Saving the silver: termination of enterprise agreements
A spate of cases was brought to the committee's attention over the
course of this inquiry where employers have seemingly sought to unilaterally
terminate enterprise agreements that have passed their nominal expiry date. It
is apparent that this is done by employers in order to significantly reduce
employee wages and conditions, often for the purpose of obtaining an advantage
in negotiations for a replacement agreement.
Terminated agreements take with them all conditions secured in previous
bargaining rounds and have the effect of placing employees back on the relevant
industry award—that is, the legal minimum. Once on the award, employees have
little ability to negotiate, and are instead manoeuvred into accepting terms
and conditions vastly inferior to those they worked under previously: from the
bottom of the bargaining floor, anything looks like an improvement.
This chapter looks at the questionable practice of agreement termination
and outlines a number of illustrative case studies.
Agreement termination under the FWA
Under the Fair Work Act 2009 (FWA, the Act) enterprise agreements
contain a nominal expiry date of up to four years. Existing agreements continue
to operate beyond the expiry date until new agreements are negotiated and
approved, or they are terminated by the Fair Work Commission (FWC).
The Act provides two ways in which enterprise agreements may be
Under section 219, where agreements are in term and where employees
and employers jointly agree to a termination;
Under section 225, where agreements have passed their nominal
In the latter case, where the nominal expiry date has passed and
agreements have rolled over, an application can be made to the FWC for the
agreement to be terminated. Applications can be made unilaterally by an
employer, employee or employee organisation covered by the agreement. The
decision to terminate an agreement, however, rests with the FWC.
application for termination is made, section 226 of the Act states that the FWC
must approve the application if:
- the FWC is satisfied that it is not contrary to the public interest to
do so; and
the FWC considers that it is appropriate to terminate the agreement
taking into account all the circumstances including:
The views of the employees, each employer, and each employee
organisation (if any), covered by the agreement; and
The circumstances of those employees, employers and organisations
including the likely effect that the termination will have on each of them.
Until recently, applications for termination were uncommon, and the
authorities on agreement termination were Tahmoor Coal
in 2010 and Aurizon
in 2015. In each of these two cases the FWC took a very different view.
The FWC set a relatively high bar in Tahmoor Coal, rejecting the
company's application for termination on the basis that bargaining for a new
agreement was still ongoing, finding that:
...[I]t will generally be inappropriate for the [Commission] to
interfere in the bargaining process so as to substantially alter the status quo
in relation to the balance of bargaining between the parties so as to deliver
to one of the bargaining parties effectively all that it seeks from bargaining.
In other words, the FWC was reluctant to terminate nominally expired
agreements while negotiations were ongoing for new agreements. This was in
recognition of the profound effect terminating an agreement could have on the
The approach taken in Tahmoor was generally adhered to, until Aurizon.
The Aurizon case unfolded in 2015. The company had been
privatised but ongoing employees were protected by the provisions of their
enterprise agreement during negotiations for a new agreement. Rather than
negotiate, the company applied to have its agreements terminated.
To the surprise of many, the FWC decided to uphold the application,
terminating all 12 nominally-expired enterprise agreements at Aurizon
and its related companies.
In its reasons, it [FWC] departed from the view expressed in
Re Tahmoor and found that there was no indication in the Fair Work Act
that there should be a predisposition against the termination of enterprise
agreement that had passed its nominal expiry date.
The Aurizon decision set a new precedent, the FWC 'finding that
it will not always be inappropriate to terminate an expired enterprise agreement
while bargaining is ongoing.'
This, the ACTU submitted,
reset the rules by which employers had to abide:
The legal orthodoxy therefore is effectively that employers
now have a new species of protected industrial action available to them in
bargaining, which is to threaten to reduce workers terms and agreements to the
award minimum, in order to economically coerce those workers to accept the
offers it has made in bargaining.
