Application by Aero Care Flight Support Pty Ltd

[2015] FWC 7437

[2015] FWC 7437

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees

Application by Aero Care Flight Support Pty Ltd
(AG2015/5296)

Airline operations
VICE PRESIDENT WATSON	MELBOURNE, 30 OCTOBER 2015

Application by Aero Care Flight Support Pty Ltd for an order in relation to transfer of business - Transferrable instrument - Application that transferrable instrument not cover transferring employees - Application opposed - Fair Work Act 2009, ss. 311, 312, 317 and 318.

Introduction

[1] This decision concerns an application by Aero Care Flight Support Pty Ltd (Aero Care) for an order under s.318 of the Fair Work Act 2009 (the Act) which relates to instruments covering a new employer and transferring employees in the context of a transfer of business.

[2] The application concerns a number of employees who are currently employed by Skystar Airport Services Limited (Skystar) under the Skystar (Perth Airport) Collective Agreement 2012 (the Skystar Agreement). The terms of the order are sought under s.318(1) of the Act and provide that:

• The Skystar Agreement 2012 will not cover the new employer and any transferring employees;



• The Aero-Care Collective Agreement 2012 (the Aero-Care Agreement) will cover any transferring employees; and



• The Skystar Agreement will not cover any transferring employees during the period of their employment with Aero Care.

[3] Aero Care has additionally offered undertakings that:

• All transferring employees will be classified for experience at no less than ASA level 0 and be paid accordingly; and



• All transferring employees will be subject to re-evaluation no later than three months after commencement with Aero Care; and if the re-evaluation results in an assessment of experience greater than their commencement level, the employee will be reclassified to the higher classification and paid accordingly.

Background

[4] The application arises in circumstances where Aero Care recently successfully tendered for airport customer and ground handling work at Perth Domestic and International Airport. This work has been historically been performed by Skystar. Aero Care will begin to take over the customer and ground handling work from Skystar on 31 October 2015.

[5] Aero Care is aware that Skystar is likely to terminate the employment of a number of its employees as a result of the loss of contract work. The following eight Skystar employees have expressed an interest in performing work for Aero Care and have applied for employment with the company:

• Andrew Burvill;



• Janelle Ketterige;



• Scott Fermanis;



• Monika Taneska;



• Nigel Shelbourne;



• Kelly Bascal;



• Evie Lee; and



• Ana Sulat.

[6] Aero Care submits that the application ought to be successful and requests that Commission make the orders sought in this application. However, the Transport Workers Union (the TWU) submits that in all the circumstances of this matter it is not appropriate for the Commission to grant the orders sought. Given this opposition, Aero Care has withheld from making any decisions in relation to offers of employment until this matter is determined.

The relevant legislation

[7] Part 2-8 of the Act describes when a transfer of business occurs and 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.

[8] Section 311(1) contains the definition of transfer of business in a wider manner than the ordinary English or legal meaning of the term. The definition is:

“(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).”

[9] 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 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 FWC may make

(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.

Who may apply for an order

(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).

Matters that FWC must take into account

(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.

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 the Skystar Agreement

[10] In relation to the factors set out in s.318(3) of the Act, Aero Care submits that the proposed orders should be made in order to facilitate the transfer of the employees. It submits that despite enlivening the provisions of Part 2-8 of the Act, there is no transfer of business that would cause the Commission concern, and the proposed transfer of employment is voluntary.

[11] The eight employees who have applied for work with Aero Care have each indicated that they support the application by way of completed Aero Care questionnaires to that effect. In support of the application, Ms Taneska, Mr Shelbourne and Matthew Pires, a further current Skystar employee, have also filed affidavits stating that they support the order being made.

[12] The TWU however submits that Ms Taneska’s affidavit, while stating that she does not consider she would be worse-off under the Aero-Care Agreement, does not point to any benefits that she is entitled to under the Aero-Care Agreement which would compensate her for the lower wages. It contends that Mr Shelbourne’s affidavit states that he is not aware as to whether he would be disadvantaged by the terms of the Aero-Care Agreement and does not take his evidence further than that. It also contends that while Mr Pires’ affidavit correctly states that the Aero-Care Agreement provides for better weekend rates than the Skystar Agreement, he would only be no worse off if he was to work a roster that involved doing mainly weekend work.

[13] It is understandable in these circumstances that employees currently engaged with the unsuccessful tenderer will wish to obtain employment with the new ground services provider. Obtaining employment is more likely if the application is successful. I note the support that exists by some employees in this category but I also note the context in which that support is given.

[14] Aero Care submits that the employees will not be unreasonably disadvantaged by the order in relation to the terms and conditions of employment. While they will receive a lower rate of pay than they currently receive under the Skystar Agreement, the employees have familiarised themselves with the terms of the Aero-Care Agreement and have formed their own view that on balance it is their preference to be employed under the Aero-Care Agreement if acceptance results in them being able to maintain employment which they enjoy and see a future in.

[15] The TWU submits that any transferring employees will be worse off if they had to work under the terms of the Aero-Care Agreement. It filed evidence containing a detailed comparison between the two agreements. It contends that the negotiated new Skystar Agreement provides for a 3% yearly wage increases whereas the Aero-Care Agreement provides for an increase of wages for each year of an employee’s service ranging from 2.5% in the first year of employment to 4% in the fourth year of employment. The TWU submits that this disadvantages transferring employees as they would only receive a wage increase of 2.5% on the first anniversary of their employment.

