Azelis Australia Pty Limited

[2019] FWC 6628

[2019] FWC 6628

FAIR WORK COMMISSION

DECISION

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

Azelis Australia Pty Limited
(AG2019/3067)

COMMISSIONER GREGORY MELBOURNE, 24 SEPTEMBER 2019

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

Introduction

[1] Azelis Australia Pty Limited (“Azelis”) has made application to the Fair Work Commission for an order under s.319 of the Fair Work Act 2009 (Cth) (“the Act”). The application is made with the intention that a transferable instrument, being the Chemcolour Industries Australia (St Mary’s Site) Enterprise Agreement 2017 (“the Enterprise Agreement”), cover Azelis as the new employer, and also cover any new or non-transferring employees employed in the future by Azelis to perform work within the scope of the Enterprise Agreement at its site at 19-25 Anne Street, St Mary’s in New South Wales.

Background

[2] In May 2019 Azelis purchased all of the shares in Chemcolour Industries Australia Pty Ltd (“Chemcolour”) and as a consequence both businesses became associated entities within the meaning of the Act. Chemcolour is a provider of speciality chemicals and food ingredients in Australia and New Zealand. At the time of the purchase Chemcolour operated from a site at 19-25 Anne Street, St Mary’s in New South Wales. The employees at the site, who are employed as Operators, Fitters and Store Persons, are covered by the Enterprise Agreement, which has a nominal expiry date of 17 November 2020.

[3] In June of this year Azelis decided to integrate the Chemcolour business into its business and offered employment to all Chemcolour employees covered by the Enterprise Agreement at the St Mary’s site. Those offers were accepted, and the employees commenced employment with Azelis immediately following the end of their employment with Chemcolour. They also continued to perform the same work at the St Mary’s site as they had been performing previously. A transfer of business therefore occurred, and the employees became transferring employees for the purposes of the Act. The Enterprise Agreement also became a transferable instrument in respect of the employees at the St Mary’s site.

[4] Azelis is not a party to an agreement that covers the type of work being performed at the St Mary’s site. As a consequence any new non-transferring employees, who are engaged to perform work at the site in the future, would be covered by the relevant Award, being the Manufacturing and Associated Industries and Occupations Award 2010 (“the Award”). This would also mean that there would be two different sets of employment conditions applying at the site for employees performing the same work, being the Enterprise Agreement and the Award. The order is accordingly sought to ensure that all employees performing work at the St Mary’s site receive the same terms and conditions. It is also submitted that any new, non-transferring employees will not be disadvantaged if an order is made as the terms and conditions contained in the Enterprise Agreement are superior to those which would apply under the Award.

[5] The application is supported by a Statutory Declaration made by Ms Maree Saunders, Azelis’ Human Resources Manager. She states that after Azelis decided to integrate the Chemcolour business, 14 employees who were covered by the Enterprise Agreement at the St Mary’s site, were offered employment with Azelis. All of those employees accepted the offer and have continued to perform the same work at the St Mary’s site.

[6] The Statutory Declaration also indicates that Azelis expects it will need to employ new employees at the St Mary’s site in the future, and it wants to be able to apply the same terms and conditions of employment to those new, non-transferring employees as now apply to the transferring employees. It also confirms that Azelis is not a party to any other enterprise agreement that would have coverage of any new employees at the St Mary’s site, and they would therefore be covered by the Award if the proposed order is not made.

[7] The Statutory Declaration also confirms that the terms and conditions contained in the Enterprise Agreement are more generous than those contained in the Award, and it would be unfair and inappropriately unmanageable to have different terms and conditions applying to different employees performing the same work at the same location.

The Relevant legislation

[8] Part 2-8 of the Act makes clear when a transfer of business occurs, and provides for the transfer of an enterprise agreement from one employer to another in those circumstances. Section 311 deals with the circumstances in which a transfer of business occurs. It states:

“311 When does a transfer of business occur

Meanings of transfer of business, old employer, new employer and transferring work

(1) There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:

(a) the employment of an employee of the old employer has terminated;

(b) within 3 months after the termination, the employee becomes employed by the new employer;

(c) the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;

(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).” 1

[9] Section 312 also indicates that a “transferable instrument” includes “an enterprise Agreement that has been approved by the FWC”. 2

[10] Section 313 continues to state, “If a transferable instrument covered the old employer and a transferring employee immediately before the termination of the transferring employee’s employment with the old employer, then:

“(a) the transferable instrument covers the new employer and the transferring employee in relation to the transferring work after the time (the transfer time) the transferring employee becomes employed by the new employer” 3

[11] Section 314 of the Act continues to provide for a transferable instrument to cover other employees in certain circumstances. It states:

“314 New non-transferring employees of new employer may be covered by transferable instrument

(1) If:

(a) a transferable instrument covers the new employer because of paragraph 313(1)(a); and

(b) after the transferable instrument starts to cover the new employer, the new employer employs a non-transferring employee; and

(c) the non-transferring employee performs the transferring work; and

(d) at the time the non-transferring employee is employed, no other enterprise Agreement or modern award covers the new employer and the non-transferring employee in relation to that work;

then the transferable instrument covers the new employer and the non-transferring employee in relation to that work.

