APE Cars Mgmt Pty Ltd
[2024] FWC 2796
•8 OCTOBER 2024
| [2024] FWC 2796 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318–Application for an order relating to instruments covering new employer and transferring employees
APE Cars Mgmt Pty Ltd
(AG2024/2548)
| Automotive industry | |
| DEPUTY PRESIDENT CLANCY | MELBOURNE, 8 OCTOBER 2024 |
Application for an order relating to instruments covering new employer and transferring employees from an associated entity
Background
The Commission approved the ULR Automotive Group [Spare Parts] Enterprise Bargaining Agreement 2014 (ULR Spare Parts Agreement) covering ULR Automotive Group Pty Ltd T/A ULR Land Rover (ULR Automotive) and various categories of employees employed as store persons and part interpreters on 3 October 2014.
On or around 1 June 2016, the Victorian dealerships of ULR Automotive were acquired by the NGP Group. Following this, there were four particular employees who became employed by an entity within the NGP Group, N G P Lorimer Pty Ltd (ACN 610 702 988) (NGP Lorimer). In this employment, they were covered by the ULR Spare Parts Agreement.
On 1 March 2024, Eagers VIC Pty Ltd (Eagers VIC) acquired a number of NGP Group’s Victorian dealerships and properties, including sites at Malvern and Mulgrave at which the four employees work. Following the acquisition, the employment of the four employees with NGP Lorimer terminated and on 1 March 2024, they became employed by AHG Services (VIC) Pty Ltd (AHG Services), an associated entity of Eagers VIC. Eagers VIC is currently undergoing a transition in its payroll and HR systems, which includes a proposal to consolidate its various employing entities. This is contemplated to result in the employment of the four employees with AHG Services terminating and them instead becoming employees of APE Cars Mgmt Pty Ltd (ACN 632 136 906) (APE Cars).
APE Cars submits the transaction between Eagers VIC and the NGP Group constituted a transfer of business as defined by s.311(1) of the Fair Work Act 2009 (the Act) on the following basis:
a)as outlined above, the employment of the four employees with NGP Lorimer terminated with effect on 29 February 2024 and they became employed by AHG Services effective 1 March 2024 (ss.311(1)(a) and 311(1)(b));
b)that the work the four employees are currently performing for AHG Services is the same work they performed when they were employed within the NGP Group by NGP Lorimer, and that it is therefore ‘transferring work’ within the meaning of s.311(1)(c); and
c)there is a connection between AHG Services and NGP Lorimer in that as an associated entity of Eagers VIC, AHG Services owns or has beneficial use of assets of NGP Lorimer that relate to and are used in connection with this ‘transferring work’, being fixed assets (property leases and leasehold improvements)(s.311(3)).
APE Cars further submits that the proposed consolidation of the various Eagers VIC employing entities would result in a further transfer of business as defined by s.311(1) because:
a)it is proposed that the employment of the four employees with AHG Services will terminate and they will become employed by APE Cars (ss.311(1)(a) and 311(1)(b));
b)the work the four employees will perform for APE Cars will be the same work they are performing for AHG Services, and is therefore ‘transferring work’ within the meaning of s.311(1)(c); and
c)there is the requisite connection between APE Cars and AHG Services required by s.311(3), including that they are associated entities within the Eagers VIC corporate structure.
APE Cars has made an application to the Commission pursuant to s.318 of the Act so that this further transfer of business as part the proposal to consolidate the employing entities of Eagers VIC can be given effect. APE Cars seeks an order that the ULR Spare Parts Agreement, which it contends is a transferable instrument, does not and will not cover APE Cars in relation to the proposed employment of the four employees previously employed by NGP Lorimer, and currently employed by AHG Services, at the Malvern and Mulgrave sites (the transferring employees).
APE Cars also seeks an order that the transferring employees will be covered by the Vehicle Repair, Services and Retail Award 2020 (the Award).
The relevant legislation
Part 2-8 of Chapter 2 of the Act describes when a transfer of business occurs and s.312(1) of the Act provides for the transfer of enterprise agreements, certain modern awards and certain other instruments if there is a transfer of business from one employer to another employer.
