| FWCA 2100|
|FAIR WORK COMMISSION|
Fair Work Act 2009
CALSTORES 2010 ENTERPRISE AGREEMENT
BRISBANE, 26 MAY 2020
Application for termination of the Calstores 2010 Enterprise Agreement – prospective date of operation of termination sought by employer – agreement terminated
 On 7 November 2019, Ms Te-Arn Chalmers made an application pursuant to s.225 of the Fair Work Act 2009 (the Act) to the Fair Work Commission (the Commission) to terminate the Calstores 2010 Enterprise Agreement (the Agreement). The Agreement has passed its nominal expiry date of 30 June 2011.
 The employer covered by the Agreement is Calstores Pty Ltd (Calstores).
 At the time of making the application, Ms Chalmers was an employee of Calstores, and an employee covered by the Agreement. Shortly after making the application, Ms Chalmers resigned her employment, however it is undisputed that Ms Chalmers had standing to make the application under s.225(b) of the Act when she was employed, and the application was made.
 No employee organisations are covered by the Agreement.
 It is Ms Chalmers’ contention that the Agreement is less beneficial for Calstores’ employees covered by the Agreement when compared with the Vehicle Manufacturing, Repair, Services and Retail Award 2010 (the Vehicle Award) and the General Retail Industry Award 2010 (the Retail Award) in respect to rates of pay and employment stability and security. Ms Chalmers submitted that in contrast with clause 12 of the Vehicle Award, ongoing full-time or part-time Calstores employees covered by the Agreement have no ordinary hours of work, are only notified of shifts seven days in advance, and shifts on any given roster are subject to frequent change.
 Calstores owns and operates over 500 convenience stores coupled with fuel sites across Australia. Collectively, Calstores employs approximately 4900 customer service attendants and console operators, the majority of them covered by the Agreement. Until recently, Calstores also had a number of sites which were independently operated by franchisees of Caltex Australia Petroleum Pty Ltd (Caltex). From about 2017, Calstores has undertaken a process to acquire a number of franchisee-operated fuel sites, as part of a move away from the franchise model. Where those employees were employed pursuant to enterprise agreements made with the earlier franchisees, the franchisee enterprise agreements continue to apply pursuant to s.313 of the Act.
 The Agreement was approved by Fair Work Australia, now the Commission, on 15 December 2009. Upon termination of the Agreement, employees who had been covered by the Agreement would then be covered by the Vehicle Award, or alternatively the Retail Award at Calstores sites where fuel is not sold.
 On 14 November 2019, I sent correspondence directing Calstores to provide by 20 November 2019:
● The number of employees covered by the Agreement, specifying how many employees are employed within each State;
● The rates of pay currently paid to employees covered by the Agreement by category/classification; and
● Submissions on whether it opposes the application.
 On 20 November 2019, Calstores responded with information as to the number of employees covered by the Agreement, together with current rates of pay of those employees. The correspondence stated:
“Calstores’ position in respect of Application
Pursuant to the Directions, the Commission has asked the Respondent to confirm whether it opposes the Application.
We are instructed that the Respondent is not currently in a position to indicate whether or not it consents or opposes the Application, for the reasons we detail further below:
Opportunity to assess impact of Agreement termination
6. As can be seen from the wage rates provided to the Commission, Calstores has ensured that the actual rates paid to employees covered by the Agreement are aligned with the Vehicle Manufacturing, Repair, Services and Retail Award 2010 (Award) rates. However, Calstores has not been in a position to comprehensively consider the benefits or detriments of moving to the Award, and the impact/s this may have on its operations and its employees.
7. In order to be in a position to confirm whether or not Calstores consents to or opposes the Application, Calstores therefore requires an opportunity to undertake a detailed analysis in respect of the potential impacts of the termination of the Agreement on Calstores, its employees and its operations. In this regard, we note that:
a. Should the Agreement be terminated, covered employees will revert to the Award. Accordingly, a detailed comparative analysis of the terms of the Agreement and the Award is required, for each respective classification and level. The Application contains no such analysis;
b. The Application was only filed on 7 November 2019. Prior to being served with a copy of the Application, Calstores was given no notice that the Applicant was contemplating such an Application and accordingly, has not had an opportunity to undertake any of its own analysis in respect of this matter. Nor has the Agreement been the subject of any similar applications previously;
c. In order to gauge the views of its employees in relation to the matter in an informed and effective manner (taking into account the number of impacted employees, as well as the fact that Calstores’ Customer Service Attendants are geographically dispersed), Calstores would seek a reasonable opportunity to consult with its employees about the potential effects of the termination of the Agreement with them in person, prior to obtaining their views (for example, by way of conducting an internal survey). Calstores would then be in a position to determine not only the views of impacted employees, but the potential cultural impacts of terminating the Agreement;
d. In addition to the above, Calstores will also need to determine:
i. the time and technical resources required to transition and reconfigure its payroll systems, and
ii. the re-training where required of front-line management to ensure compliance with the Award.
