Adairs Retail Group Pty Ltd
[2023] FWC 2505
•3 OCTOBER 2023
| [2023] FWC 2505 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.319 - Application for an order relating to instruments covering new employer and non-transferring employees
Adairs Retail Group Pty Ltd
(AG2023/2967)
| COMMISSIONER TRAN | MELBOURNE, 3 OCTOBER 2023 |
Application for an order relating to instruments covering new employer and non-transferring employees
Adairs Retail Group Pty Ltd (Adairs) has made an application to the Fair Work Commission under s 319(1)(b) of the Fair Work Act 2009 (Cth) (the Act) for an order that the DHL Supply Chain General Logistics – Vic Enterprise Agreement 2021 (the DHL Agreement) covers the Applicant and any new non-transferring employees.
The application was made by Adairs on 22 August 2023. Submissions were filed as part of the application.
I held a mention and issued directions on 12 September 2023.
Further material was filed in accordance with those directions, including a detailed comparison of the DHL Agreement with the Storage Services Award (the Award), and information about the views of relevant employees and the union, the United Workers Union (UWU).
Having considered all of the factors set out in s 319, I am of the view that it is appropriate and not contrary to the public interest to make the orders sought.
My detailed reasons follow.
Background
Adairs is a home furnishings and décor retailer. It employs approximately 1,700 employees who predominantly work in its retail stores throughout Australia.
Previously, Adairs’ logistics and warehouse functions were performed by a third party, DHL Supply Chain (Australia) Pty Ltd (DHL). Adairs is in-sourcing its logistics and warehouse functions. As part of that in-sourcing, it has made offers of employment of employees of DHL who were performing the logistics and warehouse functions work (the transferring employees) and also proposes to employ additional employees to perform the work of the logistics and warehouse functions (the non transferring employees).
Adairs would like for all employees – transferring and non-transferring – to be covered by the same instrument.
Legislation
The Act deals with transfers of businesses, and the object of the relevant part (Part 2-8) is:
The object of this Part is to provide a balance between:
(a)the protection of employees' terms and conditions of employment under enterprise agreements, certain modern awards and certain other instruments; and
(b)the interests of employers in running their enterprises efficiently; if there is a transfer of business from one employer to another employer
Section 311 deals with when a transfer of business occurs.
(1)There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:
(a)the employment of an employee of the old employer has terminated;
(b)within 3 months after the termination, the employee becomes employed by the new employer;
(c)the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;
(d)there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).
Section 319 of the Act provides for orders relating to instruments covering a new employer and non-transferring employees and reads as follows:
Orders that the FWC may make
(1) The FWC may make the following orders:
(a)an order that a transferable instrument that would, or would be likely to, cover the new employer and a non-transferring employee because of subsection 314(1) does not, or will not, cover the non-transferring employee;
(b)an order that a transferable instrument that covers, or is likely to cover, the new employer, because of a provision of this Part, covers, or will cover, a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer;
(c)an order that an enterprise agreement or a modern award that covers the new employer does not, or will not, cover a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer.
Who may apply for an order
(2)The FWC may make the order only on application by any of the following:
(a) the new employer or a person who is likely to be the new employer;
(b) a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer;
(c) if the application relates to an enterprise agreement--an employee organisation that is, or is likely to be, covered by the agreement;
(d) if the application relates to a named employer award--an employee organisation that is entitled to represent the industrial interests of an employee referred to in paragraph (b).
Matters that the FWC must take into account
(3)In deciding whether to make the order, the FWC must take into account the following:
(a) the views of:
(i)the new employer or a person who is likely to be the new employer; and
(ii)the employees who would be affected by the order;
(b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment;
(c) if the order relates to an enterprise agreement--the nominal expiry date of the agreement;
(d) whether the transferable instrument would have a negative impact on the productivity of the new employer's workplace;
(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer;
(f) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer;
(g) the public interest.
Restriction on when order may come into operation
(4)The order must not come into operation in relation to a particular non-transferring employee before the later of the following:
(a) the time when the non-transferring employee starts to perform the transferring work for the new employer;
(b) the day on which the order is made.
