s.225 - Application for termination of an enterprise agreement after its nominal expiry date

MIROMA COTTAGE INC EMPLOYEES ENTERPRISE AGREEMENT 2013

Social, community, home care and disability services

Application for termination of the Miroma Cottage Incorporated Employees Enterprise Agreement 2013

[1] This decision concerns an application made by Miroma Cottage Incorporated (Applicant) pursuant to s.225 of the Fair Work Act 2009 (Act) to terminate the Miroma Cottage Inc Employees Enterprise Agreement 2013 (Agreement).

[2] The matter was heard by the Commission via MS Teams video hearing convened today. Ms Glaister of Pinnacle HR Pty Ltd appeared with leave together with Ms Bates, the Applicant's Executive Director, on behalf of the Applicant. There is no employee organisation coved by the Agreement or representing the employees involved.

[3] The Agreement was approved by this arm of the Commission on 8 November 2013 with a nominal expiry date of 31 May 2015. Accordingly, it is now over 12 years since the Agreement was made and approved and over 10 years has passed since its nominal expiry date. I observe that in the intervening period there have been many significant changes to the Social, Community, Home care and Disability Services Industry Award 2020 (Award), that covers the parties but does not apply to them given the existence of the Agreement. I also observe that the Applicant has applied the many more beneficial terms of the Award by administrative action and is now largely applying the Award in practice.

[4] Sections 219 to 222 of the Act provide 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;

(c) an employee organisation covered by the agreement.

226 Terminating an enterprise agreement after its nominal expiry date

(1) 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 the continued operation of the agreement would be unfair for the employees covered by the agreement; or

(b) the FWC is satisfied that the agreement does not, and is not likely to, cover any employees; or

(i) the FWC is satisfied that the continued operation of the enterprise agreement would pose a significant threat to the viability of a business carried on by the employer, or employers, covered by the agreement;

(ii) the FWC is satisfied that the termination of the enterprise agreement would be likely to reduce the potential of terminations of employment covered by subsection (2) for the employees covered by the agreement;

(iii) if the agreement contains terms providing entitlements relating to the termination of employees' employment - each employer covered by the agreement has given the FWC a guarantee of termination entitlements in relation to the termination of the agreement.

(1A) However, the FWC must terminate the enterprise agreement under subsection (1) only if the FWC is satisfied that it is appropriate in all the circumstances to do so.

(2) This subsection covers a termination of the employment of an employee:

(a) at the employer's initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or

(b) because of the insolvency or bankruptcy of the employer.

(3) In deciding whether to terminate the agreement, the FWC must consider the views of the following covered by the agreement:

(a) the employees (unless there are no employees covered by the agreement);

Note: The President may be required to direct a Full Bench to perform a function or exercise a power in relation to the matter if any of the employers, employees, or employee organisations, covered by the agreement oppose the termination (see subsection 615A(3)).

(4) In deciding whether to terminate the agreement (the existing agreement), the FWC must have regard to:

(a) whether the application was made at or after the notification time for a proposed enterprise agreement that will cover the same, or substantially the same, group of employees as the existing agreement; and

(b) whether bargaining for the proposed enterprise agreement is occurring; and

(c) whether the termination of the existing agreement would adversely affect the bargaining position of the employees that will be covered by the proposed enterprise agreement.

(5) In deciding whether to terminate the agreement, the FWC may also have regard to any other relevant matter.

(1) A guarantee of termination entitlements is an undertaking given by an employer covered by an enterprise agreement that:

(a) is an undertaking that the employer will comply with subsection (3) if the agreement is terminated under section 226 and the employer terminates the employment of a protected employee for the termination of the agreement:

(i) at the employer's initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or

(ii) because of the insolvency or bankruptcy of the employer; and

(c) meets any requirements relating to the signing of undertakings that are prescribed by the regulations.

(2) A protected employee for a termination of an enterprise agreement under section 226 is an employee who would, but for the termination of the agreement, be covered by the agreement.

(3) For the purposes of paragraph (1)(a), the employer complies with this subsection, in relation to the termination of the protected employee's employment, if the employer complies with the terms of the enterprise agreement that, if the agreement were still in operation, would have provided the employee with entitlements that:

(a) relate to a termination of the employee's employment:

(i) at the employer's initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or

(ii) because of the insolvency or bankruptcy of the employer; and

(b) except if the employee was an award/agreement free employee immediately before the termination of the employee's employment - are more beneficial than the entitlements under a modern award that covered the employee in relation to the employment at that time.

