AMMA Principal Workplace Relations Consultant Simon White (pictured), reviews the successful bid by a maritime services employer to have three nominally-expired enterprise agreements terminated by the Fair Work Commission (FWC), despite the protests of maritime unions.

Background

In this case, AMMA member company Dredging International (Australia) applied to terminate three enterprise agreements covering members of the Australian Institute of Marine and Power Engineers (AIMPE), the Australian Maritime Officers Union (AMOU) and Australian Workers Union (AWU).

The AWU did not dispute the application that related to the enterprise agreement which covered it and therefore one enterprise agreement was terminated on the papers on 15 January 2019.

None of the enterprise agreements covered any current employees, with the AIMPE deal for non-propelled dredges having not covered an employee for more than five years.

In its justification for the termination application, Dredging International said the 2012 enterprise agreements were uncompetitive and provided significant commercial disadvantage when compared to enterprise agreements of its major competitors. They left the employer exposed to rates of pay up to 39% higher than some competitors, with bonus commitments, enhanced superannuation contributions and manning restrictions.

In response, the AIMPE conceded the enterprise agreements did not cover any employees but argued the company could be awarded the tender for future major projects, in particular the Outer Harbour Channel Widening Project recently approved by the South Australian Government.

The AIMPE claimed the pool of marine engineers with dredging experience was limited and terminating the enterprise agreements left employees facing the prospect of working for less favourable conditions on upcoming projects.

Dredging International explained it had not secured any future works to which the enterprise agreements applied, and that termination was in the public interest as it would improve the company’s capacity to win future work and create employment opportunities.

In contrast, the AMOU argued termination of the relevant enterprise agreements would be contrary to the “public interest” asserting that the FWC should refuse to terminate its enterprise agreement as it was a “live” agreement that would facilitate the efficient start-up of new dredging projects and assist in their timely completion.

Deputy President Melanie Binet disagreed with the AMOU and determined it was not contrary to the “public interest” to terminate the enterprise agreements and it was appropriate to do so.

DP Binet highlighted the requirements of section 226 of the FW Act, which requires consideration of how the termination might affect the public interest which includes consideration of future employment levels, inflation and the maintenance of proper industrial standards.

Policy focus – termination of enterprise agreements

The ability for an enterprise agreement to be terminated on application by an employer has been a longstanding and important function of Australia’s enterprise bargaining system. AMMA will be strongly defending this employer right leading into the 2019 Federal Election and beyond.

Since the 1996 Workplace Relations Act, it has been largely non-controversial for either party to an enterprise agreement, be it an employee or an employer, to unilaterally apply to the independent workplace tribunal to terminate expired enterprise agreements.

However, ahead of this year’s Federal Election, the Australian Council of Trade Unions (ACTU) has campaigned heavily for employers to lose the ability to apply for termination of an enterprise agreement.

The ACTU’s policy, which has been adopted by the Australian Labor Party, is to remove an employer’s right to unilaterally apply to terminate an expired enterprise agreement, but not the right of a union or employees to unilaterally apply for termination.

Resources and energy employers are historically not significant users of these termination applications, however the ability to access this type of application is an important one given the requirement of employers to adapt to the competitive pressures of the industry’s highly cyclical nature and global exposure to resources and energy markets.

Both Opposition leader Bill Shorten and Shadow Minister for Workplace Relations, Brendan O’Çonnor, have reinforced the ALP’s stance, claiming successful employer applications to unilaterally terminate enterprise agreements have led to workers “being worse off”.

AMMA holds the view there is no justification for Federal Labor’s plan to ban employers from unilaterally terminating enterprise agreements.

AMMA also believes it is appropriate the FWC continues to have the power to terminate nominally-expired enterprise agreements, especially in circumstances where there are no workers currently employed under the relevant agreement, and where that has been the case for some time.

Any union opposition to termination, based on the interest of hypothetical potential future employees, must be balanced against the fact that there are no current employees to suffer any detriment if the enterprise agreement is terminated.

Uncompetitive agreements should be axed – FWC

In addition, it is important to recognise that in particular cases the termination of nominally expired enterprise agreements which restrain an employer’s capacity to conduct business productively, and to be competitive in the market, is more conducive to achieving the objects of the FW Act.

In these cases, allowing an expired enterprise agreement that does not cover current employees to remain in place would be harmful to productivity and economic growth – key contributors to improving employment levels and employment security.

It is also important to note the FW Act does not allow a new enterprise agreement to be made if there are no employees, or a new greenfields agreement to be made, unless the employer has a new project or undertaking.

In this case, neither options applied to Dredging International, leaving an application for the termination of the enterprise agreements as the only option when competitors undercut their agreement.

The company’s enterprise agreements were negotiated in 2012 at the beginning of the most recent resources ‘boom’, however it was appropriately recognised by the FWC that those agreements are now uncompetitive in the current industry climate.

As part of the termination, no employees will lose employment conditions and the improved capacity of a more competitive Dredging International to win new contracts will create more employment.

Employers with enterprise agreements in place that provide flexibility in rosters, rates and conditions will be more able to adjust to client requirements and market fluctuations.

For advice and assistance in all enterprise agreement matters, including terminations, contact an AMMA consultant at your local AMMA office.