Is there a transfer of business?
I am satisfied that there is a transfer for business from DHL to Adairs.
Section 311 deals with when a transfer of business occurs.
The Applicant submitted that it has offered employment to those employees of the old employer – DHL – who had performed the relevant logistics and warehouse services, and therefore:
The employment of the transferring employees has been terminated as required by s 311(1)(a), as employment with DHL ended on 5 September 2023;
The transferring employees became employed by Adairs within 3 months of the termination, as required by s 311(1)(b), as Adairs made offers of employment in the period between 14 August 2023 and 8 September 2023, and 32 DHL employees accepted those offers;
The work that the transferring employees perform for Adairs is the same or substantially the same work as performed for DHL in accordance with s 311(1)(c); and
There is a connection between Adairs and DHL within the meaning of s 311(5) as required by s 311(1)(d) as
othe transferring work had been performed by employees of DHL because Adairs had outsourced that work to DHL; and
othe transferring work that is now being performed by the transferring employees of Adairs because Adairs ceased to outsource the work to DHL.
Is there an instrument that may transfer?
In accordance with s 312(1)(a), the DHL Agreement is a transferable instrument as it is an enterprise agreement that was approved by the Commission on 14 December 2021 in FWC matter number AG2021/8431.[1]
By operation of s 313 of the Act, the DHL Agreement covers Adairs and the transferring employees, subject to any order of the Commission under s 318 of the Act. I have not been made aware of any such orders.
Unless an order is made under s 319 of the Act, s 314 of the Act provides that the DHL Agreement will not cover any non-transferring employees as a modern award – the Storage Services and Wholesale Award 2020 – covers Adairs and any non-transferring employees.
Has an application in accordance with s 319(2) been made?
The requirements of s 319(2) has been met as Adairs, the new employer of the transferring employees, has made an application. The application was made on 22 August 2023.
The application seeks an order under s 319(1)(b) that the DHL Agreement will cover Adairs and any non-transferring employees.
Should the order be made?
Section 319(3) provides the relevant matters that the Commission must take into account in determining whether to issue the order sought.
s 319(3)(a)(i): the views of the new employer
Adairs as the new employer has made the application.
Adairs submitted that:
it seeks a consistent approach across its distribution centre workforce made up of transferring employees, who are covered by the DHL Agreement, and non-transferring employees, who are covered by the modern Award;
it would otherwise be required to ensure compliance across two instruments for employees performing essentially the same work;
the generally more favourable terms of the DHL Agreement compared with the Award may split the workforce into two different classes, which may result in additional resourcing, time and effort from Adairs leadership / management;
having a consistent industrial instrument for distribution centre employees will support building the culture and operational efficiency of its distribution centre.
On the basis of the above submissions, I am of the view that this factor weighs in favour of granting the order sought.
s 319(3)(a)(ii): the views of employees who would be affected by the order
Adairs provided information that there were 32 transferring employees and 75 new non-transferring permanent employees, and a further flexible casual/labour hire workforce of approximately 60 people.
My directions of 12 September 2023 required Adairs to:
notify employees (whether transferring or non-transferring) who may be affected by the order by publishing the directions on a noticeboard; and
file and serve submissions and materials relating to the application on UWU, who are a party covered by the DHL Agreement.
The directions also provided opportunities for UWU and any other interested parties to make submissions.
No submissions were directly received from employees, whether transferring or non-transferring.
UWU submitted that:
the Union had no objection to the application for the order; and
the Union had consulted with relevant employees in mass meetings and sought input of delegates, and no objections were raised by employees, whether transferring or non-transferring.
Adairs also submitted that its proposed letters of offer to prospective new, non-transferring employees made reference to this application, and that it had met with UWU regarding this application.
On the basis of the above submissions, I am of the view that this factor weighs in favour of granting the order sought.
s 319(3)(b): whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
Adairs submitted that no employees – whether transferring or non-transferring – would be disadvantaged if the order were granted. In particular, it noted that the DHL Agreement had generally more favourable terms and conditions, identified as:
Higher base rates of pay;
More generous redundancy entitlements;
An additional paid holiday each year;
5 days of paid compassionate leave; and
Additional allowances.
