s.225 - Enterprise agreement

Application to terminate an enterprise agreement under s 225 - agreement terminated

[1] The United Workers' Union (UWU) has made an application under s 225 of the Fair Work Act 2009 (Act) to terminate the Roy Morgan Enterprise Agreement 2014-2017 (2014 Agreement), a single enterprise agreement made in 2014 that reached its nominal expiry date on 12 December 2017. The application was initially opposed by the employers that are covered by the 2014 Agreement, Roy Morgan Research Ltd (RMR) and Roy Morgan Interviewing Services Pty Ltd (RMIS) (together, Roy Morgan). Pursuant to s 615A(3), the President therefore directed that the application be determined by this Full Bench.

[2] Subsequently, the UWU and Roy Morgan advised the Commission that they had reached an in principle agreement on the terms of a new enterprise agreement, as well as a consent position on the application to terminate the 2014 Agreement. Roy Morgan no longer opposed the application, provided that the termination would take effect on 17 May 2025, but subject to two conditions: first, if Roy Morgan lodges an enterprise agreement to replace the 2014 Agreement before 11.59pm on 16 May 2025, the termination will not take effect until the day on which the replacement agreement comes into operation; secondly, if Roy Morgan lodges the replacement agreement prior to 11.59pm on 16 May 2025, and the Commission decides not to approve that agreement, the termination of the 2014 Agreement will commence from the first full pay period on or after the Commission's decision. The parties requested that the Full Bench determine the application on the papers, and we agreed to do so. We note that the parties' consent position is predicated on our acceptance of the proposed arrangements for the commencement of the termination, should the application be granted.

[3] The 2014 Agreement covers all employees of RMR and RMIS who earn less than the high income threshold. The UWU is covered by the 2014 Agreement by virtue of the fact that its predecessor, the National Union of Workers, was an organisation covered by the 2014 Agreement (see the approval decision of Cargill C of 5 December 2014, [2014] FWCA 8706, at [3]). RMR and RMIS are part of the Roy Morgan group of companies which undertake social and political market research. The 2014 Agreement presently applies to some 682 employees around Australia. Part A of the 2014 Agreement applies to all employees, Part B applies to employees of RMR, and Part C applies to employees of RMIS. The underlying modern award that covers the employees is the Market and Social Research Award 2020 (Award). The Award is not incorporated into the 2014 Agreement.

[4] The UWU's application invokes s 226(1)(a) of the Act, which provides that the Commission must terminate an agreement if it is satisfied that the 'continued operation of the agreement would be unfair for the employees covered by the agreement'. The UWU contends that the Commission should be satisfied that this is the case because the 2014 Agreement provides for rates of pay that only marginally exceed those in the Award and excludes important Award entitlements without providing benefits that offset the relevant detriments.

[5] The relevant provisions of Part 2-4, Division 7 of the Act are the following:

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 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);

(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.

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

[6] The UWU relied on the form F24C declaration and witness statement of its organiser, Mon (Fin) Mulveney, as well as the witness statements of its industrial officer, Sheldon Oski, and its member, Julie Oliver, who is an employee of RMIS.

[7] Ms Oliver said in her statement that she is one of about 450 casual employees of RMIS covered by the 2014 Agreement, and that her usual job is that of a level 3 field interviewer, for which she is paid an hourly rate of $34.19. Ms Oliver stated that she had conducted her own short analysis comparing what she would receive in a typical week under the 2014 Agreement with what she would receive under the Award. The Award rate of pay is only one cent less than her rate under the 2014 Agreement: $34.18 an hour. Using the week ending 21 July 2024 as a typical example, Ms Oliver said that she received $409.28 for hours worked under the 2014 Agreement ($350.45 for interviewing and $58.83 for clerical work); plus $121.60 in motor vehicle allowance, producing a gross weekly amount of $530.88. Ms Oliver said that under the Award, she would have earned substantially more than this, because of the application of the minimum engagement provisions in the Award, which apply to each occasion when she is required to attend work. On 18 and 19 July 2024, she had undertaken 90 minutes and 15 minutes of clerical work respectively; this would have earned her two times the 2-hour minimum engagement under the Award, whereas under the 2014 Agreement she would not have a minimum engagement. Ms Oliver said that she supported the termination of the 2014 Agreement by the Commission because she considers that its continued operation is unfair to employees, and that employees, and particularly fieldworkers, would be better off if the Award applied to them.

[8] Fin Mulveney's evidence was that the UWU supported the termination of the 2014 Agreement because the Award generally provides more beneficial conditions for employees than the 2014 Agreement, largely because the Award contains better conditions relating to minimum engagements for casual interviewers and travel time for all employees.

[9] The UWU contended that the evidence demonstrated that the continued operation of the 2014 Agreement would be unfair for the employees covered by the agreement, and that having regard to the other considerations in s 226, it was appropriate to terminate the 2014 Agreement.

[10] The submissions and evidence lodged by Roy Morgan prior to the consent position being reached set out why the employers did not accept the contentions of the UWU. We will not summarise these materials because Roy Morgan no longer opposes the application.

[11] Section 226(1)(a) provides that, if an application for the termination of an enterprise agreement is made under s 225, the Commission must terminate the agreement if it is satisfied that the continued operation of the relevant agreement would be 'unfair for the employees covered by the agreement'. The principal reference point for unfairness that was addressed in the submissions was whether employees would be better off under the 2014 Agreement or under the Award.