(2) A non-transferring employee of a new employer, in relation to a transfer of business, is an employee of the new employer who is not a transferring employee.

(3) This section has effect subject to any FWC order under subsection 319(1).” 4

[12] As indicated above the provisions in s.314 are subject to those in s.319, which provides for the Commission to make an Order that a transferring instrument cover any non-transferring employees. Section 319 states:

“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.

Note: Orders may be made under paragraphs (1)(b) and (c) in relation to a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer, whether or not the non-transferring employee became employed by the new employer before or after the transferable instrument referred to in paragraph (1)(b) started to cover 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.” 5

[13] The Commission is accordingly required to have regard to each of the matters in s.319(3) in determining whether an Order should be made.

Consideration

[14] This application has been made by Azelis, who are the “new employer.” It seeks to have the Chemcolour Industries of Australia (St Mary’s Site) Enterprise Agreement 2017 cover it and any new employees it employs, who perform work covered by the Enterprise Agreement at the St Mary’s site. The Enterprise Agreement was approved by the Commission on 18 November 2016 and came into force on 25 November 2016. Its nominal expiry date is 17 November 2020.

[15] I have had regard to the material contained in the application and the accompanying Statutory Declaration provided by Ms Maree Saunders, the Human Resources Manager at Azelis. I am satisfied that there has been a transfer of business between Chemcolour and Azelis for the purposes of s.311(1), and that in June of this year the employees covered by the Enterprise Agreement ended their employment with Chemcolour and were then immediately employed by Azelis. In addition, the work they now perform is the same as the work they performed previously when employed by Chemcolour.

The views of the new employer – s.319(3)(a)(i)

[16] The Applicant is the new employer and obviously supports the making of the Order.

The views of the new employees – s.319(3)(a)(ii)

[17] It is understood that at the time of making the application no new employees have been employed by Azelis.

Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment – s.319(3)(b)

[18] I have reviewed the terms and conditions contained in the Enterprise Agreement and the Statutory Declaration provided by Ms Saunders. I am accordingly satisfied that the terms and conditions contained in the Enterprise Agreement are superior to the terms and conditions that would otherwise apply under the Award, and any new employees that are employed in the future will therefore not be disadvantaged if an Order being made.

Expiry date of the agreement – s.319(3)(c)

[19] The nominal expiry date of the Enterprise Agreement is 17 November 2020.

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

[20] There is nothing to indicate that there will be any negative impact on the productivity of the workplace if an Order is made. It is also acknowledged that there is a good sense in not having two different sets of terms and conditions applying to employees performing the same work at the same location.

Economic disadvantage – s.319(3)(e)

[21] There is nothing to indicate that there will be any economic disadvantage if an Order is made. Any new employees that are employed in the future will also have the benefit of the more generous entitlements that apply under the Enterprise Agreement if the Order is made.

Degree of business synergy – s.319(3)(f)

[22] As indicated above business synergy will inevitably be enhanced by having a single set of terms and conditions applying to employees performing the same work at the same location.

Public interest – s.319(3)(g)

[23] The Applicant submits that the granting of the Order would be in the public interest. There is also nothing to indicate that there are likely to be any adverse impacts arising in the wider public interest if an order is made.

Conclusion

[24] I am satisfied, in conclusion, after having regard to each of the matters in s.319(3) that it is appropriate for an Order to be made.

[25] In accordance with s.319(4) the Order will not come into operation in relation to each non-transferring employee until the later of the following:

•  the time when the non-transferring employees starts to perform the transferring work for the new employer; or

•  the day on which the Order is made.

[26] The Order is issued in conjunction with this decision.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

<PR712718>

 1   Fair Work Act 2009 (Cth) s 311(1).

 2   Fair Work Act 2009 (Cth) s 312(1)(a).

 3   Fair Work Act 2009 (Cth) s 313(1)(a).

 4   Fair Work Act 2009 (Cth) s 314(1).

 5   Fair Work Act 2009 (Cth) s 319(1)-(3).