DECISION

Fair Work Act 2009
s.225 – Enterprise agreement

Boskalis Australia Pty Ltd
(AG2021/117)

BOSKALIS (AUSTRALIA) PTY LTD AND THE MARITIME UNION OF AUSTRALIA DIVISION PROPELLED DREDGING ENTERPRISE AGREEMENT 2018

Application for termination of the Boskalis (Australia) Pty Ltd and The Maritime Union of Australia Division Propelled Dredging Enterprise Agreement 2018.

1 Introduction

[1] Boskalis Australia Pty Ltd (the Applicant or Boskalis) has applied under s 225 of the Fair Work Act 2009 (Act) to terminate the Boskalis (Australia) Pty Ltd and The Maritime Union of Australia Division Propelled Dredging Enterprise Agreement 2018 (the Boskalis Agreement). 1 The main reason for its application is that it considers that the Boskalis Agreement impedes its market competitiveness and consequently, it has found itself unable to win work due to the Boskalis Agreement’s terms and conditions of employment.

[2] The Applicant is a global dredging and offshore contractor and maritime services provider. 2 It focuses on dredging as well as work in the offshore oil and gas sector, with previous work including the construction and maintenance of ports and waterways, and land reclamation.3 However, according to the Applicant, the current economic climate has seen a drop off in off-shore work which has resulted in the Applicant focussing attention on winning inshore work.

[3] The Applicant currently operates both propelled and non-propelled dredges. It maintains separate enterprise agreements for each. The Applicant noted that in respect of the propelled dredges, the Construction, Forestry, Maritime, Mining and Energy Union (the Union) has traditionally had industrial coverage over some roles performed on those dredges. In contrast, the Australian Workers’ Union has traditionally had industrial coverage over some roles on the non-propelled dredges.

[4] The Agreement in question relates to the Applicant’s propelled dredges. It is expressed to cover the Applicant, the Union and employees engaged in classifications to work on vessels owned or operated by the Applicant in, or in connection, with: (a) dredging in Australia, including travelling to or from a dumping area; (b) the construction / maintenance or installation of windfarms, wave energy or tidal energy’ or while travelling from port to port. 4

[5] Whilst the Applicant contends that the termination of the Boskalis Agreement would enable it to pursue new commercial opportunities on a competitive footing with other operators in the dredging industry, hence creating employment opportunities, the Union rejects the Applicant’s assertion that it is no longer market competitive. It expressed that there was no proper evidence to support the Applicant’s assertions, albeit it appears uncontentious that no employees are currently covered the Boskalis Agreement.

[6] In short, I am satisfied that the termination of the Boskalis Agreement is not contrary to the public interest, and in the circumstances of this case, it is appropriate to terminate it. My reasons are as follows.

2 Background

[7] In support of its application, the Applicant provided a witness statement from Mr Petrus Wilhelmus Boere (Mr Boere), the General Manager of the Applicant.

[8] Mr Boere explained that since 23 February 2020, no employee has been covered by the Boskalis Agreement 5 and the Applicant has no intention to utilise this Agreement in the future6 as the terms and conditions of employment within the Boskalis Agreement are no longer market competitive in the dredging industry.7 The Boskalis Agreement has a nominal expiry date of 30 June 2020, and Mr Boere said Boskalis was not engaged in any bargaining for an enterprise agreement that would replace the Boskalis Agreement. It was Boskalis’ view that the termination of the Boskalis Agreement would enable it:

a) to pursue new commercial opportunities on a competitive footing with other operators in the dredging industry;
b) to generate employment opportunities in the dredging industry; and
c) to directly employ the personnel who work onboard its marine assets rather than relying on third parties to employ those persons. 8

[9] In support of its objections to the application, the Union filed a witness statement of Mr George Gakis. Mr Gakis is a Trade Union Official of the Union and the Divisional Branch Assistant Secretary for the Western Australian Branch of the Maritime Union of Australia Division of the Union. 9

