Boeing Defence Australia Limited
[2022] FWC 486
| [2022] FWC 486 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Boeing Defence Australia Limited
(AG2022/563)
| Manufacturing and associated industries | |
| DEPUTY PRESIDENT BELL | MELBOURNE, 8 APRIL 2022 |
Application for an order relating to instruments covering new employer and transferring employee – application dismissed.
Boeing Defence Australia Limited (BDA, Applicant) has made an application (the Application) on 3 March 2022 to the Fair Work Commission (Commission) pursuant to s.318 of the Fair Work Act 2009 (the Act) for an order that the Boeing Aerostructures Australia Pty Ltd (Port Melbourne) Enterprise Agreement 2018[1] (the BAA Agreement) not cover Boeing Defence Australia Limited (new employer) and Ms Karolina Leszczynski (transferring employee) in respect of her likely employment with the new employer.
Ms Leszczynski is currently employed by Boeing Aerostructures Australia Pty Ltd (BAA) as a Systems Engineer and her employment is covered by the BAA Agreement, which has a nominal expiry date of 30 June 2021. Ms Leszczynski applied for a role as a Systems Engineer at BDA and on 20 January 2022 accepted a conditional offer of permanent full-time employment which, among other things, provided that her employment with BDA would be conditional on the Commission granting the order sought by BDA pursuant to a s.318(1)(a) application.
Ms Leszczynski supports the Application.
The ‘Form F40’ filed in support of the Applicant provides that the new employment would be conditional on the orders sought being granted. Having regard to that condition, I corresponded with the Applicant and drew its attention to the Full Bench decision of this tribunal in TWU (179V) v Viva Energy Australia Ltd[2] (Viva Energy). I also sought further detail on whether the new work for the transferring employee would be the “same or substantially the same” as her previous work, having regard to the material filed in support of the Application, and I invited the Applicant to provide further material on both matters. The significance of these matters relates to s.311 of the Act and if there is a “transfer of business”. I will return to them below.
The Applicant supplied further submissions. Those submissions were helpful, and I set them out below. The Applicant and Ms Leszczynski were also content for me to determine the matter ‘on the papers’ and I have done so.
Is there “likely” to be a transfer of business?
Section 311(1) of the Act provides:
“(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).
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: s.311(2). Subsections (3) – (6) set out various circumstances where the necessary “connection” referred to in s.311(1)(d) will apply. Relevantly, and it is not in contention, subsection (6) is satisfied because the BDA (the new employer) and BAA (the old employer) are “associated” entities.
By s.312 of the Act, an enterprise agreement that has been approved by the Commission is a “transferable instrument”. The BAA Agreement is therefore a “transferable instrument”.
Section 313 of the Act provides that where there is a “transferring employee” (i.e. an employee for whom the requirements of ss.311(1)(a) – (c) are satisfied) in relation to the “transferring work” (i.e. the “work” for the “new employer”), then the “transferring instrument” (here, the BAA Agreement) will cover the new employer and the employee.
Division 3 of Part 2-8 sets out various powers of the Commission in relation to a transfer of business. Section 317 provides for the Commission to make certain orders “if there is, or is likely to be, a transfer of business from an old employer to a new employer”.
Section 318(1) provides for one of the orders referred to in s.317. Section 318(1) is as follows:
“(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.”
Section 318(3) sets out various matters that the Commission “must” consider before making such an order, if s.318(1) is otherwise satisfied.
Section 320 of the Act provides the Commission with power to vary a transferable instrument. Relevantly here, that section applies only “in relation to a transferable instrument that covers, or is likely to cover, the new employer because of a provision of this Part”.
In Viva Energy, the Full Bench considered an application under s.320 of the Act. An aspect of the transaction under consideration by the Full Bench was that “the employment offers are however entirely conditional on the variation orders sought being made by the Commission, so that Zip employees will not be employed by Viva Energy pursuant to the offers if the orders are not made.” By majority, the Full Bench (Hatcher VP and Gostencnik DP, Saunders DP dissenting) held that the conditional offer precluded there being a transfer of business or “likely” transfer of business. The majority stated at [31] that “the Commission could not be satisfied that the preconditions for the exercise of power under s 320(2) were met where such satisfaction was entirely dependent on an assessment as to the likelihood of it exercising such power.”