Adairs also identified those terms and conditions of the DHL Agreement that were less favourable than the Award as follows:
23.3% casual loading (compared with the Award’s casual loading of 25%);
Wider span of ordinary hours; and
25% night shift loading (compared with the Award’s night shift loading of 30%).
Adairs also provided an ‘Impact Assessment’ document, which was a comparison of the Award with the DHL Agreement.
I take note that the DHL Agreement was approved by the Commission on 14 December 2021, and that therefore, at that time, relevant employees were assessed to be better off overall under the DHL Agreement than the Award.
I also compared the DHL Agreement current rates of pay with the Award current rates of pay and note that the DHL Agreement base rates of pay are higher than the Award base rates of pay.
I take further note of, and accept, Adair’s undertaking provided to my chambers and dated 28 September 2023 that it will ensure no employee receives less take home pay under the DHL Agreement than they would under the Award.
UWU submitted that, while some terms of DHL Agreement were less beneficial than the Award, the Union was of view that new non-transferring employees would be better off overall under the DHL Agreement than under the Award. The Union identified the following more beneficial terms:
Higher wages;
Higher redundancy payment;
Provisions regarding public holidays;
Saturday loading;
Casual conversion;
Disciplinary procedure; and
Employee representational rights.
Having considered all the material before me, I am satisfied that non-transferring employees would not be disadvantaged by the order, and that this factor weighs in favour of granting the order sought.
s 319(3)(c): if the order relates to an enterprise agreement – the nominal expiry date of the agreement
The nominal expiry date of the DHL Agreement is 7 June 2024.
Adairs submitted that it wishes to have a single consistent industrial instrument for all distribution centre employees. Adairs noted that the DHL Agreement is approaching its nominal expiry date and submitted that it intends to commence bargaining for its own enterprise agreement to cover all site-based employees.
The Union noted the DHL Agreement provisions regarding employee representational rights, and submitted that this would allow all employees to make the most of the opportunity to collectively bargain for a new enterprise agreement.
On the basis of the above, I am of the view that this factor weighs in favour of granting the order sought.
s 319(3)(d): whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
Adairs submits that there would be no negative impact on productivity but rather that not granting the order sought would negatively impact the workplace due to the potential for separate instruments with differing minimum entitlements to split the workforce.
The above submissions persuades me that this factor weighs in favour of granting the orders sought.
s 319(3)(e): whether the new employer would incur significant economic disadvantage
Adairs submitted that it did not consider that it would incur significant economic disadvantage for the DHL Agreement covering its distribution centre operations.
I consider this factor weighs in favour of granting the orders sought.
s 319(3)(f): degree of business synergy
Adairs submitted that there was business synergy between the DHL Agreement and the Award that otherwise covers its distribution centre operations.
I consider this factor weighs in favour of granting the orders sought.
s 319(3)(g): the public interest
Adairs submits that there are no public interest grounds against granting of the orders sought, but that a grant of the order would be consistent with the objects of the Act in Part 2-8 – Transfer of Business in that it balances the protection of employees terms and conditions of employment with Adairs’ interests in the running of an efficient enterprise.
I do not consider that there are public interest factors weighing against granting the orders sought.
Conclusion and Order
Having considered and taken into account each of the matters above, I am satisfied that the following Order should be made:
The DHL Supply Chain General Logistics – VIC Enterprise agreement 2021 will cover any new non-transferring employees (being employees who are or who are proposed to be employed and whose duties align to the classification under clause 42 of that agreement) in respect of their employment with Adairs Retail Group Pty Ltd.
In making this Order, I have also taken into account an undertaking provided by Adairs dated 28 September 2023. This undertaking will be appended to the Order.
In accordance with s 319(4), the Order will take effect on the later of:
the day in which the Order is made; or
the time when a non-transferring employee starts to perform the transferring work for the new employer (Adairs).
An Order to this effect will be issued along with this decision.
COMMISSIONER
Determined on the papers
[1] [2021] FWCA 7098, AE514265 / PR736737.
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