Caden Group Pty Ltd v Shop, Distributive and Allied Employees Association - [2017] FCCA 3055

FEDERAL CIRCUIT COURT OF AUSTRALIA

CADEN GROUP PTY LTD V SHOP, DISTRIBUTIVE AND ALLIED EMPLOYEES ASSOCIATION & ORS

[2019] FCCA 3055

Catchwords:
INDUSTRIAL LAW – Application for declarations that a collective agreement covers certain employees, an enterprise agreement covers other employees, and that a modern award covers none of the applicant’s employees – no respondent nominated – possibly interested parties notified of proceeding – one union and two employees joined as respondents – declaration that modern award applied to certain employees.

Legislation:
Bakers Delight Holdings Ltd Collective Agreement (Victoria) 2006
Bakers Delight (Victoria) Enterprise Agreement 2011
Fair Work Act 2009, ss.47, 48, 313, 314, 319
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, items 2(1), 2(2) of Schedule 3, 2(1) of Schedule 6
General Retail Industry Award 2010, cl.4.3

Applicant:

CADEN GROUP PTY LTD

(ACN 168 989 286)

First Respondent:

SHOP, DISTRIBUTIVE AND ALLIED EMPLOYEES ASSOCIATION

Second Respondent:

AVA ELIZABETH HANDSLEY

Third Respondent:

SAVARNA LOUISE NOCK

File number:

MLG 1193 of 2017

Judgment of:

Judge Riley

Hearing date:

22 November 2017

Date of last submission:

22 November 2017

Delivered at:

Melbourne

Delivered on:

8 December 2017

REPRESENTATION

Counsel for the applicant:

Bruce Shaw

Solicitors for the applicant:

Scammell Black Mileo

Counsel for the first respondent:

No appearance

Solicitors for the first respondent:

A J Macken & Co.

Counsel for the second respondent:

James Hooper

Solicitors for the second respondent:

Ryan Carlisle Thomas

Counsel for the third respondent:

James Hooper

Solicitors for the third respondent:

Ryan Carlisle Thomas

DELCARATION

The General Retail Industry Award 2010 applied to non-transferring employees as defined by s.314(2) of the Fair Work Act 2009, including the second and third respondents, upon the commencement of their employment with Caden Group Pty Ltd.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 1193 of 2017

CADEN GROUP PTY LTD (ACN 168 989 286)

Applicant

And

SHOP, DISTRIBUTIVE AND ALLIED EMPLOYEES ASSOCIATION

First respondent

AVA ELIZABETH HANDLSEY

Second respondent

SAVARNA LOUISE NOCK

Third respondent

REASONS FOR JUDGMENT

Introduction

This is an application that was filed by the applicant on 6 June 2017 seeking certain declarations. The applicant operates a number of businesses known as Bakers Delight shops.
The applicant did not nominate any respondent to the proceeding. The applicant sought declarations as follows:
1.A declaration pursuant to section 21 of the Federal Circuit Court Act of Australia 1999 that The Bakers Delight Holdings Ltd Collective Agreement (Victoria) 2006:
(a)is a transferrable instrument within the meaning of section 312 of the Fair Work Act 2009 (“the Act”) and
(b)is a transferrable instrument for the purposes of section 314 of the Act and
(c)covers the applicant and its non-transferring employees who were employed at the applicant's Jackson Court site.
2.A declaration pursuant to section 21 of the Federal Circuit Court Act of Australia 1999 that The Bakers Delight (Victoria) Enterprise Agreement 2011:
(d)is a transferrable instrument within the meaning of section 312 of the Fair Work Act 2009 (“the Act”) and
(e)is a transferrable instrument for the purposes of section 314 of the Act and
(f)covers the applicant and its non-transferring employees other than those employed at the applicant's Jackson Court site.
3.A declaration pursuant to section 21 of the Federal Circuit Court Act of Australia 1999 that there is no modern award that covers the applicant and non-transferring employees of the applicant.
The matter came on for directions on 22 June 2017. At that point the court ordered that:
a)the Shop, Distributive and Allied Employees Association (“SDA”) be joined as the respondent to the proceeding; and
b)the applicant give copies of the material filed in the proceeding to:
i)each current and former employee of the applicant;
ii)United Voice; and
iii)the Retail and Fast Food Workers Union.
The SDA filed a submitting appearance, save as to costs. Nothing was heard from United Voice or the Retail and Fast Food Workers Union. Ava Elizabeth Handsley and Savarna Louise Nock who are employed as sales assistants at the applicant’s Bakers Delight shop in Jackson Court, Doncaster, sought to be joined as respondents to the proceeding. The matter returned to court on 29 August 2017, at which time Ms Handsley and Ms Nock were joined as the second and third respondents respectively.
On 12 September 2017, the applicant filed an amended application in which it sought the following declarations:
1.A declaration pursuant to section 16 21 of Federal Circuit Court of Australia Act 1999 that The Bakers Delight Holdings Ltd Collective Agreement (Victoria) 2006 + (the “2006 Agreement”) :
(a)was is a transferrable instrument within the meaning of section 312 of the Fair Work Act 2009 (“the Act”) and
(b)was is a transferrable instrument for the purposes of section 314 of the Act; and
(c)covered ~~covers~~ the applicant and its non-transferring employees who were employed at the applicant’s Jackson Court site between the date each such employee was employed by the applicant and 16 March 2017, being the date the 2006 Agreement was terminated by the Fair Work Commission.
2.A declaration pursuant to section 16 21 of the Federal Circuit Court Act of Australia 1999 that The Bakers Delight (Victoria) Enterprise Agreement 2011:
(d)is a transferrable instrument within the meaning of section 312 of the Fair Work Act 2009 (“the Act”);
(e)is a transferrable instrument for the purposes of section 314 of the Act; and
(f)covers the applicant and its non-transferring employees other than those employed at the applicant's Jackson Court site.
3.A declaration pursuant to section 16 21 of the Federal Circuit Court Act of Australia 1999 that there is no modern award that covers the applicant and non-transferring employees of the applicant, other than at the Jackson Court site since 17 March 2017.
The second and third respondents, in their response filed on 3 October 2017, opposed the orders sought by the applicant and sought a declaration that:
The General Retail Industry Award 2010 applied to the Second and Third Respondents upon the commencement of their employment with Caden Pty Ltd.
At the final hearing of the matter on 22 November 2017, the second and third respondents sought in the alternative a declaration that:
The General Retail Industry Award 2010 applied to non-transferring employees as defined by s.314(2) of the Fair Work Act 2009, including the second and third respondents, upon the commencement of their employment with Caden Pty Ltd.