Section 311 of the Act relevantly provides:
“311 When does a transfer of business occur
Meanings of transfer of business, old employer, new employer and transferring work
(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).
Meaning of transferring employee
(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.
Transfer of assets from old employer to new employer
(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:
(a) the old employer or an associated entity of the old employer; and
(b) the new employer or an associated entity of the new employer;
the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):
(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and
(d) that relate to, or are used in connection with, the transferring work.
…….
New employer is an associated entity of old employer
(6) There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employer by the new employer.”
Sections 317 and 318 of the Act relevantly provide:
“317 FWC may make orders in relation to a transfer of business
This Division provides for the FWC to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer.
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.
Transfer of Business
Having regard to the factual background outlined above, I am persuaded the various provisions in s.311 of the Act have been enlivened and will again be enlivened. I am therefore satisfied there was a transfer of business from NGP Lorimer to AHG Services and that there is likely to be a transfer of business from AHG Services to APE Cars (s.317 of the Act). For the purposes of determining this application, I am satisfied:
AHG Services is the “old employer” and APE Cars is the “new employer” pursuant to s.311(1) of the Act;
It has been proposed that the employment of the transferring employees with AHG Services will terminate and within 3 months after the termination, the transferring employees will become employed by APE Cars;
The work the transferring employees will perform for APE cars will be the same, or substantially the same, as the work they performed for AHG Services;
There is the requisite connection between AHG Services and APE Cars in terms that reflect the requirements in s.313(3) of the Act;
Both the ULR Spare Parts Agreement and the Award are transferable instruments (s.312(1)(a) of the Act).
Section 313 of the Act provides that the ULR Spare Parts Agreement would cover APE Cars and the transferring employees after the time the transferring employees become employed by APE Cars (defined in s.313(1)(a) as ‘the transfer time’), subject to any order of the Commission under s.318(1).
Who may apply for an order?
I am satisfied that there is likely to be a transfer (s.317) and that as “a person who is likely to be the new employer”, APE Cars meets the requirement in s.318(2)(a) of the Act. I am therefore satisfied that APE Cars has standing to make this application.
As outlined above in [6] and [7], APE Cars seeks orders that the ULR Spare Parts Agreement does not and will not cover APE Cars and the transferring employees in respect of their work with APE Cars and that the transferring employees will be covered by the Award.
Matters that the FWC must take into account- Section 318
Section 318(3)(a) the views of the new employer or a person who is likely to be the new employer and the employees who would be affected by the order
As APE Cars, the potential new employer, has made the application under s.318 of the Act, it can be concluded that it supports the application and the making of the orders sought.
APE Cars asserts it consulted with the transferring employees between 11 June 2024 and 19 June 2024. It has provided to the Commission a copy of a “Notification and Consultation” document said to have been provided to the transferring employees on 11 June 2024. This document provided some background, outlined why there was a proposal to have the Award apply instead of the ULR Spare Parts Agreement, the contemplated process for achieving this, when changes would occur and what they would represent, what entitlements under the ULR Spare Parts Agreement would be retained, how tenure and leave accruals would be treated, how feedback could be provided and who could be contacted for further discussion and clarification. A number of consultation meetings followed.
APE Cars has provided a Statement dated 9 September 2024 from Chris Urschel. The Statement from Mr Urschel outlines that he led the face-to-face meetings with the transferring employees between 11-19 June 2024, during which they asked questions about the proposal and the employment contracts they had been given on 11 June 2024 and provided feedback which was positive. Mr Urschel outlined that he answered the questions put to him by the transferring employees and that they did not respond negatively to the proposal. Further, Mr Urschel outlined that between 14 June 2024 and 21 June 2024, every transferring employee signed and returned their new contract.
Having regard to these matters, I am persuaded the transferring employees do not oppose the application.
