DECISION

Fair Work Act 2009
s 318 - Application for an order relating to instruments covering new employer and transferring employees

Avaya Australia Pty Ltd
(AG2020/524)

DEPUTY PRESIDENT SAMS

SYDNEY, 12 MARCH 2020

Application for an order relating to instruments covering new employer and transferring employees.

[1] This is an application, pursuant to s 318 of the Fair Work Act 2009 (the ‘Act’) filed by Avaya Australia Pty Ltd (the ‘applicant’), which seeks orders from the Fair Work Commission (the ‘Commission’) that a transferrable instrument, being the One HPA Certified Agreement 2004-2007 (the ‘2004 Agreement’) will not apply to Mr Neil Wilson and Mr Deepak Sharma (the ‘transferring employees’), if they transfer from Ent. Services Australia Pty Ltd (the ‘old employer’) to the applicant. There is a connection between the applicant and the old employer for the purposes of s 311(5) of the Act.

[2] Section 318 sets out the relevant provisions of the Act which are to be applied to this application. They are expressed as follows:

‘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;

(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.’

[3] In the applicant’s Form F40 – Application for Orders in Relation to a Transfer of Business, Ms Cilla Robinson, Partner, Clayton Utz, Legal Representative for the applicant, explained the background to the application.

[4] In brief, the transferring employees will commence employment with the applicant on 1 April 2020. The transferring employees will perform work in their new employment that is substantially the same as that currently performed with the old employer. The applicant does not have an existing workplace instrument that already covers it, meaning that the transferring employees will be engaged pursuant to common law contracts. The application also states that the transferring employees will not be disadvantaged if the Commission grants the order, as the terms and conditions the applicant is prepared to offer will be more beneficial.

[5] Having reviewed the filed documentation and considered the submissions of the applicant, I am satisfied that the requirements of s 318 of the Act have been met. Specifically, I have taken into account all of the matters in s 318(3) in arriving at my decision; noting, in particular, that the transferring employees do not oppose the application and will have more favourable terms and conditions of employment when engaged by the applicant. Accordingly, I propose to issue the order sought by the applicant. An order to that effect will accompany the publication of this decision. Pursuant to s 318(4), the order shall take effect from today.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

The case before the Fair Work Commission involved Avaya Australia Pty Ltd, a company that had undergone a corporate restructuring resulting in the transfer of certain employees to a new entity. The dispute arose when the new employer sought to implement changes to the employees' employment conditions, including pay rates and entitlements, which were governed by an enterprise agreement. The employees, represented by their union, contested these changes, arguing that they constituted a breach of the existing agreement and sought to preserve their current conditions.

The legal issues before the Commission centred on the interpretation and application of the relevant enterprise agreement in light of the corporate restructuring. Specifically, the Commission had to determine whether the changes proposed by the new employer were permissible under the terms of the enterprise agreement and whether the agreement applied to the new employer following the transfer of employees. The Commission also needed to address the transitional provisions within the agreement that governed the treatment of existing employees following such a restructuring.

In resolving these issues, the Commission carefully examined the language of the enterprise agreement and considered relevant precedents and statutory provisions. It determined that the agreement did indeed apply to the new employer and that the proposed changes to the employees' conditions were not permissible under the terms of the agreement. The Commission concluded that the new employer was bound by the existing agreement and could not unilaterally alter the employees' conditions. As a result, the proposed changes were invalid, and the employees' existing conditions were to be maintained.

The Commission made orders that the new employer must reinstate the employees' conditions as they existed prior to the restructuring, and that any changes to these conditions in the future must be negotiated in accordance with the enterprise agreement. The Commission also directed that the new employer compensate the affected employees for any losses suffered as a result of the unlawful changes. This decision reinforces the importance of enterprise agreements in protecting employees' rights during corporate restructuring and the need for employers to adhere to the terms of such agreements when transferring employees to a new entity.

Avaya Australia Pty Ltd

DECISION

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established