Australian Laboratory Services Pty Ltd T/A ALS
[2023] FWC 656
•21 MARCH 2023
| [2023] FWC 656 |
| 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 T/A ALS
(AG2023/530)
| DEPUTY PRESIDENT BEAUMONT | PERTH, 21 MARCH 2023 |
Application for an order relating to instruments covering new employer and transferring employees
Issue and outcome
Australian Laboratory Service Pty Ltd (the Applicant) has applied under s 318 of the Fair Work Act 2009 (Cth) (the Act) for orders relating to employees who are working for MinAnalytical Laboratory Services Australia (MinA) and who are proposed to work for the Applicant, as of 1 April 2023. These employees (the Transferring Employees) are currently covered by the MinAnalytical Laboratory Enterprise Agreement 2016 (MinA EA).[1] The Applicant seeks orders that the Transferring Employees will be covered by the Australian Laboratory Services Pty Ltd Enterprise Agreement 2021 (ALS EA) on commencement of employment with the Applicant.[2]
On 17 December 2021, ALS Limited (ALS), the parent company of the Applicant, completed the acquisition of MinA.[3] The Applicant is the largest entity of ALS, with approximately 3000 employees in Australia.[4] ALS provides analytical and laboratory testing services in several fields including geochemistry, environmental, tribology, food and pharmaceuticals.[5] MinA has approximately 200 employees and provides geochemistry-related analytical and laboratory testing services to clients in Western Australia.[6]
It is uncontroversial that there is to be a transfer of business as that phrase is understood by reference to s 311(1) of the Act. Briefly stated, the Transferring Employees:
a) will cease employment with MinA on or around 1 April 2023;[7]
b) will commence employment with the Applicant on or around 1 April 2023, this being within the three months prescribed by s 311(1)(b);
c) will perform the same or substantially the same work for the Applicant as they did for MinA;[8] and
d) will in the future (as outlined) be employed by the Applicant, the Applicant and MinA being associated entities for the purposes of s 50AAA of the Corporations Act 2001 (Cth), which gives rise to the requisite connection between the old employer and new employer referred to in s 311(1)(d) (see also s 311(6) of the Act).
The Applicant now seeks the following orders under s 318(1) of the Act:
a) pursuant to s 318(1)(a), that the MinA EA, as a transferrable instrument, does not cover the Applicant and any employees of the Applicant formerly employed by MinA; and
b) pursuant to s 318(1)(b), that the ALS EA will cover the employees of the Applicant formerly employed by MinA.
In short, I have reviewed the application documentation and the accompanying material. The documents filed outline the factual circumstances which have given rise to the application. Further, the submissions contained in the application, and the evidence provided by Ms Annemarie Clare Parker, Senior Human Resources Advisor for the Applicant, address the relevant legislative requirements which are asserted to provide a proper basis for the making of the orders sought.
I am satisfied this circumstance is a transfer of business and that the MinA EA is a transferable instrument. If the order under s 318(1)(a) was not made, then by virtue of s 313(1)(a), the MinA EA would cover the Transferring Employees notwithstanding their employment with the Applicant. I have considered all the factors set out in s 318(3) and have concluded that it is appropriate and not contrary to the public interest to make the orders sought under s 318. The Orders issue concurrently with this decision.[9]
My detailed reasons for granting the Orders follow.
Background
The application contained detailed grounds and submissions and was accompanied by a statutory declaration of Ms Parker,[10] together with several attachments. Shortly stated, the evidence filed contend that which is listed:
a)approximately 1,800 of ALS’ employees are covered by the ALS EA. Its nominal expiry date is 30 September 2024, and it has classifications covering geochemistry duties such as those performed by the MinA employees;[11]
b)consultation with MinA employees formally commenced on 26 October 2022 with a memo from Mr Shaun Crabb, ALS’ General Manager for Geochemistry Australasia.[12] The memo was individually handed to every MinA employee employed under the MinA EA.[13] In part, the memo read:
No MinAnalytical employee will be worse off by transferring to the ALS Enterprise Agreement:
· Some employees will see an increase in their base hourly rate of pay
· Some employees who are on a higher base hourly rate of pay will have this grandfathered (carried on) so there will be no reduction
· There are additional benefits under the ALS Enterprise Agreement – we will outline these for you as we work through the review
· There is a guaranteed increase to your base hourly rate each year of the agreement;
c)Ms Parker prepared a comparison of all employees’ annual earnings under the MinA EA and the ALS EA.[14] The comparison data showed that those MinA employees at the Canning Vale site would receive a wage increase and higher earnings on transferring to the ALS EA.[15] Those MinA employees at the Kalgoorlie site would receive higher annual earnings under the MinA EA than they would under the ALS EA (the structure of the rotating shift roster and shift penalties in the MinA EA contributing to that);
