AustralianSuper Pty Ltd
[2024] FWC 1337
•21 MAY 2024
| [2024] FWC 1337 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
AustralianSuper Pty Ltd
(AG2024/1624)
| DEPUTY PRESIDENT COLMAN | MELBOURNE, 21 MAY 2024 |
Application for orders relating to transferable instrument
AustralianSuper Pty Ltd (AustralianSuper) has lodged an application under s 318 of the Fair Work Act 2009 (Act) seeking orders from the Commission in relation to a transferrable instrument. First, it seeks an order under s 318(1)(a) that the Link Business Services Collective Agreement 2009 (LBS Agreement) not cover AustralianSuper or any of its employees who were previously employed by Link Business Services Pty Ltd (LBS) in its AustralianSuper member complaints resolutions team and who are ‘transferring employees’ within the meaning of s 311(2). It also seeks an order under s 318(1)(b) that the AustralianSuper Pty Ltd Enterprise Agreement 2023-2026 (AustralianSuper Agreement) cover the transferring employees.
AustralianSuper has decided to internalise member complaints resolution (the transferring work), a function which has previously been undertaken by an external service provider, Australian Administration Services Pty Limited (AAS). The employees who perform the relevant work are currently employed by LBS, which is an associated entity of AAS. The employees of LBS are covered by the LBS Agreement. AustralianSuper has made offers of employment to the LBS employees, with employment to commence on or about 11 June 2024. In their employment with AustralianSuper, the employees will continue to perform the same or substantially the same work as they currently do for LBS.
AustralianSuper and AAS have agreed that AustralianSuper will have the use of certain assets which belong to AAS or another associated entity of LBS, and which are currently used by the transferring employees to perform their work. The assets in question include various systems such as IT platforms and software for complaint resolution, as well as various processes and procedures, training materials and other documents. Further, data in relation to active claims and historical data will be accessible to AustralianSuper.
As I explain further below, I consider that on or about 11 June 2024 there will be a transfer of business within the meaning of s 311(1) from LBS to AustralianSuper, and that employees who have accepted employment with AustralianSuper will be transferring employees within the meaning of s 311(2) of the Act. The transferring employees are currently covered by the LBS Agreement, which is a transferable instrument within the meaning of s 312(1). In the absence of an order of the Commission under s 318 of the Act, the LBS Agreement will cover the transferring employees while they are performing transferring work for AustralianSuper. The application seeks orders that the LBS Agreement not apply to those employees, and that instead the AustralianSuper Agreement apply to them.
Framework
Section 318(1) of the Act provides that the Commission may, on application by a person or organisation identified in s 318(2), 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.”
The power to make orders under s 318 is contingent upon the Commission being satisfied that there has been, or that there is likely to be, a transfer of business for the purpose of s 311 of the Act. I am satisfied that there will be a transfer of business from LBS to AustralianSuper for the following reasons.
First, the employment of employees of LBS will terminate and within three months of termination (on the next working day) the employees will become employees of AustralianSuper (s 311(1)(a) and (b)). Secondly, having regard to the information before the Commission, I consider that the work to be performed by the transferring employees for AustralianSuper will be the same or substantially the same as the work that these employees performed for LBS (s 311(1)(c)). Finally, there is a connection between LBS and AustralianSuper as described in s 311(3), because in accordance with an arrangement between an associated entity of the old employer on the one hand and AustralianSuper, the latter will have the beneficial use of some of the assets that LBS owned or had the beneficial use of and that are used in connection with the transferring work (s 311(1)(d)).
In deciding whether to make an order under s 318(1), the Commission must take into account the matters in s 318(3), which I now do.
The views of the new employer and employees - s 318(3)(a)(i) and (ii)
The view of AustralianSuper, the new employer of the transferring employees, is that the application should be granted. It said that the proposed orders would provide the company with certainty and consistency in relation to its employment arrangements and the application of industrial instruments with respect of the transferring work. It would also ensure parity of conditions between transferring employees and other employees who will perform the transferring work, including other former LBS employees who have recently transferred to AustralianSuper and in respect of whom orders under s 318 have been made. AustralianSuper further submitted that the AustralianSuper Agreement would afford benefits to the transferring employees which are overall more beneficial than those in the LBS Agreement.
