The Fair Work Commission noted it was a “disgrace” that an agreement that has been running for 20 years beyond its nominal expiry date and noted that its lack of penalty rates and other conditions was an “enormous competitive advantage” for the business.
The Commission terminated the agreement after an employee covered by the agreement petitioned for its termination. In assessing the agreement Commissioner Hunt noted that the agreement was made “approximately 23 years ago and has significantly less beneficial terms and conditions to employees than those contained within the two modern awards that would otherwise apply”. Commissioner Hunt went on to notes that this agreement, in its current form, “could never satisfy the BOOT”.
In a clear declaration of the real-world business impact Commissioner Hunt also noted that the operation of this agreement resulted in an “enormous competitive advantage over other employers who pay employees penalty rates in accordance with the relevant awards or their own agreements which satisfy the better off overall test”.
The impact was “staggering” in the Commissioners own words and completely one-sided. “For more than two decades, the employer has had the benefit to it, and to it only in depriving employees of payment of penalty rates for work performed at night, on weekends and on public holidays” and that the agreement “provided no benefit to the employees at all”.
Learnings for all businesses
“The awards applies to most fuel wholesale, retail and admin staff. A few businesses have registered agreements that apply. All registered agreements have a nominal expiry date. The reason that agreements are ‘allowed’ to run past their nominal expiry date is to ensure that the common delays to renegotiation of agreements do not cause the employees to be covered by a different instrument”, explained ACAPMA’s Elisha Radwanowski.
“If the nominal expiry date was 1/5/2020 and a pandemic hit, for example, and as a result the new agreement was not approved before then, it would cause chaos to have the agreement auto terminate and the staff to go from being covered by the agreement to being covered by the award and then to being covered by the new agreement”, adds Elisha.
“So, the capacity for an agreement to run past its nominal expiry date is a safeguard to ensure that there is time to renegotiate the next agreement and get it in place without causing havoc. What it is not is an option to let an agreement negotiated over two decades ago continue to apply. All businesses who have staff who are engaged under an agreement that is past its nominal expiry date should be on notice that that agreement is subject to termination request by any of the parties, or can be terminated at the Fair Work Commissions own volition, a power that is more likely to be exercised following this particular case”, concluded Elisha.
Here to help
Through the year ACAPMA Employment Professionals are available to assist members via employment@acapma.com.au.
This article is general in nature and covers things to consider, implement and watch out for in your business. They are provided as general advice and you should seek further advice on your situation by calling 1300 160 270 and speaking to one of ACAPMA Employment Professionals its free for members. ACAPMA membership is affordable at only $810 per year for a single site and valuable with sites gaining HR advice support and representation as well as a raft of other benefits and discounts.
Visit https://acapma.com.au/membership/ to apply for ACAPMA membership.
Elisha Radwanowski BCom (HRM&IR)
ACAPMA
Published with permission from ACAPMA.
Source: https://acapmag.com.au/2022/05/zombie-agreements-damage-competition/.
