Australian Laboratory Services Pty Ltd

[2015] FWC 7916

[2015] FWC 7916

FAIR WORK COMMISSION

DECISION

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

Australian Laboratory Services Pty Ltd
(AG2015/4835)

Water, sewerage and drainage services
COMMISSIONER SAUNDERS	NEWCASTLE, 1 DECEMBER 2015

Application for an order relating to instruments covering new employer and transferring employees.

[1] Australian Laboratory Services Pty Ltd (ALS) acquired the laboratory arm of Hunter Water Australia Pty Ltd (HWA), a subsidiary of Hunter Water Corporation, on 19 December 2014. HWA and a number of its employees were covered by the Hunter Water Australia Pty Ltd General Employees’ Agreement (HWA Agreement).

[2] ALS has made an application to the Fair Work Commission (Commission) for an order under section 318 of the Fair Work Act 2009 (Cth) (Act) that the HWA Agreement not cover ALS and 21 of its employees 1 who have transferred from HWA to ALS (Transferring Employees). The Australian, Municipal, Administrative, Clerical and Services Union (ASU), which represents a number of the Transferring Employees, opposes the order sought by ALS.

Agreed matters

[3] It is not in contest and I am satisfied on the evidence that:

(a) the acquisition by ALS of the laboratory arm of HWA in December 2014 was a transfer of business within the meaning of section 311 of the Act;

(b) pursuant to section 313 of the Act, the HWA Agreement now covers ALS and the Transferring Employees;

(c) in addition to covering the Transferring Employees, the HWA Agreement covers employees who transferred from HWA to the acquirers of other parts of the HWA business, such as Veolia and H20;

(d) the HWA Agreement continues to cover the ASU pursuant to section 315(3) of the Act;

(e) the HWA Agreement has a nominal expiry date of 30 June 2015;

(f) ALS is a subsidiary of ALS Ltd, which operates in the testing, inspection and certification industry in 55 countries and employs over 11,500 staff;

(g) ALS is covered by the Australian Laboratory Services Pty Ltd Enterprise Agreement 2015 (ALS Agreement), which was approved on 16 February 2015 and has a nominal expiry date of 15 February 2018. The ALS Agreement applies at dozens of ALS’ sites around Australia, some of which became part of ALS through acquisition. One of the sites at which the ALS Agreement applies is ALS’ premises at Mayfield West in Newcastle;

(h) since May 2015, the 21 Transferring Employees have shared work premises with, and performed substantially the same work as, about 25 ALS employees who are covered by the ALS Agreement; and

(i) the occupations of each of the 21 Transferring Employees fall within the classifications covered by the ALS Agreement, with the result that the ALS Agreement will cover and apply to the Transferring Employees if the order sought by ALS under section 318 of the Act is made by the Commission.

Issues

[4] The issue I need to determine in this matter is whether or not to exercise my discretion under section 318(1) of the Act to make the order sought by ALS. Section 318(3) of the Act provides that, in deciding whether to make the order under section 318(1), I 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.”

Should the order be made?

[5] I consider each of the mandatory factors set out in section 318(3) of the Act below in turn.

Section 318(3)(a) - the views of the new employer and the employees who would be affected by the order

[6] ALS clearly supports the order sought by it under section 318(1) of the Act for the reasons set out in the witness statements of Paul Loewy, State Manager – NSW & NT, and Andrea Swan, Manager – ALS Water and the oral evidence given by each of them.

[7] ALS requested a written indication from the Transferring Employees as to whether they agree to being covered by the ALS Agreement. Seven of the 21 Transferring Employees informed ALS in writing that they support being covered by the ALS Agreement. One additional employee informed ALS in writing of his support for the change but he has since retired. Two of the Transferring Employees informed ALS in writing that they do not agree to be covered by the ALS Agreement. No written response was received by ALS from the other 12 Transferring Employees as to their position concerning coverage under the ALS Agreement.

[8] Two of the Transferring Employees gave evidence to the effect that they do not wish to be covered by the ALS Agreement.

[9] 15 of the 21 Transferring Employees are members of the ASU. 2

[10] On 30 June 2015, between about 10 to 12 of the Transferring Employees unanimously passed a resolution in the following terms:

“We, the members of the ASU and Professionals Australia, advise ALS that we are not prepared to agree to any application being made to the Fair Work Commission for our industrial instrument (Hunter Water Australia Pty Ltd General Employees Agreement 2013) not to cover transferring employees until such time as we are satisfied that all of our issues and questions about conditions and processes have been satisfactorily answered and members can make that decision based on all relevant information available.”