The Aurizon decision was pivotal. As put by the Queensland
Council of Unions (QCU):
Unions had a belief that the public interest arguments
required to bring about the termination of an agreement may have protected
these employees. The interpretation placed on section 226 of the Fair Work Act
2009 in this case now places doubt over the protection offered by existing
Agreement termination as economic coercion
All enterprise agreements negotiated in good faith between employers and
employees provide for pay and other conditions which both parties are bound by
and agree to when entering an employer-employee relationship. When these
agreements expire, and it comes time to negotiate new ones, the existing
conditions form the starting point for negotiations—employers may wish to
remove some conditions in order to make financial savings, and employees may
seek a further improvement on the status quo, or, at the very least, may wish
to minimise any erosion of existing conditions. What follows is the process of
bargaining until a compromise serving both parties' interests is reached.
Terminating an existing agreement disrupts that process, as the ACTU
It is our strong view that such a bargaining strategy is
illegitimate, as it is effectively penalising workers for their stance in
Terminating an agreement while the parties are negotiating, or preparing
to negotiate its replacement can produce a seismic shift in the bargaining
outcome by taking away any leverage employees might have had and allowing
employers to maximise this advantage.
The years since the Aurizon decision have seen a marked increase
in the number of applications for agreement termination.
When these cases are analysed it becomes clear that employers are indeed taking
advantage of the opportunity to use the threat of termination as a coercive
bargaining strategy to secure agreements which employees would otherwise
This is best illustrated through real-life examples of agreement
terminations brought to the committee's attention over the course of this
inquiry. For the purposes of this report, the committee will focus primarily on
the Griffin Coal Mining Company case, the Parmalat dispute and the Esso
Griffin Coal, Collie
Collie is a coal-mining town in Western Australia with a 120-year
history in the industry; a blue-collar town whose coalfields once boasted a
record 24 years without a strike or day off.
Today the town is host to two operators: Premier Coal and Griffin Coal.
The latter is a subsidiary of India-based Lanco Infratech Ltd and as at
December 2016 employed approximately 270 blue-collar employees—production and
maintenance workers—who were covered by two separate enterprise agreements and represented
by two different unions: the CFMEU (production) and the AMWU (maintenance).
From 27 April 2012 Griffin's maintenance employees were covered by the Griffin
Coal Mining Company (Maintenance) Collective Agreement 2012, with a nominal
expiry date 26 April 2015. Negotiations for a replacement enterprise agreement
were protracted—the parties could not come to an acceptable compromise despite
months of bargaining.
On 15 January 2016 Griffin Coal successfully made an application under
section 225 of the Fair Work Act to terminate the 2012 agreement on the basis
that termination would:
remove restraints and inefficiencies in the 2012 agreement;
enable more efficient use of the workforce;
reduce operational costs and losses;
promote efficiency; and
not preclude implementation of a new EA.
The AMWU, representing Griffin Coal's maintenance employees, opposed the
application on the following grounds:
If the 2012 Agreement were to be terminated, the maintenance
workers would fall back to the Black Coal Mining Industry Award 2010 (the
Black Coal Award), which would significantly reduce the wages and entitlements
of the employees.
It would create inequality on site, in that the majority of the
blue collar workers – the production employees – would continue to be covered
by an enterprise agreement with substantially higher terms and conditions of
The termination would erode the industrial standards not just for
the Griffin Coal maintenance workers, but also for all other workers in the
coal industry in Western Australia.
Negotiations for a replacement agreement were ongoing, and
terminating the 2012 Agreement would fundamentally alter the employees'
bargaining position in the negotiations.
The FWC heard the application over two days on 6 and 8 April 2016. On 9
June 2016 Commissioner Cloghan found in favour of Griffin Coal. A subsequent
AMWU appeal was not successful.
The effect of termination on wages and conditions
By terminating the 2012 agreement, the FWC decision effectively put
Griffin Coal's maintenance employees back on the Black Coal Mining Industry
Award, resulting in a significant reduction in pay and conditions:
A reduction in the base rate of pay of over 40 per cent.
