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Perspective

Employer’s desire to compete facilitated by Fair Work Commission

The FWC has recognised an EA may no longer be appropriate where changing economic circumstances and a business need to pivot means an employer is facing a barrier to competition because of the application of its EA.

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In Boskalis Australia Pty Ltd [2021] FWCA 457 (20 May 2021), the FWC has terminated an EA on application by the employer, Boskalis, finding the EA to be out of step with Boskalis’ need to cater for the changing economic and competitive environment it faced.

Boskalis sought to terminate the EA, under which no employees were currently employed, to facilitate a shift in its business direction brought on by economic impacts of the COVID-19 pandemic (i.e. moving from “offshore” to “inshore” dredging work).

Finding itself in a more competitive market than the one in which the EA was negotiated, Boskalis pointed to the lower rates found in the EA of its biggest competitor in this new market as the main reason it had failed to successfully tender for projects.

The Union resisted this argument, arguing the impact to Boskalis could not be solely attributed to the competitor EA having lower rates and alleging Boskalis’ true motivation was to put downward pressure on wages and conditions in the dredging industry.

In rejecting the protests of the Union, DP Beaumont accepted the evidence provided by Boskalis as to the economic climate it finds itself in, its need to pivot to a new market, and the contribution its less competitive EA was making to Boskalis being unable to successfully tender for work.

In doing so, DP Beaumont found the termination of the EA to not be contrary to public interest, emphasising the lack of employees currently engaged under the agreement meant its termination would not impact employment levels and the underlying Award would contribute to the maintenance of proper industrial standards.

Lessons for employers

  • The FWC is willing to look at direct competitor EAs when assessing appropriateness for terminating an EA – knowledge of, and evidence about, competitors EAs may be key to termination applications moving forward.
  • The FWC is willing to acknowledge in interest of both employees and employers for business to be able to enhance its competitive position and no expectation that expired EA terms and conditions continue in perpetuity.
  • Employers may wish to make note of the potential impact of competitor’s EAs on their ability to successfully tender for project based work.
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