satisfied it is not contrary to the public interest to terminate the Agreement and I note that neither party disputes this.

[154] There was a difference of opinion between the parties as to whether I was required to consider whether terminating the Agreement would be in the public interest. As I stated during the hearing, I am of the opinion that s.226(a) of the Act requires me to do no more than be satisfied that it is not contrary to the public interest to terminate the Agreement.

Section 226(b) of the Act

[155] The approach to assessing appropriateness by taking into account all the circumstances, as enunciated by the Full Bench in Aurizon, is to have reference to the construction of s.226 and the contextual matters that bear upon that construction, as well as giving specific consideration to the matters identified in ss. 226(b)(i) and (ii):

“All of the circumstances also need to be taken into account in considering whether termination of the agreements is appropriate. In particular the views of employers and employees covered by the agreement, their circumstances, and the impact of termination need to be taken into account. The requirement in s. 226(b) to take into account all of the circumstances including those set out in s. 226(b)(i) and (ii) is a requirement to take the matters into account and to give them due weight in assessing whether it is appropriate to terminate an enterprise agreement. In assessing appropriateness by taking into account all of the circumstances, we approached the task by reference to the construction of s. 226 and the contextual matters that bear upon that construction dealt with earlier as well as giving specific consideration to the matters identified in s. 226(b)(i) and (ii).” 59 (My emphasis, reference omitted)

[156] I intend to adopt this approach and note that the construction of s.226(b) of the Act is such that it is open to me to take into account matters such as the views of the SDA and the now former employee, Ms Reynolds and give them due weight.

Section 226(b)(i)

[157] In terms of s.226(b)(i), it is uncontroversial that there is no employee organisation covered by the Agreement and it is clear that Godfreys opposes the Agreement’s termination.

[158] As outlined above, I accept it is open for me to consider the views of the SDA, which supports the termination of Agreement. However I do not consider much turns on this. There was no evidence from the SDA to persuade me to do anything other than simply note its position.

[159] As for employees covered by the Agreement, I was presented with next to no evidence.

[160] At the hearing, at which time she was still an employee, no evidence from Ms Reynolds was lead. I was asked at that time to conclude that Ms Reynolds supported the termination on the basis that she had made the Application. Having subsequently received and reviewed the statutory declaration from Ms Reynolds, I accept that while a Godfreys employee, she was unhappy with aspects of the Agreement and this was a motivation for filing the Application. I also note Ms Reynolds declared the main reason she filed the Application was her sense of fairness.

[161] The response to my Statement dated 25 June 2018 was underwhelming but two employees of Godfreys responded in the manner outlined earlier at [110] – [111]. Based on the content of their statements, I consider it is open to me to infer these two employees do not oppose the termination of the Agreement.

[162] I am satisfied the remaining employees of Godfreys were on notice numerous times that the Application was before me through my Directions dated 5 January 2018, Amended Directions dated 21 February 2018 and Statement and Directions dated 25 June 2018 and that they had reasonable periods of time to file material should they have wished to do so. In the Statement dated 25 June 2018, I outlined that the impact of the Agreement being terminated would be the General Retail Industry Award 2010 setting the terms and conditions of employment.

[163] Ultimately, apart from the two employees who replied, no submissions from any other employees were filed in the Commission. For whatever reason, the Application does not seem to have moved employee sentiment either way and neither the SDA nor Godfreys appear to have been able to persuade any of the 300 or so other employees to support their position in relation to the Application. Given the totality of Mr Ford’s evidence regarding the impact on the commission scheme if the Agreement was terminated, I am not persuaded I should conclude that some employees might prefer that the Agreement not be terminated.

[164] I consider I can do no more than accord neutrality to the views of the balance of the employees when considering the Application.

Section 226(b)(ii)

[165] As there are no organisations covered by the Agreement, there are no circumstances for me to take into account in this respect. Further, it was not suggested that I should take into account the effect of the termination on the SDA.

[166] The statutory declaration of Ms Reynolds does not address the likely effect the termination of the Agreement would have on her. To the extent it includes allegations relating to the alleged non-compliance with the Agreement, I am not disposed to take these into account because they could have been put at the hearing, where Godfreys would have had the opportunity to test them and respond, but were not.

[167] Direct evidence from current employees of Godfreys is limited to the two employees who responded to the Statement dated 25 June 2018. This evidence, which I acknowledge is untested, certainly suggests the two employees are disgruntled. One employee alleges:

•  Godfreys employees “are paid so far below the award it is not funny”;

•  staff work seven days straight;

•  staff work by themselves with little to no chance of a break; and

•  the commission structure is constantly changing.