Background

The applicant was incorporated in April 2014 to operate two Bakers Delight franchises. One was in Knox and the other was in Eastland. The applicant operated both Bakers Delight stores as a franchisee. However, on 30 June 2016, the applicant bought the Knox Bakers Delight store, and, on 2 February 2017, the applicant handed back the Eastland store to the franchisor.
Also, in October 2014, the applicant took over another Bakers Delight store in Jackson Court, Doncaster East. That occurred pursuant to a business lease agreement with an option to purchase. The applicant bought the franchise for Jackson Court in February 2016.
In November 2014, the applicant bought the Donvale Bakers Delight franchise from Cielterre Pty Ltd, which was the outgoing franchisee. The applicant sold the Donvale Bakers delight franchise in April 2017.
There were existing employees of each Bakers Delight store at the time that the applicant took over operations. New employees were engaged for the Jackson Court and Donvale stores. They commenced employment in November 2014 after undergoing training at other stores operated by the applicant.
The existing employees at each Bakers Delight store taken over by the applicant who continued in employment after the takeover are described as transferring employees. People first employed in the Bakers Delight stores after the applicant took over the stores are described as non-transferring employees.
When the applicant acquired the Bakers Delight stores, the transferring employees were covered by:
a)the Bakers Delight Holdings Ltd Collective Agreement (Victoria) 2006 (“the 2006 agreement”);
b)the Bakers Delight (Victoria) Enterprise Agreement 2011 (“the 2011 agreement”); or
c)in the case of one employee, the General Retail Industry Award 2010 (“the award”).
The 2011 agreement lists the employers that are to be bound by it. Cielterre Pty Ltd and Sugarloave Pty Ltd are listed as employers. The applicant took over the Bakers Delight stores from those two companies.
When the applicant operated four bakeries, it had about 100 employees. Overall, the applicant has had 244 employees since April 2014.
The applicant’s position was that:
a)the 2006 agreement covered its non-transferring employees who were employed at the Jackson Court site;
b)the 2011 agreement covered its non-transferring employees except those employed at the Jackson Court site;
c)there is no modern award which covers the applicant’s non-transferring employees.
The second respondent is a sales assistant who has been employed at the applicant’s Jackson Court store since late November 2014. The third respondent is a sales assistant who has been employed at the applicant’s Jackson Court store since 2 July 2016. The second and third respondents’ position was that they were covered by the award and the award applied to them.