[10] Mr Gakis provided context concerning the commercial competitors of the Applicant, noting that the Applicant was one of a small number of dredging companies engaged in the top tier of the dredging sector in Australia. 10 He explained that the other companies were ‘Jan De Nul’, ‘Van Oord’, ‘Dredging International’ and, to a slightly lesser extent, ‘RND Crewing’. Mr Gakis said that these companies are the only dredging operators in Australia that have the capacity to perform large scale capital works projects.11

[11] Mr Gakis spoke of there being several smaller dredging operators across Australia that use non-propelled dredges, tugboats and small craft to perform small scale capital work in near shore environments. Mr Gakis’ evidence was that while the smaller operators also operate in the dredging industry, the work they perform is fundamentally different to the nature of the work of Boskalis and the type of vessel that Boskalis use. 12

[12] According to Mr Gakis, he was aware that Boskalis had engaged employees pursuant to the terms of the Agreement for several projects since it had commenced operation (presumedly, Mr Gakis was referring to the Boskalis Agreement). 13 Mr Gakis referred to a project to perform dredging to widen the outer harbour channel in the port of Adelaide from June to September 2019,14 and a project to perform dredging work in Melbourne from November 2019 to February 2020.15 Mr Gakis acknowledged that the employees engaged in the projects were only engaged for the purposes of that project and ceased work for Boskalis when the work came to an end.16

[13] As far as future work was concerned, Mr Gakis expressed his understanding that Boskalis had been selected to perform a large dredging project for ‘Woodside’ on the Scarborough field in the Carnarvon Basin. 17 Whilst originally scheduled to commence in March 2021 and finish mid-2022, Mr Gakis understood that the date for the project had been pushed out.18

[14] Responding to Mr Gakis’ evidence concerning the Scarborough field, Mr Boere acknowledged that Boskalis had been awarded a potential scope of work on the Scarborough Project for Woodside Energy Limited (WEL). 19 However, he made the following observations:

a) no final investment decision had been made by WEL in relation to the Scarborough Project and as such the potential work had not been confirmed; 20
b) Boskalis did not intend to directly employ any personnel for that potential work but would instead engage a third party to provide personnel;
c) Boskalis did not intend to employ any person under the Boskalis Agreement for the potential work;
d) Boskalis did not tender for and win the work in reliance upon the rates contained in the Boskalis Agreement contrary to the assertion of Mr Gakis; and
e) Boskalis tendered for the potential work on the basis of its operational expertise and the capabilities of its marine vessels using a combination of vessel day rates drawn from the maritime oil and gas sector. 21

[15] Elaborating on the difficulties faced by the Applicant in winning work, Mr Boere noted that one of Boskalis’ main competitors for dredging work is Hall Contracting Pty Ltd and Hall Plant Hire Pty Ltd (collectively referred to in this decision as Hall). Mr Boere said that Hall mostly operated non-propelled dredges, although he understood that some of the non-propelled dredges had some ability to manoeuvre themselves. 22

[16] Mr Boere described that Hall owned two vessels of similar capability to those owned by Boskalis and could undertake the same work. He first gave the example of Hall’s semi-propelled backhoe dredge called the Woomera, which he said was operationally the equivalent of Boskalis’ non-propelled back dredge Baldur. 23 The second was the long non-propelled cutter suction dredge named Eastern Aurora that was said to be operationally the equivalent in many cases to Boskalis’ propelled dredge, the Taura II.

[17] According to Mr Boere, over the last five years, Hall had tendered for and won the following dredging work in circumstances where Boskalis had similarly tendered for the same work:

a) a port dredging scope of work for Fortescue Metals Group in 2017;
b) the widening of the Clinton Channel in Gladstone Port in 2019 and executed in 2020; and
c) the Townsville Port channel upgrade in December 2020, a dredging contract work over $100 million which stood as the largest dredging project in Australia in at least the last seven years. 24

[18] Mr Boere spoke of further work for the Pilbara Ports, but acknowledged that Boskalis did not tender for the work as he was advised by the Pilbara Port that it considered Boskalis’ rates were too expensive and therefore Boskalis was not invited to tender for that work. 25