8. Finally, Calstores will also need to assess any potential impact of the termination with reference to its broader industrial arrangements, noting that:
a. Since 2017, Calstores has been undergoing a considerable period of operational change, which has included transitioning franchise sites to Company operated sites, and which has resulted in coverage under a number of transferable instruments. This will continue over the next 12 months. While we are still obtaining instructions in this regard, at this stage we understand that there are approximately 67 employees who are covered by 14 transferable instruments. This may also affect the number of employees who are impacted by the Application, and the Commission’s considerations pursuant to the Section 226 Criteria; and
b. Pending a more detailed assessment of the potential impact of the termination of the Agreement on its workforce and operations – Calstores may also potentially consider bringing separate applications to terminate the transferable instruments which also currently apply to its workforce. Such applications would raise similar issues to the present Application and accordingly, may be more appropriately heard together with the present Application.
9. The above analysis will:
a. ensure that Calstores is fairly and reasonably in a position to confirm whether or not it consents to the Application, which will in turn, allow for the Commission to determine the most appropriate and effective manner in which to determine the Application; and
b. put Calstores in a position to put evidence to the Commission for the purposes of satisfying itself in respect of the Section 226 Criteria – including but not limited to in respect of the views and circumstances of Calstores and its employees.”
 On 27 November 2019, I convened a conference by telephone between the parties. Ms Chalmers participated in the conference. Ms Gella Rips, Senior Adviser in Workplace Relations of Ai Group, and Ms Tessa Hart, the HR Business Partner of Caltex, participated on behalf of Calstores. Following the conference, on 2 January 2020, Calstores issued written communication (that I had first reviewed) to employees setting out:
● The application pursuant to s.225 of the Act made by Ms Chalmers on 7 November 2019;
● The circumstances when the Commission must terminate an enterprise agreement;
● What will happen if the Agreement is terminated, which included hyperlinks to the Vehicle Award and the Retail Award;
● Information sessions were going to be held by Calstores to discuss the likely impacts of the application with employees;
● An anonymous online survey will be sent out by Calstores to obtain the views of employees covered by the Agreement after the information sessions have concluded; and
● How employees could provide their views on an ex parte basis about the application directly to my chambers.
 Between 6 January 2020 and 25 February 2020, eight employees wrote directly to my chambers providing their views about the application. Anonymous and appropriately redacted copies of these statements were sent to Calstores for consideration.
 On 6 February 2020, in seeking an update as to whether the application is opposed, I received correspondence from Calstores, as below:
“Views of the employer and impacts of the termination
The Respondent has also continued, in the interim, to undertake its analysis in respect of the potential impacts to it and its operations, should the Agreement be terminated.
In this regard, we are instructed that the Respondent has formed the preliminary view that it may be prepared to consent to the termination of the Agreement, subject to:
The termination of the Agreement coming into effect on an agreed date pursuant to s 227 of the FW Act, which would leave the Respondent with an adequate timeframe within which to implement the necessary changes to its payroll systems. The changes would require, among other matters, the reconfiguration of Calstores’ SAP and Kronos systems (which is dependent, in part, on timeframes imposed on Calstores by external vendors), as well as the training of its IT, payroll and managerial employees nationally to ensure compliance with the various rostering and pay rules in both Awards; and
The Commission approving applications by Calstores to terminate and/or vary the application of a number of transferring instruments that currently apply to it by virtue of s 313 of the FW Act (Transferring Instruments). We are instructed that there are 25 Transferring Instruments that currently apply to Calstores and its customer service attendants (or are anticipated to apply), including a number of expired and pre-reform instruments. Calstores is currently in the process of preparing a number of s 318 and 225 applications in respect of the Transferring Instruments (as relevant). The Transferring Instrument applications are directly relevant to the present Application and the impact on Calstores of the termination of the Agreement – as their approval would allow Calstores to ensure parity of pay and conditions across the business for all of its customer service attendants, reduce the cost and burden of implementing the necessary changes to its payroll systems, and streamline the entire transition process.
