Bothar Boring and Tunnelling (Australia) Pty Ltd

[2019] FWC 7049

[2019] FWC 7049

FAIR WORK COMMISSION

DECISION

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

Bothar Boring and Tunnelling (Australia) Pty Ltd
(AG2019/3844)

Building, metal and civil construction industries
COMMISSIONER HUNT	BRISBANE, 16 OCTOBER 2019

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

[1] On 24 January 2018 the Fair Work Commission (Commission) approved the Bothar Group Enterprise Agreement 2017 (the Transferable Instrument). The Transferable Instrument has a nominal expiry date of 30 June 2020. The Transferable Instrument is an agreement entered into by the Bothar Group, comprising of Petroserv International Pty Ltd and Bothar Boring and Tunnelling Pty Ltd.

[2] Since the approval of the Transferable Instrument a new entity, Bothar Boring and Tunnelling (Australia) Pty Ltd (Bothar), has been incorporated and commenced operations.

[3] All relevant employees of the Bothar Boring and Tunnelling Pty Ltd who were covered by the Transferable Instrument have had their employment transferred to Bothar.

[4] Bothar has applied for an order under s.319(1)(b) of the Fair Work Act 2009 (the Act) that the Transferable Instrument will cover any non-transferring employees of Bothar who perform, or are likely to perform, transferring work in a role within the classifications provided by the Transferable Instrument.

[5] Section 311 of the Act sets out the circumstances in which a transfer of business occurs. It states:

“311 When does a transfer of business occur

(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).”

[6] Section 312 of the Act also indicates that a “transferable instrument” includes “an enterprise agreement that has been approved by the FWC”.

[7] Section 313 of the Act provides that “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”.

[8] I am satisfied that there was a transfer of business and that the employees of Bothar Boring and Tunnelling Pty Ltd transferred to Bothar under the terms of the Act. I am also satisfied that the Transferable Instrument is a transferable instrument and that it now covers Bothar and the transferring employees.

[9] Section 314 of the Act also provides 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).”

[10] I observe that the Building and Construction General On-site Award 2010 (the Award) is likely to cover Bothar’s enterprise. Given the coverage of a modern award, s.314(1) does not operate to have the Transferable Instrument cover the non-transferring employees.

[11] However, as indicated, the provisions contained in s.314 are subject to s.319 of the Act, which allows for the Commission to make an order that a transferring instrument covers non-transferring employees.

[12] Section 319 of the Act states:

“319 Orders relating to instruments covering new employer and non-transferring employees

(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.

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.”

[13] Bothar is entitled to bring the application, which relies upon the terms of s.319(1)(b) of the Act to, in effect, extend the coverage of the Transferable Instrument to the non-transferring employees.

[14] In dealing with the application, the Commission is required to have regard to each of the matters in s.319(3) in determining whether an order should be made. I now turn to deal with each of those considerations.

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

[15] Bothar as the applicant and the new employer supports the application and the order sought. Bothar submits that making the order sought will allow Bothar to engage employees on a common set of terms and conditions and within a single classification scheme, regardless of whether they are transferring or non-transferring employees. Bothar submits that if the order sought is not made two sets of employment conditions would be applied to employees that perform the same work, which would be unfair to its non-transferring employees.

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

[16] It is not possible to obtain the views of the new employees who will be affected by the Order because there are no non-transferring employees currently employed by Bothar.

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

[17] Non-transferring employees would be covered by the Award. The Transferable Instrument was compared against the Award and it was determined by the Commission that employees covered by the Transferable Instrument would be better off overall under the Transferable Instrument rather than the Award. 1 I am satisfied that the employees would not be disadvantaged in relation to their terms and conditions of employment by the making of an order.

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

[18] The nominal expiry date of the Transferable Instrument is 30 June 2020.

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

[19] Bothar submitted that it did not expect there to be any negative impact on its productivity or the productivity of employees to be covered by the Transferable Instrument were I to make the order sought. Bothar submitted that making the order sought would in fact enhance productivity by avoiding difficulties arising from applying two sets of terms and conditions to employees that perform the same work. I am satisfied that there will be no negative impact on productivity if the order is made. In contrast, if the order is not made and transferring and non-transferring employees are on different terms and conditions of employment, this may have a negative impact on team engagement and in turn upon workplace productivity.

Economic disadvantage – s.319(3)(e)

[20] Bothar submitted that making the order sought would not result in any economic disadvantage and noted that Bothar already applies the Agreement to its entire workforce. I am satisfied that the Transferable Instrument’s coverage of non-transferring employees will not cause any significant economic disadvantage.

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

[21] Bothar submitted that the Award is a more complex industrial instrument than the Transferable Instrument. Bothar submitted that having to apply the Award and the Transferable Instrument to employees performing the same work would reduce synergy within Bothar’s business. I am satisfied that if the order sought is granted it will confirm a single framework of regulation that has been negotiated and approved in the context in which it has and will continue to apply.

Public interest – s.319(3)(g)

[22] The public interest in this context is influenced by the objects of this Part of the Act in s.309 and those adopted by the Act more broadly.

[23] Bothar submitted that it would not be contrary to the public interest to make the order sought. I am satisfied that the public interest is served by facilitating arrangements that permit the maintenance of the presently approved employment conditions across the entirety of Bothar’s enterprise.

Conclusion

[24] Having considered each of the matters in s.319(3) of the Act I am satisfied that it is appropriate for an order to be made. In accordance with s.319(4) of the Act, 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 employee starts to perform the transferring work for the new employer; or

•  the day on which the order is made.

[25] An order [PR713256] will be issued to this effect.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

<AE427078  PR713257 >

 1   [2018] FWCA 512.