Alliance Airlines Pty Limited
[2022] FWC 2284
•26 AUGUST 2022
| [2022] FWC 2284 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Alliance Airlines Pty Limited
(AG2022/3191)
TOLL AVIATION AIRCRAFT MAINTENANCE ENTERPRISE AGREEMENT 2018
| Airline operations | |
| COMMISSIONER SPENCER | BRISBANE, 26 AUGUST 2022 |
Application for an order relating to instruments covering new employer and transferring employees
An application was made by Alliance Airlines Pty Ltd (Applicant/new employer) pursuant to s.318 of the Fair Work Act 2009 (the Act) for an order relating to an instrument covering a new employer and transferring employees.
The Applicant sought an Order in the following terms:
(1)Pursuant to s.318(1)(a) of the Act, that the Toll Aviation Aircraft Maintenance Enterprise Agreement 2018 (UAM EA/transferable instrument) will not cover the Applicant or any transferring employees, being employees formerly employed by Unity Aviation Maintenance Pty Ltd (UAM/old employer) who become employees of the Applicant (transferring employees).
(2)Pursuant to s.318(4) of the Act, the Order shall operate in relation to each of the transferring employees at the time they become employed by the Applicant.
BACKGROUND
The following background was provided to the Commission in the Form F40 – Application for orders in relation to a transfer of business, and in an affirmed witness statement of Mr Toby Koch, General Manager of the Applicant.
In or about November 2020, Alliance Aviation Services Limited (AASL), the parent company of the Applicant, acquired the shares of Toll Aviation Engineering Pty Ltd (Toll Aviation). In January 2021, the name of Toll Aviation was changed to UAM.
From this time, the business of UAM and the Applicant were operated separately. The business of the Applicant operated from its hangar at 81 Pandanus Avenue, Brisbane Airport (Applicant Hangar), and the business of UAM operated from its hangar at 75-79 Pandanus Avenue, Brisbane Airport (UAM Hangar). The Applicant offered line and base maintenance to the Applicant’s operation and UAM provided line and base maintenance to third party airlines, including the Applicant.
Approximately 40 employees are currently employed by UAM at its operations at the UAM Hangar, including 33 employees who are covered by the UAM EA. It is proposed that 29 of the UAM EA covered employees will transfer from UAM to the Applicant.
Following a review of operations, the UAM operation at Brisbane Airport is to be merged into the Applicant’s Brisbane engineering operation. This will create a single engineering operation in Brisbane, intended to promote efficiencies in line and base maintenance for the Embraer fleet and to support an increase in Embraer operations. It will also mean that all employees at the Applicant’s Brisbane operation will operate under common systems.
RELEVANT LEGISLATION
Section 313 of the Act relevantly provides:
“313 Transferring employees and new employer covered by transferable instrument
(1) If a transferable instrument covered the old employer and a transferring employee immediately before the termination of the transferring employee’s employment with the old employer, then:
(a) the transferable instrument covers the new employer and the transferring employee in relation to the transferring work after the time (the transfer time) the transferring employee becomes employed by the new employer
…
(3) This section has effect subject to any FWC order under subsection 318(1).”
Further, s.318 of the Act relevantly provides:
“318 Orders relating to instruments covering new employer and transferring employees
(1) 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 transferring employee because of paragraph 313(1)(a) does not, or will not, cover the new employer and the transferring employee;
(b) an order that an enterprise agreement or a named employer award that covers the new employer covers, or will cover, the transferring employee.
(2) 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 transferring employee, or an employee who is likely to be a transferring employee;
(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).
(3) In deciding whether to make the order, 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.
(4) The order must not come into operation in relation to a particular transferring employee before the later of the following:
(a) the time when the transferring employee becomes employed by the new employer;
(b) the day on which the order is made.”
APPLICANT’S SUBMISSIONS
The Applicant made the following submissions in support of the Application:
· The UAM EA is an enterprise agreement that has been approved by the Fair Work Commission, and is therefore a transferable instrument as falling under s.312(1)(a) of the Act;
· The transferable instrument passed its nominal expiry date on 30 June 2021;
· Within 5 days of the Fair Work Commission making the order sought, the Applicant intends to make offers of employment to all of the transferring employees, with such offers of employment to:
obe for employment that commences on and from the commencement of the next pay period;
obe in a position substantially similar to the transferring employee’s position immediately prior to the completion date;
obe on terms and conditions no less favourable on an overall basis than those on which the transferring employee is employed immediately prior to the transfer; and
oprovide for continuity of service and recognition of prior continuous service with UAM (and its predecessors).
The Applicant further submitted, pursuant to s.311 of the Act:
· There is a connection between the old employer and the new employer, as the new employer is an associated entity of the old employer when the transferring employees become employed by the new employer.