The Respondent would therefore like the opportunity to put material before the Commission in relation to the above (including a proposed date for the termination of the Agreement), file the relevant Transferring Instrument applications, and address the Commission in Conference to see if an agreed position can be reached on these matters. While the Respondent will need some further time to prepare these materials, this course will also potentially avoid the time and expense of one (or multiple) hearings.”
 On 10 February 2020, I issued directions requiring Calstores to file and serve the materials described above at  and listed the matter for hearing. Calstores subsequently made 26 applications to the Commission pursuant to s.318 of the Act seeking orders that the ‘Transferring Instruments’ not apply to any of the recently acquired Caltex sites, being matters AG2020/744; AG2020/745; AG2020/747; AG2020/748; AG2020/750; AG2020/751; AG2020/754; AG2020/755; AG2020/756; AG2020/760; AG2020/761; AG2020/762; AG2020/764; AG2020/765; AG2020/766; AG2020/767; AG2020/770; AG2020/771; AG2020/772; AG2020/773; AG2020/774; AG2020/775; AG2020/776; AG2020/777; AG2020/778 and AG2020/780 (the s.318 Applications). The s.318 Applications have been allocated to my chambers and will be heard and determined on the papers.
 On 16 March 2020, Calstores provided submissions to my chambers that the operative date of termination of the Agreement be not before 3 August 2020, for the reasons outlined below at -. On 26 March 2020, Mr Daniel Murray of Ai Group wrote to my chambers on behalf of Calstores asking for the hearing to be vacated and for the matter to be determined on the papers on the basis that he had discussions with Ms Chalmers who advised that she would consent to Calstores’ proposed operative date of termination of the Agreement provided that Calstores in turn agrees to carry out an adjustment, as soon as practicable after 3 August 2020, to the wages of Calstores employees covered by the Agreement to bring their pay for the period from 1 July 2020 into line with what they would have been paid under the applicable awards.
 On 26 March 2020, I sought undertakings from Calstores that it will carry out an adjustment, as soon as is practicable after 3 August 2020, to the wages of Calstores employees to whom the Agreement had until then applied, to bring their pay for the first full pay period on or after 1 July 2020 into line with what they would have been paid under the applicable awards. Calstores subsequently provided such undertakings to my chambers. On 30 March 2020, I wrote to Ms Chalmer’s seeking her views in respect to the undertakings, and advised that if she did not wish to raise any issues with the Commission, the hearing of this matter would be vacated. I did not receive any correspondence from Ms Chalmers, and accordingly I decided to vacate the hearing and informed the parties that my decision was reserved.
Calstores’ submissions on operative date of termination
 Calstores submitted that s.227 of the Act contemplates when the termination of an enterprise agreement comes into operation. It was submitted that in considering the operative date of termination, the Commission should have regard to the complexity of Calstores’ payroll systems, rostering, administration and other changes that will need to be implemented in order to transition to applying the Vehicle Award or the Retail Award to employees currently covered by the Agreement. It is noted that Calstores filed in support of its submissions statements of three employees including Mr Andrew License (Principal of Impact HRT), Ms Tessa Kate Hart (HR Business Partner) and Ms Gabrielle Small (Project Service Manager), to which I have had regard.
 The evidence before the Commission is that Calstores utilises the Kronos application (also known as the CalTime internally) to record and manage the attendance of its employees. SAP is used to apply and administer Calstores’ payroll functions as part of a ‘single touch payroll system’, and relies on the rules and algorithms set up in the system for the specific industrial instrument as well as data captured by Kronos to do so. For this to occur, Kronos and SAP must communicate with each other and operate in parallel. 1 Calstores submitted that the systems have been configured to reflect the conditions and pay rules in the Agreement, and would require a substantial amount of work and time to be reconfigured to reflect different conditions and pay rules.