AustralianSuper noted that the letters of offer that it had given to LBS employees had explained its intention to make the present application to the Commission under s 318. This was also addressed at an information session for relevant employees on 1 February 2024. On 15 March 2024, contracts of employment were issued to 14 LBS employees. None of the employees raised any concerns with AustralianSuper about the prospect of the AustralianSuper Agreement covering them in their employment with AustralianSuper.
The views of the new employer weigh in favour of granting the application. The views of employees who would be affected by the order are not known, however I consider that it may reasonably be inferred that they are not opposed to the application.
Whether any employees would be disadvantaged by the order - s 318(3)(b)
AustralianSuper submitted that in almost all respects the AustralianSuper Agreement contains terms and conditions of employment that are equal to or more favourable than those in the LBS Agreement. It said that examples of provisions in the AustralianSuper Agreement that are more beneficial to employees include rates of pay and superannuation contributions, a 36 hour week, and various leave arrangements. It contended that the only areas in which the LBS Agreement provided conditions more beneficial to employees than the AustralianSuper Agreement were higher duties, certain conditions applicable to redeployment in a redundancy situation, and four weeks’ notice of termination, although the latter condition is reflected in employees’ letters of offer. I note that the Finance Sector Union of Australia (FSU) is covered by the AustralianSuper Agreement and has confirmed that it does not oppose the application.
I consider that the AustralianSuper Agreement provides for terms and conditions of employment that overall are more generous to employees than those of the LBS Agreement. I am satisfied that the transferring employees will not be disadvantaged by the proposed order. This weighs in favour of granting the application.
The nominal expiry dates of relevant agreements - s 318(3)(c)
AustralianSuper submitted that the LBS Agreement is a so-called ‘zombie’ agreement which reached its nominal expiry date on 30 June 2014. On 9 February 2024, the Commission ordered, pursuant to subitem 20A(6) of Schedule 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, that the default period of the agreement be extended to 6 December 2024. AustralianSuper submitted that the nominal expiry date of the LBS Agreement, which is many years in the past, weighed in favour of the application. I agree.
Whether negative impact on productivity of new employer’s workplace - s 318(3)(d)
Section 318(3)(d) requires the Commission to take into account whether the transferrable instrument would have a negative impact on the productivity of the new employer’s workplace. AustralianSuper submitted that its enterprise agreement was the only one which applies to its workforce of some 1700 employees, and that if the proposed orders were not made, it would be required to divert resources to administer and manage the different terms and conditions in the LBS Agreement, thereby adding unnecessary complexity to its payroll and human resources functions. It submitted that a disparity in conditions of employment among employees performing the same work might result in discontent and adversely affect morale and productivity. I accept that the transferable instrument could have some negative impact on productivity. This weighs in favour of the application.
Whether significant economic disadvantage - s 318(3)(e)
Section 318(3)(e) requires the Commission to consider whether the new employer would incur significant economic disadvantage as a result of being covered by a transferable instrument. AustralianSuper contended that it would suffer economic disadvantage as a result of the additional administrative burden and complexity associated with managing different terms and conditions of employment. However, AustralianSuper does not contend that it would suffer significant economic disadvantage as a result of the transferable instrument covering it. This factor does not support the granting of the application.
Whether there is business synergy between instruments s 318(3)(f)
AustralianSuper contended that there was little business synergy between the LBS Agreement and the AustralianSuper Agreement. I accept this submission. This consideration weighs in favour of granting the application.
The public interest - s 318(3)(g)
AustralianSuper contended that the orders it seeks are consistent with the public interest because they further the objects of the transfer of business provisions in the Act, and would strike an appropriate balance between protecting employees’ conditions of employment and its own interest in the efficient running of its operations without unnecessary complications and costs. However, in my view the public interest does not carry any weight in this matter.
Conclusion
Taking into account the matters in s 318(3), I have decided that it is appropriate to grant the application under s 318(1). I will make orders under s 318(1) that the LBS Agreement will not cover AustralianSuper or any of the transferring employees and that the AustralianSuper Agreement will apply to such employees. An order will be issued separately in PR775225.
DEPUTY PRESIDENT
Determined on the papers
Printed by authority of the Commonwealth Government Printer
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