Bendigo Schnitzels Pty Ltd T/A Schnitz - Bendigo (Pall Mall)
[2019] FWC 7535
•31 OCTOBER 2019
| [2019] FWC 7535 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
ss.318 and 319—Enterprise Agreement
Bendigo Schnitzels Pty Ltd T/A Schnitz - Bendigo (Pall Mall)
(AG2019/3304)
DEPUTY PRESIDENT CLANCY | MELBOURNE, 31 OCTOBER 2019 |
Application for an order relating to instruments covering new employer and transferring and non-transferring employees.
[1] Bendigo Schnitzels Pty Ltd T/A Schnitz - Bendigo (Pall Mall) (Schnitz Bendigo) has made an application to the Fair Work Commission (the Commission) pursuant to s.318 of the Fair Work Act 2009 (the Act) for an order in relation to a transfer of business.
[2] Upon review of the material filed in support of the application pursuant to s.318 of the Act by Schnitz Bendigo, I formed the view that an application pursuant to s.319 of the Act might also need to be made. I therefore conducted a Mention by telephone on 13 September 2019 (Mention). Mr Daniel de Vries, Director for Schnitz Bendigo, attended.
[3] At the telephone Mention, I confirmed with Mr de Vries:
• Schnitz Bendigo was previously under the same ownership structure as Ballarat Schnitzels Pty Ltd atf The Ballarat Schnitzels Unit Trust T/A Schnitz - Ballarat (Sturt Street) (Schnitz Ballarat);
• Schnitz Ballarat is covered by the Ballarat Schnitzels Pty Ltd Enterprise Agreement 2015 1 (the Agreement);
• The Agreement has a nominal expiry date of 9 March 2020;
• Schnitz Ballarat owned 50% of Schnitz Bendigo and used the Agreement to employ staff in Bendigo;
• There has been a change in the ownership of Schnitz Bendigo, with 100% ownership of Schnitz Bendigo now held by Mr de Vries;
• All staff of Schnitz Ballarat employed in Bendigo have transferred to Schnitz Bendigo;
• Since 1 July 2019, Schnitz Bendigo have employed some new staff under the Restaurant Industry Award 2010 (the Award);
• Schnitz Bendigo seeks the same employment conditions for all of its staff in Bendigo; and
• Schnitz Bendigo seeks orders that all transferring staff and all the new staff are covered by the Agreement.
[4] It therefore appeared that in addition to it seeking an order under s.318 of the Act relating to transferring employees, Schnitz Bendigo was also seeking an order under s.319 of the Act relating to non-transferring employees. It became apparent at the telephone Mention that what had been intended was an application for orders pursuant to both s.318 and s.319 of the Act.
[5] I therefore waived compliance with the Fair Work Commission Rules 2013 and accepted an application pursuant to s.319 of the Act during the Mention from Schnitz Bendigo, in addition to the application pursuant to s.318 of the Act it had previously lodged with the Commission on 4 September 2019 (together, the Applications).
[6] Following the Mention, I issued Directions on 23 September 2019 which required Schnitz Bendigo, as the new employer, to address the considerations set out in ss.318(3)(a)-(g) and 319(3)(a)-(g). I also directed any transferring and non-transferring employees to file material, if they wished to do so, in respect of the considerations affecting them. Schnitz Bendigo filed its material in compliance with my Directions on 7 October 2019. No submissions were received from any transferring or non-transferring employees by the required date of 22 October 2019.
The relevant legislation
[7] Part 2-8 of Chapter 2 of the Act describes when a transfer of business occurs and s.312(1) of the Act provides for the transfer of enterprise agreements, certain modern awards and certain other instruments if there is a transfer of business from one employer to another employer.
[8] Section 311 of the Act relevantly provides:
“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).
Meaning of transferring employee
(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.
Transfer of assets from old employer to new employer
(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:
(a) the old employer or an associated entity of the old employer; and
(b) the new employer or an associated entity of the new employer;
the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):
(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and
(d) that relate to, or are used in connection with, the transferring work.”
[9] Sections 317, 318 and 319 of the Act relevantly provide:
“317 FWC may make orders in relation to a transfer of business
This Division provides for the FWC to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer.
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;
(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.
319 Orders relating to instruments covering new employer and non-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 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.
Restriction on when order may come into operation
(4) The order must not come into operation in relation to a particular non-transferring employee before the later of the following:
(a) the time when the non-transferring employee starts to perform the transferring work for the new employer;
(b) the day on which the order is made.”
