Bendigo and Adelaide Bank Limited

[2019] FWC 4182

[2019] FWC 4182

FAIR WORK COMMISSION

DECISION

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

Bendigo and Adelaide Bank Limited
(AG2019/1507)

Banking finance and insurance industry
DEPUTY PRESIDENT COLMAN	MELBOURNE, 26 JUNE 2019

Application for orders relating to transferrable instruments

[1] Bendigo and Adelaide Bank Limited (Bendigo Bank) has made an application seeking orders pursuant to s 318(1)(a) and (b) of the Fair Work Act 2009 (Act) in relation to certain ‘transferrable instruments’ as defined in s 312.

[2] The orders sought would have the effect that an enterprise agreement that applies to Rural Bank Limited, and another enterprise agreement that applies to Elders Rural Services Australia Limited, its subsidiaries and Elders Insurance Limited, would not apply to certain ‘transferring employees’ of these entities who are offered employment with Bendigo Bank. The instruments in question are the Rural Bank Enterprise Agreement 2016 – 2019 (Rural Bank Agreement) and the Elders Rural Services Australia Limited and Elders Insurance Limited Workplace Agreement 2009 (Elders Workplace Agreement).

[3] The proposed orders would also have the effect that the Bendigo and Adelaide Bank Enterprise Agreement 2015 – 2018 (Bendigo Bank Agreement) would cover the employment of many of the transferring employees in their employment with Bendigo Bank.

[4] I listed the application for mention on 4 June 2019, and invited the Finance Sector Union of Australia (FSU), an organisation covered by the Rural Bank Agreement and the Bendigo Bank Agreement, to participate. At the mention, Bendigo Bank agreed to file an affidavit addressing factual matters relevant to the Commission’s consideration of the various matters in s 318 of the Act. The FSU advised that it supported the application. Bendigo Bank later filed and served an affidavit of Mr Stephen Brown, the general manager for risk and acting head of people and culture for Rural Bank Limited. I advised the company and the FSU that I proposed to deal with the application on the papers and they agreed.

Background

[5] This application arises in the context of a corporate reorganisation that has two principal dimensions. First, prior to 4 March 2019, Elders Services Company Pty Ltd (Elders Services) was a subsidiary of Elders Rural Services Australia Limited, which itself was a subsidiary of Elders Limited. On 4 March 2019, Elders Services became a wholly owned subsidiary of Bendigo Bank. The employees of Elders Services remained employed by that company. The Elders Workplace Agreement continued to apply to the employment of employees falling within its scope.

[6] Bendigo Bank proposes to employ employees of Elders Services effective from 1 July 2019. There are presently 85 employees employed by Elders Services of whom 75 are covered by the Elders Workplace Agreement. Thirty of these employees will be employed by Bendigo Bank in roles that will fall within the scope of the Bendigo Bank Agreement. The application would have the Bendigo Bank Agreement apply to these employees’ employment. It is proposed that the other 45 employees will be employed on staff contracts, with their employment covered by the Banking, Finance and Insurance Award 2010 (Award).

[7] Secondly, in January 2019 an application was made for Bendigo Bank and its wholly owned subsidiary, Rural Bank Limited (Rural Bank), to operate under the same banking licence. Previously, each had had its own banking licence as an Australian Deposit-taking Institution (ADI). On 6 April 2019, the Treasurer granted the application. As part of the ADI consolidation process, it is proposed that from 1 July 2019, employees of Rural Bank will be employed by Bendigo Bank.

[8] Some 152 employees of Rural Bank will be offered employment with Bendigo Bank from 1 July 2019. Fifty-two of these employees are currently covered by the Rural Bank Agreement. They will all be offered employment with Bendigo Bank in roles that will fall within the Bendigo Bank Agreement. The application seeks to have their employment governed by that agreement. The other one hundred employees of Rural Bank not covered by the Rural Bank Agreement will be offered employment with Bendigo Bank on staff contracts, with their employment covered by the Award.

Statutory framework

[9] 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.’

[10] 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 purpose of s 311 of the Act. I am satisfied that there will be a transfer of business from Elders Services to Bendigo Bank, and from Rural Bank to Bendigo Bank, for the following reasons.

[11] First, the employment of employees of the two former entities will terminate and within three months of termination the employees will become employees of the new employer (s 311(1)(a) and (b)). Secondly, having regard to Mr Brown’s affidavit, I consider that the work that will be performed by the transferring employees for the new employer will be the same or substantially the same as the work performed for the old employers (s 311(1)(c)). Finally, there is a ‘connection’ between the old employers and Bendigo Bank as described in s 311(6), because Bendigo Bank is an associated entity of the old employers, and will be so at the time the transferring employees become employees of Bendigo Bank (s 311(1)(d)).

[12] Next it is necessary to consider s 318(3), which states that, in deciding whether to make an order under s 318(1), the Commission must take into account certain matters.

