[2020] FWC 1051

FAIR WORK COMMISSION

DECISION

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

Asthma Australia Ltd
(AG2019/4350)

DEPUTY PRESIDENT KOVACIC

CANBERRA, 26 FEBRUARY 2020

Application for an order relating to instruments covering the Applicant and transferring employees – application dismissed.

[1] This decision concerns an application made pursuant to s.318 of the Fair Work Act2009 (the Act) by Asthma Australia Ltd (the Applicant) seeking orders that the Community Sector Multiple Enterprise Agreement 2014-2018 (Australian Capital Territory) (the Agreement) 1 does not and will not cover the Applicant or any transferring employees and that any transferring employees be covered by the Social, Community, Home Care and Disability Services Industry Award 2010 (the Award)2.

[2] For the reasons set out below, I am not satisfied that the orders sought should be made. Accordingly, the application is dismissed.

Background

[3] The application arises in circumstances where the Asthma Foundation of ACT Inc, one of the employers covered by the Agreement, merged with Asthma Australia Incorporated and several other State-based asthma foundations in 2017 to form the Asthma Australia. By way of background, Asthma Australia is a public company which is also a registered charity which provides “information and education to people with asthma, their carers and family and health professionals so that people with asthma can live freely.” 3 In 2018-2019 Asthma Australia had total income or around $10.7 million of which almost 38% came from government grants and just over 35% came from donations and bequests.4

[4] Having received the application on 14 November 2019, on 29 November 2019 the Commission wrote to the Applicant and the Australian Municipal, Administrative, Clerical and Services Union (ASU), which is covered by the Agreement, in the following terms:

“On 14 November 2019 Asthma Australia Ltd (Asthma Australia) made an application to the Fair Work Commission pursuant to s.318 of the Fair Work Act 2009 seeking an order that the Community Sector Multiple Enterprise Agreement 2014 – 2018 (Australian Capital Territory) (the Agreement) not apply to Asthma Australia or any transferring employees. Employees would then be covered by the Social, Community, Home Care and Disability Services (SCHADS) Modern Award (MA000100).

In deciding whether to grant the order, the Commission is required to consider the views of the employees likely to be affected by the order. The criteria for consideration of the Commission in determining the orders sought are set out in s.318(3) and s.319(3) of the Fair Work Act 2009 (excerpt included below).

DIRECTIONS

The following directions are issued:

1. This Letter and Directions are to be made available to any employee of Asthma Australia Ltd (the Applicant) by no later than close of business on Tuesday, 3 December 2019.

2. Any party intending to provide their views on the order sought may do so by providing a written statement to chambers ([email protected]) by no later than close of business on Friday, 6 December 2019.

3. If any party wishes to be heard, they must advise chambers by email, by no later than close of business on Friday, 8 December 2019.”

[5] The sole transferring employee covered by the Agreement, Ms Janine Lourensz, responded to the above correspondence on 6 December 2019 indicating inter alia that she would be financially disadvantaged were the Commission to make the orders sought. Against that background, the Commission listed the application for a telephone mention and/or directions hearing on 16 December 2019.

[6] In other developments, on 12 December 2019 the ASU wrote to the Commission advising that it did not wish to make any submissions in respect of the matter.

[7] The telephone mention and/or directions hearing on 16 December 2019 concluded on the basis that the Applicant would provide both Ms Lourensz and the Commission with further details regarding the impact of the orders sought on Ms Lourensz’ remuneration and the process going forward in terms of remuneration increases for Ms Lourensz given that she was employed on an above Award salary. Ms Lourensz was to subsequently provide any comments she may have on the material prepared by the Applicant.