The 2006 agreement

Section 313 of the Fair Work Act 2009 (“the Act”) provides that:
(1)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; and
(b)while the transferable instrument covers the new employer and the transferring employee in relation to the transferring work, no other enterprise agreement or named employer award that covers the new employer at the transfer time covers the transferring employee in relation to that work.
(2)To avoid doubt, a transferable instrument that covers the new employer and a transferring employee under paragraph (1)(a) includes any individual flexibility arrangement that had effect as a term of the transferable instrument immediately before the termination of the transferring employee’s employment with the old employer.
(3)This section has effect subject to any FWC order under subsection 318(1).
Section 314 of the Act provides that:
(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).
The parties were in agreement that s.314(1)(a), (b) and (c) of the Act are satisfied in this case. They were in dispute about whether s.314(1)(d) of the Act is satisfied in this case. The applicant argued that no modern award covered the non-transferring employees. The second and third respondents argued that the award, which is a modern award, covered the non-transferring employees.
The second and third respondents drew a distinction between whether an award applies to an employee and whether an award covers an employee. Section 314(1)(d) of the Act concerns the question of whether a modern award covers an employee.
Section 47 of the Act provides that:
(1)A modern award applies to an employee, employer, organisation or outworker entity if:
(a) the modern award covers the employee, employer, organisation or outworker entity; and
(b)the modern award is in operation; and
(c)no other provision of this Act provides, or has the effect, that the modern award does not apply to the employee, employer, organisation or outworker entity.
…
Section 48 of the Act provides that:
(1)A modern award covers an employee, employer, organisation or outworker entity if the award is expressed to cover the employee, employer, organisation or outworker entity.
…
(2)A modern award also covers an employee, employer, organisation or outworker entity if any of the following provides, or has the effect, that the award covers the employee, employer, organisation or outworker entity:
(a)a provision of this Act or of the Registered Organisations Act;
(b)an FWC order made under a provision of this Act;
(c)an order of a court.
(3)Despite subsections (1) and (2), a modern award does not cover an employee, employer, organisation or outworker entity if any of the following provides, or has the effect, that the award does not cover the employee, employer or organisation or outworker entity:
(a)a provision of this Act;
(b)an FWC order made under a provision of this Act;
(c)an order of a court.
…
The applicant noted that clause 4.3 of the award provides that:
The award does not cover employees who are covered by a modern enterprise award, or an enterprise instrument (within the meaning of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth)), or employers in relation to those employees.
The applicant argued that clause 4.3 of the award satisfied the test in s.48(3) of the Act. The applicant noted that, under s.48(3)(b) of the Act, the award is a Fair Work Commission order made under the Act.
The applicant argued that the award excluded the non-transferring employees because they were covered by the 2006 agreement, which the applicant said was an enterprise instrument within the meaning of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (“the TPCA”).
The applicant accepted that the 2006 agreement was not a modern enterprise award, but maintained that it was an enterprise instrument.
The applicant argued that the 2006 agreement was an enterprise instrument because it fitted within the description of Workplace Relations Act 1996 instruments set out in Schedule 3 item 2 of the TPCA. Items 2(1) and (2) of Schedule 3 of the TPCA provide as follows:
(1)Each WR Act instrument (see subitem (2)) that becomes a transitional instrument (see subitems (3) to (4A)) continues in existence in accordance with this Schedule from when it becomes a transitional instrument, despite the WR Act repeal.
…
(2)Each of the following instruments is a WR Act instrument:
(a)an award;
(aa)a State reference transitional award or common rule;
(b)a notional agreement preserving State awards;
(c)a workplace agreement;
(d)a workplace determination;
(e)a preserved State agreement;
(f)an AWA;
(g)a pre-reform certified agreement;
(h)a pre-reform AWA;
(i)an old IR agreement;
(j)a section 170MX award.
…
The applicant argued that the 2006 agreement was an enterprise instrument because it was a workplace agreement within the meaning of Schedule 3 item 2(2)(c) of the TPCA.
However, the second and third respondents pointed out, correctly, that the actual definition of enterprise instrument is in Schedule 6 item 2 of the TPCA. Item 2(1) of Schedule 6 of the TPCA provides that:
2Enterprise instruments
(1)Each of the following is an enterprise instrument:
(a)an enterprise award-based instrument;
(b)an enterprise preserved collective State agreement;
(c)a Division 2B enterprise award.
The applicant conceded that the 2006 agreement was not an enterprise award-based instrument, or an enterprise preserved collective State agreement or a Division 2B enterprise award. Consequently, the 2006 agreement does not fit within the definition of an enterprise instrument.
Schedule 3 of the TPCA does not define enterprise instruments. Rather, it provides that certain instruments will continue in existence notwithstanding the repeal of the Workplace Relations Act 1996 and the commencement of the Fair Work Act 2009.
Consequently, the 2006 agreement does not fit within the definition of enterprise instrument in clause 4.3 of the award. It was not disputed that, but for clause 4.3 of the award, that award would cover the applicant’s non-transferring employees. It follows, in all the circumstances of this case, that the award applies to the second and third respondents and, indeed, to all of the applicant’s non-transferring employees at Jackson Court.
I note that s.319 of the Act provides that:
(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.
…
(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).
(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.
(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.

It was common ground that the applicant had not sought to avail itself of s.319 of the Act. I make no comment on whether the applicant might be successful in an application under that provision.

The 2011 agreement

For the same reasons, the applicant’s contentions in respect of the 2011 agreement cannot succeed. I accept the second and third respondents’ submissions that it is irrelevant that the applicant was not an employer at all until the transfer time in 2014. That follows from the clear words of s.314 of the Act.
In the circumstances, I consider that it is appropriate to make the alternative declaration sought by the second and third respondents.

I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of Judge Riley

Associate:

Date: 8 December 2017