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

[13] The Commission must take into account the views of the new employer and employees who would be affected by the order. The application states that the preference of Bendigo Bank is that the transferring employees of Elders Services and Rural Bank who will be employed in roles covered by the Bendigo Bank Agreement be covered by that instrument and that employees not covered by the Bendigo Bank Agreement be employed on staff contracts underpinned by Award. It says that this will ensure employees performing similar work will have commensurate terms and conditions and that this will promote a more harmonious workplace.

[14] In relation to the views of employees who would be affected by the order, it is relevant to consider whether the employees support or oppose the application, or have questions or concerns about it that might bear on the Commission’s considerations of the various matters identified in s 318(3) or the exercise of its discretion.

[15] In his affidavit, Mr Brown explained the steps taken by Bendigo Bank to inform the employees who will be affected by the proposed orders about the proposed new employment arrangements within the group and the application to the Commission that had been made under s 318. He said that on 5 June 2019, notices were posted on both the Rural Bank intranet and the Elders Services intranet, to which employees have access at work, seeking feedback from the affected employees regarding the proposed change of instrument coverage in respect of their proposed employment at Bendigo Bank. On 7 June 2019, employees of Elders Services and employees of Rural Bank were sent a copy of the relevant notice by email, and copies were provided to team leaders to be distributed to employees. The notices explained the proposed employment arrangements and stated that if employees had any questions or concerns about the application they could contact a company representative or the Commission. Copies of the notices were appended to Mr Brown’s affidavit.

[16] Mr Brown stated that on 10 June 2019, two employees raised a number of questions about how the proposed change in employment arrangements would affect their particular circumstances. They did not oppose the application. Mr Brown said that on 12 June 2019, he requested that Ms Jaime Cornish, people and culture business partner, speak with both employees about their respective questions, and that she later informed him that she had done so and answered their questions. Mr Brown said that no other employee responses were received.

[17] Employees have not expressed any views in opposition to the proposed orders, in circumstances where the applicant has taken reasonable steps to inform them about the proposed arrangements and the effect of those arrangements on their employment at Bendigo Bank. This consideration tells in favour of the application being granted.

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

[18] The Commission is required to consider whether any employee would be disadvantaged by the order in relation to their terms and conditions of employment. In my view this consideration enquires into whether employees will be disadvantaged overall, rather than a line by line comparison.

[19] Mr Brown says in his affidavit that he has reviewed comparison tables filed with the application, which compare the terms and conditions of the Elders Workplace Agreement to the Bendigo Bank Agreement and to the Bendigo Bank staff terms; and which also compare the Rural Bank Agreement to the Bendigo Bank Agreement. He says that none of the transferring employees of Elders Services who are currently covered by the Elders Workplace Agreement, or Rural Bank employees who are covered by the Rural Bank Agreement, will be disadvantaged in their proposed terms of employment on transfer to Bendigo Bank. 1

[20] In my assessment, transferring Elders Services employees who will be covered by the Bendigo Bank Agreement will be better off, because the terms and conditions in the Bendigo Bank Agreement are more favourable to employees. In particular, wage rates and redundancy benefits under the Bendigo Bank Agreement are significantly more generous than those in the Elders Services Agreement. I also consider that those Elders Services employees who will not be covered by the Bendigo Bank Agreement will be better off, as the Bendigo Bank staff contracts are more generous than the Elders Services Agreement. Although these employees will not be covered by any enterprise agreement, I note that the Elders Services Agreement is an instrument made some ten years ago and also that the employment of these employees will continue to be underpinned by the Award, which compares favourably to the Elders Service Agreement, particularly in relation to minimum rates of pay and the casual loading.

[21] As for employees of Rural Bank, all those who are currently covered by the Rural Bank Agreement will be covered by the Bendigo Bank Agreement. The terms and conditions of these two instruments are very similar. The wage rates are the same, with 3% increases occurring in December of each of the three years of each agreement’s operation.

[22] However, the Bendigo Bank Agreement was made in 2015 and provides for wage increases in each of 2015, 2016 and 2017. The Rural Bank Agreement, which was made in 2016, provides for wage increases in 2016, 2017 and 2018. Thus, the Rural Bank Agreement provides for a 3% increase in December 2018 (clause 32.7), whereas the final 3% increase under the Bendigo Bank Agreement was in December 2017 (clause 33.7). The effect of this is that the minimum rate of pay under the Rural Bank Agreement is currently higher than its counterpart under the Bendigo Bank Agreement. However, in a further affidavit filed by Bendigo Bank, Mr Greg Penno, head of employee relations, said that the Bank will offer to employ employees of Rural Bank on terms reflecting their current salaries with Rural Bank, including the most recent wage increase under the Rural Bank Agreement.

[23] Having reviewed and compared the terms of the relevant instruments, and considered all of the proposed employment arrangements that are to apply upon employees’ transfer to Bendigo Bank, I consider that employees will not be disadvantaged by the proposed orders in relation to their terms and conditions of employment. This weighs in favour of the application being granted.

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

[24] Section 318(3)(c) provides that, if the order relates to an enterprise agreement, the Commission must take into account the nominal expiry date of the agreement. The Rural Bank Agreement reaches its nominal expiry date on 27 January 2020. It still has a year and a half of nominal life to run however given the close similarities between this agreement and the Bendigo Bank Agreement, and the evidence of Mr Penno, I consider this a neutral consideration.