 Calstores submitted that among the changes to the conditions in moving from the Agreement to the Vehicle Award and Retail Award, the most significant differences relate to the rostering rules, rates of pay and calculation of penalties in relation to time worked (including shift loadings and overtime). It was submitted that both the Vehicle Award and the Retail Award need to be assessed and subsequently configured in the Kronos system. SAP would then need to go through the same process in terms of accounting for changes to pay conditions and rules such as when penalties and loadings would apply, and this would then need to correlate with the information from Kronos.
 It was submitted that where the timelines of this work are compromised, for example reduced time for testing, significant compliance risk is introduced which may lead to underpayments or overpayments to employees. Calstores submitted that that the steps required from the design phase, systems changes, testing and training would require until August 2020, with a month (August to September) being given to deployment of the changes and support.
 Calstores submitted that that an integral aspect of its ability to ensure that it complies with its obligations under the Vehicle Award and Retail Award includes familiarising itself with the awards and training its managerial staff, including those at the store level, to ensure that those obligations are met at each of its stores. Store managers are responsible for rostering employees, reviewing timecards and making certain decisions (such as manually applying a ‘work rule transfer’ to ensure part-time employees are paid overtime for shifts worked outside of agreed working hours and correct application of dirty work and confined space allowances). Kronos does not automate all the information and data in relation to such matters and store managers are required to exercise some discretion to ensure operational compliance.
 It was submitted that the Vehicle Award is an award that is quite complex in nature, in that it contains various intersecting provisions in relation to penalties and shift loadings, which Clastores previously was not required to interpret or apply by virtue of the Agreement.
 Calstores submitted that it would need to enter into new individual arrangements with part-time employees in relation to hours of work and meal break times. Currently, Calstores operates on a rostering system, dependent on the employee’s availability, and there is no requirement to have fixed shifts. However, under the Vehicle Award and the Retail Award, the employer and the part-time employee must agree on a regular pattern of work specifying at least the hours worked each day, the days of the week on which the employee will work, and the actual starting and finishing times each day. They must also agree on the timing and duration of meal breaks, and employees are paid overtime for work performed outside of their agreed hours unless they agree to vary their hours in writing before the shift commences.
 To ensure Calstores meets its potential future obligations under the Vehicle Award and the Retail Award, it has already begun consulting with and preparing for the changes and reconfigurations in preparation for the termination of the Agreement, including seeking the advice of its external advisers, internal meetings with representatives from relevant sectors of the business, and training of management staff. Calstores submitted that its approach in seeking the operative date of termination being not before 3 August 2020 is not one that will, or is intended to unduly delay the matter, but rather is based on a detailed examination of the time required to make the necessary changes to systems, to test those changes, to make human resources changes including to rostering and employee contracts, and to train personnel including several hundred store managers.
 Calstores referred to the decision of Deputy President Colman in the Applications by Xzavier Kelly (AG2019/1531) and the Shop, Distributive and Allied Employees Association (AG2019/3813) to terminate the McDonald’s Australia Enterprise Agreement 2013 (McDonalds). 2 It was submitted that McDonalds at paragraph  relevantly provides:
“It is reasonable that, in specifying a day for the purpose of s 227, an appropriate period
of time should be allowed for the employers to prepare their businesses to apply the Award properly to all of their employees.
The fact that so many businesses and employees are affected points to the possibility of complexity associated with the preparations for the implementation of new employment regulation, and also to the possibility of far-reaching implications in the event those preparations are inadequate.” [Calstores emphasis].
 Calstores submitted that it shares at least the same complexities as those identified as applicable to the Respondent in McDonalds, in that [McDonalds] employs a large number of employees on roster cycles providing for coverage of operations, employed in several hundred locations. Calstores submitted that in McDonalds, the Commission agreed with [McDonalds] that with such a vast coverage, the impact of the termination of the agreement and reversion to a modern award would require a significant amount of work to ensure that the respondent is able to meet its compliance obligations following the termination of the agreement. Accordingly, the Commission in McDonalds adopted the approach that it should exercise its discretion under s.227 of the Act to allow a period of time between the date of the decision and when the termination would take effect to accommodate for the work that the respondent was required to undertake.
