Australian Leisure and Hospitality Group Pty Ltd
[2023] FWC 1868
•3 AUGUST 2023
| [2023] FWC 1868 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Australian Leisure and Hospitality Group Pty Ltd
(AG2023/2160)
| Hospitality industry | |
| COMMISSIONER RIORDAN | SYDNEY, 3 AUGUST 2023 |
Application for an order relating to instruments covering new employer and transferring employees.
Australian Leisure and Hospitality Group Pty Ltd (the Applicant) has made an application to the Fair Work Commission (the Commission) in accordance with s.318 of the Fair Work Act 2009 (the Act), seeking an Order that the Beachfront Hotel Hospitality Agreement 2009 (the Agreement) does not cover the Applicant or any transferring employees.
Ms Shannyn Bird, Senior People Partner QLD & NT for the Applicant, filed a witness statement in support of the Applicant’s application.
Background
In April 2022, the Applicant entered into an asset sale agreement with Trojanmede Pty Ltd (Trojanmede) for the sale of Beachfront Hotel. The Applicant took over operation of the Beachfront Hotel on 20 March 2023, including the bottle shop.
The Agreement covers Trojanmede and each employee of Trojanmede who performs work in a classification specified in the Agreement at the Beachfront Hotel.
The Applicant has noted that pursuant to the Fair Work (Transitional Provisions and Consequential Amendments) 2009, as amended by the Fair Work Legislation (Secure Jobs, Better Pay) Act 2022, the Agreement will automatically terminate on 7 December 2023.
The Applicant has sought Orders from the Commission under s.318(1)(a) of the Act as follows:
The Beachfront Hotel Hospitality Agreement 2009 (Beachfront Agreement) does not, and will not, cover Australian Leisure and Hospitality Group Pty Ltd (ALH) in respect of employees transferring from employment with Trojanmede Pty Ltd to ALH.
The Beachfront Agreement does not, and will not, cover any employee whose employment transfers from Trojanmede Pty Ltd to ALH.
The Commission notes that the Hospitality Industry (General) Award 2020 will apply to former employees of Trojanmede Pty Ltd who are employed by ALH to perform work at the Beachfront Hotel, 342 Casuarina Drive, Rapid Creek NT (Beachfront Hotel) within the scope of the classifications referred to in the Beachfront Agreement.
Subject to section 318(4) of the Act, the orders will come into operation from the date when the first employee transferring from Trojanmede Pty Ltd becomes employed by ALH to perform work at the Beachfront Hotel.
The matter was listed for a Telephone Conference on 3 July 2023.
Further to this Telephone Conference, the Applicant was requested to file roster information for the transferring employees as well as email addresses for each of the transferring employees for the purposes of the Commission writing to them to seek their views on the application.
The Applicant provided the requested roster information and email address for 14 transferring employees (the affected employees).
The roster information was forwarded by my Chambers to the Commission’s Agreements Team for the purposes of undertaking an assessment of the Agreement terms as compared to the Hospitality Industry (General) Award 2020 (the Award) for each of the affected employees. The Agreements Team’s assessment found that each of the affected employees would be better off overall under the Award.
My Chambers wrote to each of the affected employees on 20 July 2023, seeking their views on the Application by close of business 25 July 2023. The affected employees were advised that their responses would be treated confidentially.
My Chambers received responses from a number of the employees. These have been taken into account.
Relevant Legislation
Pursuant to s.313 of the Act:
“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 FWC order under subsection 318(1).”
Further, s.318 of the Act relevantly provides:
“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.”
(My emphasis)
I will now turn to consider each of the subsections of s.318(3) of the Act.
Consideration
Section 318(3)(a)(i) the views of the new employer or a person who is likely to be the new employer;
The Applicant submitted that it does not want the Agreement to transfer as it wishes to avoid having two sets of employment terms and conditions applying to its employees at the Beachfront Hotel.
The Applicant noted that the Agreement is scheduled to terminate on 7 December 2023, accordingly, if the Agreement continues in operation, it would only do so for a limited duration.
In her witness statement, Ms Bird has noted that the offers of employment that have been made to employees of Trojanmede are not conditional on the Commission making the orders sought in this application.
I have taken this into account.
Section 318(3)(a)(ii) the views of the employees who would be affected by the order;
The Applicant submitted that the affected employees have been briefed about the Applicant’s intention to acquire the assets of the old employer in order to operate the Beachfront Hotel as a going concern, and in relation to this application. Ms Bird outlined in her witness statement that between 17 March and 30 March 2023, she sent an email to the venue employees, which:
“(a) Notified the venue employees about the Applicant’s application to the Fair Work Commission;
(b) Provided a summary overview of how the application, if successful, would impact their pay and entitlements;
(c) Attached a copy of the table attached to this statement, marked as attachment SB-1 and a copy of the Agreement;
(d) Provided a link to the Award; and
(e) Contained my email address, so that venue employees could respond to myself directly in writing with any views they would like to be considered as part of the orders being sought, as well as any questions they may have about their current or proposed entitlements.”