[16] In response to this material filed by the TWU, Aero Care submits that it does nothing more than highlight the differences between classifications in the two enterprise agreements. It notes that it does not take into account whether the classifications are identical or directly comparable, the importance of rostered days and hours worked by employees, the impact of a reduction in hours and penalty rates that may occur for those employees that remain with Skystar, and the validly and reasonably held views of employees who have supplied completed questionnaires.

[17] It is difficult to make findings as to any reduction in terms and conditions of employment without knowing all aspects of the respective positions. Nevertheless I consider that in certain respects there will be a reduction in entitlements. The extent of the reduction in particular cases will depend on the classification of employees and the hours in which they work.

[18] Aero Care submits that the application of the Skystar Agreement at its workplace would have a negative impact on the productivity of its business because Aero Care payroll staff and management staff with responsibility for preparing rosters would need to be familiar with two separate enterprise agreements. This would significantly increase the workload of these personnel. Additionally, Aero Care operates customised rostering software which has been tailored to its successive industrial instruments. Any requirement to accommodate two separate enterprise agreements would require significant cost and effort to modify the programming, operation and functionality of the software. The TWU submits that while this may be the case, this is something that Aero Care should have been aware of as a potential issue at the time that it put in its tender for work.

[19] Aero Care submits that the application of the Skystar Agreement at its workplace would also result in it incurring significant economic disadvantage. This is because Aero Care’s tendering for contracts involving the work was predicated on the application of the Aero-Care Agreement. In the event that this application to the Commission is unsuccessful, it contends that it will have to give further consideration to whether employment of Skystar workers fits within its financial modelling and is financially viable. Aero Care therefore submits that it would incur significant economic disadvantage due to increasing operational costs and a reduction in their competitive advantage in the flight support industry. The TWU again submits that while this may be the case, this is something that Aero Care should have been aware of as a potential issue at the time that it put in its tender for work.

[20] The airport services industry has become quite competitive in recent years as airlines have engaged contractors to perform work and those contractors have been able to apply terms and conditions of employment and flexible rostering arrangements not previously available to airlines. I am aware of the operational model developed by Aero Care and the fact that it incorporates unique features which are commercially sensitive. I accept that any need to apply different operational arrangements for some new employees will adversely impact on its business model.

[21] Aero Care submits that there is negligible business synergy between the Skystar Agreement and the Aero-Care Agreement for reasons outlined above. In contrast, the TWU submits that there appears to be a high degree of synergy between the work Skystar is currently delivering to its client and the work that Aero Care will be undertaking for the same clients. It contends that the only difference is that the transferring employees will be working for a different employer.

[22] In this respect I accept the assessment of Aero Care and my knowledge of the unique features of its business model. I do not consider that there is a strong business synergy between the respective instruments.

[23] As the order sought relates to an enterprise agreement, I also have regard to the nominal expiry date of the Skystar Agreement, which is 31 December 2014. Aero Care notes that the Skystar Agreement will not have any further increase until it is terminated and while the approval of a new Skystar Agreement is pending, unless and until it is registered, its content cannot be relied upon for the purposes of this application. Aero Care submits that the nominal expiry date of the Aero-Care Agreement is 19 February 2017 and there are further incremental pay increases scheduled under clause 14.3 and Schedule A(2).

[24] In the absence of any published undertaking or statement of intention by Skystar, it is submitted by Aero Care that it is reasonable to infer that the workers who do not seek and obtain employment with Aero Care will need to redeployed in Skystar’s operations or made redundant. It is submitted that redeployment with Skystar may result in employees not being allocated the same hours, same number of hours, same days, or receive the same penalties, entitlements, overtime or other payments. On that basis, Aero Care submits that it is open to them to infer that employees may in fact end up worse off if they remain with Skystar. It further contends that if the Commission makes orders accepting Aero Care’s further undertakings, the employees may not be financially disadvantaged should their evaluated classifications be higher with Aero Care than what it was with Skystar.

[25] The TWU submits that this consideration has little relevance in the circumstances. This is because the Aero-Care Agreement expires in early 2017 and this is the earliest time that any transferring employee could hope to possibly catch up to the wages contained in the Skystar Agreement.

[26] Aero Care submits that it is also in the public interest to grant the orders sought for the following reasons:

• In September 2015, Aero Care was notified it had been awarded certain contracts for customer service and ground handling work at Perth Airport which are due to commence operation progressively from 31 October 2015;



• The employment of workers at Perth Airport performing work to be taken over by Aero Care will be potentially be terminated or materially affected due to the loss of work;



• Aero-Care’s tendering for and acceptance of contract work in the aviation ground handling and flight support industry is predicated on a cost structure based on the Aero-Care Agreement and the imposition of other transferring instruments threatens its profit margins and overall profitability and impacts on its ability to employ the employees of former competitors who will otherwise be unemployed or lost to the industry.

[27] In response to this the TWU contends that Aero Care was aware of the transfer of business provisions. It submits that Aero Care should have priced into its tender for work the risk of transferring employees potentially having different conditions of employment than those that apply to Aero Care employees.

[28] I have weighed these various findings and circumstances in assessing whether to grant the application. Aero Care is a large national employer in this industry. It operates under formal enterprise agreements. It has been able to grow its business through flexible innovative employment arrangements. Its agreements have passed legislative approval tests. Failure to grant the application may damage the prospects of Skystar employees obtaining on-going employment at Perth Airport. If they nevertheless obtain on-going employment, Aero Care’s operational model will be impacted. In all of the circumstances I consider that it is appropriate to grant the application.

Conclusions

[29] For the reasons above I will make orders as sought in the application.

VICE PRESIDENT

Final written submissions:

Aero Care Flight Support Pty Ltd on 26 October 2015.

Transport Workers Union on 27 October 2015.

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