A move from a 42-hour to a 49-hour working week.
A move from a four-panel "even time" roster based on
12-hour shifts to a three-panel roster based on 10.5 hour shifts, equating to
fewer days off and fewer weekends at home.
Considerable erosion of superannuation entitlements.
Considerable erosion of the accrued value of annual and long
service leave and redundancy benefits.
To the employer, these may simply be figures contributing to the bottom
line. For employees, their families and households, the impact of such sizable
reductions can be devastating. This is particularly pronounced in cases where
employees and their families have borrowed money to buy a home on the basis of
what they thought were set, legally enforceable incomes, and where the
prospects of alternative employment are poor, as they are in Collie. And the
effects do not stop there:
It must also be remembered that a pay cut impacts not only on
immediate incomes but also the value of accrued entitlements such as long
service leave. Further, there are flow-on effects to communities as a result of
reduced disposable incomes.
Not only did terminating the agreement place Griffin Coal's maintenance
employees onto the industry award—the minimum pay and conditions allowed under
law—it also lowered the bargaining floor and exacerbated the power imbalance
between the employer and the employed.
In their own words
I have lost 43% of my income and now work 49 hours per
week up from 42 hours. Sporting clubs and volunteer groups are also seeing a
big drop in support where the wives now are running the clubs and volunteer
groups because their partners are at work. We need help.
Mr Rodney Latham, Griffin Coal maintenance worker,
We've had a massive cut in our annual income, and the
funny thing is, my husband has to work 60 extra shifts a year to get that pay
cut, and it will be nearly 50% come February 2017.
Ms Jane Beauglehole, wife of Griffin Coal
maintenance worker, Collie
I am aware that things change, and myself and my fellow
employees have tried to be flexible. We have tried to work with the company.
For months we went back and forth giving concessions, and each time the
company simply refused. The lack of negotiation and contempt that the company
displayed was staggering. They have spent millions on expensive lawyers who
advise them in exactly how to refuse to engage in any agreement.
Mr Brett Pernich, Griffin Coal maintenance worker,
The maintenance workforce had been aware of Griffins'
plight to turn around its loss making business and so offered approximately a
15% pay cut along with a four year wage freeze. This offer was clearly not
enough for Griffin Coal as it set its bargaining position at a point so low
that a new agreement was unattainable to reach... Commissioner Danny Cloughan
had stated in his decision that [the agreement was terminated] to help assist
both parties in reaching a new agreement. This far his decision has failed to
accomplish its desired outcome and has placed employees and their families
under enormous pressure both financially and mentally.
Mr Paul Beauglehole, Griffin Coal maintenance
The award is 35 hours per week but I am being forced to
work a 2 and 1 roster and 46.66 hours. I class this as excessive hours and
having to work 2 out of 3 weekends is unreasonable. It has caused great
stress to myself and my family and my quality of life has been greatly affected.
I am being forced to work excessive overtime for greatly reduced income. When
I bring this up with my HR department they continually ignore my objections
and tell me to seek counselling.
Mr Greg Avins, Griffin Coal maintenance worker,
The Griffin Maintenance Enterprise Bargaining Agreement
was cancelled by the Fair Work Commission and they have taken a 43% pay cut
along with a FIFO style roster of increased hours that is not family
friendly. This means the men work 7 days straight, 3 days off, 7 days on, 4
off. Griffin are getting the best out of my man, while at home he is
exhausted recovering from his long hours. The cancellation of the maintenance
workers EBA has affected our life as well as our Collie community.
Ms Leonie Scoffern, wife of Griffin Coal maintenance
Reasons for the application
Submissions provided to the committee discussed the reasons for the
termination at length, going into Griffin Coal's motivations for applying to
the FWC, as well as the wisdom of the FWC's decision.