[19] It was Mr Boere’s view that Boskalis’ inability to secure work on any of the aforementioned projects was due either in whole or in part to The Hall Group Non-Propelled Dredges and Workshop Enterprise Agreement 2019 26 (Hall Agreement). Mr Boere said that he was aware that Hall employed personnel on its dredges under the Hall Agreement, and that the Hall Agreement provided terms and conditions of employment that were more competitive than those in the Boskalis Agreement.27

[20] Mr Boere gave examples of the differences between the two Agreements:

a) the Boskalis Agreement required Boskalis to operate an even-time roster (with employees paid a day’s pay for each day worked and a day’s paid leave for each day worked) whereas the Hall Agreement allowed for rosters to be determined to suit both project and employee needs;
b) the Boskalis Agreement required superannuation contributions to be made at 13.5% whereas the Hall Agreement required that superannuation contributions were to be made in accordance with legislation;
c) the Boskalis Agreement required the payment of a ‘project completion bonus’ for capital works programs at a cost of $100 per employee per day, whereas the Hall Agreement required no such payment; and
d) the Boskalis Agreement required payment of income protection insurance to employees at a rate of 2% payroll, whereas the Hall Agreement required no such payment.  28

[21] Mr Boere expressed the opinion that the Boskalis Agreement was significantly more expensive than the Hall Agreement. However, he provided no quantification of the cost with the exception of referring to the examples provided at paragraph [20] and noted the difference in the base rates of pay in both agreements. 29 In giving his evidence, Mr Gakis recognised that the Hall Agreement provided lower rates of pay than the Boskalis Agreement.

[22] Insofar as Mr Gakis attempted to distinguish Hall from other dredging companies, Mr Boere gave evidence that Mr Gakis had omitted Hall from the top tier dredging sector, albeit it had recently won the biggest scope of dredging work in Australia (presumedly the Townsville Port project). 30

[23] Evidence was given by Mr Boere about Boskalis’ discussions with the Union to reduce rates of pay in its Boskalis Agreement. 31 Those discussions had, said Mr Boere, occurred in June and July 2020 and had included representatives from both Van Oord and Dredging International.32 It was Mr Boere’s evidence that Boskalis, Van Oord and Dredging International had discussed with the Union reducing the rates of pay in their respective enterprise agreements in order for them to compete against Hall for the Townsville Port channel upgrade project.33 Mr Boere said that those discussions included the Union proposing to endorse a ‘project specific’ enterprise agreement for the Townsville work that contained rates of pay that were approximately 20% lower than the rates in various operators’ relevant dredging enterprise agreements.34

[24] An email trail dated 20 July 2020 between Mr Boere and Mr Gakis formed part of Mr Boere’s evidence. In that email trail, Mr Gakis referred to the Union having offered rates to align with other operators that did not have union agreements in the industry. Mr Gakis also spoke of having received a number of signed memorandum’s of understanding (MOU).

[25] When giving evidence at hearing, Mr Gakis clarified several points. Whilst acknowledging that there were discussions between Boskalis and the Union about lowering rates of pay at Boskalis, Mr Gakis said it was not about lowering rates in the Boskalis Agreement, but rather entering into an agreement outside of the Boskalis Agreement to deal with specific scopes of work. Insofar as operators had discussed with the Union about lowering rates, Mr Gakis noted that the operators in the dredging industry had not taken steps to reduce the terms and conditions in their enterprise agreement because the rates had been dealt with through MOUs.