(4) A guarantee of termination entitlements given in relation to the termination of an enterprise agreement:

(a) comes into force on the day on which the termination of the agreement comes into operation under section 227; and

(b) ceases to be in force at the earliest of the following times:

(i) if the guarantee specifies a period during which the guarantee is to remain in force and the FWC approves that period under subsection (5) - the end of that period;

(ii) immediately before another enterprise agreement that covers the same, or substantially the same, group of employees as the terminated agreement comes into force;

(iii) the end of the period of 4 years beginning on the day the guarantee is given to the FWC.

(5) The FWC may, in its decision terminating an enterprise agreement, approve a period for the purposes of subparagraph (4)(b)(i) if it considers the period to be appropriate.

(6) An employer must comply with a guarantee of termination entitlements given by the employer to the FWC in relation to the termination of an enterprise agreement if:

(a) the agreement is terminated under section 226; and

(b) the employer terminates the employment of a protected employee for the termination of the agreement while the guarantee is in force:

(i) at the employer's initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or

(ii) because of the insolvency or bankruptcy of the employer.

Note: This subsection is a civil remedy provision (see Part 4-1).

Guarantee is a governing instrument for employment

(7) To avoid doubt, a guarantee of termination entitlements is a governing instrument for employment for the purposes of the Fair Entitlements Guarantee Act 2012.

If an enterprise agreement is terminated under section 226, the termination operates from the day specified in the decision to terminate the agreement."

[5] The Applicant was entitled to make the application as the employer covered by the Agreement.

[6] The Agreement has passed its nominal expiry date. This application does not rely upon ss.226(1)(b) or (c) of the Act and they are not relevant. Given the basis of this application, the Commission is required to terminate the Agreement only if satisfied that its continued operation would be unfair for the employees covered by it and that it is appropriate in all the circumstances to do so.[1]

[7] In deciding whether to terminate the Agreement, the Commission is also required to consider the views of any employees who are covered by it, each employer, and each employee organisation (if any).[2]

[8] The employer has made the application and the employee group covered by the Agreement support or otherwise do not oppose its termination. The latter aspect has been confirmed by the material[3] before the Commission, including as a result of a process[4] established by the Commission itself. The parties adopt this position, in effect, on the basis that the continued application of the Agreement in the context of the Award and the national Employment Standards (NES) is unfair. That is, the Award and NES provide for a more comprehensive package of wages and conditions that is of greater benefit to the employees. Further, to the extent that there is an existing above award entitlement, this will continue to be honoured by the Applicant.

[9] A review of the Agreement terms in the context of the Award (and the NES which applies in any event) supports this proposition.

[10] The Commission is also required under s.226 (4) to have regard to whether circumstances exist involving a notification time for a proposed agreement that will cover the same, or substantially the same, group of employees, and where bargaining for the proposed agreement is occurring, and whether the termination of the agreement would adversely affect the bargaining position of the employees that would be covered by the proposed agreement. As no bargaining for a proposed agreement directly involving the Applicant is occurring, this consideration has no bearing on the application.

[11] Given the basis of this application and noting in any event the absence of more beneficial Agreement conditions relevant to the termination of employment arising from insolvency or redundancy, s.226A of the Act is not engaged in this matter.

[12] The Commission may also have regard to any other relevant matter. The existence of an informed consent position to terminate the Agreement is also a relevant consideration for the purposes of s.226(5) of the Act in support of granting the application.[5] Further, I have had regard to the fact that the Applicant has given the employees, and this Commission, an undertaking as follows:

"Miroma Cottage Incorporated will maintain the higher rate of $80.00 per shift for passive sleepovers until exceeded by the amount specified in clause 25.7 of the Social, Community, Home care and Disability Services Industry Award 2020."

[13] I am satisfied that the requirements of s.226 of the Act as are relevant have been met, and in all the circumstances I find that it is appropriate to terminate the Agreement with effect from 11.59pm on 13 January 2026. I so determine and Order accordingly.

[14] Access to a copy of this Decision is to be provided to the relevant employees for their information.

[3] Statutory Declaration of Ms Bates and the submissions made to the Commission.

[4] The arrangements provided an additional opportunity for any employees wishing to be heard on the application to do so by contacting the Commission directly. No concerns were raised.

[5] See Employee X [2023] FWCFB 155 at [23].

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