 Calstores referred to paragraph  of McDonalds:
“There is nothing unusual about affording a period of time between the date of the decision to terminate an agreement and the operative date of the termination. Plainly this is what the prospectively exercisable discretion in s 227 is intended to accommodate, because it is to be expected that new conditions of employment and working arrangements will apply following the termination of an enterprise agreement, and proper preparations will need to be made in order to implement them. The Commission commonly exercises its discretion to allow a period of time between the decision and the specified date.
 Calstores requested the Commission adopt the principles applied in McDonalds, and submitted that based on the advice from external vendors it has engaged and drawing on previous experiences, Calstores would be in a position to correctly apply the applicable awards to its employees on or after 3 August 2020, but not before, and asked that the operative date of the termination of the Agreement therefore not be before 3 August 2020.
Termination of an enterprise agreement after its nominal expiry date
 The parties have reached consensus that the Agreement should be terminated, with an operative date of the termination being not before 3 August 2020. However, I must decide in having regard to the relevant circumstances whether s.226 of the Act requires me to terminate the Agreement, and if so the date from which the termination of the Agreement will operate.
 Subdivision D of Division 7 of Part 2-4 of the Act provides for the termination of an enterprise agreement after its nominal expiry date. This subdivision consists of ss. 225, 226 and 227, the terms of which are as follows:
“225 Application for termination of an enterprise agreement after its nominal expiry date
If an enterprise agreement has passed its nominal expiry date, any of the following may apply to the FWC for the termination of the agreement:
(a) one or more of the employers covered by the agreement;
(b) an employee covered by the agreement;
(c) an employee organisation covered by the agreement.
226 When the FWC must terminate an enterprise agreement
If an application for the termination of an enterprise agreement is made under section 225, the FWC must terminate the agreement if:
(a) the FWC is satisfied that it is not contrary to the public interest to do so; and
(b) the FWC considers that it is appropriate to terminate the agreement taking into account all the circumstances including:
(i) the views of the employees, each employer, and each employee organisation (if any), covered by the agreement; and
(ii) the circumstances of those employees, employers and organisations including the likely effect that the termination will have on each of them.
227 When termination comes into operation
If an enterprise agreement is terminated under section 226, the termination operates from the day specified in the decision to terminate the agreement.”
Section 226(a) – Not contrary to public interest
 Based on the material contained in the statutory declaration sworn by Ms Chalmers on 7 November 2019, and the submission of Calstores on 16 March 2020 that it is not aware of any material fact which would suggest that the termination of the Agreement would be against the public interest,3 I am satisfied that the termination of the Agreement is not contrary to the public interest. There is nothing before me which raises public interest considerations which might militate against the termination of the Agreement.
Section 226(b) – Whether appropriate taking into account all the circumstances
 The Commission sought the views of Calstores employees covered by the Agreement, as above at . I received the views of eight employees to my chambers. The collective views are that those employees support the termination of the Agreement for their respective reasons. The employees said, among other things, that they were dissatisfied with their wage rates, that there is a lack of stability with respect to rostering, and they each consider that they would be better off overall should the Agreement be terminated and the relevant awards apply. I accept the submissions of Calstores, 4 and the evidence of Ms Hart5 that Calstores took bona fide steps to communicate to affected employees the process to provide their views to my chambers.
 In respect to the circumstances of employees covered by the Agreement and the likely effect the termination have on each of them, Calstores acknowledge that: 6
a) The applicable awards contain more beneficial provisions for part-time employees, which requires there to be an agreed regular pattern of work, specifying the number of hours of work each day, the days of the week to be worked, actual starting and finishing times, and various other matters (for example clauses 12 of the Vehicle Award and the Retail Award). An employee who does not meet the definition of a part-time employee and who is not a full-time employee must be paid a casual loading;
b) Whilst there are more beneficial aspects for the employees under the Vehicle Award and the Retail Award in relation to an agreed regular pattern of work for part-time employees, there is a loss of availability-based rostering and flexibility that is currently being provided under the Agreement. Currently under the Agreement, part-time employees advise their manager of their availability and rosters are implemented around the availability and preferences of the employees. Because the Vehicle Award and the Retail Award require agreed hours and other matters referred to above, this flexibility is lost;
c) The Agreement provides for lower rates of pay than the Vehicle Award and the Retail Award, however base rates of pay under each of the Awards has been maintained; and
d) There are some differences in the way that certain rates are calculated under the Vehicle Award and the Retail Award, such as a lower rate under the Agreement for the first three hours on a Sunday, as well as in the treatment of shift loadings and in relation to the calculation of allowances.