[26] Mr Boere made reference to Mr Gakis’ comment in his witness statement that the work performed by smaller dredging operators that operate using non-propelled dredges was fundamentally different to the work of Boskalis. Mr Boere reiterated that non-propelled dredges were being used to perform large scale capital work and those works were not fundamentally different to the work Boskalis sought to perform. 35

[27] During the hearing, evidence was given about the paucity of major projects available to tender on. It did not appear contentious that there had not been any major projects except for the Townsville Port project, which Mr Boere considered to be a major project, but Mr Gakis questioned whether that was the case. When Mr Boere suggested to Mr Gakis that both Boskalis and Hall had competed for work on the Townsville Port project, Mr Gakis noted that typically speaking, the work that Boskalis would do would be on a larger scale, such as the Scarborough project. When asked whether he was aware that Boskalis was tendering for the same projects as Hall and that Boskalis sought to perform inner harbour work, Mr Gakis confirmed that he was.

3 Legislative framework

[28] Section 225 of the Act allows an employer to apply to the Commission for the termination of an agreement that has passed its nominal expiry date. It reads:

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.

[29] Section 226 of the Act, set out below, details the considerations for the Commission when dealing with such an application.

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.

[30] Section 226 is placed within Part 2-4 of the Act, which includes provisions that form part of a scheme designed to enable bargaining for, making of, approving, varying and the termination of enterprise agreements. The objects of Part 2-4 are set out in s 171 in the following terms:

171 Objects of this Part

The objects of this Part are:

(a) to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits; and

(b) to enable FWA to facilitate good faith bargaining and the making of enterprise agreements, including through:

(i) making bargaining orders; and

(ii) dealing with disputes where the bargaining representatives request assistance; and

(iii) ensuring that applications to FWA for approval of enterprise agreements are dealt with without delay.

[31] The Object of the Act itself, and the means by which that object is to be achieved, is contained in s 3, which provides as follows:

3 Object of this Act

The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:

(a) providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations; and

(b) 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; and

(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and

(d) assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and

(e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and

(f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and

(g) acknowledging the special circumstances of small and medium-sized businesses.

4 The Union’s submissions

[32] The Union submitted that consistent with the authorities that have considered s 226 of the Act, the Commission should undertake the following consideration. First, it should consider where it would not be contrary to the public interest to terminate the Boskalis Agreement. Second, if satisfied that it would not be contrary to the public interest to terminate the Boskalis Agreement, the Commission must consider if it is appropriate to terminate the Agreement taking into account all of the circumstances. Those circumstances included, but were not limited to, the views of the employees, each employer and each employee organisation covered by the Boskalis Agreement and the circumstances of those employees, employers and employee organisations – including the likely effect the termination would have on each of them.

[33] The Union pressed that it would be contrary to the public interest to terminate the Boskalis Agreement now because there were no employees engaged under it. The Union noted that the fact that there were no employees currently engaged under the Agreement was a function of the project type nature of the work carried out by Boskalis. In this respect, said the Union, as recently as February 2020, there had been employees engaged under the terms of the Boskalis Agreement. On this basis, the Union surmised that while the intention of the Boskalis was not to engage employees under the Boskalis Agreement, there would in fact be employees employed under the terms of the Boskalis Agreement if it was not terminated.

[34] To take advantage of a temporary state of affairs to terminate the Boskalis Agreement without an opportunity for employees who will be engaged under the Boskalis Agreement in the near future to have an opportunity to express their views on the termination, was, in the Union’s view, contrary to the public interest.

[35] It also considered that the motivation for Boskalis’ application was to lower wages and conditions of its employees and place downward pressure on wages in the dredging industry. In light of this motivation, the Union advanced that the termination was not in the public interest due to the risks it posed to the industry through loss of skills and experience.

[36] Insofar as it was appropriate to terminate the Boskalis Agreement, the Union submitted it was not. Reflecting on the evidence adduced by Boskalis, the Union advanced that there was no proper evidence to support the assertions made by Boskalis that the Agreement was no longer market competitive and that its termination would allow the Boskalis to win future work and create employment opportunities. In contrast, said the Union, the termination of the Boskalis Agreement would lower the wages and conditions of employees who might otherwise have been engaged under the Agreement with no prospect of Boskalis agreeing to bargain to reach a new agreement.