The factual basis of the conditional offer considered by the Full Bench in Viva Energy appears materially the same to the offer made by BDA before me. In the matter before me, the letter of offer stated:
“This offer of employment is also conditional upon each of the following pre-conditions being satisfied:
(a) …
(c) The Fair Work Commission granting the orders sought by Boeing Defence Australia Limited in the Application pursuant to section 318 under (sic) of the Fair Work Act 2009 (Cth).”
While I note that the application in Viva Energy was under s.320 of the Act, I do not consider those differences were material to the Full Bench’s consideration, at least as they relate to whether a conditional offer of employment is “likely” to constitute a transfer of business for the purpose of s.318. First, the Full Bench granted permission to appeal on grounds that included disharmonious decisions made under s.318.[3] Second, s.317 was a relevant part of the decision in Viva Energy and the same reasoning would appear applicable to an application made for an order under s.318.
As noted above, I invited the Applicant to address me on the implications of Viva Energy for its application. Relevantly, the response was as follows:
“With respect to matter [1], BDA considers that, in light of the nature of the conditional offer of employment which has been made to Ms Leszczynski by BDA, the majority’s reasoning in Viva provides a credible basis for the Commission to conclude that it does not have jurisdiction to entertain BDA’s application on the basis that there would not “likely” be a transfer of business for the purposes of sections 317 and 318. That said, BDA notes that varying approaches have been taken to this jurisdictional question previously by the Commission (ie where it has proceeded on the basis that it has jurisdiction to do so) notwithstanding that relevant offers of employment were made conditional on the Commission making an order under Division 3 of Part 2-8 of the Act. BDA also notes in this regard the dissenting decision of DP Saunders in Viva and the decision in Crown Sydney Gaming Pty Limited v United Workers’ Union [2022] FCA 97 (Crown), in which Jagot J made the declaration sought by Crown Sydney Gaming that “the employment of the “Transferring Employees” by Crown Sydney will not result in a transfer of business within the meaning of s 311 of the Fair Work Act 2009 (Cth)” in circumstances where it had made offers of employment to employees conditional on the Federal Court making the declaration that their employment would not result in a transfer of business.
BDA is of course in the Commission’s hands on the above jurisdictional issue and seeks its determination of the threshold question of whether BDA is, or is likely to be covered by the instrument the subject of its application, the Boeing Aerostructures Australia Pty Ltd (Port Melbourne) Enterprise Agreement 2018. ”
The above submissions put in issue whether “conditional” offers (where the condition is based on the outcome of an order granted by the Commission) ought necessarily be fatal in light of the subsequent Federal Court decision in Crown Sydney Gaming Pty Limited v United Workers’ Union[4] (Crown).
Crown was a decision published on 14 February 2022. The facts concerned offers of employment by the applicant, ‘Crown Sydney’, to existing employees of related entities, referred to in the decision as ‘Crown Perth’ and ‘Crown Melbourne’. Crown Sydney was evidently alert to the prospect that the transfer of business provisions under the Act might be an issue and the decision records it sought certainty about that question. Crown Sydney initially contemplated making an application under s.318(1) to the Fair Work Commission.
Crown Sydney instead sought a declaration from the Federal Court that employment of the transferring employees would not constitute a transfer of employment. Relevantly to the application before me, the decision noted that:[5]
“Crown Sydney’s offer of employment to the transferring employees is conditional on the declaration being made”.
A declaration was granted. The form of the declaration made was as follows (excluding the definition of ‘Transferring Employees’):
“The employment of the Transferring Employees by Crown Sydney Gaming Pty Ltd will not result in a transfer of business within the meaning of s 311 of the Fair Work Act 2009 (Cth).”
While Jagot J did not specifically address the conditional nature of the declaration sought in the decision, it does not appear her Honour considered that conditional offer to be any impediment to the granting of a declaration. The “key provision” in question - and which was not satisfied in the case - was s.311(1)(c), which was whether the proposed employees would be performing the “same or substantially the same” work for the new employer as they were for the old employer.
I acknowledge the submissions from BDA indicate there is some difficulty in reconciling the Court’s granting of declaratory relief (predicated as it was on employment being conditional on the grant of a declaration) and Viva Energy (where an offer made conditional on Commission approval was fatal). A possible difference between Crown and Viva Energy is that, in the former case, the applicant was asserting that there was not a transfer of business whereas, in the latter, the applicant was asserting that there was a transfer. Viva Energy also turned on the statutory text in s.317 and s.320, whereas Crown was considering a declaration (albeit one as to future matters involving similar considerations).