[11] On 14 July 2015, about 11 or 12 of the Transferring Employees passed a resolution in the following terms:

“We, being ASU and Professional Australia union members, wish to advise that we do not accept ALS’ proposal to transition employees currently employed under Hunter Water Australia Agreement 2013 to Australian Laboratory Services Agreement 2015. Furthermore we seek commencement of bargaining as soon as possible on the basis of the 2013 HWA Agreement with a view to maintaining or enhancing current conditions.”

[12] Two of the Transferring Employees who were present at the time of voting in relation to the resolution passed on 14 July 2015 abstained from voting.

[13] Mr Macphee, an Organiser employed by the ASU, contacted two or three of the Transferring Employees who were not present at the time the resolution was passed on 14 July 2015 to find out whether or not they supported the resolution. Each of them informed Mr Macphee that they supported the resolution.

[14] Mr Macphee gave the following evidence in his witness statement in relation to the position of union members on 25 August 2015:

“Members subsequently determined in a meeting held 25 August 2015 to oppose this application as they wished to maintain their current HWA EA conditions as they would lose important conditions if transferred to the ALS EA.”

[15] Mr Macphee gave oral evidence that 13 Transferring Employees were present at the time they “determined” on 25 August 2015 to oppose ALS’ application for orders under section 318 of the Act. 11 of the Transferring Employees voted in favour of the “determination” and two Transferring Employees abstained from voting.

[16] Mr Macphee contacted three of the Transferring Employees who were not present at the time the “determination” was made on 25 August 2015 to find out whether or not they supported it. Each of them informed Mr Macphee that they supported the “determination”.

[17] I reject ALS’ submission that the views of the Transferring Employees who are ASU members were not as well informed as they needed to be. I am satisfied that Mr Macphee provided sufficient information to the Transferring Employees, in addition to the information already provided directly to them by ALS, to enable them to make an informed view as to whether or not to support the order sought by ALS. In addition to providing the Transferring Employees with his analysis of the comparison between the ALS Agreement and the HWA Agreement, Mr Macphee provided the ASU members with correspondence from ALS to the ASU such as the letter from Mr Van de Hoef to the ASU dated 1 September 2015.

[18] In my view, having regard to the range of information provided to the Transferring Employees by ALS and the ASU, the errors in the comparison documents prepared by Mr Macphee 3 are not significant enough to warrant a finding that the Transferring Employees were, or were likely to be, misled or uninformed in relation to the consequences of an order being made under section 318 of the Act.

[19] On the basis of the evidence summarised in paragraphs [7] to [18] above, I find that:

a. ALS strongly supports the order sought by it under section 318(1) of the Act;

b. about seven Transferring Employees agree to being covered by the ALS Agreement. They support the order sought by ALS;

c. about 14 Transferring Employees do not agree to being covered by the ALS Agreement. They oppose the order sought by ALS; and

d. a majority of the Transferring Employees oppose the order sought by ALS under section 318(1) of the Act.

Section 318(3)(b) - whether any employees would be disadvantaged by the order in relation to the terms and conditions of employment

[20] Section 318(3)(b) requires a comparison between the “terms and conditions of employment” applicable to the employees with their former employer (in this case, HWA) and those that would be applicable (in this case, with ALS) after the transfer of business if an order under section 318(1) were made. Because the inquiry is directed to “terms and conditions of employment” and not simply to the terms of different industrial instruments, the contractual terms and conditions of employment may in particular cases have a bearing on the analysis required by section 318(3)(b) of the Act. 4 In the present case, no evidence was adduced as to any written or oral contractual terms or conditions of employment applicable to any of the Transferring Employees at either HWA or ALS.

[21] While the terms and conditions of employment to which an employee is entitled (including under an enterprise agreement) with a new employer may be different to those provided by a former employer prior to the transfer of business, the Commission should consider whether “overall, the employees would not be disadvantaged” 5 by making an order under section 318 of the Act.