Unsurprisingly, Griffin Coal's perspective differed markedly from that
of its employees and their union, the employer describing agreement termination
as a necessary, if unfortunate, consequence of financial hardship. Neither
Griffin Coal's employees nor their union were persuaded by the company's
narrative, instead painting a very different picture of the breakdown in
The committee reviewed evidence provided by the AMWU, Griffin Coal and a
considerable number of individual employees. While it is not the committee's
place or intention to arbitrate individual industrial disputes or comment on
the content of specific agreements, the respective positions are briefly
The employer's view
Griffin Coal stressed that its decision to apply for a termination of
the 2012 agreement was not taken lightly, and was pursued as a measure of last
resort only when it became necessary. The decision was made necessary, Griffin
Coal submitted, for a number of reasons:
Not least of these reasons were the dire financial
circumstances faced by Griffin and the need to make operational changes which
were not possible under the Agreement.
The financial circumstances described meant that Griffin Coal was only
operating with financial support from its parent company and banks, with
ongoing losses unsustainably funded by debt. Retaining the pay and conditions
offered by the 2012 agreement, Griffin Coal submitted, was an untenable option:
A new enterprise agreement that locks in losses for the
period of another agreement would jeopardise further funding and likely cause
Griffin to cease operation with the loss of over 300 jobs. Griffin Coal is a
vital member of the South West community in Western Australia with a number of
key local industries dependent on the viability of the mine. There would be a
significant detrimental knock-on effect if Griffin cannot continue operating.
Pay and conditions at Griffin Coal had been 'unrealistically generous
for a long period', the company asserted, and were set 'at a time when
commodities (and particularly coal) market opportunities and relevant revenues
were greatly optimistic.'
Reducing staffing costs was necessary for survival:
Griffin's goal is to survive by initially reaching a
self-sustaining position. That is, a break-even operating position (unrelated
to borrowing costs). This will assist to underpin further funding to continue
operating. Given that income from domestic contracts is effectively fixed, this
has to come from a reduction in costs. We have been working hard at operational
improvements. However, labour costs are by far the largest operating cost and
at about 50% they are out of all proportion as a percentage of total operating
In essence, Griffin Coal's argument was that failing to cut staffing
costs would ultimately force the company to cease operating in Collie, which
would be to the wider community's detriment:
If they [workers' pay and conditions] are not re-balanced the
business cannot continue. We understand that it is not easy to accept a
reduction in terms and conditions of employment but we are seeking the changes
that are necessary for survival of the business. There is no joy in this task.
It is not easy. Members of management have been put under significant personal
pressure. However, if sustainable employment terms and conditions are not
achieved we will fail all of our stakeholders, including our employees.
In the company's view, what employees were asking for was unreasonable:
While it would be nice for the economy and the business to
perform on an upward trend at all times, that is not the current reality for
many businesses, particularly in our sector. A business must be able to adjust.
The Agreement was very generous to employees and completely uneconomic for
Far from agreeing with Griffin Coal's assessment, the AMWU explained
that negotiations for a new agreement were in fact stymied from the start due
to Griffin Coal's unbending determination to substantially increase the hours
worked and reduce the rates that are paid to its maintenance workers.
Griffin Coal, the AMWU submitted, did not waver from this position
during or after the agreement termination:
Last month, the AMWU took the enormous step of presenting a
possible three-panel roster to Griffin Coal. Even this was rebuffed on the
basis that it did not provide enough cuts.
The union also drew the committee's attention to the singular nature of
Griffin Coal's position towards its maintenance workers, who the company
appears to expect will shoulder the lion's share of its cost-cutting:
Despite Griffin Coal's constant protestations that they need
to reduce labour costs and the 2012 Agreement was a significant barrier to a
productive workforce, Griffin Coal have not attempted to move the production workforce
or the managerial/administrative staff onto the same arrangements as
The 230 production workers are still working an even time
roster, and continue to earn wages under their agreement. This is despite their
agreement expiring earlier this year in July. The managers and supervisors
continue to work an even time roster, with no loss of earnings.