In the present case, I ultimately do not need to decide whether, or the extent, any differences in Crown and Viva Energy need to be or can be reconciled. It is unnecessary for me to do so having regard to my view, below, that the proposed employment is not, nor is likely to be, a transfer of business because the requirements of s.311(1)(c) are not met. I also consider that it would be preferrable for the resolution of such issues to be resolved in a matter where there is an active contradictor. This is not a criticism of the Applicant before me (and I acknowledge the Applicant made submissions frankly, including drawing attention to matters both in support of and against its application). While there was a proper respondent in the Crown matter, I would respectfully observe that the respondent was not an active contradictor.
Section 311(1)(c) - whether the same or substantially the same work
Ms Leszczynski is a Systems Engineer for BAA (i.e the ‘old employer’), having commenced as a Graduate Systems Engineer in February 2019.
The evidence filed with the Application described Ms Leszczynski’s work with BAA as follows:
“(a) Worked on the aircraft production of commercial transportation platforms (mainly
Boeing 787 models);
(b) Focused on the structural assembly of composite and metallic detail parts of aircraft;
(c) Supported production tooling methodologies;
(d) Participated in Integrated Product Teams (IPTs) to integrate technical solutions;
(e) Conducted producibility and variation analyses to ensure that manufacturing
process capability matches requirements; and(f) Provided producibility information for inclusion in project plans.”
The work it is proposed Ms Leszczynski would undertake with BDA (i.e. the ‘new employer’) was described as follows:
“22. The Systems Engineer position within BDA that Ms Leszczynski has been
conditionally offered will primarily undertake the following key tasks:
(a)Evaluate customer/operational needs to define system performance requirements, integrate technical parameters and assure compatibility of all physical, functional and program interfaces;
(b) Perform analyses to optimize total systems and/or system architecture;
(c)Perform analyses for affordability, safety, reliability, maintainability, testability, human systems integration, survivability, vulnerability, susceptibility, system security, regulatory, certification, product assurance and other specialties quality factors into a preferred configuration to ensure mission success;
(d)Witness and support testing days with the aircraft with regard to ground, lab and flight testing;
(e)Support the planning, organization, implementation and monitoring of requirements management processes, tools, risk, issues, opportunity management and technology readiness assessment processes; and
(f)Apply an interdisciplinary, collaborative approach to plan, design, develop and verify basic lifecycle balanced system of systems and system solutions.”
Other material in support of the Application included the following, which I accept:
· The different locations of the employers. When working for BAA, the primary location is Port Melbourne, Victoria. The work for BDA will be at a different site near Newcastle, New South Wales. (In passing, I note that an important reason for the proposed change in roles was because the transferring employee wished to be located at the NSW site to be closer to family).
· The Applicant’s witness statement in support describes BDA as “one of the major prime contractors in the Australian Defence industry. Its core capabilities include Defence systems, modelling and simulation, maintenance, repair and operations of Defence aircraft, research and development, support and training.” And specifically that “BDA provides solutions for the support, maintenance, modification and upgrade of Boeing and non-Boeing aircraft; military aircrew training design and delivery; and the design, development and support of Command, Control, Computers, Communications, Intelligence, Surveillance and Reconnaissance solutions.”
· BDA has operations at 16 sites in Australia and presently employs approximately 3,157 employees. It is headquartered in Brisbane, Queensland.
· BAA is “a designer and manufacturer of composite flight control components for commercial aircrafts and currently employs approximately 761 employees.”
· While both BDA and BAA are part of the same corporate group, the evidence discloses that “the nature of their operations, corporate and operational structure, reporting structure, management lines, financial reporting and budgeting and administrative functions are completely separate and distinct. BDA and BAA also operate with different customers and under different regulatory structures. BDA and BAA also have different Managing Directors who report to [different] Senior Vice Presidents in the United States”.
· Within the wider Boeing corporate group, the group consists of three business units: Boeing Commercial Airplanes; Boeing Defense Services [sic – the US spelling variant of ‘defence’ is used] and Boeing Global Services. BDA functionally reports to Boeing Global Service and Boeing Defense Services, whereas BAA reports to Boeing Commercial Airplanes.
