Altus People Pty Ltd

Case •

[2023] FWC 2920

•

16 NOVEMBER 2023
[2023] FWC 2920

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.318 - Application for an order relating to instruments covering new employer and transferring employees;
s 319 - Application for an order relating to instruments covering new employer and non-transferring employees

Altus People Pty Ltd

(AG2023/3697; AG2023/3730)

COMMISSIONER PERICA

MELBOURNE, 16 NOVEMBER 2023

Application by Altus People Pty Ltd

  1. On 13 October 2023, Altus People Pty Ltd. (Altus People), made an application for the following orders.

(a)   Under s 318(1)(a) and (b): the Altus Traffic (SA) Management Agreement 2009 (the Altus Traffic Agreement) does not and will not cover transferring Altus Traffic Australia Pty Ltd (Altus Traffic) employees in respect of their work with Altus People; and the Downer Traffic Management Enterprise Agreement 2021 (the Downer Agreement) will cover those transferring employees.

(b)   Under s 319(1)(b): the Downer Agreement will cover any non-transferring employees who perform, or are likely to perform, traffic management work for Altus People.

  1. For the reasons I give below, after considering the matters I must take into account under ss 318(3) and 319(3) respectively, I exercise my discretion under ss 318(1) and 319(1) to make the orders sought.

  1. The material filed is comprehensive. It included a detailed application, a witness statement of Ms. Clare Agnew, the Executive General Manager – People of Altus Traffic, and a witness statement of Mr. Salvatore Loprete, who is a casual traffic controller employed by Altus Traffic. The witness statements each have several attachments.

  1. A short mention hearing was held on Friday 27 October 2023. The relevant union, the CFMEU, was notified of that mention and did not attend. I then directed Altus People to e-mail a copy of the directions to employees affected by the application. Any opposition to the orders sought were to be filed in the Commission by Friday, 3 November 2023. Those directions noted, in the absence of any parties notifying the Commission of their opposition to the orders, the application would be decided on the papers.

  1. Neither Altus People nor the Commission received any correspondence opposing the orders sought. On that basis I will decide this matter on the papers filed by the Altus People.

Background

Altus Group

  1. Altus People is part of Altus Group Holdings Pty Ltd (Altus Group). Altus Group provides a range of traffic management services, including traffic control, event management, traffic engineering and provisioning, training services and equipment hire.

Altus Traffic

  1. Altus Traffic operates a road traffic management business and currently employs approximately 2,355 traffic management employees in South Australia, Queensland, New South Wales, Victoria, Western Australia, and Tasmania.

  1. In South Australia, Altus Traffic employed approximately 186 traffic management employees. 172 of those traffic management employees transferred their employment from Altus Traffic to Altus People on 28 August 2023.

  1. The terms of the Altus Traffic Agreement apply to the employment of the South Australian traffic management employees of Altus Traffic. The Altus Traffic Agreement:

·   is expressed to cover Altus Traffic and its traffic management employees;

·   commenced operation on 7 October 2009; and

·   has a nominal expiry date of 7 October 2012.

  1. The Altus Traffic Agreement is an “agreement-based transitional instrument” that will terminate on 7 December 2023 by operation of item 20A of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth).

  1. When the Altus Traffic Agreement terminates, any new non-transferring employees of Altus People (New Non-Transferring Employees) will be covered by the relevant modern award. Depending on the environment in which the New Non-Transferring Employee is working, they may be covered by either the Building and Construction General On-site Award 2020, the Security Services Industry Award 2020 or the Miscellaneous Award 2020 (the Modern Awards).

Altus People

  1. Altus People was established in or around February 2022, when Altus Group acquired the traffic management assets of Downer EDI Works Pty Ltd (Downer).

  1. Associated with the purchase of the assets, traffic management employees of Downer transferred their employment to Altus People (Downer Employees) within 3 months of their employment ending at Downer. In their employment with Downer, the Downer Employees were covered by the terms of the Downer Agreement. The Downer Agreement commenced operation on 19 November 2021 and has a nominal expiry date of 12 November 2025.

  1. The traffic management work performed by the Downer Employees for Altus People was the same, or substantially the same, as the work the Downer Employees performed for Downer.

Altus Traffic employees’ transfer to Altus People

  1. On or around 28 July 2023, 172 traffic management employees of Altus Traffic agreed to transfer their employment to Altus People (Transferring Altus Traffic Employees) within 3 months of their employment ending at Altus Traffic. The Transferring Altus Traffic Employees commenced employment with Altus People with effect from 28 August 2023.