[8] The Applicant provided the abovementioned material on 9 January 2020, with Ms Lourensz forwarding comments on that material to the Applicant on 14 and 16 January 2020. Key aspects of the material provided by the Applicant included that:

• Ms Lourensz’ current employment agreement will end on 30 June 2020, with no further salary increases scheduled under the Agreement prior to that date;

• exiting the Agreement and transitioning to the Award would involve a reclassification of Ms Lourensz’ role to properly reflect the role being undertaken;

• as a result, Ms Lourensz’ role would be classified as Level 5.3 under the Award (in line with equivalent roles at Asthma Australia) whereas under the Agreement she was classified as a Level 8.2 under the Award;

• Ms Lourensz’ current salary was some $20,000 per annum above the reclassified equivalent Award rate;

• it would maintain Ms Lourensz’ current salary until the Award rate reached parity with her agreed salary; and

• those of its employees receiving above Award salaries were eligible for salary increases through an annual remuneration review process, with that process based on performance and the findings from a market scan of salaries undertaken by an external provider.

[9] A further telephone mention and/or directions hearing was held on 22 January 2020.

[10] At that telephone hearing, Ms Lourensz submitted among other things that:

• in proposing that she be covered by the Award the Applicant was not recognising either her value or what she brought to her role;

• she would be better off under the Agreement as it reflected her standing as a health professional; and

• she believed that she would lose out were she to be covered by the Award as she would not have access to any increase arising from future annual wage reviews.

[11] On the other hand, the Applicant submitted that it recognised “100%” what Ms Lourensz brought to the organisation, highlighting that it intended to maintain her current above Award salary for the remainder of her contract, i.e. until 30 June 2020. The Applicant further submitted that it was really happy with Ms Lourensz and, subject to an imminent budget round which determined future roles in the organisation, wanted to pursue a new contract with her. The Applicant also emphasised that in classifying Ms Lourensz’ role as a Level 5.3 under the Award, it was important to remember that it was classifying the role and not the person.

[12] The telephone hearing concluded on the basis that both the Applicant and Ms Lourensz were content for the Commission to determine the application on the papers.

Relevant legislation

[13] The relevant sections of the Act are ss.313 and 318 which provide as follows:

“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

...

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

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;

…

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;

(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.”

[14] Before turning to consider each of the matters specified in s.318(3) the Act, I note that the Applicant, as the new employer, has standing pursuant to s.318(2)(a) of the Act to make the application for the orders sought.

The views of the new employer [s.318(3)(a)(i)]

[15] While the Applicant did not specifically address this consideration in its application, what can be distilled from its application is that that Applicant’s primary motivation in making the application appears to be a desire to have a common set of terms and conditions of employment applying across the merged entity.

The views of the employees who would be affected by the order [s.318(3)(a)(ii)]

[16] As noted above, Ms Lourensz is the sole transferring employee. More specifically, Ms Lourensz believes that she will be disadvantaged were she to be covered be the Award and therefore would prefer to continue to be covered by the Agreement. In short, Ms Lourensz does not support the making of the orders sought.

Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment [s.318(3)(b)]

[17] In its application Asthma Australia stated that there was only one employee covered by the Agreement and that the orders sought, if made, would result in a reduction in annual scheduled pay increases for that employee.

[18] Ms Lourenz stated that she wished to remain covered by the Agreement as the salary increases that would be available to her under the Award did not match those provided for by the Agreement.

[19] Clause 9.2 of the Agreement which deals with rates of pay provides as follows:

“9.2 The employer must apply any increase in minimum wages in the Social, Community, Home Care and Disability Services Industry Award 2010 to the amounts set out for 30 November 2014 in Schedule B.”

[20] In short, under the Agreement Ms Lourenz would continue to receive the benefit of any increases awarded as a result of Annual Wage Reviews whereas were she to be covered by the Award any such increase would be absorbed given that her salary is above the relevant Award rate. Ms Lourensz would however participate in the Applicant’s annual remuneration review process, though she is not assured that any salary increase would result from that process.