5 Boskalis’ submissions

[37] Turning to the interpretation of s 226 of the Act, Boskalis referred to the Full Bench decision in Wollongong Coal Limited T/A Wollongong Coal v Construction, Forestry, Maritime, Mining and Energy Union (Wollongong Coal) 36 where it was said:

a) s 226(a) of the Act requires the Commission to form a view as to whether the termination of an enterprise agreement would be contrary to the public interest; and
b) if the proposed termination is contrary to the public interest then the Commission need not determine under s 226(b) of the Act whether the termination is appropriate in all the circumstances. 37

[38] In respect to the Commission’s consideration of the public interest, Boskalis referred to and adopted the passage in Wollongong Coal at paragraph [86], noting that the Commission was required to assess whether the termination of the Boskalis Agreement is not contrary to the public interest so far as it relates to: (a) the achievement or otherwise of the objects of the Act; (b) employment levels; (c) inflation; (d) the maintenance of proper industrial standards; or (e) any other matter that might affect the public as a whole. Further, in its assessment of these matters the Commission should be guided by the likely foreseeable consequences of termination rather than speculation about possible consequences, said Boskalis. 38

[39] Regarding the object of the Act, Boskalis submitted that the termination is in keeping with the object of the Act because:

a) the Boskalis Agreement contains terms and conditions of employment that are no longer market competitive in the dredging industry;
b) termination of the Boskalis Agreement would enable Boskalis to pursue new commercial opportunities on a competitive footing with other operators in the dredging industry; and
c) termination of the Boskalis Agreement would enable Boskalis to generate employment opportunities in the dredging industry.

[40] While s 171 of the Act spoke of collective bargaining, Boskalis submitted that the termination of the Agreement did not offend the objects of Part 2-4 because it was not engaged in bargaining for an enterprise agreement to replace the Agreement.

[41] Boskalis observed that the Union had made the submission that maintaining the Boskalis Agreement would be consistent with the object of the Act with regard to ss 3(a), (e) and (f), as it would allow employees (presumedly future employees) to express their views on the termination of the Boskalis Agreement. In response, Boskalis stated that the discretion under s 226 was narrow, and the assessment was whether terminating the Agreement is contrary to the public interest, not whether an alternative course of action is more aligned with the public interest. Boskalis continued that the Union’s assertion that Boskalis would employ persons under the Boskalis Agreement was baseless and Boskalis had led evidence to the contrary. Boskalis surmised that it was not unusual for an enterprise agreement to be terminated under s 226 in circumstances where there were no employees covered.

[42] Boskalis traversed the impact on employment levels, stating that the termination would enable it to pursue new commercial opportunities on a competitive footing with other operators in the dredging industry, and in doing so generate employment opportunities in that same industry. Insofar as inflation was concerned, Boskalis acknowledged that the termination would result in no effect.

[43] Industrial standards however would be maintained, said Boskalis. It submitted that the maintenance of proper industrial standards is an examination of whether employees would be covered by a modern award in the absence of an enterprise agreement. In this respect it referred to the decision of the Full Bench of the Australian Industrial Relations Commission in Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (Kellogg), 39 where at paragraph [23] it was stated:

The notion of public interest refers to matters that might affect the public as a whole such as the achievement of otherwise of 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.

[44] Boskalis submitted that if the Boskalis Agreement was terminated and it engaged new employees for work on propelled dredges, those future employees would be covered by the Dredging Industry Award 2020. On this basis, said Boskalis, the termination of the Boskalis Agreement would not adversely affect the public interest in so far as the maintenance of proper industrial standards was concerned.

[45] Boskalis contended that the foreseeable consequences of the termination are: (a) its company being better positioned to secure future work in the dredging industry, resulting in improved employment opportunities for person who work in the dredging industry (both onboard dredging assets and those more broadly connected with the dredging industry in non-dredging roles); and (b) being able to directly employ persons in dredging roles working onboard Boskalis’ assets in the dredging industry.