  1. In their employment at Altus Traffic, the Transferring Altus Traffic Employees were covered by the Altus Traffic Agreement. The traffic management work performed by the Transferring Altus Traffic Employees for Altus Traffic was the same, or substantially the same, as the traffic management work the Transferring Altus Traffic Employees are performing for Altus People.

Legislative framework for orders under ss 318 and 319

  1. The discretion to make the orders sought by the Applicant under ss 318(1) and 319(1) will only be exercised after the factors set out in s 318(3) and 319(3) are considered.[1] These factors, which must be read having regard to the objects of Part 2.8, are intended to enable the Commission to balance appropriately the protection of employees’ entitlements under certain instruments with the need for some flexibility to depart from the default rules about coverage of instruments following a transfer of business.[2]

  1. The objects of this Part 2.8 of the Act, are:

309 Object of this Part

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.

  1. Section 318 sets out the circumstances where the proposed orders can be made that: Altus Traffic Agreement will not cover Transferring Altus Traffic employees; and the Downer Agreement will cover those employees in respect of their work at Altus People:

318 Orders relating to instruments covering new employer and transferring employees

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 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.

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 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).

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 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.

  1. Section 319 sets out the circumstances in which the order sought that the Downer Agreement will cover all New Non- Transferring employees who perform, or are likely to perform, traffic management work for Altus People can be made:

319 Orders relating to instruments covering new employer and non‑transferring employees

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.

Note: Orders may be made under paragraphs (1)(b) and (c) in relation to a non‑transferring employee who performs, or is likely to perform, the transferring work for the new employer, whether or not the non‑transferring employee became employed by the new employer before or after the transferable instrument referred to in paragraph (1)(b) started to cover 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.

Can Altus People apply for these orders?

  1. Altus People, as the new employer, has standing to bring this application pursuant to ss 318(2)(a) and 319(2)(a) of the Act.

Has there been a transfer of business of the Altus Traffic Agreement and the Downer Agreement?

  1. On the material filed it is clear there was a ‘transfer of business’ from Altus Traffic to Altus People within the meaning of s 311 of the Act and the Altus Traffic Agreement is a transferrable instrument under s 312. It follows that the transferrable instrument covers Altus People under s 313.

  1. There was also a ‘transfer of business’ from Downer to Altus People within the meaning of s 311 of the Act and the Downer Agreement is a transferrable instrument under s 312. It follows the transferable instrument covers Altus People under s 313.

  1. Given Altus People can make this application, and the relevant agreements are both “transferrable instruments” under ss 318(1) and 319(1). The next step is to consider each of the matters which I must take into account under ss 318(3) and 319(3). As the matters in ss 318(3) and 319(3) are the same, I will consider each equivalent matter together.

Consideration of the matters that must be taken into account under ss 318 (3) and 319(3)

The view of Altus People - ss 318(3)(a)(i) and 319(3)(a)(i)

  1. Altus People expresses the view the Altus Traffic Agreement should not apply to the Transferring Altus Traffic Employees. It favours the Downer Agreement to cover Altus Traffic Employees and all New Non-Transferring Employees.

  1. The reasons for this view include:

·   The orders sought would ensure the terms and conditions of employment for all traffic management employees of Altus People are nationally standardised and consistent;

·   It would help maintain productivity across its business operations and would avoid employee dissatisfaction and confusion because of inconsistent terms and conditions between the relevant employees;

·   It seeks to avoid the costs and rostering difficulties associated with simultaneously implementing and managing up to five separate industrial instruments across its traffic management workforce; and

·   As Downer is the largest customer of Altus People, there is a natural and strong business synergy achieved by extending the operation of the Downer Agreement to the employment of the Transferring Altus Traffic Employees and all New Non-Transferring Employees of Altus People.

Views of the employees who would be affected by the order - ss 318(3)(a)(ii) and 319(3)(a)(ii)

  1. The material before me provides evidence of extensive consultations and interactions with staff and the CFMEU concerning the proposed orders. This is confirmed in the filed Statements of Ms. Claire Agnew and Mr. Salvatore Loprete.