[21] Beyond that, I note that the Agreement is more advantageous than the Award in a number of respects. For instance, the Agreement provides for:

• 15 days Personal Leave each year annum as opposed to 10 days under the Award;

• 3 days Compassionate Leave per occasion as opposed to 2 days under the Award;

• up to 39 weeks Accident Pay whereas the Award does not provide for Accident Pay; and

• 10 days paid Domestic Violence Leave as opposed to 5 days unpaid leave to deal with family and domestic violence under the Award.

[22] Also relevant in this regard is that Ms Lourensz’ current employment ends on 30 June 2020 with any employment beyond that date subject to the Applicant’s current budget round and negotiation of a mutually acceptable employment arrangement. I note that Ms Lourensz will not receive any further salary increases under the Agreement before her employment ends on 30 June 2020.

[23] In summary, it is likely that Ms Lourensz would be disadvantaged were the Commission to make the orders sought. This does not favour the making of the orders.

The nominal expiry date of the agreement [s.318(3)(c)]

[24] The Agreement passed its nominal expiry on 31 December 2018.

Whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace [s.318(3)(d)] and any significant economic disadvantage to the new employer [s.318(3)(e)]

[25] The Applicant submitted the orders it sought, if made, would impact positively on productivity by ensuring consistency across the organisation and reducing the administration of multiple awards and agreements.

[26] Ms Lourensz submitted that she believed there was a need to meet a happy medium between overriding the rights of an individual employee and their productivity based on their feelings of self-worth in the workplace and an organisation which has the capacity to utilise a human resources area to administer multiple awards and agreements.

[27] While I consider that any impact on productivity is likely to be negligible, I accept that in the absence of the order sought the Applicant will incur some additional costs in administering a separate set of terms and conditions. If anything, this factor supports the making of the order sought.

The degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer [s.318(3)(f)]

[28] The Applicant submitted that making the orders sought would bring Ms Lourensz into line with its other employees. Ms Lourensz noted the Applicant’s submission regarding this consideration.

[29] The Applicant’s submission does not really address this consideration. I note that the Agreement is underpinned by the Award. While there are differences between the two instruments, those differences are not so great as to support a finding that there is little business synergy between them. I therefore consider this factor to be a neutral consideration in this case.

The public interest [s.318(3)(g)]

[30] A Full Bench of the Australian Industrial Relations Commission made the following observation in relation to the public interest in Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 5:

“The notion of public interest refers to matters that might affect the public as a whole such as the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards. An example of something in the last category may be a case in which there was no applicable award and the termination of the agreement would lead to an absence of award coverage for the employees. While the content of the notional public interest cannot be precisely defined, it is distinct in nature from the interests of the parties. And although the public interest and the interests of the parties may be simultaneously affected, that fact does not lessen the distinction between them.” 6

[31] Section 309 of the Act sets out the object of Part 2-8 – Transfer of Business of the Act as follows:

“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.”

[32] The Applicant submitted that the orders sought were not contrary to the public interest, adding that it would ensure consistency and transparency across the organisation. Ms Lourensz noted the Applicant’s submission regarding this consideration.

[33] The public interest in this case is enlivened by virtue of the application going to the achievement of the objective of Part 2-8 of the Act. As previously noted, the orders sought, if made, are likely to disadvantage Ms Lourensz. Further, the fact that the application was only made some two years after the merger created Asthma Australia suggests that the continued operation of the Agreement has not impacted significantly, if at all, on the efficient running of the Applicant. Accordingly, the public interest in this case favours the protection of Ms Lourensz’ terms and conditions of employment over the Applicant’s interests in having a common set of terms and conditions of employment.

Conclusion

[34] Taking into account each of the matters set out in s.318(3), I am not satisfied that the orders sought should be made. Key considerations in this regard were the likelihood that Ms Lourensz would be disadvantaged by the orders sought and the public interest in achieving the objective of Part 2-8 of the Act. Accordingly, the application is dismissed.

Printed by authority of the Commonwealth Government Printer

1 AE418104

2 MA000100

3 Australian Charities and Not-for-profits Commission website at Ibid

5 (2005) 139 IR 34

6 Ibid at [23]