[22] In the event that employees would be disadvantaged overall to any significant extent by the making of an order under section 318 of the Act in relation to their terms and conditions of employment, this factor would, in my view, weigh considerably against granting an order under section 318. 6

[23] The ASU submits that the principal area of disadvantage associated with a change from coverage under the HWA Agreement to the ALS Agreement relates to ordinary hours of work and overtime. Under the HWA Agreement, a Day Worker’s ordinary hours of work are from 7am until 6pm, Monday to Friday inclusive. Under the ALS Agreement, ordinary hours of work are from Monday to Sunday inclusive. A number of the Transferring Employees are concerned that they could be rostered to work their ordinary hours of work on weekends, rather than from Monday to Friday as they have done for many years, if they move from coverage under the HWA Agreement to the ALS Agreement.

[24] ALS submits that, provided its consults with employees and its directions to employees are lawful and reasonable, it has the unilateral right to roster the Transferring Employees, who have traditionally worked as Day Workers under the HWA Agreement, to work as Shift Workers under the HWA Agreement 7, and thereby require them to work ordinary hours on weekends. ALS contends that because it has this right there is no material difference between ordinary hours of work under the ALS Agreement and ordinary hours of work under the HWA Agreement.

[25] ALS accepts that the HWA Agreement does not confer any express right on the employer to change Day Workers to Shift Workers (and nor does it contain any term prohibiting such a unilateral change), but it contends that the employer has the power to make such a change by reason of its contractual right to require its employees to comply with its lawful and reasonable directions. 8

[26] The duty for an employee to comply with a lawful and reasonable direction arises only with respect to the lawful commands of an employer that fall within the scope of the employment contract. 9 Further, if the direction to an employee relates to an aspect of the relationship of employment that is regulated by the employment contract, then the change the subject of the direction cannot be imposed unilaterally on the employee unless the contract authorises the employer to make such a change.10 This is because implied terms such as the requirement for an employee to comply with a lawful and reasonable direction from their employer only operate to the extent to which they are not inconsistent with the express terms of the contract.11

[27] In the present case, although no evidence was adduced as to any written or oral contractual terms or conditions of employment applicable to any of the Transferring Employees at either HWA or ALS, Ms Andrea Swan, the manager responsible for the Transferring Employees at HWA and ALS for over 15 years, gave evidence that the Transferring Employees were employed by HWA as Day Workers under the HWA Agreement and when they were required to work on a weekend they did so by working overtime and being paid at the applicable Day Worker rates for overtime under the HWA Agreement.

[28] The Transferring Employees have continued to be rostered and paid as Day Workers under the HWA Agreement since commencing employment with ALS. So much is clear from the evidence given by Mr Glover, one of the Transferring Employees who commenced employment with the Hunter Water Corporation in 1996. Mr Glover gave evidence that the Transferring Employees had always historically been Day Workers under the HWA Agreement and he had, during his employment with HWA and ALS, worked ordinary hours within the span of ordinary hours permitted for a Day Worker, together with overtime at the rates payable under the HWA Agreement for a Day Worker. At the commencement of his employment with ALS, Mr Glover and the other Transferring Employees were informed by ALS that “it’s business as usual except for a different work shirt”. 12 In those circumstances, I am satisfied that, even if the parties to the contracts of employment made between ALS and each of the Transferring Employees did not express, in writing or orally, their agreement that each of the Transferring Employees would be employed by ALS as a Day Worker within the meaning of the HWA Agreement, it can be inferred that the parties to those contracts actually intended for such a term to form part of the employment contracts made by them.13

[29] In light of my finding that it is a term of the employment contracts made between each of the Transferring Employees and ALS that they are employed as Day Workers under the HWA Agreement, ALS does not have the unilateral right to transfer them to Shift Workers, whether pursuant to a direction issued by ALS or otherwise and regardless of the extent to which the Transferring Employees have been consulted about the change. Indeed, it would be remarkable if ALS had the unilateral right to transfer a Day Worker to a Shift Worker in the context of the Transferring Employees, for that would, by way of example, give ALS the right to direct 14 an employee who had, since the commencement of their employment in the business many years (or decades) ago, worked ordinary hours from, say, 9am until 5pm Monday to Friday to work regular night shift, including on a seven day roster.15

[30] It follows that ALS does not have the right under the HWA Agreement to roster the Transferring Employees to work ordinary hours outside of the range of 7am until 6pm, Monday to Friday. 16 ALS can require the Transferring Employees to work reasonable additional hours17 including work on Saturdays and Sundays, in accordance with clause 17.1 of the HWA Agreement, for which it must pay the Transferring Employees overtime at the rates prescribed by clause 17.1 of the HWA Agreement. Those rates are higher than the penalty rates payable to employees under the ALS Agreement, whether such hours are worked under the ALS Agreement as ordinary hours or overtime hours. The relevant comparison is set out in the following table:

Weekend penalty rates for overtime worked by a Day Worker under the HWA Agreement 18		Penalty rates for ordinary hours worked on a weekend under the ALS Agreement 19		Penalty rates for overtime worked on a weekend under the ALS Agreement 20
Saturday	Sunday	Saturday	Sunday	Saturday	Sunday
Up to 12 noon – time and a half for the first two hours and double time thereafter After 12 noon – double time	Double time	Time and a half	Time and a half	Time and a half for the first four hours and double time thereafter	Double time

[31] Because employees to whom the ALS Agreement applies can be required to work ordinary hours on a weekend, rather than from Monday to Friday (as is the case under the HWA Agreement for a Day Worker), and the penalty rates payable for weekend work under the ALS Agreement are lower than those payable under the HWA Agreement for a Day Worker, I am of the view that a number of the Transferring Employees would be disadvantaged to a significant extent if the section 318(1) order sought by ALS were made.

[32] Importantly, this is not simply a theoretical disadvantage or one which is very unlikely to ever eventuate. The evidence demonstrates that at least four of the Transferring Employees are required to work on weekends throughout the year to undertake work on the beach watch monitoring program for Hunter Water Corporation, albeit more shifts have to be done on the weekend during the summer months than is the case during the cooler months of the year. Under the HWA Agreement, those employees work their ordinary hours during the week and work (and are paid) overtime to undertake the necessary weekend work. ALS is not willing to give the Transferring Employees an undertaking that they would not be rostered to work ordinary hours on the weekend in the event a section 318 order were made and the ALS Agreement applied to them. 21 Accordingly, making the section 318 order sought by ALS would enable ALS to roster the Transferring Employees to work their ordinary hours on weekends and to pay them the lower penalty rates payable for such ordinary hours under the ALS Agreement.

[33] In light of the undertakings offered by ALS to the Transferring Employees, I am satisfied that there is no other material disadvantage associated with coverage under the ALS Agreement compared with coverage under the HWA Agreement. In fact, in a number of respects the benefits under the ALS Agreement are more generous than those under the HWA Agreement. I summarise below the position in relation to a number of the areas of contention addressed by the parties at the hearing: 22

(a) Meal breaks – although the tea break under the ALS Agreement is 5 minutes shorter than the tea break under the HWA Agreement, ALS has undertaken to continue to provide the Transferring Employees with the 5 minute longer tea break if the section 318 order is made;

(b) Preserved conditions – about six of the Transferring Employees are entitled to the preserved conditions set out in schedule A to the HWA Agreement. Those conditions are more beneficial in many respects than the corresponding conditions under the ALS Agreement. ALS has undertaken to continue to provide the preserved conditions to the Transferring Employees who have an entitlement to them under the HWA Agreement;

(c) Exemption clause – unlike the HWA Agreement, the ALS Agreement contains an exemption in clause 2.1.10 which precludes employees paid above the rate for Professional Scientist Level 2 ($74,713.01 from 1 October 2015) from higher duties, meal allowances, call–out, on-call, shift work, leave loading, overtime and public holiday entitlements. The one Transferring Employee who is paid above the threshold rate would be exempt from these entitlements under the ALS Agreement (unless they are preserved conditions 23). However, that Transferring Employee has agreed to be covered by the ALS Agreement;

(d) Wage increases – if the section 318 order is made, ALS has undertaken to pay each of the Transferring Employees a 3% wage increase in 2015. In addition, for about seven of the Transferring Employees who will move to a higher classification under the ALS Agreement, they will receive a salary increase of between $2,145 and $11,772, together with the 3% pay increase. As for future years, the ALS Agreement provides for the rates of pay prescribed by the agreement to be increased on 1 October 2016 by 3% or by the national minimum wage increase determined by the Commission in its 2016 annual wage review, whichever is the greater. The ALS Agreement also provides for annual salary increments for graduates based on years of experience. 24 ALS has given an undertaking that Transferring Employees who are paid above the relevant rate provided for under the ALS Agreement will, if the section 318 order is made, be given a pay increase of not less than 2.5% on 1 July 2016 and 1 July 2017. Under the HWA Agreement, no wage increases are payable because it has passed its nominal expiry date. Any future pay increases would have to be negotiated by the parties to that agreement;