[168] The other employee alleges:

•  He is expected to work before 9.00am starting times without pay;

•  Staff have to work without access to breaks; and

•  Weekend work is without penalty payments and while employees are promised commission for the time spent working, they could also receive nothing.

[169] As to the likely effect of the termination of the Agreement on the two employees, their evidence is short on detail but it is such that I consider it is open to me to infer the two employees do not oppose the termination of the Agreement and I do not consider they would be worse off should it be terminated, leaving the Award to apply.

[170] Assessing the likely effect of termination of the Agreement on Godfreys and the employees more broadly requires evaluating the impact of the Award applying instead of the Agreement.

[171] Having regard to the evidence of Mr Ford and the submissions of Godfreys, it seems open to me to conclude that Godfreys’s costs relating to the non-commission components of current remuneration will increase and it will incur higher costs as a result of changes to rostering and break arrangements. I consider it is also open to conclude that were the Award conditions to apply, this would represent an improvement in conditions for Godfreys’s employees.

[172] While Mr Ford opined there would be a negative impact on productivity and efficiency if the Agreement was terminated, he also said staff would continue to be rostered in accordance with store opening times and at levels to cover busy periods.

[173] As to the rates of pay, while the last increases the Agreement provided for took effect on 1 July 2011, particulars for some, but not all, rates payable to employees covered by the Agreement from 1 July 2018 were provided by Mr Lee. The figures provided suggest that in a range of classifications, the rates have increased since 1 July 2011 but they also suggest some rates have not increased since then. It also remains somewhat unclear as to how these increased rates compare to the corresponding Award rates of pay that would apply if the Agreement was terminated.

[174] A further feature of this case is that the terms of the Agreement are to be assessed in combination with the discretionary commission schemes and it was submitted by Godfreys that while some Agreement conditions regulating hours of work are inferior to those in the Award they must be evaluated in combination with the ability to earn commission payments. 60

[175] I have considered Mr Ford’s evidence regarding the commission earnings of the five employees and am of the view that it is lacking in probative value. Firstly, I do not consider the five employees were a representative sample and secondly, Mr Ford did not know enough about their particular working conditions during the sample week to give me confidence that his analysis of their earnings pursuant to the Agreement, compared with what they would have earned pursuant to the Award, was accurate. Therefore I do not consider I can accurately assess how the combination of the Agreement terms and conditions and commission payments compares with the entitlements under the Award.

[176] I have also considered Mr Ford’s evidence that the likely consequential changes if the Agreement was terminated will include a reduction of the maximum amount of commission payable to employees and his suggestion this is likely to counteract the benefits employees might receive under the Award. I have weighed this evidence against the evidence he also gave that he had not yet conducted an overall assessment of the possible impact of the termination of the Agreement, there had been no decision made by the company board on the future of the schemes and no matter what happens in this proceeding, a commission scheme to incentivise sales will continue in some form.

[177] Given Mr Ford’s evidence regarding the importance of the commission structure in attracting and retaining staff and that Godfreys’s business success depends on sales staff being incentivised to sell products, plus his evidence that Godfreys has operated on a commission-based model for many years, I find it difficult to accept that Godfreys will wantonly adjust its commission structure in a manner that will demotivate staff and negatively impact on its sales and profitability if the Agreement is terminated.

Conclusion

[178] As outlined in paragraph [153] above, I am satisfied it is not contrary to the public interest to terminate the Agreement.

[179] As to whether I consider it appropriate to terminate the Agreement, I have noted that it does not cover any employee organisation but that the SDA supports the Application. I further note that Ms Reynolds also supports the Application, although she is no longer an employee covered by it. Apart from the two employees who seem disgruntled with the Agreement, no other employee expressed a view in relation to the Application.

[180] While Godfreys opposes the Application, the evidence it presented going to the manner in which it engages and pays its employees leaves me somewhat uncertain as to the likely impact the termination of the Agreement would have on it and its employees, particularly because there were gaps in the evidence of both Mr Ford and Mr Lee. I also am uncertain as to how the Agreement, as currently applied, measures up against the Award, were it to apply. The assessment I have made of the evidence of Mr Ford is that he had not conducted an overall assessment of the possible impact of the termination of the Agreement, Godfreys was likely to seek to counteract the benefits the employees might receive under the Award, a commission scheme of some shape or form would however still be ongoing and staff would continue to be rostered in accordance with store opening hours and at levels to cover busy periods.

[181] Therefore, I am satisfied that although Godfreys opposes the Application, it would adjust in the event the Agreement was terminated and I am satisfied I can reasonably conclude, based on a reading of its terms, that if the Award was to apply to the employees, they would not be left with non-commission conditions less favourable than those they currently enjoy.

