Australian Nursing and Midwifery Federation

[2017] FWC 6792

[2017] FWC 6792

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.319 - Application for an order relating to instruments covering new employer and non-transferring employees

Australian Nursing and Midwifery Federation
(AG2017/5007)

DEPUTY PRESIDENT HAMILTON MELBOURNE, 21 DECEMBER 2017

Application for an order relating to instruments covering new employer and non-transferring employees - interim orders.

[1] On 24 October 2017, the Australian Nursing and Midwifery Federation (the applicant) applied for orders under s.319(1)(b) and (c) of the Fair Work Act 2009 (the Act) that the Royal District Nursing Service Ltd Victorian Operations Enterprise Agreement 2016 (the old agreement) cover non-transferring employees of RSL Care RDNS Limited (the new employer) performing transferring work in the State of Victoria and that the RSL Care Enterprise Agreement 2015 (the new agreement) does not and will not cover non-transferring employees of the new employer performing transferring work in the State of Victoria.

[2] The old agreement was approved by the Fair Work Commission (the Commission) on 6 January 2017 and nominally expires on 1 June 2018 1. The new agreement was approved by the Commission on 15 March 2016 and nominally expires on 21 March 20192. In the absence of the orders sought by the applicant, the relevant non-transferring employees will be covered by the new agreement.

[3] I held conferences on 20 November 2017, 6 December 2017 and 14 December 2017 to enable discussions between the parties with a view to reaching agreement. The applicant, the Health Services Union Victoria No. 3 Branch (the Victorian Allied Health Professionals Association) and the new employer and its representative were in attendance at the conferences.

[4] This decision concerns interim orders sought by the applicant on 8 November 2017 that the old agreement cover non-transferring employees of the new employer performing transferring work pending hearing of the application for final orders in February 2018.

[5] There was no request from any party that a hearing be further listed in relation to the application for interim orders. The matter is determined on the basis of written submissions. The Victorian Allied Health Professionals Association adopted and endorsed the applicant’s submissions.

Relevant legislation

[6] Sections 317 and 319 of the Act relevantly provide:

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

This Division provides for the FWC to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer.

…

319 Orders relating to instruments covering new employer and non-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 non-transferring employee because of subsection 314(1) does not, or will not, cover the non-transferring employee;

(b) an order that a transferable instrument that covers, or is likely to cover, the new employer, because of a provision of this Part, covers, or will cover, a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer;

(c) an order that an enterprise agreement or a modern award that covers the new employer does not, or will not, cover a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer.

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 non-transferring employee who performs, or is likely to perform, the transferring work for the new employer;

(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 non-transferring employee before the later of the following:

(a) the time when the non-transferring employee starts to perform the transferring work for the new employer;

(b) the day on which the order is made.”

[7] Section 589 of the Act provides as follows:

“589 Procedural and interim decisions

(1) The FWC may make decisions as to how, when and where a matter is to be dealt with.

(2) The FWC may make an interim decision in relation to a matter before it.

(3) The FWC may make a decision under this section:

(a) on its own initiative; or

(b) on application.

(4) This section does not limit the FWC’s power to make decisions.”

[8] I have also had regard to the Explanatory Memorandum 3 and the Supplementary Explanatory Memorandum4.

Background

[9] In this case, the old employer employed a number of employees in the State of Victoria, and employed them under the old agreement. The old employer transferred the business to the new employer, which performed all the work of the old employer as of 19 November 2017.

[10] As the new employer submitted 5, there was a transfer of business within s.311 of the Act, and the employees of the old employer who transferred are ‘transferred employees’ within the meaning of s.311(2) of the Act. The old agreement is a ‘transferable instrument’ within s.312 of the Act. The effect is that the old agreement applies to the ‘transferring employees’ who are performing ‘transferring work’ to the exclusion of other instruments by operation of s.313 of the Act. This is conceded by the new employer.

[11] By operation of s.314 of the Act, however, non-transferring employees are not covered by the old agreement. Section 314 of the Act provides that such employees would be covered by the transferable instrument, but only if the requirements of that section are met. In this case the requirements are not met because non-transferring employees, such as new employees, are covered by the new agreement within s.314(1)(d) of the Act. This is not disputed by the applicant.

[12] The applicant seeks orders directed at overturning that position, with the effect that certain non-transferring employees are covered by the old agreement. The new employer opposes the application. Further, the applicant seeks the orders on an interim basis, until full trial next year.