When asked by the committee, Griffin Coal's Chief Operating Officer,
Mr Terry Gray, confirmed that only maintenance workers had had their agreement
terminated and pay and conditions cut. At the time of the public hearing, no
application had been made to terminate Griffin Coal production workers'
enterprise agreement, which had nominally expired, and white-collar
administrative staff had not had wages reduced.
Employees rejected Griffin Coal's assertion that they had enjoyed
unrealistically high wages and conditions for too long. Mr Brett Pernich, an
electrician with Griffin Coal, stated:
All this stuff about being high-paid and all of that? We were
actually below industry standard, if you like.
Others called on the company to take responsibility for its financial
management. Their evidence was diametrically opposed to Griffin Coal's
narrative, and questioned the company's determination to address its financial
problems by slashing staffing expenditure:
[T]hough the company promotes its excessive financial losses,
it still somehow maintains a team of top-notch lawyers to break its employees
down to wages and conditions from several decades ago, yet fails to find the
same amount of money to execute its main duty and reason for existence: to mine
The numbers do not add up. Even if we worked for nothing,
which they would be quite happy to agree to, it would still not be enough to
save this company.
My employer the Griffin Coal Mining Company has set many new
precedents in Corporate Australia since coming under the ownership of Indian
giant Lanco Infratech. Over the past 6 years Griffin Coal has managed its
business into a state of decay and has focused the blame on everyone else but
It is beyond the scope of this inquiry to delve into Griffin Coal's
financial circumstances, however the committee notes that parent company Lanco
Infratech went into receivership in April 2017.
The committee also notes reports that accrued entitlements earned by
Griffin Coal's workers at $62 an hour are to be paid out at only $30 an hour.
Parmalat Australia is one of the major dairy manufacturers operating in
Australia and is part of a European multinational—Lactalis Group of Companies.
Parmalat took over the ownership and operation of the former Fonterra Echuca
dairy product manufacturing site in February 2016, transferring existing
Fonterra employees into its employment in the process.
Under transmission-of-business provisions within the FWA, Parmalat
recognised all employment service and entitlements of the transferred
employees. Parmalat was bound by the provisions of the existing enterprise
agreement, negotiated by employees prior to Parmalat taking over. Many of those
provisions had featured in enterprise agreements covering the site for over 15
The agreement Parmalat inherited had a nominal expiry date of 31 August
2016—negotiations for a new agreement began between Parmalat, the AMWU and ETU
(unions representing the workers) in July 2016.
A submission from workers (and members of the AMWU or ETU) described
Parmalat's opening position:
At the start of enterprise agreement negotiations, Parmalat
presented a very aggressive log of claims attacking Echuca site employment
conditions. The following were part of the company log of claims:
A four year wage freeze;
A reduction of employer superannuation contributions;
The company to have total freedom to engage contractors and
labour hire personnel to do the work on the Echuca site. No minimum wage rates
and employment conditions were to apply to such labour. (This would results in
a 40% to 50% reduction in wage rates paid on the site);
A significant reduction to employee rights in relation to union
Parmalat, in turn, submitted that workers had made the following log of
Wage and allowance increases of 5.0 per cent per annum.
Any time worked by an employee on a rostered day off would be
paid at double time for the whole day, with the employee to be provided with an
additional day's leave.
A right for all categories of permanent employees to be offered
overtime work before any casual employee is allocated work (under the 2015
Enterprise Agreement this 'right of first refusal' was granted only to
particular categories of employees).
A requirement that changes to manning levels were only able to be
implemented if agreed by the majority of employees covered by the new
An increase of paid union meetings from 4 hours per year to 70
hours per year.
An increase of two pay levels (to a majority of employee) from
level 6 to level 8.
As with the Griffin Coal case, considering the parties' respective
bargaining positions is beyond the scope of this inquiry.
The company did not wait long to seek to terminate the existing
agreement once employees rejected the above proposal, applying to the FWC in
early October 2016—five weeks after the agreement's nominal expiry date.
