AWH Pty Ltd

Case •

[2023] FWC 826

•

14 APRIL 2023
[2023] FWC 826

FAIR WORK COMMISSION
DECISION

Fair Work Act 2009

s.318 - Application for an order relating to instruments covering new employer and transferring employees

AWH Pty Ltd

(AG2023/901)

Clerical industry

COMMISSIONER MIRABELLA

MELBOURNE, 14 APRIL 2023

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

  1. AWH Pty Ltd (AWH) has applied for orders under s.318 of the Fair Work Act 2009 (the Act) in relation to the   Landmark Operations Limited Enterprise Agreement 2009[1] (the Landmark Agreement).

  1. Clause 1.1 of the Landmark Agreement states that it applies to Landmark Operations Limited (Landmark) and its employees. Landmark’s business had been previously purchased by Nutrien Ag Solutions Limited (Nutrien). As a result, Nutrien’s employees working in the Nutrien Distribution Centres, which is the business being transferred to AWH, are still covered by the Landmark Agreement.

  1. The Landmark Agreement is a “transferrable instrument” as defined in s.312 of the Act.

  1. AWH is seeking the following orders that:

·   The Landmark Agreement will not cover employees transferring from Nutrien to AWH as part of the transfer of business (the transferring employees) and that this order will come into operation when AWH assumes operational control of the Nutrien Distribution Centres;

·   AWH will not be covered by the Landmark Agreement; and

·   The transferring employees will be covered by either the AWH Collective Agreement 2021[2] or the AWH Pty Ltd Staff Employees Collective Agreement 2009[3] (the AWH Agreements), whichever is applicable to their role.

Background

  1. Nutrien, the current employer of the transferring employees, operates an agricultural business which provides a range of services to the agriculture sector including real estate, financial services, insurance, retail sales and broking services. 

  1. Nutrien currently manages the Nutrien Distribution Centres, which provide stock to the Nutrien retail centres. The management of the Nutrien Distribution Centres is being transferred to AWH and this transfer is slated to take place between April and June 2023.  AWH is in the warehousing industry.

Statutory provisions

“318 Orders relating to instruments covering new employer and transferring employee

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.”

  1. The power to make orders under s.318 is premised on the Commission being satisfied that there has been, or that there is likely to be, a transfer of business for the purposes of s.311 of the Act. I am satisfied that there will likely be a transfer of business from Nutrien to AWH for the following reasons.

  1. First, as per sections 311(1)(a) and (b), the employment relationship between Nutrien and the transferring employees will terminate upon the transfer of business and, immediately following the termination of their employment, the transferring employees will be employed by AWH. Secondly, having regard to the information in the application, I consider that the work performed by the transferring employees for Nutrien is the same or substantially the same as the work they will perform for AWH (s.311(1)(c)). Finally, there is a “connection” between Nutrien and AWH as described in s.311(4) and (6) because Nutrien is outsourcing work to AWH and AWH is an associated entity of Nutrien (s.311(1)(d)). Nutrien is the owner of Landmark Wool Pty Ltd and Landmark Wool Pty Ltd owns 50% of AWH.

  1. Next it will be necessary for me to consider s.318(3) which states that in deciding whether to make an order under s.318(1), the Commission must take certain matters into account.

The views of the new employer and affected employees – s.318(3)(a)

  1. The view of AWH, as the new proposed employer, is that the application should be granted. It contends there will be the following benefits in standardising the employment conditions of transferring employees to match those of AWH’s current workforce:

·    The standardisation will create uniform employment conditions, thus removing a source of potential workplace disharmony and division;

·   Transferring employees will be better off under the terms of the AWH Agreements;

·   AWH will not be left to administer a zombie agreement; and

·   Standardisation will reduce the burden associated with administering an additional enterprise agreement.

  1. AWH says that there will be 21 transferring employees and that 11 employees will be covered by the AWH Collective Agreement 2021 and 10 will be covered by the AWH Pty Ltd Staff Employees Collective Agreement 2009.

  1. The Finance Sector Union (the FSU) was involved in the initial bargaining for the Landmark Agreement, but they are not covered by the Landmark Agreement, nor are any other union.

  1. AWH sought the views of employees who will be affected by the transfer and provided evidence of these views to the Commission.

  1. AWH provided to transferring employees copies of the AWH Agreements, as well as an outline of the differences between the Landmark Agreement and the AWH Agreements. This explanatory document was provided to the Commission. 