[13] The applicant seeks orders pursuant to s.319(1)(b) and (c) of the Act that the old agreement apply to a non-transferring employee ‘who performs, or is likely to perform, the transferring work for the new employer’ and that the new agreement does not apply to such an employee.

Consideration

Scope of the order

[14] The new employer submits that the scope of the orders sought exceeds that provided for in s.319 of the Act. It is correct in submitting that the orders must relate to non-transferring employees who perform or are likely to perform transferring work. This is conceded by the applicant in its reply submissions 6. However, orders in a more limited form may still be possible and are sought by the applicant.

Interim orders

[15] The applicant submits 7, and the new employer does not deny, that the Commission has the power to issue an interim order pursuant to s.589(2) of the Act.

[16] In Castlemaine Tooheys Ltd v South Australia 8, the High Court said:

“In order to secure such an injunction the plaintiff must show (1) that there is a serious question to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief; (2) that he will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and (3) that the balance of convenience favours the granting of an injunction.”

[17] In Beecham Group Ltd v Bristol Laboratories⁹,Kitto, Taylor, Menzies and Owen JJ described the tests for an interlocutory injunction, and made it clear that the tests are about the preservation of the status quo:

“The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief: Preston v Luck; Challender v Royle. How strong the probability needs to be depends, no doubt, upon the nature of the rights he asserts and the practical consequences likely to flow from the order he seeks. Thus, if merely pecuniary interests are involved, "some" probability of success is enough: Attorney-General v Wigan Corporation and in general it is right to say, as Roper C.J. in Eq. said in Linfield Linen Pty Ltd v Nejain:

‘There are disputes of fact as to a number of matters but this being an application for an interlocutory injunction I look at the facts simply to ascertain whether the plaintiff has established a fair prima facie case and a fair probability of being able to succeed in that case at the hearing.’

Thus where the defendant goes into evidence on the interlocutory application the Court does not undertake a preliminary trial, and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case. James L.J. explained the general attitude of the Court when he said, in Plimpton v. Spiller, in relation to a patent action where there was no outstanding issue as to validity:

‘… the Court, not forming an opinion very strongly either one way or the other whether there is an infringement or not, but considering it as a fairly open question to be determined at the hearing, and not to be prejudiced by any observation in the first instance, reserves the question of infringement as one which will have to be tried at the hearing, and which it will then have to consider.’

And he proceeded to discuss what was the best mode of keeping things in statu quo:

‘… “for that” – he said – “is what the Court has to do – to keep things in statu quo – until the final decision of the question.”’

This is generally true, but in a particular case it may be that although the plaintiff has shown a probability of success other considerations make it unjust to grant an injunction, especially if another form of interlocutory relief is possible. The second inquiry is directed to this aspect of the matter. It is whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted. It is of course to be remembered that if an injunction be granted it will be upon terms of the plaintiff submitting, in the event of his ultimately failing, to such order as to damages as the Court may make in order to compensate the defendant for any injury caused by the injunction; and likewise it is to be remembered that if the injunction be refused the defendant may be required to keep an account of the profits he makes from the course of conduct of which the plaintiff complains, so that, if he loses the case and the plaintiff elects under s.118 of the Patents Act to recover the amount of those profits rather than damages, the quantum will be readily ascertainable.” (footnotes omitted)

[18] This is conceded by the applicant, which in its reply submissions cites Katzmann J in Construction Forestry Mining and Energy Union v Anglo Coal (Capcoal Management) Pty Ltd 10:

“As Greenwood J explained in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Bluestar Pacific Pty Ltd (Bluestar), in order to warrant the exercise of the Court’s discretion to grant interim reinstatement, the applicant must show “a sufficient likelihood of success in the principal proceeding at trial to justify, in the circumstances, the preservation of the status quo [strictly, the status quo ante] pending the trial”.

…

I conclude that the strength of the applicants’ case tips the balance of convenience in the applicant’s favour. An interim injunction will restore the status quo ante…” (footnote omitted)

[19] The applicant submits in reply that it is the status quo ante, the state of affairs prior to the issues giving rise to the dispute, and not the status quo per se, which is to be preserved 11.