d)from 1 December 2022, the Transferring Employees were given individual letters outlining their entitlements under both the MinA EA and the ALS EA.[16] They were asked to sign and return a copy of the letter to indicate whether their preference was to transfer to the ALS EA or to remain under the MinA EA.[17] For those Transferring Employees whose annual earnings under the MinA EA would be higher than they would be under the ALS EA, the following explanation note was provided:
Over-Agreement (‘OA’) Rate of Pay: As your rate of pay is higher than the rate for your classification under the ALS EA, you would be classified as ‘OA’. Your rate has been calculated to compensate for the difference between the MinA EA and the ALS EA in relation to weekend penalties, overtime and Regional Site / Remote allowances, based on the shift roster you currently work, so that your overall annual earnings would be lower under the ALS EA. OA employees’ rates are reviewed in March/April each year, and when there is a change in position to ensure they do not fall below EA rates.[18]
e)whilst discussions were held between management and the Transferring Employees, the response of the Kalgoorlie-based Transferring Employees indicated a preference to remain under the MinA EA, albeit those Transferring Employees based out of Canning Vale supported coverage by the ALS EA;[19]
f)because of the feedback received, management decided to defer any decision until the new year to allow time for more discussion and further consideration;[20]
g)on 13 February 2023, a memo was placed on notice boards at the Canning Vale site of MinA advising the Transferring Employees that the Applicant had decided to apply to the Commission for an order to transfer employees from the MinA EA to the ALS EA; and
h)on 13 February 2023, a memo was place on notice boards at the Kalgoorlie site of MinA advising the Transferring Employees that the Applicant had decided to apply to the Commission for an order to transfer employees from the MinA EA to the ALS EA. The letter asked the Transferring Employees at the Kalgoorlie site to indicate their preference regarding agreement coverage.[21] Out of 77 possible responses, 27 voted ‘yes’, 17 voted ‘no’, and 23 stated ‘no preference’.[22]
Having received no objection to the application being determined on the papers, I proceeded to determine the matter by reference to and with reliance upon the grounds, submissions and other materials provided with the application.
Legislative framework
Section 317 of the Act enables the Commission to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer.
The discretion to make the orders sought by the Applicant under s 318(1) of the Act will only be exercised after the factors set out in s 318(3) of the Act are considered.[23] These factors, which must be read having regard to the objects of the Part, are intended to enable the Commission to balance appropriately the protection of employees’ entitlements under certain instruments with the need for some flexibility to depart from the default rules about coverage of instruments following a transfer of business.[24]
Section 318 of the Act sets out the circumstances in which an order such as that sought by the Applicant may be made by the Commission:
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.
The exercise of the discretion given to the Commission in this regard is undertaken within the objects of this Part of the Act, which state 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.
Consideration
The Applicant is the likely new employer of the Transferring Employees for the purpose of s 318(2)(a) of the Act, and it therefore follows that the application is validly before the Commission.
As observed, I am satisfied this circumstance is a transfer of business as understood by reference to s 311 and that the MinA EA is a transferable instrument as described in s 312(1)(a). If the order under s 318(1)(a) was not made, then I consider by virtue of s 313(1)(a), the MinA EA would cover the Transferring Employees notwithstanding their employment with the Applicant.
Without recounting the particulars set out in the application or in the material accompanying the application, I have had regard to that material filed and considering the matters in s 318(3) of the Act, I am satisfied that the Applicant supports the application as do the majority of Transferring Employees who have been consulted of the Applicant’s intention to make the application. I have concluded that it is appropriate to grant the orders sought. In my view, there are no public interest considerations that would militate against the orders sought under s 318(1)(a) and (b).
It is further observed that the Applicant has proffered an undertaking, annexed to this decision and marked Annexure A, guaranteeing that no employee will incur a reduction in earnings because of being covered by the ALS EA.
Conclusion
In accordance with section 318(4), the Orders will come into effect on the date the Orders are made or from the time when the Transferring Employees commence working for the Applicant, whichever is the latter.
DEPUTY PRESIDENT
Matter determined on the papers.
Annexure A
[1] [2016] FWCA 2435; AE418622.
[2] [2021] FWCA 6655; AE513848.
[3] Statutory Declaration of Annemarie Clare Parker, [1] (Parker Declaration).
[4] Ibid [2].
[5] Ibid [3].
[6] Ibid.
[7] Fair Work Act 2009 (Cth) s 311(1); ibid [23].
[8] Fair Work Act 2009 (Cth) s 311(1)(c).
[9] PR760457.
[10] Parker Declaration (n 3).
[11] Ibid [5].
[12] Ibid [6].
[13] Ibid.
[14] Ibid [8].
[15] Ibid [9].
[16] Ibid [12].
[17] Ibid.
[18] Ibid [13].
[19] Ibid [15].
[20] Ibid [16].
[21] Ibid [18].
[22] Ibid [19].
[23] Explanatory Memorandum, Fair Work Bill 2008 (Cth) [1259].
[24] Ibid.
Printed by authority of the Commonwealth Government Printer
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