AustralianSuper Pty Ltd
[2022] FWC 1307
•30 MAY 2022
| [2022] FWC 1307 |
| 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
(AG2022/1556)
LUCRF Super Business Development Managers and Field Staff/ National Union of Workers Certified Agreement 2017-2020
| Banking finance and insurance industry | |
| COMMISSIONER YILMAZ | MELBOURNE, 30 MAY 2022 |
Application for an order relating to instruments covering new employer, transferring employees and non-transferring employees.
This decision concerns an application by AustralianSuper Pty Ltd (the Applicant) for orders pursuant to s.318 of the Fair Work Act 2009 (the Act).
The application is made in respect of employees who are currently covered by the LUCRF Super Business Development Managers and Field Staff/ National Union of Workers Certified Agreement 2017 – 2020 (the Agreement) and will transfer employment to the Applicant.
The Labour Union Co-Operative Retirement Fund Pty Ltd T/A LUCRF Pty Ltd (LUCRF) and the Applicant are registered superannuation entities and will merge on or around 3 June 2022. Under the terms of the merger, LUCRF will cease to operate. LUCRF employees under the Agreement have expressed an interest to accept a redundancy, or alternatively be offered employment either on a permanent basis or fixed term arrangement with the Applicant. The Applicant seeks those transferring employees covered by the Agreement to be covered by the AustralianSuper Pty Ltd Enterprise Agreement 2019-2023 (the New Agreement) on commencement of employment, and that the transferring instrument does not cover it as the new employer.
The orders sought pursuant to s.318 (1)(a) of the Act are as follows:
1. An order pursuant to s.318(1)(a) of the Act that:
a)the Agreement will not cover AustralianSuper or any employees whose employment is transferred from LUCRF to AustralianSuper;
b)the AustralianSuper Pty Ltd Enterprise Agreement 2019-2023 (the “AustralianSuper Agreement”) will cover any employees whose employment is transferred from LUCRF to AustralianSuper.
The application was accompanied by a letter from the United Workers’ Union indicating its support for the orders sought by the Applicant, a memorandum of agreement between the Applicant and LUCRF together with additional material relevant to the application. In these circumstances I have determined the matter on the papers without the need for a hearing.
Legislation
Section 318(3) of the Act sets out the matters the Commission must have regard to in determining if the orders sought should be granted
Section 318 provides as follows:
318 Orders relating to instruments covering new employer and transferring employees
Orders that FWA may make
(1) FWA 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) FWA may make the order only on application by any of the following:
(c)the new employer or a person who is likely to be the new employer;
(d)a transferring employee, or an employee who is likely to be a transferring employee;
(e)if the application relates to an enterprise agreement—an employee organisation that is, or is likely to be, covered by the agreement;
(f)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 FWA must take into account
(3) In deciding whether to make the order, FWA 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.
Background
On or around 3 November 2021 LUCRF and the Applicant entered into a Heads of Agreement to transfer LUCRF Super members’ interests on a successor fund basis and transfer
LUCRF Super’s assets to the Applicant.
The s.318 application was lodged on 23 May 2022. At that time of the application, LUCRF engaged 96 employees, of which 67 expressed interested in employment with the Applicant, 11 of which were covered by the Agreement. All employees covered by the Agreement are members of the United Workers’ Union.
On 11 April 2022, the United Workers’ Union agreed to support the s.318 application and a list of agreed matters were formalised in writing in a memorandum of agreement. Those agreed matters include treatment of salaries, RDOs and that employees will be offered terms and conditions of the New Agreement. The Memorandum of Agreement was attached to the Applicant’s Form F40 at Annexure B.
Transferrable instrument
Section 311 of the Act sets out when a transfer of business occurs. On the evidence before me, I am satisfied that there will be a transfer of business from LUCRF (the old employer) to AustralianSuper (the new employer) within the meaning of s.311(1) of the Act. Employees of the old employer will be terminated, they will be employed by the new employer within three months, the transferring work is the same or substantially the same, and there is a connection between the old employer and the new employer.
Section 318(3)(a) – the views of the new employer and the employees who would be affected by the order
The Applicant submits that the proposed orders would ensure consistency in relation to its employment arrangements, and submitted that the AustralianSuper Agreement, while similar, afforded greater financial and non-financial benefits to employees than those contained in the Agreement.
Additionally, given that the work is substantially the same, and the terms and conditions of the Agreement and New Agreement have a high degree of similarity, approval of this application will result in a transition with few disruptions.
The Applicant met with the United Workers’ Union and employees were consulted regarding the proposed merger. The Applicant tendered in evidence the expression of interest form provided by LUCRF to its employees seeking their expression of interest for employment with AustralianSuper Pty Ltd or alternatively their interest to access to a redundancy package. Of the 96 employees, 67 indicated that they were interested in accepting a role with AustralianSuper Pty Ltd. From among the LUCRF employees, 12 employees were covered by the Agreement as of January 2022.