[20] Commission decisions make it clear that the question in interim decisions is that of whether or not the Commission should intervene to preserve the status quo. In Australasian Meat Industry Employees Union, The v Teys Bros (Beenleigh) Pty Ltd T/A Teys Brothers 12, the Commission said:

“I am satisfied that the AMIEU has made out the requisite arguable case and that the relevant status quo ante was the position that obtained before the Notification Letter. It is certainly arguable that on the proper construction of s.492(1)(a) an employer will not be acting reasonably in making a request under that paragraph if the reason for the request is unconnected with the practical requirements of the employer’s business and the avoidance of “undue inconvenience” and is instead motivated only by a desire to withdraw cooperation with the AMIEU (as is evident from the Notification Letter). In making that observation I should not be interpreted as in way finding that Mr Teys lacked a proper foundation for taking offence in the manner noted above. The authenticity of Mr Salter’s shared feelings on the topic was evident in the witness box and he explained Teys’ position in a measured and reasonable way. However, the union defends the propriety of its actions and this interim application is not the appropriate occasion for the final resolution of the rights and wrongs of the events of December 2012.”

[21] Senior Deputy President Watson said in DesignInc (Sydney) Pty Limited v M Xu 13:

“The conventional tests for the granting of a stay order, as set out in the Full Bench decision in Kellow-Falkiner Motors Pty Ltd and Edghill are as follows:

‘[5] In determining whether to grant a stay application the Commission must be satisfied that there is an arguable case, with some reasonable prospect of success, in respect of both the question of leave to appeal and the substantive merits of the appeal. In addition, the balance of convenience must weigh in favour of the order subject to appeal being stayed. Each of the two elements referred to must be established before a stay order will be granted. [See generally McAdam v Swersky and Velos per Williams SDP; Franklin and Porcheron v Gainot and Zamos Pty Ltd t/as White Ibis Partnership per Munro J]

[6] The Commission approaches applications for stay orders on the basis that, unless otherwise established, the order subject to appeal was regularly made.’” (footnotes omitted)

[22] In my view the question is whether or not I should preserve the status quo by issuing orders. The difficulty for the applicant is that on the basis of the authorities quoted the status quo is that established by the Act, namely that pursuant to s.314 of the Act, non-transferring employees performing transferring work and other work are covered by the new agreement. It would not be consistent with authority to change the status quo established by express operation of the Act, and to return the status quo to that applying before the Act operated. Nor is it that of establishing a new status quo, namely that these employees should be covered by the old agreement. This would seem contrary to the purpose of interim orders, and the structure of s.319 of the Act, which provides for orders to be made in some limited circumstances to overcome the operation of the Act under s.314 of the Act.

Serious question

The views of the employer and employees who would be affected by the order – s.319(3)(a)

[23] In relation to s.319(3)(a) of the Act, the new employer submits that its views have to be taken into account. Its views are that it is its intention to have all employees of RSL Care RDNS Limited move to the same terms and conditions of employment over time. This includes being covered by the one national enterprise bargaining agreement. It explains that it seeks a ‘one organisation’ process, with one agreement and one set of conditions for all employees. The orders will delay or prevent consistency in terms and conditions of employment. The new employer has introduced a new ‘one organisation’ brand, being ‘Bolton Clarke’. It submits that realising the benefits of the new brand will be enhanced by the employees being in ‘one organisation’ with one culture, and shared values, terms and conditions. It submits that these benefits will be prevented by the proposed orders, and it will have significant cost implications for the employer, and perpetuate inequities. The applicant accepts that the new employer opposes the orders sought. Regard must be given to the views of the employer.

[24] The applicant asserts, and the employer concedes, that the terms of the new agreement are less generous than the old agreement, and that employees who would be affected by the orders would prefer to be engaged under the more generous terms. An examination of the two agreements reveals that there are many and substantial differences between the old and the new agreement, including in wages, in penalty rates, in allowances, in leave entitlements, and other matters, and that the old agreement is more generous than the new in relation to these issues. The applicant contests the new employer’s submission that the intention was not to give weight to the preference of employees to be provided with more generous conditions of employment 14. I accept this submission by the applicant.

Whether any employees would be disadvantaged by the employer – s.319(3)(b)

[25] The new employer submits that new employees have an entitlement to the terms of the old agreement, and that this is not the case. New employees are entitled to the new agreement, and are not disadvantaged in any way. The applicant submits that employees would be substantially disadvantaged if orders are not made, and in its reply submissions estimates the amount and describes them as ‘significant’ 15. The new employer’s submissions are strictly correct, namely that the entitlements of non-transferring employees are not directly affected by the orders, because they are established by the Act. The entitlements of transferring employees performing transferring work may be indirectly affected at most, and probably not even that.