[25] The nominal expiry date of the Elders Services Agreement was 22 May 2014. It is an old expired agreement, and in my view this tells in favour of the proposed orders as they concern this instrument. The nominal expiry date of the Bendigo Bank Agreement was 8 December 2018. I note Mr Brown’s evidence that bargaining is currently underway for a new enterprise agreement to replace the Bendigo Bank Agreement, and that he considers it likely that there will be further benefits under the replacement agreement for transferring employees who will be covered by it. However I consider this a neutral consideration.

Negative impact on productivity – s 318(3)(d)

[26] The Act requires the Commission to consider whether the transferrable instruments would have a negative impact on the productivity of the new employer’s workplace.

[27] Mr Brown said in his affidavit that if the application were not successful, Bendigo Bank would employ the Rural Bank transferring employees under the terms of the Rural Bank Agreement, and the Elders Services transferring employees under the terms of the Elders Workplace Agreement, alongside the employees of Bendigo Bank covered by the Bendigo Bank Agreement. He said that having multiple enterprise agreements applying to employees performing the same or similar work at Bendigo Bank will require Bendigo Bank to operate a monthly payroll for the former employees of Elders Services, whereas all other employees are paid fortnightly. He said that Bendigo Bank would need to apply different consultation, grievance and dispute resolution procedures for different employees, as well as manage different spans of hours within the same workforce. Mr Brown also explained that Bendigo Bank has made the application in order to achieve consistency in the terms and conditions of employment for employees who will be performing the same or similar work.

[28] These matters go not only to management and administrative difficulties, but also to potential issues of unfairness or disharmony arising from different employees performing the same or similar work receiving differing conditions. From this I infer that, in the circumstances, the transferrable instruments would have at least some negative impact on the productivity of the new employer’s workplace. I attribute some weight to this factor.

Whether the new employer will incur significant economic disadvantage – s 318(3)(e)

[29] Bendigo Bank does not contend that, as the new employer, it would ‘incur significant economic disadvantage’ as a result of the transferable instrument covering it. The consideration in s 318(3)(e) is a neutral factor in this case.

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

[30] The Commission must consider ‘the degree of business synergy between the transferrable instrument and any workplace instrument that already covers the new employer.’ The existence of significant synergy might tell against an application to displace the ordinary application of the relevant instruments arising from a transfer of business under s 311.

[31] However, the company’s application states that there is no significant business synergy between the Elders Workplace Agreement and the Bendigo Bank Agreement, and that although there is a certain ‘synergy’ between the Rural Bank Agreement and the Bendigo Bank Agreement, bargaining is now underway for a replacement agreement to the Bendigo Bank Agreement. In the circumstances, I do not consider any ‘business synergy’ between the transferrable instruments and the Bendigo Bank Agreement to tell either for or against the making of the proposed orders.

Public interest – s 318 (3)(g)

[32] The Commission is required by s 318(3)(g) to consider the public interest. I note that the provision does not specify in what way the public interest is to be considered, that is, whether the application is or should be in, or not contrary to the public interest.

[33] The company submits that it is in the public interest to have harmonious workplaces, and that this is facilitated by having one industrial instrument applying to employees performing similar work. I do not consider that the application of different industrial instruments to a single workforce consequent upon a transfer of business necessarily engages the public interest, as this is a common consequence of a transfer of business under the Act. In my view, the relevant private interests are a discretionary consideration supporting the making of the orders sought in this case, however I do not consider that the public interest is engaged. In my view it is a neutral consideration.

Conclusion

[34] Taking into account all of the statutory considerations in s 318(3), I have decided to make the proposed orders. The relevant employees have been informed of the proposed arrangements and the application and invited to express their views. No negative views have been expressed. The new employer’s view is that there is a cogent rationale for the proposed orders, namely that employees performing similar work should have commensurate terms and conditions of employment, which will promote a harmonious workplace. There would be some adverse productivity impact if the orders were not made. Employees will not be disadvantaged by the proposed orders. In all the circumstances I consider that it is appropriate to make the orders sought.

[35] I will make orders that, pursuant to s 318(1)(a) of the Act, the Elders Rural Services Australia Limited and Elders Insurance Limited Workplace Agreement 2009 and the Rural Bank Enterprise Agreement 2016-2019 will not cover Bendigo Bank or any transferring employees as defined in Part 2-8 of the Act, being employees formerly employed by Elders Services or Rural Bank and who become employees of Bendigo Bank on or about 1 July 2019.

[36] I will also order that, pursuant to s 318(1)(b), the Bendigo and Adelaide Bank Enterprise Agreement 2015-2018 will cover any transferring employees employed by Bendigo Bank in roles falling within the scope of that instrument. The orders will come into operation in relation to each transferring employee on the date the employee becomes an employee of Bendigo Bank.

[37] An order giving effect to this decision will be issued separately in PR709729.

DEPUTY PRESIDENT

<PR709417>

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