Bluescope Steel Limited

[2017] FWC 4140

[2017] FWC 4140

FAIR WORK COMMISSION

decision

Fair Work Act 2009

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

Bluescope Steel Limited

(AG2017/2280)

Capgemini Business Services Collective Workplace Agreement 2008

Manufacturing and associated industries
Commissioner McKinnon	MELBOURNE, 8 AUGUST 2017

Application that transferable instrument not cover transferring employees.

Introduction

1. BlueScope Steel Limited (BlueScope) has applied for an order under section 318 of the Fair Work Act 2009 (the Act) dealing with instruments covering a new employer and transferring employees in the context of a transfer of business.

1. The application concerns payroll employees who transferred or will transfer to BlueScope from Capgemini Business Services Australia Pty Limited (Capgemini). The order sought is that the Capgemini Business Services Collective Workplace Agreement 2008 (Capgemini Agreement) will not cover BlueScope in respect of current or future transferring employees.

Background

1. Prior to 15 January 2017, BlueScope outsourced its payroll functions to Capgemini, who performed these functions through its own employees under the Capgemini Agreement.

1. From 15 January 2017, BlueScope ceased outsourcing its payroll functions and commenced performing those functions in-house. Eleven Capgemini employees[1] performing payroll functions under the Capgemini Agreement commenced employment at BlueScope performing the same or substantially similar functions (the Employees).

1. At the time of the application, BlueScope indicated its intention for other business functions that are currently outsourced to Capgemini to be brought ‘in-house’. This may lead to further transfers of employment from Capgemini to BlueScope.

The relevant legislation

1. Part 2-8 of the Act describes when a transfer of business occurs and provides for the transfer of certain enterprise agreements, modern awards and other instruments in a transfer of business from one employer to another.

1. Section 311(1) defines “transfer of business” and section 312 defines the types of “transferable instrument” that may transfer from one employer to another. Sections 317 and 318 empower the Commission to make orders in relation to a transfer of business, including orders that a transferable instrument will, or will not, cover the new employer in relation to the transferring employee.

1. In deciding whether to make orders of this kind, the Commission must take into account a range of factors set out in section 318(3). I will consider the application having regard to each of those factors.

Consideration

1. BlueScope is both the new employer of the Employees and the person who is likely to be the new employer of current Capgemini employees. The Capgemini Agreement is a transferable instrument within the meaning of section 312(1) because of the effect of Schedule 11 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.

1. I find that the Employees are each transferring employees in relation to a transfer of business. It is evident on the materials before the Commission that in each case:

   (i)their employment with Capgemini terminated;

   (ii)they were employed by BlueScope within 3 months of termination;

   (iii)their work for BlueScope is the same, or substantially the same, as the work they performed for Capgemini (the transferring work); and

   (iv)BlueScope has ceased outsourcing their work to Capgemini.

The views of the new employer and employees affected by the order

1. As the applicant, BlueScope supports the application. It has consulted with each of the Employees, who also support the application. The Employees have expressed the view that if the application is successful, their terms and conditions of employment with BlueScope will be better off overall.

Whether any employees would be disadvantaged by the order

1. BlueScope submits that under the common law contracts, there are a number of more beneficial terms than those contained in the Capgemini Agreement, including rates of pay approximately $10,000 to $30,000 higher, eligibility to participate in a Profit Share Plan, superannuation contributions from 10-14%, depending on the choice of fund and novated leasing options. In addition, BlueScope policies confer a range of more generous conditions covering redundancy pay, paid parental leave, discretionary sick and compassionate leave, pressing domestic needs leave, flexible work arrangements, 10 days paid emergency service leave, uncapped paid jury service leave, defence force leave, representative sporting leave and a beneficial annual leave scheme.

1. The Capgemini Agreement contains a number of terms that are more beneficial than the proposed common law contracts that will cover the Employees if the application is granted. These include payment of overtime or time off in lieu, additional payment for working on public holidays, 5 days of non-cumulative paid carer’s leave, one paid ‘Capgemini’ day off per year and the requirement to work 37.5 hours per week.

1. BlueScope submit that some of these terms are contingent in nature and accordingly, difficult to quantify. BlueScope have undertaken that if the application is granted, the Employees’ terms and conditions of employment will be revised so that:

i)   base rates of pay for transferring employees will be increased to factor for an additional 0.5 hour per week;

ii)     the current entitlements to 5 days paid carer’s leave and the ‘Capgemini’ day off will continue to apply for the remainder of 2017.

1. I note that employees performing payroll functions are likely to be covered by the Clerks - Private Sector Award 2010 (the Award) in addition to the legislative safety net established by the National Employment Standards.

1. While the Capgemini Agreement contains some more beneficial terms, on balance I am satisfied that employees will not be disadvantaged in relation to their terms and conditions of employment if the application is granted.

The nominal expiry date of the agreement

1. The Capgemini Agreement has a nominal expiry date of 6 June 2011, more than six years ago. It commenced operation over 9 years ago and contains what BlueScope described as a number of terms that are “archaic and do not reflect current workplace practices”.

Whether the transferable instrument would have a negative impact on productivity at BlueScope

1. BlueScope submits, and I agree, that continuing to apply the Capgemini Agreement is likely to have a negative impact on productivity at the workplace, because there will be two sets of different terms and conditions applying to employees performing the same work. This will increase the regulatory and administrative burden on BlueScope, and may lead to disharmony in the workplace where employees working side by side have the benefit of different conditions.

Whether BlueScope would incur significant economic disadvantage by coverage of the Capgemini Agreement

1. BlueScope submits that it will not be significantly economically disadvantaged should the Capgemini Agreement continue to cover the transferring employees. I find that while there will be an economic cost to ongoing regulatory inefficiency, it is not likely to be significant in this case.

Degree of business synergy between the Capgemini Agreement and other workplace instruments

1. There is limited business synergy between the Capgemini Agreement and the Award, which appears to be the only other relevant workplace instrument likely to cover the Employees.

The public interest

1. BlueScope submitted that it would not be contrary to the public interest to make the order sought, noting that the only parties affected by the making of the order would be BlueScope and transferring employees.

1. I have taken the public interest into account in reaching my decision.

Conclusion

1. Having regard to each of the factors set out above, I am satisfied that an order should be made to the effect that the Capgemini Agreement does not, and will not, cover BlueScope or the transferring employees in relation to the transferring work.

1. The order will take effect from the date of this decision.

COMMISSIONER

[1] Kylie Gaskin, Caroline Milne, Miriam Fromentin, Nancy Pinneri, Sam McEwen, Sharon Fenwick, Suzanne Redden, Apana Komasarelly, Louise Jennings, Michelle Warriner and Helen Glen-Holmes.

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