Nominal expiry date of the agreement - section 319(3)(c)

[26] The nominal expiry date of the old agreement is 1 June 2018, and of the new agreement is 21 March 2019. The new employer also states its intentions on renegotiation, namely that the next agreement will apply to all employees in all States and Territories, and that this is inconsistent with the objectives of the applicant. It submits that the granting of interim orders would assist the applicant in its negotiations. The applicant submits that the parties will shortly be at liberty to negotiate the terms and conditions of their employment. In its reply submissions, the applicant submits that if the new employer unilaterally refuses to negotiate, it may avail itself of statutory mechanisms to commence bargaining, and the new employer is obliged to negotiate in accordance with clause 1.4(b) of the old agreement. I have had regard to all submissions.

[27] In my view the parties need to make a substantial effort to negotiate. Their positions are far apart and there is no sign at all that either has made concessions or had any real regard to the negotiating position of the other side.

Negative impact on productivity – s.319(3)(d)

[28] In Schweppes Australia Pty Ltd v United Voice – Victoria Branch¹⁶, a Full Bench said:

“Accordingly, we find that ‘productivity’ as used in s.275 of the Act, and more generally within the Act, is directed to the conventional economic concept of the quantity of output relative to the quantity of inputs. Considerations of the price of inputs, including the cost of labour, raise separate considerations which relate to business competitiveness and employment costs.

Financial gains achieved by having the same labour input - the number of hours worked - produce the same output at less cost because of a reduced wage per hour is not productivity in this conventional sense. A reduction of unit labour costs, achieved under Schweppes’ shift proposal through less overtime and lower shift loadings, does not constitute productivity within that conventional meaning. Similarly, an increase in the value of output achieved through product differentiation and a higher average value of the quantity of output is not productivity in the conventional sense.” 17

[29] The new employer submits that there would be negative impact resulting from granting the orders, namely that the new agreement provides for greater flexibility in rostering of employees, including part time hours arrangements, shorter minimum engagements, greater flexibility in split shifts. Further, it submits that there are 29 new employees since 19 November 2017, which is not an unusual turnover rate. The granting of orders would lead to a continuation of two payrolls, and the complexity of two sets of policies and procedures given the differences between the two agreements. The making of the orders would delay or prevent the achievement of these productivity gains.

[30] The applicant submits that orders would not diminish productivity and would not significantly financially disadvantage the new employer. In its reply submissions, the applicant submits that the new employer’s claims are generalized and vague, unsupported by evidence, highly non-specific and contrary to the objects of the Act. It submits that the new employer ironically seeks to apply two inconsistent instruments.

[31] In my view, the new employer’s submissions have some force, although I am as with all these matters unable to reach a firm conclusion. As the applicant submitted, the claims of the new employer have to be tested, including on the effects of its ‘ironical’ position on two instruments applying.

Significant economic disadvantage – s.319(3)(e)

[32] The applicant submits that there would not be significant economic disadvantage.

[33] The new employer submits that this is a very significant issue for it. It submits and provides financial estimates that the current cost of delivery of services in the State of Victoria exceeds the revenue for such delivery, which is not sustainable. It has to make cost savings, and s.319 orders would inhibit this. Future work is at risk if the current costs are not reduced, the most significant cost being labour. Therefore extending the old agreement to new employees ‘could place the future of the service in Victoria at risk in terms of its commercial competitiveness’. Again, this is a submission of some substance. In its reply submission, the applicant submits that this will have to be tested. This is correct, and I am therefore unable to reach a firm conclusion on this.

Business synergy between the old and new agreement – s.319(3)(f)

[34] The new employer submits that there are significant differences between the two agreements, and one agreement is sought, with a reduction in the burden of applying two agreements. It is not possible to have consistent policies for all employees due to the differences, and the applicant would perpetuate this duplication. The applicant submits that existing industrial arrangements would be maintained, and that the new agreement is not suited to the work. In its reply submissions, it again submits that the new employer is seeking to perpetuate the position of two instruments applying. These submissions need to be tested before a final conclusion can be reached.

The public interest – s.319(3)(g)

[35] In Graham Randall v Australian Taxation Office¹⁸, the Commission refers to a Full Bench decision of the Australian Industrial Relations Commission, which said 19:

“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.”