  1. Since 15 June 2023, Altus People engaged in consultation with the Transferring Altus Traffic Employees, including regular consultations on a local level, answering e-mail and telephone enquiries concerning the transfer and the orders sought, production and distribution of explanatory documents and correspondence with the CFMEU during the consultations which included responding to questions about the orders Altus People are now seeking.

  1. The Transferring Altus Traffic Employees have each accepted offers of employment with Altus People on terms which make it clear that if Altus People is successful in obtaining the orders sought, the Altus Traffic Agreement will cease to apply to their employment with Altus People, and they will instead be covered by the Downer Agreement.

  1. At the time that application was made there were no New Non-Transferring employees. It follows their views could not be sought.

  1. It should be noted in my directions, I invited the relevant employees and the CFMEU to indicate opposition to the orders sought by Altus People. This did not produce any responses. I infer the relevant employees do not oppose the orders sought.

Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment - ss 318(3)(b) and 319(3)(b)

  1. Altus People argue I should be satisfied the Transferring Altus Traffic Employees will not be disadvantaged if the orders sought by Altus People are made.

  1. It has given the Transferring Altus Traffic Employees a contractual guarantee that, if the orders are made, the terms and conditions (including wage rates) applying to the Transferring Altus Traffic Employees will be no less favourable than the terms and conditions under the Altus Traffic Agreement. Altus People will preserve any term of the Altus Traffic Agreement to the extent that it provides an Altus Traffic Employee with a more favourable entitlement.

  1. Altus People have also undertaken that the wage increase applying to the Transferring Altus Traffic Employees on 1 July 2024 will be the higher of 2% (under the Downer Agreement) or the percentage increase that the Commission applies to the base rate of pay for the CW2 classification under the Building and Construction General On-site Award 2020 arising from its 2024 minimum wage decision. It follows, in the submission of Altus People, the Transferring Altus Traffic Employees will be financially advantaged by the making of the orders.

  1. Conversely, if the orders are not made, the Transferring Altus Traffic Employees will remain covered by the Altus Traffic Agreement which was approved by Employment Advocate in 2009. The Altus Traffic Agreement is a “zombie agreement” that will expire on 7 December 2023. After this time the Transferring Altus Traffic Employees will be employed under the terms of one of the Modern Awards.

  1. The New Non-Transferring Employees will also be financially advantaged by the making of the order. If the orders are not made, the New Non-Transferring Employees will be covered by one of the Modern Awards. Based on a comparison of minimum rates of pay applying to day work, night work, overtime and public holidays, all New Non-Transferring Employees would, on an overall basis, be financially better off under the terms of the Downer Agreement than they would be under either of the Modern Awards.

The nominal expiry date of the enterprise agreements - ss 318(3)(c) and 319(3)(c)

  1. The Downer Agreement has a nominal expiry date of 12 November 2025. The Altus Traffic Agreement has a nominal expiry date of 7 October 2012, and will automatically terminate on 7 December 2023.

Whether the enterprise agreement would have a negative impact on the productivity of the Altus People workplace - ss 318(3)(d) and 319(3)(d)

  1. Altus People submits the application of the Altus Traffic Agreement will negatively impact the productivity of Altus People’s business in various ways. The Altus Traffic Agreement will automatically terminate on 7 December 2023. On that date the Transferring Altus Traffic Employees will revert to the terms of either of the three Modern Awards. The adverse impacts claimed by Altus people include:

·   Its managers, sales team, rostering team, payroll, and human resources functions will require substantial training for Altus People to understand the differences between the Altus Traffic Agreement, the Downer Agreement, and the Modern Awards.

·   Its rostering teams will be required to comply with the rostering principles that are prescribed by multiple industrial instruments. This complexity will increase the risk of potential over-staffing or under-staffing of clients, as well as the likelihood of errors and misapplication of rostering principles in the various instruments.

·   The application of multiple industrial instruments is likely to create significant resourcing and productivity issues for Altus People’s payroll function; and

·   Morale amongst the traffic management employees will be adversely impacted from multiple industrial instruments applying to employees who are performing the same or substantially the same work.

  1. Altus People contrasts these adverse effects with circumstances where the orders sought are made. If the orders are made, they will provide “certainty, synergy, clarity, and consistency”, and the capacity for “confusion, administration, resourcing, low morale, and dispute” will diminish across Altus People’s business.