The impact of a termination would have been considerable:
If the Fair Work Commission approved Parmalat's application
to terminate the existing Echuca site Enterprise Agreement, the wage rates of
all employees would be reduced by at least 40%. Such an agreement termination
would result in further reductions in wages with lower overtime and shift
penalty loadings applying. The combined effect of the application of award
rates and penalty loadings would be an approximate 50% reduction in the wage
entitlements paid to Echuca site employees. This would mean that the annual
wage bill paid to the current 70 Echuca site employees would be millions of
dollars less than was paid to these employees in the calendar year 2016.
The unions responded by announcing protected industrial action. Within
the first hour of the strike, Parmalat implemented an indefinite lockout of its
Echuca site workers and negotiations for a new agreement unfolded with the
spectre of termination hanging over them.
The committee was pleased to note that the agreement was not terminated,
due at least in part to a delay in the FWC's processing of Parmalat's
application for termination.
With the threat of termination withdrawn, the parties ultimately reached
a mutually acceptable agreement through continued negotiation.
A case which graced headlines across the country is that of Esso
Australia, a company which applied to have enterprise agreements covering its
oil and gas onshore and offshore operations terminated in August 2016,
following protracted negotiations with employees and the unions representing
them, the Australian Workers' Union (AWU), Electrical Trades Union (ETU) and
Both sides agree that negotiations were long-drawn-out.
Speaking before the committee, executives representing the company
described the termination application as a means of bringing negotiations to a
head and a path 'within the Fair Work Act to essentially get to an end point,
rather than ongoing negotiations.'
The AWU described the potential impact of such a termination:
Esso has told the AWU that if the EAs are terminated by the
FWC, pay rates won't be cut for six months, but after that all bets are off. It
is anticipated that in event of a termination, cuts could be 40% or 50%.
Termination of these agreements would inevitably affect the
pay and conditions of those in some of the most dangerous workplaces in the
country. It is a threat, and one not taken lightly by the AWU, particularly in
the light of terminations already achieved in oil and gas, mining and freight
This case had a pronouncedly different outcome than that of Griffin
Coal. In response to the company's application to have its agreements
terminated, the unions notified the company that 600 workers would go on
strike, potentially affecting gas supplies to Victoria, New South Wales and
So concerned was the Victorian state government about the prospect of
large-scale industrial action against the largest domestic supplier of gas,
that it intervened, applying to the FWC to stop termination proceedings and
force the parties back to the negotiating table.
In this case it is clear that the union's leverage in raising the
prospect of large-scale industrial action—which could have brought much of the
nation's gas supply to a screeching halt—made the difference for these workers.
Does agreement termination constitute avoidance of
Employers are quick to point out that applying to have agreements
terminated is well within the law. For example Griffin Coal submitted:
The Fair Work Act contains various obligations and mechanisms
to facilitate the making of an agreement in good faith. Griffin has complied
with all of the rules. There has been no avoidance of the Fair Work Act as
stated in the terms of reference for this Inquiry.
On the face of it at least, none of Griffin Coal's actions appear to be
illegal, nor has anyone alleged differently. Instead, these cases expose a flaw
in the FWA, because agreement termination allows employers to subvert the
bargaining process and coerce employees. The ACTU described the use of such
tactics as 'illegitimate':
is our strong view that such a bargaining strategy is illegitimate, as it is
effectively penalising workers for their stance in bargaining. The Fair Work
Act is otherwise very clear in not permitting employers to engage in forms of
economic coercion against
their workforce during bargaining except by way of a lockout in response to
protected industrial action.
A problem with the FWA
Many witnesses called into question the prudence of the FWC's decision
to terminate the Griffin Coal agreement, questioning whether the commissioner
gave enough weight to the interests of the employees and the wider community.