· A further motivation from the transferring employee in applying for the new role, in addition to relocating, is that she was seeking an opportunity to branch out and gain wider experience in Systems Engineering, a capability that isn’t a widely offered at BAA where the work has a “far heavier design element”.
In Community and Public Sector Union, NSW Branch v Northcott Supported Living Limited[6] (Northcott), Katzmann J considered s.311(1)(c) and the meaning of “substantial”. Her Honour stated at [156] that:
“It has rightly been said that “‘substantial’ is not a word with a fixed meaning in all contexts”: AE Terry’s Motors Ltd v Rinder [1948] SASR 167 at 180 (Mayo J). The online edition of the Macquarie Dictionary (accessed 6 January 2020) offers 10 different meanings, none of which seems to hit the mark. The closest would appear to be “of or relating to the essence of a thing; essential, material, or important”. In Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees Union (1979) 42 FLR 331 at 348 Deane J observed that “[t]he word ‘substantial’ is not only susceptible of ambiguity: it is a word calculated to conceal a lack of precision”. As it was said of the adjective, so it may be said of the adverb.”
In relation to the word “work”, her Honour stated at [162] that:
““Work” in the context of s 311 refers to the nature or character of the employment, rather than the particular duties the employee was undertaking or will or may be called upon to undertake.”
In Crown, Jagot J stated at [14] in relation to the word “work” that:
“the “work” an employee performs or performed is not confined to the mere carrying out of tasks in an abstract sense. Depending on the circumstances, the conception of the “work” an employee performs or performed for the purposes of s 311(1)(c) may include the location at which the work is performed and other aspects related to the performance of the tasks comprising the job or work;”
In response to my request for submissions in relation to the comparability of the transferring employee’s new and old work, the Applicant stated:
“With respect to matter [2], a determination by the Commission is of course contingent on the Commission finding it has jurisdiction notwithstanding matter [1]. BDA’s position is that because of the differing nature of the work as outlined in paragraphs [18] and [22] of Ms Taylor’s statement and the interstate location in NSW of the new role (noting that the location of work was a relevant factor in Crown for determining that the work was not ‘the same or substantially the same’), it is reasonably arguable the circumstances presently before the Commission do not give rise to a ‘transfer of business’ under the Act because the work is not the same or substantially the same and the pre-condition in section 311(1)(c) is therefore not met. However, there remains a dearth of case law to date on this issue a lack of detailed consideration (beyond the decision in Community and Public Sector Union, NSW Branch v Northcott Supported Living Limited [2021] FCA 8 (Northcott)) as to when the work would be the same or substantially the same.
Northcott also involved an application for a declaration and the Federal Court found it would not be appropriate to adopt a ‘technical approach’ when considering whether an employee was performing substantially the same work as performed in their previous role. The focus should be on whether the ‘fundamental nature’ of the work had changed, rather than upon a comparison of the particular duties of the two positions. Relevantly, a distinguishing factor between Crown and Northcott was location. In Northcott the transferring employees would perform work in the same location, in Crown, they would be performing the work in a different location, indeed, in different States. Another distinguishing factor was that, in Crown, the tasks performed in the employees’ previous roles continued to be performed in a different business enterprise and facility, notwithstanding the commencement of the new roles. This is directly analogous to the circumstances before the Commission in this application and tends towards a conclusion that the work is not the same or substantially the same.
Notwithstanding its views in respect of matter [2], BDA has made this application given the limited authority to date on the question of what constitutes ‘the same or substantially the same work’ and there remains reasonable doubt as to whether the work performed in Ms Leszczynski’s new role would be the same or substantially the same as her old role. Accordingly, subject to the Commission finding jurisdiction on [1], BDA seeks the Commission’s determination on the discrete jurisdictional question raised in [2].”
The Applicant’s witness statement in support of the Application referred to a conversation between the Applicant and the transferring employee where the new work was described as “similar” to her existing work. So much might be accepted, however I consider that does not extend to the work being the “same” or “substantially the same”.
In the present case, I conclude that the transferring work of the transferring employee will not be the same or substantially the same as her work with BAA. In reaching that conclusion, I have had regard to the totality of the material filed in support of the Application (the more salient aspects I have referred to above), as well as to the principles from Northcott and Crown. I am fortified with that conclusion by the candid acknowledgement from the Applicant concerning Crown that that decision “tends towards a conclusion that the work is not the same or substantially the same” for the transferring employee’s proposed transfer to BDA.