Whether Altus People would incur significant economic disadvantage as a result of the Altus People Agreement or Downer Agreement covering it – ss 318(3)(e) and 319(3)(e)

  1. Altus People argues it would suffer significant economic disadvantage if the Altus Traffic Agreement were to apply to the Transferring Altus Traffic Employees and the Modern Awards apply to any New Non-Transferring Employees (and the Transferring Altus Traffic Employees after 7 December 2023).

  1. Additional expenses would be incurred because of the introduction of the three Modern Awards into the current payroll system, requiring a significant payroll system upgrade and additional resourcing and training for Altus People’s managers and staff.

  1. In contrast, Altus People argue a significant economic disadvantage would be avoided if I make the orders sought. This is because the number of industrial instruments required to be managed by payroll would be reduced, the orders sought would also provide synergies with the business of Downer, its biggest customer.

The degree of business synergy between the transferrable instrument and any workplace instrument already covering Altus People - ss 318(3)(f) and 319(3)(f)

  1. Altus People argue there is little business synergy between the Downer Agreement and the Altus Traffic Agreement. Significant operational differences exist between the Altus Traffic Agreement and the Downer Agreement. These include differences in the span of ordinary hours, wage rates, weekend overtime, shift penalties, allowances, part-time working arrangements, meal breaks, annual leave loading, casual loading, casual conversion, redundancy, flexibility entitlements and consultation obligations.

  1. In contrast, Altus People argue there is great business synergies by all traffic management employees being covered by the same enterprise agreement. There are also significant business synergies if the Downer Agreement applies because the terms and conditions within Altus People are aligned with their biggest client. Another reason the Downer Agreement commends itself is, according to Altus People, it is better suited to the asphalting road maintenance work that Altus People performs for other clients such as Fulton Hogan.

The public interest - ss 318(3)(g) and 319(3)(g)

  1. Altus People argue the orders it seeks are in the public interest because the proposed orders would promote the objects of Part 2.8 of the Act. It would promote the protection of employee’s terms and conditions of employment and the interests of Altus People in running their business efficiently.

  1. It also argues the proposed orders will allow for the Transferring Altus Traffic Employees and any other New Non-Transferring Employees to be afforded the benefit of superior terms and conditions of employment than they would otherwise receive.

Consideration

  1. The arguments made by Altus People are compelling. The workers who would be covered by these orders, and Altus People, would be significantly disadvantaged if I did not make the orders. The proposed orders provide protection of employee’s terms of employment and assist Altus People in running their business efficiently.

  1. The business synergy between the terms and conditions of Altus People’s biggest client, Downer, and the terms of conditions of Altus People’s own employees is an important consideration. Also, the complexity and number of industrial instruments which would apply to the employees of Altus People if I did not make the orders, is significant.

  1. Lastly, the terms and conditions of employment of the former Altus Traffic employees who now work for Altus People, would in almost all respects, be improved by the making of the orders. With respect to those terms of the Altus Traffic Agreement that are superior, Altus People has given an undertaking to preserve them.

Conclusion

  1. After consideration of all the material filed and taking into account each of the matters in ss 318(3) and 319(3), I am satisfied I should exercise my powers under ss 318 and s 319.

  1. Under s 318 (1)(a), I will order the Altus Traffic Agreement does not, and will not, cover Altus People or the Transferring Altus Traffic Employees.

  1. Under s 318(1)(b), I will order the Downer Agreement will cover the Transferring Altus Traffic Employees.

  1. Under s 319(1)(b), I will also order the Downer Agreement covers, any Non-Transferring Employees who perform, or are likely to perform, traffic management work for Altus People.

  1. These orders will come into operation on and from today, Thursday 16 November under ss 318(4)(b) and 319(4)(b). I will publish the s 318 order in AG2023/3697 and the s 319 order in AG2023/3730 together with this decision.

  1. I also note Altus People has made a written undertaking dated 9 November 2023 covering those of its employees who were employed by Altus Traffic and covered by the Altus Traffic Agreement. Altus People undertakes (amongst other things) to preserve each of the terms of the Altus Traffic Agreement to the extent the term provides those employees with a more favorable entitlement than the Downer Agreement. This undertaking supplements the s 318 order in AG2023/3697. I attach that undertaking to this decision and mark it Annexure AP 1.


COMMISSIONER

Annexure AP 1


[1] Explanatory Memorandum of the Fair Work Bill 2008 (Cth) [1259].

[2] Ibid.

Printed by authority of the Commonwealth Government Printer

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