· Accordingly, where the transferring employees accept employment with the new employer, there will be a ‘transfer of business’ within the meaning of s.311(1) of the Act from the old employer to the new employer, and any transferring employees who accept offers of employment with the new employer will be ‘transferring employees’ as defined by s.311(2) of the Act.
· In the absence of an order by the Commission, under s.313 of the Act, the transferable instrument will cover the transferring employees while they are performing work for the Applicant.
· The effect of this Application will be that the transferable instrument will not apply, and instead the Alliance Agreement will apply.
In support of the Application, the Applicant provided affirmed witness statements from Mr Koch, and Nathan Schmidt, Senior Supervisor at Unity Aviation Maintenance Pty Ltd.
CONSIDERATION
In deciding whether to make the Order sought by the Applicant, I must take into account the matters in s.318(3) of the Act.
Section 318(3)(a)(i): The views of the new employer
The Applicant submitted that it strongly supported the making of the Order, on the basis that:
a. the transferring employees performing the same work would do so under harmonised, equivalent and applicable terms and conditions to the Applicant’s current employees; and
b. there would be a reduced administrative burden of introducing and maintaining two separate sets of terms and conditions.
Section 318(3)(a)(ii): The views of the employees who would be affected by the order
The Applicant submitted that it had consulted directly with the Australian Licensed Aircraft Engineers’ Association (ALAEA). The ALAEA advised the Applicant that there was no major opposition to the planned transfer amongst ALAEA members, and noted that further consultation was required.
The Applicant submitted that it had also consulted directly with each of the transferring employees in one-on-one meetings in the period from 12 July 2022 to 19 July 2022.
The Applicant submitted that the transferring employees were advised of this Application and that no employee had raised any opposition to the Application. Rather, employees raised questions about the implementation of the transfer and the effect of the transfer on them individually.
The Applicant submitted that it was committed to continuing to discuss its plans and any specific questions or concerns with the transferring employees and the ALAEA.
The views of the ALAEA were sought directly by Chambers. In response, the ALAEA sent correspondence to Chambers on 24 August 2022 that confirmed its support for the Application.
The ALAEA’s support for the Application was on the basis that its members would be significantly better off if the Application was granted. Further, the ALAEA advised that it had consulted with its affected members, and that they were agreeable to coverage under the Alliance EA.
The ALAEA further submitted that the Applicant had engaged with the ALAEA throughout the entire consultation process in a transparent manner, and concurred with the evidence that the Applicant had filed in support of the Application.
In summary terms, the ALAEA requested the Commission approve the Application.
Section 318(3)(b): Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
The Applicant undertook a comparison of the key entitlements provided for by the UAM EA and the Alliance EA.
The Applicant submits that the Alliance EA provides for terms and conditions of employment which are more generous overall than those of the UAM EA.
Section 318(3)(c): The nominal expiry date of the transferable instrument
The UAM EA has passed its nominal expiry date of 30 June 2021.
In contrast, the nominal expiry date for the Alliance EA is 2 May 2023. Therefore, transferring employees and the Applicant’s employees will be in a position to bargain for a new enterprise agreement to replace the Alliance EA within a short period after the transfer of employment.
Section 318(3)(d): Whether the transferable instrument would have a negative impact on the productivity of the Applicant’s workplace
The Applicant submitted that should the UAM EA transfer to cover the Applicant, it would mean that two sets of terms and conditions of employment would apply to employees who are working alongside each other, performing the same or substantially the same role.
The Applicant further noted the transferring employees will perform their work under the Applicant’s Approved Maintenance Organisation (AMO) approval from the Civil Aviation Safety Authority (CASA) and not the UAM AMO. This would mean that the transferring employees would apply the Applicant’s Maintenance Repair Organisation (MRO) system for maintenance and management of parts, tools and materials, the Applicant’s learning management system, and the Applicant’s finance system.
Section 318(3)(e): Whether the Applicant would incur significant economic disadvantage as a result of the transferable instrument covering the Applicant
The Applicant submitted that there was no significant economic disadvantage to the Applicant if the UAM EA continued to apply to the transferring employees. Instead, the economic disadvantage would be to the transferring employees who would not be entitled to the higher rates of pay under the Alliance EA.
Section 318(3)(f): The degree of business synergy between the transferable instrument and any workplace instrument that already covers the Applicant
The Applicant submitted an analysis of the UAM EA in comparison to the Alliance EA.
Section 318(3)(g): The public interest
The Applicant submitted that the granting of the order would be in the public interest in ensuring the Applicant could operate efficiently, without unnecessary complications in its employment relations.
The Applicant further submitted that the introduction of the UAM EA to the Applicant would create unnecessary complexity.
CONCLUSION
Taking into account the matters in ss.318(3)(a)-(g) of the Act, I am satisfied that it is appropriate to make an Order in the terms set out by the Applicant.
A separate Order[1] is made.
COMMISSIONER
[1] PR745237.
Printed by authority of the Commonwealth Government Printer
<AE500303 PR745236>
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