[12] Section 226(1)(a) does not specify whether it is concerned with unfairness to all of the employees or some of them. The presence of the definite article (the employees) arguably suggests that all employees must be affected by unfairness. Grammatically, it would make more sense to have omitted the article if the intention was to signify a general reference to any or all of the employees covered by the agreement (i.e. 'unfair for employees covered by the agreement'). But this would set a very high bar of the application of the sub-section. It would mean that the continued operation of the agreement could be unfair to all bar one of a group of employees covered by an agreement, yet the provision would not be engaged. Further, such a strict reading would sit uneasily with the industrial reality that an enterprise agreement will typically cover different groups of employees in different classifications, and that in the ordinary course, the continued operation of an enterprise agreement might be unfair to some employees but not to others, because of their different entitlements under the agreement and the modern award that would otherwise cover them. We consider that s 226(1)(a) is concerned with whether the continued operation of the enterprise agreement would be unfair for any of the employees covered by the agreement. Of course, the number or proportion of employees in respect of whom the continued operation of the agreement might be unfair would be a consideration relevant to the question of whether the Commission was satisfied that it was appropriate in all the circumstances to terminate the agreement (see s 226(1A)).

[13] We are satisfied that the continued operation of the 2014 Agreement would be unfair for employees covered by it. First, we consider that some classifications of permanent employees covered by the 2014 Agreement receive less remuneration under the agreement than they would receive under the Award. Employees' current rates of pay under the 2014 Agreement were set out in attachment 'UWU1' to the application. This shows the current rates of pay in the 2014 Agreement to be marginally higher than their Award counterparts, ranging from 0.04% to 1.39% above the Award. However, the 2014 Agreement states that these rates of pay are inclusive of annual leave loading (see clauses 36.1(b) and 42.1(b)). Clause 20.2 of the Award entitles permanent employees to 17.5% annual leave loading. Four weeks of annual leave loading under the Award would exceed the margin by which many employees' rate of pay in the 2014 Agreement exceeds the rate in the Award.

[14] The annual leave loading deficit does not affect casual employees because they are not entitled to annual leave. However, we are also satisfied that the continued operation of the 2014 Agreement would be unfair for casual employees who are employed as face-to-face interviewers. These employees have no entitlement under the 2014 Agreement to a minimum engagement, whereas clause 11.3 of the Award provides for a minimum engagement of 2-hours. In our view this is a significant detriment. Having regard to the evidence of Ms Oliver and the nature of the industry, we consider that it is reasonably common for casual employees to work for periods of less than 2 hours. As will be apparent, it would not take a significant incidence of 'missed' minimum engagement under the Award to erode the narrow margin by which the agreement rates for these casuals exceed their award counterparts.

[15] We do not consider that the other benefits provided to employees under the 2014 Agreement outweigh these detriments. The rest breaks provided for under the 2014 Agreement are a benefit as against the Award, but not a significant one. We consider that the other benefits in the 2014 Agreement referred to by Roy Morgan are not sufficient to offset these detriments. They are either conditional benefits or of relatively minor significance when weighed against the detrimental matters we have identified above. Moreover, as the UWU pointed out, the 2014 Agreement is less beneficial to employees than the Award in several other respects, including motor vehicle allowance.

[16] Section 226(1A) states that the Commission must terminate the enterprise agreement under s 226(1) only if it is satisfied that it is appropriate to do so in all the circumstances. We are satisfied that this is the case. First, we take into account the fact that the employees for whom the continued operation of the 2014 Agreement would be unfair include a class who constitute the majority of those covered by it. Secondly, we take into account that certain beneficial provisions of the 2014 Agreement will fall away if it is terminated, including in particular the minimum 4-hour engagement for casual 'CATIs' (call-assisted interviewers) and breaks. However, it is within the control of the employers to ameliorate the effect of the termination of the 2014 Agreement on these employees by electing to continue to pay them the 4 hour minimum amount. It is not the case that the 4-hour minimum engagement for CATIs or the break arrangements are legally dependent on the continued operation of the Agreement.

[17] As required by s 226(3), we have considered the views of the employees who have submitted correspondence to the Commission about the proposed termination of the 2014 Agreement. We have also considered the views of Ms Oliver, the UWU, and of Roy Morgan, which no longer opposes the application.

[18] We have had regard to the fact that the application was made after the notification time for a proposed agreement that will cover the same or substantially the same group of employees (see s 226(4)(a)). We also take account of the fact that bargaining is occurring and that an in principle agreement has been reached (s 226(4)(b)). In our opinion, this is not a case where termination of an agreement would adversely affect the bargaining position of the employees that will be covered by the proposed agreement (see s 226(4)(c)). As to other relevant matters, we note that this is an eleven year old agreement in which rates of pay are only very marginally above the Award, and which in real terms affords many employees less remuneration than what they would receive under the Award. It also omits important Award benefits for many casuals.

[19] Given our conclusions above, we are required by s 226(1) to terminate the 2014 Agreement and we do so. The Commission has a discretion to specify the date from which the termination of the 2014 Agreement will operate. We consider it appropriate to give effect to the parties' consent position in respect of the commencement of operation of the termination referred to earlier. In relation to the first condition proposed by the parties, we note that if a new agreement wholly replaces the 2014 Agreement, such that there are no employees who remain covered by it, the 2014 Agreement will cease operation pursuant to s 54 of the Act, and there will be no extant agreement to terminate. However, if the coverage of the replacement agreement differs from the 2014 Agreement, it is possible that some employees might remain covered by the 2014 Agreement, and the first condition would then be effective to terminate the 2014 Agreement. In short, we are satisfied that there is utility in the first condition.

[20] Pursuant to s 227, we specify that the termination of the 2014 Agreement will operate from 17 May 2025, unless an application under s 185 for approval of an enterprise agreement to replace the 2014 Agreement is made before 11.59pm on 16 May 2025, in which case the termination will take effect either on the day when the new agreement commences operation, or on the first day of the first full pay period on or after the Commission's decision to dismiss the application for approval of the new agreement.

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