 Section 206 of the Act requires that the base rate of pay payable to an employee under an Agreement must not be less than the base rate of pay that would be payable to the employee under the modern award if the modern award applied to the employee.
 In respect to the views of the employer and the likely effect it will have on it, I note that Calstores has stated that it does not oppose the termination of the Agreement, provided it is given an adequate time frame to make the necessary arrangements and changes to ensure compliance with the Vehicle Award and the Retail Award. 7
 In consideration of the materials before me relevant to ss.226(b)(i) and (ii), I consider that it is appropriate to terminate the Agreement.
 Having been satisfied that both ss.226(a) and (b) have been met, I must terminate the Agreement.
s.227 – Operative date of termination
 I accept the submissions of Calstores above at  that its approach in seeking the operative date of termination being not before 3 August 2020 is not one that will or is intended to unduly delay the matter, but rather is based on a detailed examination of the time required to make the necessary changes to systems, to test those changes, to make human resources changes including to rostering and employee contracts and to train personnel including several hundred store managers.
 The evidence of Ms Hart details that significant changes to Calstores’ current systems and rostering practices are required before Calstores can transition to apply the Vehicle Award and the Retail Award correctly to employees. 8 I accept Ms Hart’s evidence that an amount of time is required to implement and configure the requisite IT process such as the configuration of the payroll system, SAP, implementing new rules in Kronos and training payroll staff and store managers on implementing the changes.9
 Mr Andrew Licence, Principal of Impact HRT, consults to Calstores. His organisation is tasked with assisting Calstores transition from the Agreement to the two modern awards in the event the Agreement is terminated. His witness statement to the Commission details potential compliance and operational risks to Calstores that he urges the Commission to consider in determining the operative date of the termination of the Agreement. Mr Licence stated that none of the previous Calstores’ processes (for example system design, award rule configuration, testing and parallel run activities) can be ‘leveraged’ to implement the relevant award calculation pay rules in either Kronos or SAP, and that all changes ‘must be done from scratch’. 10 I accept Mr Licence’s evidence that if these changes are not well understood or managed effectively, there may be exposure for Calstores to compliance and operational risks.11
 Ms Gabrielle Small, Project Services Manager of Caltex provided a witness statement in these proceedings. Her evidence set out the projected time needed for Calstores to transition to applying the Vehicle Award and the Retail Award based on the changes required to Calstores’ systems. Ms Small stated that the projected timeframe for the transition is based on ‘high-level phases’ of: 12
• A three-month design phase (January to April);
• A three-month configuration (February to May);
• Two months of system testing (May to July); and
• One month of deploying changes and support (August to September).
 I accept Ms Small’s evidence that any time constraints imposed on the implementation process will introduce an element of risk of error. 13
 In consideration of the materials before me, and in adopting the principles in McDonalds as set out above at -, there is nothing that suggests that the time sought by Calstores’ to transition to applying the Vehicle Award or the Retail Award is unusual or unreasonable. I consider it appropriate to exercise my discretion to allow Calstores an appropriate period of time to prepare to apply the Vehicle Award and Retail Award correctly to its employees.
 I am satisfied that it is not contrary to the public interest to terminate the Agreement, and in consideration of the materials before me relevant to s.226(b)(i) and s.226(b)(ii) of the Act, I consider that it is appropriate to terminate the Agreement. In accordance with s.226 of the Act, I must terminate the Agreement. The application to terminate the Agreement is approved.
The termination will take effect from 3 August 2020.
1 Statement of Andrew Licence, 16 March 2020, Paragraphs  – .
2  FWCA 8563.
3 Respondent’s Submissions, filed 16 March 2020, Paragraph .
4 Ibid  – .
5 Statement of Tessa Kate Hard, filed 16 March 2020, Paragraph .
6 Respondent’s Submissions, filed 16 March 2020, Paragraph  – .
7 Ibid .
8 Statement of Tessa Kate Hard, filed 16 March 2020, Paragraph  – .
9 Ibid .
10 Statement of Andrew Licence, 16 March 2020, Paragraph .
11 Ibid  – .
12 Statement of Gabrielle Small, 16 March 2020, Paragraphs  –.
13 Ibid .
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