  1. AWH requested that all 21 of the transferring employees complete and sign a declaration. The completed declarations were provided to the Commission. The declaration asked employees to confirm whether they do or do not have any concerns about transferring to the relevant AWH Agreement and provided a text box for employees to include any comments.

  1. Of the 21 transferring employees, AWH says that six did not provide a response, five did not have any concerns, two raised issues which AWH says are not relevant for the consideration of which industrial instrument covers their employment, and eight raised concerns or asked queries regarding the AWH Agreements.  The concerns raised were regarding hours of work, banked hours, paid paternity leave, paid overtime, meal breaks and leave loading.

  1. The views of the new proposed employer and the views of the transferring employees, which are equally divided either in support of and/or not opposing the application and expressing concern, weigh marginally in favour of granting the orders sought.

Whether any employee will be disadvantaged – s.318(3)(b)

  1. The Commission must consider whether any of the transferring employees will be disadvantaged by the order in relation to their terms and conditions of employment.

  1. AWH submits that the transferring employees will be better off under the AWH Pty Ltd Staff Employees Collective Agreement 2009.  It submits that this is because this agreement provides for a 38-hour week, compared with a 40-hour week in the Landmark Agreement.  AWH acknowledged that the National Employment Standards in providing for a 38-hour work week overrides the Landmark Agreement with regards to maximum weekly hours; however, AWH says that the transferring employees are still contracted for 40-hour weeks and their annual salary is calculated by dividing the rate by 40.  AWH submits that the transferring employees who will remain on a salaried rate under the AWH Pty Ltd Staff Employees Collective Agreement 2009 will be better off as they will retain the same annual rate but calculated on less hours.  It submits that therefore their hourly rate will be higher under the new agreement.

  1. When comparing the Landmark Agreement with the AWH Collective Agreement 2021, AWH submits that transferring employees will be better off because they will receive higher rates of pay, guaranteed pay increases that are renegotiated every three years with the involvement of the United Workers’ Union, access to paid overtime and access to banked hours (which is essentially a time in lieu arrangement).

  1. AWH further submits that transferring employees will be entitled to a more beneficial long service leave entitlement under both of the AWH Agreements. This is because they will be entitled to long service leave calculated at a rate of one week for each year of service, which is higher than the rate under state legislation.

  1. The absence of any demonstrable disadvantage weighs in favour of granting the orders sought.

The nominal expiry date of the agreement – s.318(3)(c)

  1. If the application under s.318 relates to an enterprise agreement, the Commission must consider the nominal expiry date of the agreement. The expiry date for the Landmark Agreement is 11 March 2014. The nominal expiry date for the AWH Collective Agreement 2021 is 30 June 2024. The nominal expiry date for the AWH Pty Ltd Staff Employees Collective Agreement 2009 is 11 January 2015. I consider the nominal expiry date of the agreements to be a neutral factor.

Negative impact on productivity and whether the new employer will incur significant economic disadvantage – s.318(3)(d) and (e)

  1. The Act requires the Commission to consider whether the transferrable instrument would have a negative impact on the productivity of the new employer’s workplace and whether the new employer will incur significant economic disadvantage if the transferable instrument continues to cover the transferring employees.

  1. AWH submits that although the Landmark Agreement would unlikely have a negative impact on productivity or create significant economic loss, it is not as suitable as the AWH Agreements as it was not created with the transferring work in mind.

  1. I consider these factors to be neutral considerations.

The degree of business synergy – s.318(3)(f)

  1. The Commission is required to consider the degree of business synergy between the transferrable instrument and any workplace instrument that already covers the new employer.

  1. The AWH submits that there is very little business synergy between the Landmark Agreement and the AWH Agreements.  It submits that the Landmark Agreement was bargained with the FSU and was developed primarily for white collar roles; however, the AWH Agreements were created to apply to work in a warehouse environment, which is the type of work which is being transferred.

  1. That there is little business synergy between the transferable instruments and the existing Landmark Agreement weighs in favour of the orders sought.

Public Interest – s.318(3)(g)

  1. Section 318(3)(g) requires the Commission to consider “the public interest”. AWH made no submissions regarding the public interest.

  1. I am satisfied that it is not contrary to the public interest to grant the orders sought. This weighs in favour of the orders sought.

Conclusion

  1. Having considered the application and supporting material and taking into account each of the requirements in s.318(3), I am satisfied that the orders sought should be granted.

  1. An Order will be separately issued with this Decision.


COMMISSIONER


[1] AE874712.

[2] AE513631.

[3] AC325507.

Printed by authority of the Commonwealth Government Printer

<AE874712  PR760896>

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