(e) Redundancy pay – redundancy payments under the ALS Agreement 25 are more generous than under the HWA Agreement;

(f) Performance bonus – the HWA Agreement does not provide for a performance bonus. Under the ALS Agreement, employees are entitled to an annual bonus of one week’s salary if ALS’ profit result is at least 105% of its budgeted profit for the year. 26 In the past, ALS has often paid a performance bonus to its employees who are covered by the ALS Agreement even where ALS has not met its profit target;

(g) Uniform allowance – a $110 per annum clothing allowance is payable to employees under the ALS Agreement. 27 No such allowance is payable to employees under the HWA Agreement;

(h) Long service leave – employees covered by the ALS Agreement can take their pro rata long service leave after seven years’ service. 28 This is more generous than the HWA Agreement, which provides for long service leave benefits to be governed by the Long Service Leave Act 1955 (NSW). Under that legislation, pro rata long service leave is only payable to employees who have completed at least five years but less than 10 years’ service if employee’s services are terminated by the employer for any reason other than the worker’s serious and wilful misconduct, or by the employee on account of illness, incapacity or domestic or other pressing necessity, or by reason of the death of the employee;

(i) Overtime – under the ALS Agreement, all time worked on a public holiday is paid at the rate of double time plus 7.6 hours for the public holiday (regardless of the number of hours worked). Under the HWA Agreement, work performed on a public holiday is paid at the rate of double time and one half; and

(j) Introduction of change - clause 2.12.3(c) of the ALS Agreement requires ALS, in the event that it wishes to change an employee’s regular roster or ordinary hours of work, to invite the relevant employees to give their views about the impact of the proposed change (including any impact in relation to their family or carer responsibilities). ALS has undertaken to comply with this obligation and to ensure that any changes to a Transferring Employee’s hours of work are lawful and reasonable. There is no clause equivalent to clause 2.12.3(c) of the ALS Agreement in the HWA Agreement.

[34] Mr Paul Loewy, State Manager – NSW & NT for ALS Environmental Division, gave evidence, which I accept, that moving the Transferring Employees from the HWA Agreement to the ALS Agreement would increase ALS’ labour costs by about $30,000 per annum plus superannuation and on-costs.

[35] There may be one or more Transferring Employees who would receive a significant pay rise (up to $11,772), together with the 3% pay increase for 2015, if the section 318 order were made, and for whom there is no realistic prospect of being rostered to work any hours, let alone ordinary hours, on a weekend in the future (Benefitting Employees). The evidence adduced did not go to that level of detail for individual employees, other than in the case of Mr Glover and Ms Lindstrom, neither of whom is in the category of Benefitting Employees. Any Benefitting Employees would not, in my view, be disadvantaged overall in relation to their terms and conditions of employment by making an order under section 318 of the Act; they would benefit overall from the change. However, for the reasons set out in paragraphs [20] to [34] above, I am of the view that there are a number of Transferring Employees 29 who would be disadvantaged overall in relation to their terms and conditions of employment by making an order under section 318 of the Act. This factor weighs against making the order sought by ALS.

s.318(3)(c) - the nominal expiry date of the enterprise agreement

[36] The HWA Agreement nominally expired on 30 June 2015. The ALS Agreement will expire on 15 February 2018. The application of the latter agreement as sought by ALS would therefore result in the Transferring Employees having certainty as to their terms and conditions of employment (as governed by an enterprise agreement) for a longer period. 30 This factor weighs in favour of the order sought by ALS.

s.318(3)(d) - whether the transferable instrument would have a negative impact on the productivity of ALS’ workplace

[37] The Transferring Employees now operate out of two buildings at ALS’ Mayfield West site, alongside and sharing the same facilities as approximately 25 other ALS employees who are covered by the ALS Agreement and who do the same or similar work to the Transferring Employees.

[38] Mr Loewy gave evidence, which I accept, to the following effect:

(a) two enterprise agreements operating at the same site to staff performing the same or similar work impacts negatively on productivity and is a barrier to developing harmonious work arrangements;

(b) the fact that employees continue to work under a separate and expired enterprise agreement creates unnecessary uncertainty and unfairness. For example, employees covered by the ALS Agreement at the Mayfield West site recently received a 3% increase in salary; the Transferring Employees have not received an increase in salary since July 2014; and

(c) having to maintain different employment terms for some staff is an unnecessary and unproductive burden. For example, in the HWA Agreement classification structure there are five streams and 44 levels for 21 staff. In the ALS Agreement there are three streams and 15 levels for over 1,100 staff.