[46] In relation to concerns raised by the Union, Boskalis submitted:

a) the termination of the Boskalis Agreement may result in future employees of Boskalis being paid lower wages and conditions than those under the Boskalis Agreement, but as Boskalis has no intention of employing any persons under the Boskalis Agreement this should be a neutral consideration;
b) the termination of the Boskalis Agreement has no impact on whether Boskalis will or will not agree to bargain for a new enterprise agreement;
c) it has no motivation to place downward pressure on wages in the dredging industry (rather Boskalis has sought the termination of the Boskalis Agreement to improve its own position in the dredging market); and
d) it is speculation by the Union to suggest that the termination of the Boskalis Agreement poses a risk to the dredging industry through loss of skills and experience.

6 Consideration

6.1 Section 225 of the Act

[47] I am satisfied the requirements of s 225 of the Act are met. The Boskalis Agreement has passed its nominal expiry date and pursuant to s 225(a), Boskalis, an employer covered by the Agreement, has applied to the Commission for the termination of the Boskalis Agreement.

6.2 Section 226(a) of the Act – Not contrary to the public interest

[48] Attention first turns to whether I am satisfied that termination of the Boskalis Agreement is ‘not contrary to the public interest’.

[49] The ‘public interest’ refers to matters that might affect the public as a whole, such as the achievement or otherwise of the object of the Act, employment levels, inflation, and the maintenance of proper industrial standards. 40 It is distinct in nature from the interests of the parties, though those interests may be simultaneously affected.41

[50] The object of the Act set out in s 3 is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians. The object is to be achieved, among other things, by ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions, and by achieving productivity and fairness through an emphasis on enterprise-level collective bargaining. Section 578 requires that in performing functions or exercising powers, the Commission must take this object into account.

[51] It is also relevant to highlight that the Full Bench in Aurizon Operations Limited; Aurizon Network Pty Ltd; Australian Eastern Railroad Pty Ltd (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. 42 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.

[52] The Union submitted that there were employees engaged under the terms of the Boskalis Agreement in February 2020 and that it is a function of the project type nature of the work carried out by the employer and the employees engaged under the Boskalis Agreement that there were no employees to whom the Agreement now applied. It continued that it would be contrary to the public interest to allow Boskalis to take advantage of a temporary state of affairs to terminate the Boskalis Agreement without an opportunity for employees who will be engaged under the Agreement in the near future to have an opportunity to express their views on the termination of the Boskalis Agreement.

[53] 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 or to circumstances where it still applies to employees. Terminating an agreement which has passed its nominal expiry date in circumstances where the agreement does not apply to any employees is not inherently inconsistent with the objects of the Act. Speculating on whether employees will or will not be employed under the Boskalis Agreement in the ‘near’ future and thereafter finding it would be ‘contrary to the public interest’ to terminate the Agreement, in part, because ‘prospective’ employees never had the opportunity to express their view is not, in my view, a relevant consideration.

[54] In this respect, it should first be said that s 226 asks the question of whether termination of the agreements is not contrary to the public interest. It does not require the Commission to be satisfied that the termination of an enterprise agreement is in the public interest or is contrary to the public interest. Instead, it sets the requirement of ‘not contrary to the public interest’ and perhaps it could therefore be said, that this is a lower requirement.

[55] Second, the Commission's consideration of the public interest for the purpose of s 226(a) is directed to the consequences of terminating the agreement. That is, the Commission should be guided by the likely foreseeable consequences of termination rather than speculation about possible consequences. The speculation to therefore be engaged in is not about future gazing with a view to ascertain that at some distant point the employer may employ workers to whom the Agreement will apply.

[56] If I am wrong on this point however, it should be said that there was no disagreement between the parties that there had been no employees employed under the Boskalis Agreement since February 2020. Boskalis’ evidence was that it did not intend to employ workers under the Boskalis Agreement, and it had tendered on the Scarborough Project on the basis of adopting labour rates not prescribed by the Agreement – hence its strategy of engaging a third party. The Union took no issue with the latter submission.