In my view, the work in the new role is of a sufficiently different nature, comprising not only a number of different duties (noting the caution contained in Northcott regarding a focus on duties as such), in a business unit whose function, purpose, reporting lines and location diverge materially from that of BAA.
Section 318(3) consideration
If I am wrong about the above matters, I would record that I would have otherwise granted the order sought under s.318. I will briefly state my reasons, noting the detailed supporting material that was filed in support of the Application.
Before an order under s.318(1)(a) can be made, s.318(3) sets out matters that the Commission “must” take into account in deciding whether to make the order. No singular factor is determinative, although in some cases one factor might weigh more heavily than another. Each factor must be taken into account.
BDA’s Form F40 Application was accompanied by a witness statement in support from both Mrs Vanessa Taylor, Senior Human Resources Director at BDA, and Ms Leszczynski, the BAA Agreement and Ms Leszczynski’s Employment Contract. The Application and witness statement of Mrs Taylor deals with matters including the views of BDA and Ms Leszczynski, a number of which I have summarised above. The material specifically addressed the factors in s.318(3).
I take into account the views of the new employer (which is the Applicant) and the affected employee, Ms Leszczynski. The witness statement of Ms Leszczynski deals with her views and states her support for the s.318 application: s.318(3)(a). This is a factor in support of the Application.
Section 318(b) requires me to take into account whether any employees – in this case Ms Leszczynski – would be disadvantaged by the order in relation to their terms and conditions of employment. Noting again Ms Leszczynski’s support, the witness statement of Mrs Taylor contains a comparison and analysis of the terms and conditions of Ms Leszczynski’s employment with BAA with the terms and conditions offered by BDA. The Application notes some areas of improvement for the new employment, such as a higher base salary and improved flexibility options for roster patterns, such as rostered days off. The new employment terms suggest a capacity for higher annual bonuses. Quite properly, the Application identifies some areas for disadvantage. They are overtime allowances, annual leave loading and more generous redundancy entitlements. I consider this factor to be neutral.
For s.318(3)(c), the nominal expiry date of the BAA Agreement was 30 June 2021. I consider this a factor in favour of the Application, albeit it is not of great significance.
In relation to s.318(3)(d), the Application set out in some detail the differences between BDA’s operations and BAA’s operations, which I accept. A number are set out above. Having regard to the fact that the transferable instrument would presently only apply to a single employee, the impact on productivity would not be profound but I accept there would be some impact. I consider this a largely neutral factor.
For s.318(3)(e), the material in support of the Application contends that BDA would suffer significant economic disadvantage. I do not consider that BDA would suffer “significant” economic disadvantage in the context of a single transferring employee. There might be some economic disadvantage, albeit slight, but I am not prepared to elevate this factor any higher. I consider this a neutral factor.
I consider the factor under s.318(3)(f) to be a neutral factor, as it was not clear to me that the engineering workforce in BDA is governed by workplace instruments such that any degree of synergy (or lack thereof) between the various workplace instruments is applicable.
For s.318(3)(g), I consider that it is in the public interest for a single employee, who is seeking to transfer and supports the Application, be able to do so without carefully delineated industrial arrangements with the new employer being impacted. I consider this a factor in support of the Application.
Having examined and considered the Application and supporting documentation, I have taken into account the matters set out in (a) to (g) of subsection 318(3) of the Act and I would be otherwise satisfied that it is appropriate to make the order sought under s.318(1)(a) of the Act.
However, for the reasons set out above concerning the threshold question of whether there can be a “transfer of business” by reason of s.311(1)(c), I am not satisfied that threshold is met and, accordingly, I must dismiss the Application.
An order[7] to this effect will be issued concurrently with this decision.
DEPUTY PRESIDENT
[1] AE500147
[2] [2019] FWCFB 6212.
[3] Viva Energy, [21]. The decisions referred to were Re Lend Lease Building Pty Ltd [2014] FWC 5499 (Hatcher VP, in which the conditional requirement caused the relevant applications to be dismissed); Re Qantas Airways Limited [2016] FWC 4913 (Watson VP, in which orders under s.318 were made).
[4] [2022] FCA 97.
[5] Crown, [8].
[6] [2021] FCA 8.
[7] PR739026
Printed by authority of the Commonwealth Government Printer
<AE500147 PR739024>
0
6
0