[36] The applicant submits that the public interest warrants the granting of interim orders, while the new employer denies this. In my view both submissions have some force.

Conclusion in relation to serious question

[37] In my view there is a serious question to be tried, although it may be that the new employer has put a fuller case at this stage, and therefore arguably a more persuasive case.

That he will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted, and/or maintaining the ‘status quo’

[38] The question to be tried is that of whether the status quo should be maintained, in order to avoid injury to the applicant. In this case, as already stated, the status quo is that provided by the operation of the Act. This is that by operation of s.314 of the Act, the new agreement applies to non-transferring employees performing transferring work, as well as non-transferring work. The applicant seeks to overturn the status quo by the making of interim and then final orders. It is not appropriate to create a new status quo by way of interim orders, and therefore the application should be refused on that basis.

[39] Even if this is not correct, I would not issue orders. I am not satisfied that the gradual process of increase of non-transferring employees performing transferring work and working under the new agreement would amount in the circumstances to ‘irreparable injury’ to the applicant’s position. I accept that damages cannot be issued to correct the applicant’s position, nevertheless my assessment remains the same.

[40] The new employer submits that the making of orders is not in the public interest, while the applicant submits otherwise. The public interest is expressed in the Act, which provides for the status quo to be that the new agreement applies to the employees in question.

[41] The new employer has, to some extent, voluntarily made payments under the old agreement to enable discussions to be held in conference with a view to reaching agreement. This was a good faith concession by them to assist the process of attempting to reach amicable agreement, and is to their credit. It does not of course count against the fact that the Act provides a status quo. The new employer submitted that the applicant, by way of contrast, made no concessions of any kind to assist the resolution of the dispute 20. It is difficult to resist this conclusion.

The balance of convenience

[42] The applicant submits that the making of orders would do no more than preserve the status quo 21. It also submits that the old agreement previously applied and applied at the time of the application, and that the new employer has capriciously refused to continue undertakings22. However, for reasons already given, if orders are not made then the status quo will continue by operation of the Act. I am able to issue orders which disturb the status quo if I am persuaded to do so having regard to a number of stated factors, but this is not merited on the submissions put to date in relation to the statutory tests for an order. On the other hand, non-transferring employees have no entitlement to the old agreement, and are employed on the new agreement. There is, as the new employer submitted, little disadvantage in that. The new employer, however, would have the disadvantage of a change to the status quo with the result of a substantial change in costs of the old agreement23. I have taken account of all submissions and I am not persuaded that the balance of convenience favours the applicant. Overall it favours the new employer.

Conclusion

[43] I have considered all submissions and for the reasons given I refuse the application for interim orders.

DEPUTY PRESIDENT

 1   [2017] FWCA 53.

 2   [2016] FWCA 1260.

 3   Explanatory Memorandum, Fair Work Bill 2008 (Cth), p.202-203.

 4   Supplementary Explanatory Memorandum, Fair Work Bill 2008 (Cth), p.27.

 5   Employer’s submissions in relation to the application for interim orders, 15 December 2017, p.1.

 6   Applicant’s submissions in reply in relation to the application for interim orders, 18 December 2017, p.1.

 7 Applicant’s submissions in relation to the application for interim orders, 19 November 2017 at [12].

 8 (1986) 161 CLR 148 at 153 (Mason ACJ).

9 (1968) 118 CLR 618.

 10 [2016] FCA 1582.

 11 Applicant’s submissions in reply in relation to the application for interim orders, 18 December 2017 at [10].

 12   [2013] FWC 2753 at [20].

 13   [2012] FWA 1088 at [3].

 14   Applicant’s submissions in reply in relation to the application for interim orders, 18 December 2017 at [4(b)].

 15   Ibid at [4(c)].

16 [2012] FWAFB 7858.

 17   Ibid at [45]-[46].

18 [2010] FWAFB 5626.

 19   Kellogg Brown & Root Pty Ltd and Others v Esso Australia Pty Ltd, PR955357 at [23].

 20   Employer’s submissions in relation to the application for interim orders, 15 December 2017, p.11.

 21 Applicant’s submissions in relation to the application for interim orders, 19 November 2017 at [21].

 22 Applicant’s submissions in reply in relation to the application for interim orders, 18 December 2017 at [11].

 23   Employer’s submissions in relation to the application for interim orders, 15 December 2017, p.12-13.

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