Section 318(3)(b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
APE Cars has stated that none of the transferring employees will have their base rate of pay reduced by being placed on the Award. APE Cars has also stated that certain non-Award or above-Award benefits which are currently provided to transferring employees under the ULR Spare Parts Agreement have been either incorporated into or adapted to form part of the employment contracts offered to the transferring employees. These are as follows:
(a) A long service leave accrual rate of 1.3 weeks per year of continuous employment;
(b) A sick leave bonus payment of $20 per day for each untaken day of accrued sick leave available in the ULR Spare Parts Agreement has been replaced with a contractual bonus recognising continuing service and providing flexibility and freedom to use personal leave as required; and
(c) A continuation of annual leave loading benefits.
APE Cars has also outlined that each transferring employee will receive a “once-off $500 gross transition bonus” to compensate for any administrative or other matters associated with the transition from the ULR Spare Parts Agreement to the Award.
Having regard to these matters, I am persuaded the transferring employees would not be disadvantaged by the Orders sought.
Section 318(3)(c) if the order relates to an enterprise agreement—the nominal expiry date of the agreement
I observe the nominal expiry date of the ULR Spare Parts Agreement is 2 October 2018 and do not consider that this weighs against making the Orders sought.
Section 318(3)(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
I have noted the submission of APE Cars that the ULR Spare Parts Agreement will have a negative impact on its productivity because the terms of the ULR Spare Parts Agreement do not fit with the Applicant’s current business operations at other car dealerships within Victoria and Tasmania. I also note the submission that there would be an administrative overlay if the ULR Spare Parts Agreement transfers to APE Cars while non-transferring employees who perform the same or similar work are covered by different terms and conditions. I accept the proposition that a requirement to maintain separate payroll systems would impact APE Cars’ productivity as the attention of the relevant staff members would need to be directed at ensuring compliance with different terms and conditions of employment.
I consider this factor weighs in favour of granting the Orders sought.
Section 318(3)(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer
In relation to this factor, APE Cars submits that there would be a significant cost in maintaining a separate payroll system for the four transferring employees from the remaining employees of APE Cars. This cost is not quantified however it may be accepted that maintaining a separate payroll system for only four employees would require a disproportionate allocation of the time and resources of IT and payroll personnel. I also note that in a statement provided in support of the application, Ms Joanne Stanton makes reference to the expense associated with maintaining a separate payroll system, which includes the cost of the requisite licence fee
I am satisfied there would be material economic disadvantage if the ULR Spare Parts Agreement covered APE Cars, such that this factor weighs does not weigh against the granting of the Orders sought.
Section 318(3)(f) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer
APE Cars has outlined that it currently employs non-transferring employees under the Award at other sites throughout Victoria and Tasmania, and that having employees covered by more than one industrial instrument would be inefficient and reduce business synergy. Ms Stanton has proffered that having employees perform the same work under different industrial instruments could raise issues of equity and fairness between employees, impacting business culture and values.
These representations suggest there is a lack a business synergy between the ULR Spare Parts Agreement and the Award that already covers APE Cars and I am persuaded that this weighs in favour of granting the Orders sought.
Section 318(3)(g) the public interest
APE Cars asserts that it is not contrary to the public interest to make the Orders sought because the transferring employees will be employed under the terms and conditions of the Award, while retaining some more generous entitlements that were applicable under the ULR Spare Parts Agreement. APE Cars submits that making the Orders sought would be consistent with the object of Part 2-8 of the Act, which requires a balance between the protection of employees’ terms and conditions of employment under enterprise agreements and modern awards and the interests of employers in running their enterprises efficiently if there is a transfer of business from one employer to another (s.309 of the Act). Having regard to the circumstances before me, I am not persuaded that there are public interest reasons weighing against making the Orders sought.
Conclusion
Having considered each of the matters set out in s.318(3) of the Act with regard to the circumstances before me, I am satisfied that orders should be made with the following effect after the transferring employees cease to be employed by AHG Services (VIC) Pty Ltd and become employed by APE Cars Mgmt Pty Ltd:
The ULR Automotive Group [Spare Parts] Enterprise Bargaining Agreement 2014 will not cover APE Cars Mgmt Pty Ltd and the transferring employees; and
The Vehicle Repair, Services and Retail Award 2020 will cover the transferring employees.
An Order to this effect, coming into operation in accordance with s.318(4) of the Act, will be issued along with this decision.
DEPUTY PRESIDENT
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