Mr Jay Scoffern, a maintenance worker with ten years' service at Griffin
Coal, gave this account of his encounter with the commissioner who decided the
Mr Cloghan told me personally that he couldn't listen to
“bush lawyers” and “bush accountants”. Why not? Fair Work to my understanding
was a method for lament to strike a fair and honest deal with a big company
without the use of lawyers. Not so, I believe not one thing that the AMWU
members put forward against the termination of the EBA was considered
In assessing an application for agreement termination, a single Fair
Work commissioner exercises discretion in determining whether termination is in
the public interest. Appealing this decision is almost futile, as a lawyer
acting for the AMWU explained:
The only way you can overturn a single commissioner's decision
is to demonstrate that there was an error of law. This is why we say there is a
problem with the act. What the full bench ultimately said was that the
commissioner applied the legal tests but he exercised his discretion in a
particular way. There is a really old authority of the house and the king
which effectively says that it is very, very difficult to overturn
discretionary decisions of single commissioners.
In other words, the way in which a single commissioner exercises his or
her discretion is very difficult to appeal, since appeals are not an assessment
of the rationale behind a particular decision, but rather about the
commissioner's authority to exercise discretion.
Defining the public interest
The FWA does not clearly articulate the public interest issues that the
FWC should or must consider in making its decisions. The ACTU argued that it is
...whether there is any public interest in employers actually
continuing to be bound by the agreements they sign; or any public interest in
protecting workers from economic coercion when they seek to bargain
It is worth noting again that in the Griffin Coal case, the employer
argued that the company's survival depended on reducing staffing expenditure.
Griffin Coal's Chief Operating Officer, Mr Terry Gray, told the committee that
the maintenance workers' salary cuts were necessary in order to prevent the
company from continuing to operate at a significant loss:
We understand quite genuinely that the scale of the change
that we are asking the employees to take is significant, that it does create
significant financial on-costs for these individuals, but it is in our view a
very necessary step in order to take this business forward with sustainability.
It is also worth noting that the termination did not prevent Griffin
Coal's continued financial decline.
Together with the fact that terminating the agreement undermined the bargaining
process and had a devastating effect on workers, their families and the small
Collie community, the 'public interest' remains an obscure justification.
Terminating an existing agreement imposes an unnatural end to the
bargaining process. It lowers the bargaining floor and effectively allows
employers to coerce employees into accepting anything better than the legal
minimum. Put aptly by Mr Ben Davis, Secretary of the AWU Victoria, submitted
that the leverage termination gives employers, forces unions and the workforce 'into
basically trying to save the silver'.
The committee is of the view that enterprise agreement termination is
being used as an uncompromising bargaining strategy by some employers, with
blithe disregard for both employees' right to bargain, and the objectives of
the FWA. The committee concludes that these cases expose a failure of the Act
to protect workers.
There is, however, nothing illegal about employers exploiting loopholes
in the FWA to pursue ruthless industrial strategies, and therein lies the
problem. Employers are within their rights in applying for expired agreements
to be terminated, and the FWC is makes a decision to accept or reject the
application applying the test prescribed by the Act as it has been interpreted
The committee holds that, as EBAs are entered into by agreement by the
employer and employees, terminations should only be approved by the FWC when
there is mutual agreement of both parties. To allow one party to unilaterally
apply and be granted termination appears to fundamentally undermine the purpose
employer-employee enterprise agreement making.
The committee concurs with the AMWU's view that section 225 of the FWA 'in
its current form threatens collective bargaining and democratic participation
by workers in the industrial instrument that covers their terms and conditions.'
The committee concludes that section 226 of the Act should be amended to
prevent the FWC from terminating an agreement where workers would be worse off
as a result of the termination. This would have the effect of protecting the
living standards of workers as the parties go about the task of negotiating a
new collective agreement. Failing to do so will allow further erosion of the
collective bargaining process and expose workers to significant vulnerability.
Any remaining concerns about the public interest could readily be covered off
via changes to part 2-5 of the Act referred to in chapter 3 of this report.
The committee recommends section 226 of the Act should be amended
to prevent the FWC from terminating an agreement where workers would be worse
off as a result of the termination.
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