Transfer of business
[1] I am satisfied that has been a transfer of business from Schnitz Ballarat to Schnitz Bendigo and that Schnitz Bendigo is a “new employer” pursuant to s.311(1) of the Act, having regard to the material before me and the advice of Mr de Vries during the telephone Mention by virtue of:
a) the employment of the transferring employees with Schnitz Ballarat having terminated (s.311(1)(a));
b) the transferring employees having become employed by Schnitz Bendigo within three months after the termination, (s.311(1)(b));
c) the work the transferring employees are performing for Schnitz Bendigo being the same, or substantially the same, as the work they performed for Schnitz Ballarat (s.311(1)(c)); and
d) there is a connection between Schnitz Ballarat and Schnitz Bendigo (s.311(1)(d)), as described in s.311(3), in that Schnitz Bendigo owns or has the beneficial use of some or all of the assets that Schnitz Ballarat owned or had beneficial use of and that relate to or are used in connection with, the transferring work.
[2] As I am satisfied Schnitz Bendigo is a “new employer” as defined pursuant to s.311(1) of the Act, it may apply to the Commission under s.318 and s.319 of the Act for orders relating to a transferable instrument.
Transferable instrument
[3] As it is an enterprise agreement that was approved by the Commission on 3 March 2016, the Agreement is a transferable instrument pursuant to s.312(1)(a) of the Act.
[4] Section 313 of the Act provides that the Agreement covers Schnitz Bendigo and the transferring employees, subject to any order of the Commission under s.318(1) of the Act.
[5] Section 314 of the Act provides that the Agreement covers Schnitz Bendigo and any non-transferring employees, subject to any order of the Commission under s.319(1) of the Act. In this matter, Schnitz Bendigo has advised that since 1 July 2019, it has employed three new staff under the Award.
Who may apply for an order?
[6] The application has been made by Schnitz Bendigo, the new employer. This meets the requirements of both s.318(2) and s.319(2) of the Act.
[7] Schnitz Bendigo seeks orders that the Agreement covers it and:
a) the transferring employees pursuant to s.318 of the Act, named by Schnitz Bendigo in its submissions filed on 7 October 2019 as follows:
• Abby Sanderson
• Amanda Downing
• Ashlee Elliot
• Breanna Killen
• Chloe Devaney
• Chris Amor
• Crystal Milne
• Fiona Furletti
• Jonathan Bush
• Josh Furletti
• Lara Kofoed
• Liam Cole
• Liam Dickins
• Montana Pinchbeck
• Nikara Smith
• Robert Thatcher
• Samara Sutton-Boyd; and
b) the non-transferring employees pursuant to s.319 of the Act, named by Schnitz Bendigo in its submissions filed on 7 October 2019 as follows:
• Jacob Kofoed
• Tom Sefton
• Caleb Green.
Matters that the FWC must take into account- Section 318
Section 318(3)(a) the views of the new employer or a person who is likely to be the new employer and the employees who would be affected by the order
[8] Schnitz Bendigo, the new employer, has made the application under s.318 of the Act and supports the making of the Order sought.
[9] In its material filed on 7 October 2019, Schnitz Bendigo submitted that this was a “unique situation” in which the entity who owns Schnitz Bendigo was previously a 50% owner and has subsequently increased its shareholding to 100%.
[10] I am satisfied the 17 transferring employees were on notice as to the application before me and had a reasonable period of time to file material should they have wished to do so. However, no submissions from any transferring employees were filed in the Commission and I will therefore accord neutrality to their views in considering the application.
[11] Having regard to these matters, I have formed the view that this factor weighs in favour of granting the Order.
Section 318(3)(b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
[12] I have had regard to the fact that the Agreement was approved by the Commission on 3 March 2016 and has a nominal expiry date of 9 March 2020. Schnitz Bendigo submits the s.318 order sought would enable the transferring employees to continue to receive payments that meet the Award and Annual Wage reviews. Schnitz Bendigo also submits that the rates contained within the Agreement were raised on 1 July 2019 to comply with the better off overall test.
[13] Based on the submissions of Schnitz Bendigo and having considered all the material before me, I am on balance satisfied that the transferring employees will not be disadvantaged by the Order in relation to their terms and conditions of employment. This factor weighs in favour of granting the Order.
Section 318(3)(c) if the order relates to an enterprise agreement—the nominal expiry date of the agreement
[14] The nominal expiry date of the Agreement is 9 March 2020. This does not weigh against the granting of the Order sought.