[182] Further, I have had regard to the statement of Vice President Watson in Energy Resources of Australia Ltd v Liquor, Hospitality and Miscellaneous Union 61 that “the longer the time after expiry of the nominal term the stronger the case for termination”62 and consider it apt in considering the circumstances of this case. I have also had regard to the fact that the applicable safety net changed significantly with the creation of the Award through the process of Award Modernisation, which has occurred since the Agreement was first approved.

[183] Having regard to all these matters and noting the Act contemplates the Award and NES applying as the safety net, in the event of termination of the Agreement, I consider it is appropriate in the circumstances of this case to grant the Application.

[184] Further to these findings, the Act requires that I terminate the Agreement. 63

[185] As to the Godfreys’s submission regarding the costs and time that would need to be invested in administrative changes to the payroll system and the rostering system, I accept this would be a consequence of termination of the Agreement but have not considered these matters to be of such significance so as to outweigh the termination of the Agreement. I have however considered the submissions of the parties on disposition, and in accordance with s.227 of the Act, the termination will be prospective and take effect on 29 December 2018.

[186] An order to this effect will be issued today.

DEPUTY PRESIDENT

 1   [2018] FWC 237.

 2   Re Aurizon Operations Ltd (2015) 249 IR 55 at [129].

 3   Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (2005) 139 IR 34 at 40.

 4   Applicant’s Submissions dated 22 February 2018 – Attachment C.

 5   Transcript PN 81.

 6   Transcript PN 83.

 7   Transcript PN 86.

 8   Transcript PN 84.

 9   Transcript PN 85.

 10   Transcript PN 98-107.

 11   Transcript PN 107.

 12   Transcript PN 108-109.

 13   Transcript PN 115-116.

 14   Transcript at PN 119-124.

 15   Transcript PN 125-127.

 16   Applicant’s Submissions dated 22 February 2018 – Attachment C.

 17   See also Transcript at PN 87-91.

 18   See also Transcript at PN 95-97.

 19   See also Transcript at PN 92-94.

 20   Wilson Security – Western Australia Collective Agreement 2009 [2017] FWCA 1595.

 21   Applicant’s Submissions dated 22 February 2018 at [42].

 22   Four Yearly Review of Modern Awards – Penalty Rates [2017] FWCFB at [1656].

 23   Energy Resources of Australia Ltd v Liquor, Hospitality and Miscellaneous Union [2010] FWA 2434.

 24   Ibid at [31].

 25   Applicant’s Submissions dated 22 February 2018 – Attachment C.

 26   Citing Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia and Others v Aurizon Operations Ltd and Others (2015) 233 FCR 301 at [16] and [21]-[23].

 27   Transcript PN 131.

 28   Grace & Ors v Coverall Security Pty Ltd [2014] FWC 3943 at [41].

 29   Gilhooley v Barnery Pty Ltd [2017] FWCA 3103 at [24].

 30   Transcript PN 138.

 31   Exhibit R1.

 32   Transcript PN 477.

 33   Exhibit R1 at [19].

 34   Transcript PN 337-340.

 35   Transcript PN 430-431.

 36   Transcript PN 162-164.

 37   Transcript PN 174 and 176.

 38   Transcript PN 456.

 39   Transcript PN 432-435.

 40   Transcript PN 439.

 41   Applicant’s Submissions dated 22 February 2018 – Attachment C.

 42   Applicant’s Submissions in Reply dated 4 April 2018 – Attachment D.

 43   Transcript PN 655-656.

 44   [2017] FWCA 3103.

 45   [2014] FWC 3943.

 46   [2017] FWCA 1595 at [38].

 47   [2018] FWCFB 4344.

 48   [2015] FWCA 8422.

 49   Ibid at [35].

 50   [2017] FWCA 3103 at [22].

 51   [2017] FWCA 1595 at [83].

 52   [2015] FWCFB 540 at [167].

 53   [2017] FWCA 3103 at [24].

 54   [2017] FWCA 3103 at [22].

 55   [2015] FWCFB 540.

 56   (2005) 139 IR 34.

 57   Ibid at 40.

 58   [2015] FWCFB 540 at [176].

 59   Ibid at [167].

 60   See Annexure A to Respondent’s Outline of Submissions dated 20 March 2018.

 61   Energy Resources of Australia Ltd v Liquor, Hospitality and Miscellaneous Union [2010] FWA 2434.

 62   Ibid at [31].

 63   Fair Work Act 2009 (Cth), s.226.

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