[57] The issue, however, remains as to whether the Commission is satisfied that termination of the Boskalis Agreement is not contrary to the public interest. The Union submitted that Boskalis’ motivation to bring the application was to lower the wages and conditions of its employees and place downward pressure on wages in the dredging industry.

[58] Boskalis submits that the termination of the Agreement may result in future employees of Boskalis being paid lower wages and conditions than those under the Agreement, however it is not motivated to place downward pressure on wages in the dredging industry. The application had been brought, said Boskalis, simply to improve its own position in the dredging market.

[59] As was said in Aurizon, I do not accept that by terminating the Boskalis Agreement, the Commission becomes the effective arbiter of terms and conditions of employment of the employees of Boskalis or the broader dredging industry at large because the effect is to alter the terms and conditions of employment of the ‘prospective’ employees. 43 The Act sets out the safety net terms and conditions of employment.44 They comprise the relevant modern award and the National Employment Standards.45 In this application, the termination of the Agreement would not lead to an absence of award coverage for the employees. The Award provides for ‘proper industrial standards’ within the meaning given to that term by the Full Bench in Kellogg.

[60] There is nothing before me which raises public interest considerations that might militate against termination of the Agreement, such as the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards.

[61] Having regard to all the circumstances, I am satisfied that is it is not contrary to the public interest to terminate the Boskalis Agreement. The first limb of s 226 is therefore made out.

6.3 Section 226(b) of the Act – Appropriateness

[62] The approach to assessing ‘appropriateness’ in the context of ss 226(b)(i) and (ii) of the Act was detailed by the Full Bench in Aurizon. It said:

[A]ll 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). 46

[63] I intend to adopt this approach.

[64] The Union rejected Boskalis’ submission that the Boskalis Agreement is no longer market competitive and that its termination would allow Boskalis to win future work and create employment opportunities.

[65] Turning to the first issue of market competitiveness, Mr Boere led incontrovertible evidence of Boskalis’ failure to win tenders on three inshore scopes of work, and in respect of the Townsville Port channel upgrade, he spoke of negotiating with the Union different rates of pay (lesser) in an attempt to win that work. Mr Gakis did not deny that other operators in the dredging industry had negotiated MOUs with the Union for the purpose of establishing pay rates for particular scopes of work that were less than those found in relevant enterprise agreements. However, he took umbrage with the contention that operators in the dredging industry had taken steps to reduce the terms and conditions of employment, distinguishing that they did so only on the basis of the issue being dealt with through a MOU, not by a variation to the terms of an enterprise agreement.

[66] In my assessment, Mr Boere’s evidence was spontaneous, candid, and convincing, and as such, I consider he was a truthful witness. This is not to say that Mr Gakis was not. However, at times Mr Gakis appeared to border on obfuscation or alternatively drew a very fine line when it came to giving evidence about Boskalis seeking to reduce rates of pay for the Townsville Project and differentiating the work undertaken by Hall in comparison to the Applicant, Boskalis.

[67] While Boskalis did not quantify the difference between its Agreement and the Hall Agreement in terms of the rates of pay and other fiscally based terms and conditions, it gave examples of the disparity between the two enterprise agreements noting that the Hall Agreement contained terms and conditions of employment that were more competitive than those in the Boskalis Agreement. Mr Gakis conceded that the Hall Agreement provided for lower rates of pay than the Boskalis Agreement.

[68] Mr Gakis gave evidence that the work of Hall and Boskalis could be distinguished on the basis that Boskalis provides services to major projects in contrast to Hall, which was not an operator that could compete directly on larger scales of work. However, Mr Boere said that there had been very little insofar as major project work was concerned over the last few years, and it was the case that both Boskalis and Hall both competed for work on the Townsville Port channel upgrade. Mr Gakis ultimately gave evidence that he was aware that Boskalis sought to tender and perform work on the same scopes of work as Hall and did not appear to parry with the submission concerning the paucity of offshore work.