Section 318(3)(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
[15] Schnitz Bendigo submits having the Agreement apply would result in there being continuity in terms of pay structures and the payroll and accounting system of Schnitz Bendigo. Schnitz Bendigo otherwise submits that there is no negative impact on its productivity.
[16] I accept these submissions have merit and have formed the view that this factor weighs in favour of granting the Order sought.
Section 318(3)(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer
[17] Schnitz Bendigo submits that it would not incur significant economic disadvantage as a result of the Agreement covering it and as such, I consider this is to weigh in favour of granting the Order sought.
Section 318(3)(f) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer
[18] The Award already covers Schnitz Bendigo and it submits that due to the business trading throughout the year, the pay rates in the Agreement offer flexibility.
[19] I do not consider this factor weighs against the granting of the Order sought.
Section 318(3)(g) the public interest
[20] No submission was made in relation to this consideration. However, having regard to all the material before me, I am not of the view there are any public interest reasons not to make the Orders sought.
Matters that the FWC must take into account- Section 319
Section 319(3)(a) the views of the new employer or a person who is likely to be the new employer and the employees who would be affected by the order
[21] Schnitz Bendigo, the new employer, has made the application under s.319 of the Act and supports the making of the Order sought.
[22] Two of the three non-transferring employees, Jacob Kofoed and Caleb Green, have signed the Form F40 – Application for orders in relation to a transfer of business to indicate that they wish to be employed pursuant to the Agreement. This weighs in favour of granting the Order.
[23] No submissions were filed in the Commission by the other non-transferring employee and I am satisfied he was on notice as to the application before me and had a reasonable period of time to file material should he have wished to do so. I will therefore accord neutrality to his view in considering the application.
[24] Having regard to these matters, I have formed the view that this factor weighs in favour of granting the Order.
Section 319(3)(b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
[25] Schnitz Bendigo submits that the rates contained within the Agreement were raised on 1 July 2019 to comply with the better off overall test. I have also had regard to the fact that the Agreement was approved by the Commission on 3 March 2016 and has a nominal expiry date of 9 March 2020.
[26] Having considered all the material before me, I am satisfied that the non-transferring employees will not be disadvantaged by the Order in relation to their terms and conditions of employment and therefore, this factor weighs in favour of granting the Order sought.
Section 319(3)(c) if the order relates to an enterprise agreement—the nominal expiry date of the agreement
[27] The nominal expiry date of the Agreement is 9 March 2020. This does not weigh against the granting of the Order sought.
Section 319(3)(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
[28] Schnitz Bendigo submits having the Agreement apply would result in there being continuity in terms of pay structures and the payroll and accounting system of Schnitz Bendigo.
[29] I accept this submission has merit and have formed the view that this factor weighs in favour of granting the Order.
Section 319(3)(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer
[30] Schnitz Bendigo submits that it would not incur significant economic disadvantage as a result of the Agreement covering it and as such, I consider this is to weigh in favour of granting the Order sought.
Section 319(3)(f) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer
[31] The Award already covers Schnitz Bendigo. Schnitz Bendigo submits that due to the business trading throughout the year, the pay rates in the Agreement offer flexibility.
[32] I do not consider this factor weighs against the granting of the Order sought.
Section 318(3)(g) the public interest
[33] No submission was made in relation to this consideration. However, having regard to all the material before me, I am not of the view there are any public interest reasons not to make the Order sought.
Conclusion
[34] Having considered each of the matters set out in s.318(3) of the Act, I am satisfied that the following order should be made, with immediate effect (s.318(4)(b)):
• The Agreement (or any agreement that may replace it) will cover the following transferring employees during their employment with Schnitz Bendigo:
• Abby Sanderson
• Amanda Downing
• Ashlee Elliot
• Breanna Killen
• Chloe Devaney
• Chris Amor
• Crystal Milne
• Fiona Furletti
• Jonathan Bush
• Josh Furletti
• Lara Kofoed
• Liam Cole
• Liam Dickins
• Montana Pinchbeck
• Nikara Smith
• Robert Thatcher
• Samara Sutton-Boyd.
[35] Having considered each of the matters set out in s.319(3) of the Act, I am satisfied that the following order should be made, with immediate effect (s.319(4)(b)):
• The Agreement (or any agreement that may replace it) will cover the following non-transferring employees (and any future non-transferring employees) during their employment with Schnitz Bendigo:
• Jacob Kofoed
• Tom Sefton
• Caleb Green.
[36] Orders to this effect will be issued along with this decision.
DEPUTY PRESIDENT
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