The Applicant held separate meetings with those employees that expressed an interest in employment with the new employer. On 29 April 2022, the Applicant sent letters of offer to LUCRF employees containing the terms and conditions to apply to their employment. The Applicant submits that it received 9 signed employment agreements out of 11 employees covered by the Agreement at that stage. Evidently, not all LUCRF employees transferring are subject to this application, except for 9 transferring employment.
On 10 May 2022, the Applicant received a letter of support for the s.318 application from the United Workers’ Union.
These factors have, in my view, a legitimate basis, and are factors that weigh in favour of granting the application.
Section 318(3)(b) – whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
The Applicant submits that if the order sought is made, transferring employees will not be disadvantaged in relation to their terms and conditions of employment, and for existing employees of the Applicant there will be parity in terms and conditions.
In addition to the agreed treatment of salaries and RDOs, the Applicant submits that the AustralianSuper Agreement provides more beneficial entitlements than the Agreement. The new Agreement contains more beneficial terms in respect to:
a)all roles covered by the New Agreement can be performed on a flexible basis;
b)employees are entitled to 17.5% annual leave loading;
c)more favourable parental leave provisions;
d)gender transition leave;
e)grandparent leave;
f)family and domestic violence leave;
g)Aboriginal and Torres Strait Islander leave;
h)Additional three days of leave per year as nominated by the employer;
Income protection;
j)Firewarden and first aid officer annual allowance.
For the purposes of easing the transition of LUCRF employees to the AustralianSuper Agreement, the Boards of LUCRF and the Applicant committed to a range of measures including:
1) A guarantee, at a minimum, 12-month contracts to all interested LUCRF employees;
2) for any LUCRF employees who work in positions for which AustralianSuper does
not have a comparable position, the Applicant will arrange third party introductions to assist those employees to pursue roles with those organisations;
3) Employees who are not interested in transferring their employment will be eligible for a retrenchment package from LUCRF; and
4) LUCRF employees who accept an offer of employment with the Applicant
on a permanent or maximum-term basis will receive a total salary package
that is no less than their current arrangements.
On 1 December 2021, the Applicant sent a letter to LUCRF detailing the agreed measures and a copy of the letter was provided with the application.
In my view, the above considerations weigh in favour of making the order sought.
Section 318(3)(c) – if the order relates to an enterprise agreement—the nominal expiry date of the agreement
I note that the Agreement has passed it nominal expiry date of 31 July 2020 and consider that the granting of the proposed orders would not disadvantage employees, but rather ensure greater stability for transferring employees.
Section 318(3)(d) – whether the transferable instrument would have a negative impact
on the productivity of the new employer’s workplace
The Applicant submits that if the proposed orders were not made, they would be required to divert more resources towards administering and managing the different terms and conditions of employment to employees performing the same or similar work, adding unnecessary complexity to existing payroll and human resources functions.
The Applicant further submits that the disparity between the terms and conditions which apply to transferring and non-transferring employees may result in conflict and discontent amongst employees who perform the same work alongside each other.
Having considered the differences in conditions, application of the Agreement would in my view have a negative impact on productivity in the workplace.
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 suffer an economic disadvantage as a result of the additional administrative burden of managing two separate agreements and the complexity associated with managing employees performing the same work under separate instruments may in all likelihood lead to discontent and economic disadvantage. Further, in relation to future enterprising bargaining processes, the Applicant submitted that a single enterprise agreement would create greater certainty, however the nominal expiry date of the AustralianSuper Agreement is 30 June 2023.
I consider that the Applicant, being the new employer will suffer economic disadvantage should it be required to apply two similar enterprise agreements notwithstanding the more beneficial entitlements agreed for transferring employees.
Section 318(3)(f) – the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer
Given that AustralianSuper and LUCRF both operate in the superannuation industry, I am satisfied that the requirement of s.318(3)(f) is met based on a consideration of the materials before me.
Section 318(3)(g) – public interest
The Applicant submits that transferring employees by way of the proposed orders be in the public interest. Having regard to all the material before me, I am not of the view there are public interest reasons that weigh against making the Order sought.
Conclusion
Pursuant to s.318(3)(a) I have taken into account the views of the Applicant and the views of the employees who would be affected by the order based on the material before me. For the purposes of s.318(3)(b) of the Act I am satisfied that the transferring employees will not be disadvantaged in relation to their terms and conditions of employment.
I have also taken into account the material provided by the Applicant in support of its
application and the matters set out in s.318(3) of the Act. I am satisfied the materials provided
by the Applicant, when considered against the matters set out in s.318(3) of the Act, support
the making of the order.
An order[1] to this effect will be issued together with this decision.
COMMISSIONER
[1] PR742105.
Printed by authority of the Commonwealth Government Printer
<AE427247 PR741998>
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