[69] The overall picture that emerges is that the current economic climate is one where there is a paucity of offshore project work. Consequently, Boskalis has shifted its focus to trying to win inshore dredging work. However, in doing so, it is competing against other operators, one of which has an enterprise agreement which has rates of pay less than those set out in the Boskalis Agreement, and for the most part appears to be winning tenders ahead of Boskalis. It is evident that Boskalis seeks to reduce costs to achieve the objectives of allowing it to better compete for business and increase market share. I am persuaded by Mr Boere’s account that the award of the Scarborough Project to Boskalis did arise from Boskalis winning the the work in reliance upon the rates contained in the Boskalis Agreement. Mr Gakis was simply not in a position where he could not reliably say otherwise.

[70] I appreciate the point made by Mr Gakis that there may be other reasons at play as to why Boskalis has been an unsuccessful bidder on the scopes of work referred to in this decision. However, I am satisfied that, more likely than not, the Boskalis Agreement has contributed to Boskalis’ inability to win inshore scopes of work, and that the Agreement is now out of step with the need to cater to changing economic and competitive environments.

[71] As was noted earlier in this decision, it cannot be expected that terms and conditions of employment contained in an enterprise agreement will continue unaltered in perpetuity after the agreement has passed its nominal expiry date. Ultimately, it will be in the interests of both employees and employer if a business can enhance its competitive position, competing more effectively for new market opportunities. With new market opportunities comes the possibility of employment opportunities, and as stated by Boskalis, its preference is to directly employ persons to work on its assets in the dredging industry. It is appreciably difficult to do that when project work cannot be won. It is of course the case that this decision does not thwart any attempt by either party to set their attention on the appropriate terms and conditions of employment that focus, not on the past, but on the circumstances that prevail in 2021 – whether the scope of work pertains to inshore or offshore projects, and to negotiate terms tailored to those contexts.

7 Conclusion and disposition

[72] It follows that I am satisfied that the termination of the Boskalis Agreement is not contrary to the public interest; and in the circumstances of this case, it is appropriate to terminate it.

[73] The views of Boskalis and the Union have been taken into account and I accept Mr Boere’s evidence that there are no employees covered by the Boskalis Agreement. The Union has not challenged this point.

[74] Accordingly, the Boskalis Agreement is terminated. Pursuant to s 227 of the Act, the termination is to take effect on and from the date of this decision. The Order 47 issued will reflect such terms.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<AE429212 PR726532>

 1   [2018] FWCA 6360.

 2   Witness Statement of Petrus Wilhemus Boere (Boere Statement) [6].

 3   Boere Statement [7].

 4   [2018] FWCA 6360, clause 5.1.

 5   Boere Statement [17].

 6   Boere Statement [16(b)].

 7   Boere Statement [16(d)].

 8   Boere Statement [16(e)-(f)].

 9   Witness Statement of George Gakis (Gakis Statement) [1] – [2].

 10   Ibid [7].

 11   Ibid.

 12   Ibid [10].

 13   Ibid [11].

 14   Ibid [12].

 15   Ibid [14].

 16   Ibid [13], [15].

 17   Ibid [16].

 18   Ibid.

 19   Boere Statement [20].

 20   Ibid [21].

 21   Ibid [26].

 22   Ibid [28] – [29].

 23   Ibid [30].

 24   Ibid [33].

 25   Ibid [34].

 26   [2019] FWCA 2018.

 27   Ibid [35].

 28   Ibid [36].

 29   Ibid [37].

 30   Ibid [39].

 31   Ibid [41].

 32   Ibid.

 33   Ibid.

 34   Ibid.

 35   Boere Statement [45].

 36   [2020] FWCFB 3676 (‘Wollongong Coal’).

 37   Ibid [85].

 38   Ibid [86].

 39   (2005) 139 IR 34.

 40   Re Aurizon Operations Limited [2015] FWCFB 540 (‘Aurizon’) [129].

 41   Re Kellogg Brown and Root Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2004 PR955357 [23].

 42   Aurizon [176].

 43   Aurizon [161].

 44   Ibid.

 45   Ibid.

 46   Ibid [167].

 47   PR730047.