Ms Bird provided that as at the date of making her witness statement, she had not received any questions or views on the application from any of the venue employees.
Ms Bird advised that she understood on 17 March 2023, Mr Matt Schier, Retail Relief Area Manager, had a discussion with the bottle shop employees regarding the application, including:
“(a) Notified each of the bottle shop employees about the Applicant’s application to the Fair Work Commission;
(b) Provided a summary of how the application, if successful, would impact their pay and entitlements; and
(c) Provided Ms Birch’s (Ms Clare Birch, Senior People Partner for South Australia, Western Australia and Northern Territory) contact details so that bottle shop employees could contact her directly with any views they would like to be considered as part of the orders being sought, as well as ask any questions they may have about their current or proposed entitlements.”
Ms Bird outlined that the bottle shop employees had raised, and been provided answers to, questions as follows:
“(a) What is the base rate of pay under the Award? It was explained to each of the employees how to locate their base rate in the Award;
(b) What are the penalty rates available under the Award? It was explained to each of the employees how to locate the relevant penalty rates in the Award; and
(c) How long would the process of making the application take? Mr Schier informed the employees that he was unable to provide an accurate timeline for the application process.”
Ms Bird understood that no further substantive matters had been raised by the bottle shop employees.
I note that of those affected employees who have provided a response to my Chambers, the majority have advised that they are happy to move to being covered by the Award.
I have taken this into account.
Section 318(3)(b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment;
The Commission’s Agreements Team has undertaken an assessment of the affected employees’ roster information and compared the employees’ entitlements under the Agreement and the Award. The Agreements Team have advised my Chambers that, in all cases, the affected employees would be better off overall if covered by the Award.
I have taken this into account.
Section 318(3)(c) if the order relates to an enterprise agreement—the nominal expiry date of the agreement;
The Commission’s records show that the Agreement was approved in February 2010. The Agreement provides that it has a nominal expiry period of 5 years from the date of commencement, therefore, the nominal expiry date of this Agreement was February 2015.
I have taken this into account.
Section 318(3)(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace;
The Applicant submitted that if this application is not granted, the Agreement would have a negative effect on productivity at the Beachfront Hotel because of the practical difficulties associated with applying two different sets of terms and conditions of employment at the one workplace. The Applicant noted this would impact rostering, breaks, leave, allowances, overtime, penalties and loadings.
The Applicant further submitted that having the Agreement in place would limit, or considerably complicate, the Applicant’s ability to share resources across its business which would negatively impact productivity by reducing the number of employees which the Applicant is willing or able to deploy at different work sites.
I have taken this into account.
Section 318(3)(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer;
The Applicant submitted that it would incur significant economic disadvantage through the significant administrative, rostering and payroll costs associated with managing two sets of employment arrangements.
I have taken this into account.
Section 318(3)(f) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer;
The Applicant submitted that there is a lack of business synergy between the Agreement and the Award, which is likely to cause both practical difficulties and industrial disharmony, should the application not be granted.
I have taken this into account.
Section 318(3)(g) the public interest.
The objects of the Act are identified in s.3 as follows:
“3 Object of this Act
The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:
(a) providing workplace relations laws that are fair to working Australians, promote job security and gender equality, are flexible for businesses, promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations; and
(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and
(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and
(d) assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and
(e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and
(f) achieving productivity and fairness through an emphasis on enterprise‑level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and
(g) acknowledging the special circumstances of small and medium‑sized businesses.”
The Applicant submitted that it is in the public interest to grant the orders sought. The Applicant submitted that the orders are consistent with the object of the transfer of business provisions of the Act, in striking a balance between the protection of employees’ terms and conditions of employment and the interests of the employers in running their enterprises efficiently without the burden of unnecessary complications in their employment arrangements.
Further, the Applicant relied on the Agreement being a ‘zombie agreement’ made under the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, noting again that it will automatically terminate on 7 December 2023.
I have taken this into account.
Conclusion
I have taken into account all of the submissions and materials provided in this matter, including the responses received from the affected employees.
This ‘zombie agreement’ is outdated and does not pass the better off overall test. The loaded rate contained in the Agreement does not sufficiently remunerate employees who are required to work shifts which attract penalties under the Award. As a result, I am satisfied that this application should be granted. I note that there is nothing preventing the parties from entering into negotiations for a new agreement in accordance with the provisions of the Act.
For the reasons identified above, I find that the Agreement does not and will not cover the Applicant and the transferring employees from today’s date.
I so Order.
COMMISSIONER
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