[39] On the basis of this evidence, I am satisfied that the continuation of the application of the HWA Agreement to the Transferring Employees would have a negative impact on the productivity of ALS’ workplace. This factor weighs in favour of granting the order sought by ALS.

s.318(3)(e) - whether ALS would incur significant economic disadvantage as a result of the HWA Agreement covering ALS

[40] It is not in contest and I am satisfied on the evidence that ALS would not incur any economic disadvantage as a result of the HWA Agreement continuing to apply to the Transferring Employees.

s.318(3)(f) - the degree of business synergy between the HWA Agreement and the ALS Agreement

[41] ALS submits, on the basis of evidence given by Mr Loewy and Ms Swan, that the HWA Agreement was made for a local, public sector organisation. The Transferring Employees are now part of a global, private-sector company (ALS). The terms of the ALS Agreement properly reflect and facilitate the commercial environment in which the new employer operates. There is little business synergy, so ALS contends, between the HWA Agreement and ALS or the ALS Agreement.

[42] Mr Loewy gave evidence to the effect that, prior to the transfer of business, HWA undertook environmental analysis work for consultants and other clients in addition to its major client, Hunter Water Corporation. HWA was created as a wholly owned subsidiary of Hunter Water Corporation and was intended to operate and compete in the open market. HWA and Hunter Water Corporation also operated under different enterprise agreements with different terms and conditions. Notwithstanding those matters, I accept there is limited business synergy between the HWA Agreement and the ALS Agreement, particularly (but not exclusively) in relation to the topics of ordinary hours of work and preserved conditions such as a 19 day working month. This factor weighs in favour of granting the order sought by ALS.

s.318(3)(g) - the public interest

[43] 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: 31

“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.”

[44] The public interest in this context is influenced by the objects of Part 2-8 of the Act as set out in section 309 and those adopted by the Act more broadly. 32

[45] I agree with the following comments made by Commissioner Hampton in Stractco concerning the public interest in section 318(3)(g) of the Act:

“[43] There is public interest in ensuring that agreed and statutorily approved arrangements are not put aside lightly and where they are to no longer apply, the interests of the employees concerned are safeguarded. The absence of disadvantage and the evident employee support for the change in this case, are important considerations.

[44] Further, and particularly given the above context, there is also public interest in ensuring that the business of Stratco in the Hunter and more broadly, is able to efficiently operate without unnecessary complications in its employment arrangements.

[45] It is also the case the public interest in this matter is served by facilitating arrangements that permit and encourage the maintenance of employment for the former Hunter Timber employees through the transfer of business process.”

[46] ALS submits that: 33

(a) terms and conditions of employment governed by an enterprise agreement should not continue unaltered in perpetuity after the agreement has passed its nominal expiry date; and

(b) a party to whom such an agreement applies is entitled to take steps to bring the agreement to an end, particularly in circumstances where ALS is not prepared to negotiate a new agreement to replace the HWA Agreement.

[47] These statements of principle relied on by ALS were made by a Full Bench of the Commission in the context of an application to terminate an enterprise agreement under section 225 of the Act. 34 That is different to the context of the present application under section 318 of the Act. In any event, the legitimate interest an employer has to take steps to bring an enterprise agreement which has passed its nominal expiry date to an end or to otherwise bring about a situation where the enterprise agreement no longer applies to its employees must be weighed against the legitimate interests employees have in safeguarding their terms and conditions of employment.

[48] In the present case, it is necessary to weigh the public interest associated with the protection of employees’ (such as the Transferring Employees’) terms and conditions of employment against the public interest in facilitating an employer such as ALS to run its enterprise efficiently.

[49] The fact that ALS’ labour costs will increase by about $30,000 plus superannuation and on–costs if the order sought by it under section 318 of the Act is made clearly demonstrates that ALS has not made this application for economic reasons. It has done so for reasons of efficiency, alignment, fairness (between employees) and productivity. It is in the public interest that employers achieve such objectives. However, it is also in the public interest that employees such as the Transferring Employees who work in a business which has been sold by one entity (HWA) to another (ALS) are not thereby subject to disadvantage in their terms and conditions of employment. Having regard to my conclusion that the order, if made, would disadvantage a number of the Transferring Employees in relation to their terms and conditions of employment, I consider that the public interest in protecting the Transferring Employees’ terms and conditions of employment under the HWA Agreement outweighs the public interest associated with ALS running its enterprise efficiently.

