Resources: Blog

Outdated yoghurt agreement terminated by the FWC

Blog
|

Frozen in time

A teenage employee of a yoghurt shop has successfully applied to the Fair Work Commission (FWC) for the termination of a workplace collective agreement.

A teenage employee of a yoghurt shop has successfully applied to the Fair Work Commission (FWC) for the termination of a workplace collective agreement that was “out of step with the contemporary minimum standards set by modern awards”.

In a blog late last year, we discussed the process by which an enterprise agreement can be terminated. In short, the Fair Work Act 2009 (Cth) (FW Act) provides that, once the nominal expiry date of an agreement has passed, a party covered by the agreement can apply to the FWC to have it terminated (although it can also be terminated prior to the nominal expiry date with agreement from all parties).

The FWC must terminate an agreement if:

  • It is not contrary to the public interest to do so; and
  • It is appropriate in the circumstances, taking into account the views of the parties and the likely effect that termination of the agreement will have on them.

In this particular application, the employee, represented by her mother, submitted that The Yoghurt Shop Pty Ltd Collective Agreement Number One (2006) (the Agreement) should be terminated.

The Agreement was made prior to the commencement of the FW Act and became a collective agreement-based transitional instrument when the FW Act was introduced. The effect was that the Agreement has continued to operate past its nominal expiry date in late November 2009.

The employee submitted that over time, the Agreement had failed to keep up with the minimum standards for employees under the applicable modern awards since their introduction in 2010. As a result, the Agreement failed the Better Off Overall Test that proposed enterprise agreements are required to satisfy before being approved by the FWC.

Given that The Yoghurt Shop had been on notice of this issue since at least December 2017, the employee submitted that the termination of the Agreement should have immediate effect and employees should be allowed to fall back on the applicable modern award.

The employers operating under The Yoghurt Shop franchise conceded that “the Agreement is now a very old instrument and that its termination was not inappropriate and was supported in principle”.

However, a request was made that its termination be delayed for some two months noting that under the FW Act, the FWC was required to have regard to the views of other employees (which were yet to be canvassed) and, from a practical perspective, the increase in wages resulting from termination of the Agreement would require the employers to give consideration to restructuring and implementing more cost-effective and profitable business structures.

The FWC noted that this application had been made with no opposition, and that there was a very strong case that termination was in the best interests of the employees. It was nonetheless agreed that immediate termination would inevitably result in changes to staffing and other arrangements, but given the nature and small size of the franchises, this was likely to be uncomplex.

A one-month delay (to 23 March 2018) was granted, which the FWC noted would also allow the employers to identify the modern award most relevant to their employees.

In the meantime, the employers are bound to pay the base rate of pay provided by the relevant modern award (but not penalties and other additional payments) and are also bound by the National Employment Standards (NES) set out in the FW Act.

 

Lessons for employers

This decision is a reminder to employers that the right to make an application for the termination of an enterprise agreement is given to all parties covered by the agreement – including individual employees. Accordingly, employers with agreements that have past their nominal expiry date should be prepared for the possibility that the agreement may be terminated on application by a single employee and they should have a plan for falling back to the coverage of a modern award or negotiating a new agreement.

 

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.

 

Similar articles

SPECIAL EDITION E-UPDATE

ANNUAL WAGE REVIEW DECISION 2020

The Fair Work Commission’s Expert Panel announced on Friday 19 June 2020 the outcome of its annual review of the national minimum wage and minimum wages under the modern awards.

Read more...

COVID-19 and modern award variations

COVID-19 and modern award variations

In response to the impacts of the COVID-19 pandemic on businesses and employment across Australia, the Fair Work Commission (FWC) has already introduced (and proposes to further introduce) a range of temporary variations to modern awards to provide increased flexibility for employers and employees during this challenging time.

Read more...

Employers’ consultation obligations when implementing major workplace change

How was I supposed to know?

When an employer is required to make changes to the workplace which are likely to have significant effects on employees, the employer must ensure that it meets any consultation obligations which might apply under various laws and industrial instruments prior to implementing any redundancies that might arise.

Read more...

FWC upholds objection to constructive dismissal claim

Construction zone

In order to access the unfair dismissal jurisdiction, an employee must be “dismissed” from their employment by the employer. One of the instances in which an employee may be “dismissed” from their employment is if they were forced to resign because of the employer’s conduct or course of conduct.

Read more...

Court penalises accountant for involvement in employer’s failure to keep employee records

Put your records on

The Fair Work Regulations 2009 (Cth) impose a number of obligations on employers with respect to the making and keeping of employee records and pay slips.

Read more...

The onus and presumption in adverse action matters

It’s on you

Under the general protections provisions in the Fair Work Act 2009 (Cth) (FW Act), it is unlawful for a person to take adverse action against another person for a proscribed reason. One of the features of the general protections provisions under the FW Act is the presumption that adverse action was taken for a proscribed reason unless it is proven that the adverse action was not taken for that reason.

Read more...

Let's talk

please contact our directors to discuss how ouR expertise can help your business.

We're here to help

Contact Us
Let Workplace Law become your partner in Workplace Relations.

Signup to receive the latest industry updates with commentary from the Workplace Law team direct to you inbox.