APT AM Employment Pty Limited

[2013] FWC 4571

[2013] FWC 4571

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.318—Transfer of instrument

APT AM Employment Pty Limited
(AG2013/6925)

Oil and gas industry
COMMISSIONER JOHNS	MELBOURNE, 12 JULY 2013

Application in relation to a transfer of business - transferrable instrument - application that transferrable instrument not cover transferring employees.

[1] This decision concerns an application by APT AM Employment Pty Ltd (APT) 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 three employees, who were employed by Comdain Gas (Aust.) Pty Ltd (Comdain) under the Comdain Gas (Aust) Pty Ltd (Comdain Agreement), Messrs Craig Mahoney, John Foletta and Frank Bonacci (Affected Employees).

[3] The terms of the Order sought are that the Comdain Agreement will not apply to the Affected Employees transferring from Comdain to APT, rather that the APA Network Agreement (Victoria) 2011 (APT Agreement) apply to their employment.

Background

[4] APT is part of the APA group of companies. Since 2008, Comdain have been engaged by APT in an outsourcing arrangement to provide management, maintenance, installation, renewal and replacement services in relation to gas distribution assets owned by the broader APA Group. This arrangement came to an end on 31 June 2013.

[5] APA has made the decision to in-source the work performed by Comdain, referring the work to APT.

[6] APT is looking to recruit or has recruited the Affected Employees to perform the same or similar duties to those they performed at Comdain.

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:

“(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] Section 312(1) of the Act defines what a transferable instrument is. It reads:

“312 Instruments that may transfer

Meaning of transferable instrument

(1) Each of the following is a transferable instrument:

(a) an enterprise agreement that has been approved by FWA;

(b) a workplace determination;

(c) a named employer award.”

[10] Section 312(1) of the Act was amended by Schedule 11, item 8 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) to include a new subclause (d) which reads:

“(d) a transitional instrument (other than a workplace agreement or a workplace determination that has not yet come into operation and other than a State reference common rule).”

[11] Section 313 of the Act provides when a transferable instrument will cover a transferring employee and the new employer. It reads:

“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; and

(b) while the transferable instrument covers the new employer and the transferring employee in relation to the transferring work, no other enterprise agreement or named employer award that covers the new employer at the transfer time covers the transferring employee in relation to that work.

(2) To avoid doubt, a transferable instrument that covers the new employer and a transferring employee under paragraph (1)(a) includes any individual flexibility arrangement that had effect as a term of the transferable instrument immediately before the termination of the transferring employee’s employment with the old employer.

(3) This section has effect subject to any FWA order under subsection 318(1).”

[12] Sections 317 and 318 of the Act relevantly provide:

“317 FWA may make orders in relation to a transfer of business

This Division provides for FWA 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 FWA may make

(1) FWA 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) FWA 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 FWA must take into account

(3) In deciding whether to make the order, FWA 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.”

Submissions

[13] In relation to the factors set out in ss.318(3) APT submits that the proposed Order should be made in order to facilitate the transfer of the Affected Employees to APT.

[14] It is submitted that the Affected Employees will not be disadvantaged if an Order is made. APT outlined that although transferring employees will lose access to unlimited paid sick leave under the Comdain Agreement, this is offset by more favourable conditions under the APT Agreement.

“The transferring employees would not be disadvantaged by the order in relation to their terms and conditions of employment. In nearly all areas, the [APT Agreement] is more favourable. In particular, the rates of pay provided by the [APT Agreement] are significantly more favourable than the [Comdain Agreement]. If the order sought was made, the more favourable benefits of the [APA Agreement] would more than offset the loss to the transferring employees of the more favourable aspects of the [Comdain Agreement].”

[15] The nominal expiry date for both Agreements is the same, 30 June 2014.

[16] APT have submitted that the more favourable paid sick leave provisions under the Comdain Agreement would “undermine [APA’s] efforts to counter high absenteeism and disrupt [APT’s] rostering”.

[17] APT did not make submissions regarding the incursion of financial disadvantage resulting from the transferrable instrument covering their employment or the degree of business synergy between the Comdain Agreement and APT Agreement.

[18] The Australian Workers’ Union and Transport Workers’ Union of Australia were both contacted by chambers and each indicated that it does not object to an Order being issued in the terms sought.

[19] Each of the Affected Employees have provided statements indicating their awareness of the affect of the Order sought. Further each of the Affected Employees has indicated that he supports the Commission making the Orders sought.

Conclusion

[20] The Commission is satisfied that the Comdain Agreement is a transferrable instrument under s.312(1)(d) of the Act and that this circumstance is a transfer of business within the meaning of s.311 of the Act.

[21] The Commission has considered the factors outlined in ss.318(3) and is satisfied that it is appropriate to make an Order that the Comdain Agreement will not apply to Affected Employees transferring to APT and that the APT Agreement will apply to Affected Employees that undertake such a transfer.

[22] An Order [PR538785] to this effect will be issued concurrently with this decision.

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