Conclusion

[50] Having carefully weighed each of the matters set out in paragraphs [6] to [49] above, I decline to exercise my discretion to make an order under section 318(1) of the Act in relation to the HWA Agreement. In my view, the factors weighing against the making of the order sought outweigh those in favour. Accordingly, the application is dismissed.

COMMISSIONER

Appearances:

Mr Doug Van de Hoef, Corporate Employee Relations Manager on behalf of ALS.

Ms Marisa Whitington, Industrial Officer on behalf of the ASU.

Hearing details:

2015.

Newcastle:

November, 23.

 1   22 employees transferred from HWA to ALS but one has since retired (statement of Paul Loewy (Ex ALS 1) at [18])

 2   One of the 15 was formerly a member of Professionals Australia, but is now a member of the ASU.

 3   For example, the error in annexure PM 1 to the witness statement of Mr Macphee (Ex ASU 1) concerning long service leave. In particular, PM 1 erroneously states that pro rata long service leave is only available under the ALS Agreement after 7 years continuous service.

 4   CEPU; CSIRO [2010] FWA 1171 (CSIRO) at [102]

 5   Stratco (NSW) Pty Ltd [2010] FWA 7036 (Stratco) at [25]

 6   Stratco at [25]; Sonic HealthPlus Pty Ltd [2015] FWC 6460 at [95]; CSIRO at [101]

 7   Clause 15.2 of the HWA Agreement

 8   Adami v Maison de Luxe Ltd (1924) 35 CLR 143 at 151

 9   R v Darling Island Stevedoring & Lighterage Co Ltd; Ex parte Halliday and Sullivan (1938) 60 CLR 601 at 621-2

 10   Stratton v Illawarra County Council [1978] 2 NSWLR 494 at 500 (reversed on other grounds in [1979] 2 NSWLR 701); I Neil and D Chin, The Modern Contract of Employment (2012), at [4.20] & [4.40]

 11   Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468 at 492BC; I Neil and D Chin, The Modern Contract of Employment (2012), at [6.10]

 12   Witness statement of Craig Glover at [6]

 13   Hawkins v Clayton (1988) 164 CLR 539 at 570

 14   Assuming the direction was lawful and reasonable and ALS had complied with its consultation obligations

 15   Clause 15.2 of the HWA Agreement

 16   Clause 15.1 of the HWA Agreement

 17   That is, additional to their ordinary hours of work

 18   Clause 17.1 of the HWA Agreement

 19   Clause 4.1.1(f) of the ALS Agreement

 20   Clauses 4.2.3 and 4.2.4 of the ALS Agreeement

 21   ALS submits that, whilst it has no plans for a major change in working hours, it could not guarantee its employees that such a change may not be required in the future. In the event it was required, the ALS Agreement has a clause based on the Commission model consultation clause in respect of a proposed change to regular roster ordinary hours of work and ALS would comply with that obligation (ALS’ written submissions dated 16 October 2015 at [17]).

 22   A comprehensive comparison of the main differences between the HWA Agreement and the ALS Agreement is set out in exhibit ALS 2 and annexure PM 2 to Mr Macphee’s witness statement (Ex ASU 1)

 23   See (b) above

 24   Clauses 3.3.4 and 3.4.1 of the ALS Agreement

 25   Clause 2.5.7 of the ALS Agreement

 26   Clause 3.7.1 of the ALS Agreement

 27   Clause 3.8.5 of the ALS Agreement

 28   Clause 5.4.2 of the ALS Agreement

 29   Mr Glover, Ms Lindstrom, the other two microbiology staff required to work overtime on weekends on the EPA licence beach watch monitoring program for Hunter Water Corporation, and any other Transferring Employees who are required to work regular overtime on weekends or for whom there is a realistic prospect of being required to undertake weekend work during the period of operation of the ALS Agreement.

 30   Lend Lease Engineering Pty Ltd (formerly known as Abigroup Contractors Pty Ltd) [2014] FWC 5499 at [30(c)]

 31 (2005) 139 IR 34 at 40

 32   Stratco at [42]

 33   Aurizon Operations Limited; Aurizon Network Pty Ltd; Australia Eastern Railroad Pty Ltd [2015] FWCFB 540 at [126]

 34   Ibid

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