Calstores Pty Ltd T/A Calstores

[2020] FWC 2858

[2020] FWC 2858

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees

Calstores Pty Ltd T/A Calstores
(AG2020/750)

COMMISSIONER HUNT BRISBANE, 5 JUNE 2020

Application for an order relating to instruments covering new employer and transferring employees – Collective Australian Workplace Agreement – application granted.

[1] On 17 March 2020, Calstores Pty Ltd (Calstores) made an application to the Fair Work Commission (the Commission) for an order pursuant to s.318 of the Fair Work Act 2009 (the Act) that the Collective Australian Workplace Agreement (the Agreement) not cover Calstores Pty Ltd and transferring employees who would be covered by the Agreement by virtue of s.313(1)(a) of the Act.

[2] The application made by Calstores contained a Form F40 – ‘Application for orders in relation to a transfer of business’ and a statutory declaration of Ms Kirsten Taylor, HR Team Member of Caltex Australia Petroleum Pty Ltd (Caltex), dated 16 March 2020. It is noted that Calstores is a wholly owned subsidiary of Caltex.

[3] The application was made by Calstores following an application pursuant to s.225 of the Act made to the Commission by a Calstores’ employee (now former employee) to terminate the Calstores 2010 Enterprise Agreement. As such, Calstores has also sought that pursuant to s.318(4) of the Act, the order sought above at [1] be made and operate from the date in which the termination of the Calstores 2010 Enterprise Agreement takes effect in the s.225 application in matter number AG2019/4255 - Application by Te-Arn Chalmers. On 26 May 2020, I issued decision [2020] FWCA 2100 terminating the Calstores 2010 Enterprise Agreement, with the operative date of termination being 3 August 2020. Accordingly, from 3 August 2020, relevant employees of Calstores will be employed either under the Vehicle Manufacturing, Repair, Services and Retail Award 2010 (the Vehicle Award) or the General Retail Industry Award 2010 (the Retail Award).

Background

[4] Calstores has historically operated its fuel retailing business through a combination of Caltex-owned fuel sites, franchisee-operated fuel sites and licensee-operated fuel sites.

[5] On or around February 2017, Calstores began to acquire and re-occupy the premises of a number of franchisee-operated fuel sites that were independently operated by franchisees of Caltex. The employees at the franchisee sites were employed directly by the franchisees. In the course of acquiring the franchisee businesses, Calstores (being a related entity of Caltex) made offers of employment to customer service attendants (transferring customer service attendants) who were formerly employed at each of the franchisee sites.

[6] The transferring customer service attendants who choose to accept offers of employment with Calstores are to be engaged by Calstores as customer service attendants, and will be engaged to perform work which if the same, or very similar to, the work they were previously performing for the Caltex franchisee. Calstores understands that at the time of each respective acquisition, the employment of the transferring customer service attendant is terminated with the relevant franchisee.

[7] The Agreement applies to the ‘Bathurst’, ‘Orange’, ‘Orange Diesel Stop’, ‘Parks Town Centre’, ‘Yass Town Centre’, ‘Bombala’, ‘Cooma’, ‘Eden’ and ‘Merimbula’ sites. The statutory declaration made by Ms Taylor stated Calstores acquired the business from the franchisee on 24 July 2019 for the ‘Parkes Town Centre’ site, on 31 July 2019 for the ‘Orange’ site, on 1 August 2019 for the ‘Orange Diesel Stop’ site, on 5 August 2019 for the ‘Yass Town Centre’ site and 7 August 2019 for the ‘Bathurst’ site. Of those employees who accepted employment at the time of the acquisition for those above mentioned sites, there are currently nine still employed. The statutory declaration made by Ms Taylor further stated that Calstores anticipates acquiring the remaining sites cover by the Agreement in mid-2020, and that Calstores would be purchasing stock and equipment from the former employer franchisee (Hawgood Pty Ltd) and will own such stock and equipment after the transition period. At the time of the application, Calstores was unable to confirm how many employees of the remaining sites will accept employment with Calstores.

Transferrable instrument

[8] Section 311 of the Act sets out when a transfer of business occurs. On the evidence before me, having regard to the acquisition of the business from the franchisee that has now occurred, I am satisfied that there has been a transfer of business within the meaning of s.311(1)(d) of the Act. Pursuant to s.311(4) of the Act, there is a connection between two entities because of an arrangement between the old employer franchisee and the new employer (Calstores) under which Calstores has the beneficial use of some or all of the assets of the old employer franchisee that relate to the work of any potential transferring employees. Any employees still in employment are transferring employees within the meaning of s.311(2) of the Act.

[9] Section 312 of the Act details instruments that may transfer:

“312 Instruments that may transfer

Meaning of transferable instrument

(1) Each of the following is a transferable instrument:

(a) an enterprise agreement that has been approved by the FWC;

(b) a workplace determination;

(c) a named employer award.

Meaning of named employer award

(2) Each of the following is a named employer award:

(a) a modern award (including a modern enterprise award) that is expressed to cover one or more named employers;

(b) a modern enterprise award that is expressed to cover one or more specified classes of employers (other than a modern enterprise award that is expressed to relate to one or more enterprises as described in paragraph 168A(2)(b)).

Note: Paragraph 168A(2)(b) deals with employers that carry on similar business activities under the same franchise.”

[10] The Agreement was approved by the Workplace Authority, which existed until 1 July 2009 when it was replaced by Fair Work Australia (now the Commission).   Accordingly, it is a transitional instrument.

[11] Consideration was given by Senior Deputy President Richards in Queensland Nickel Pty Ltd [2009] FWA 335 as to whether a transitional instrument could be a transferable instrument. His Honour found, in the matter before him then, that by virtue of sub item 2(3), Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (“the Transitional Act”), the agreement before him was a transitional instrument. He determined that Fair Work Australia (as the Commission then was) was empowered to make an order relevant to a transitional instrument being a transferrable instrument. I adopt his Honour’s findings in this decision and determine that the Agreement is a transferrable instrument pursuant to s.312(1) of the Act.

Relevant legislation

[12] The application seeks for the Commission to make an order under s.318 of the Act, which is set out below:

“

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.”

Who may apply for an order?

[13] The application has been made by Calstores, the new employer. The requirements of s.318(2) have therefore been met. The matters considered below are contained within Ms Taylor’s statutory declaration.

Matters the Fair Work Commission must take into account (s.318(3))

Section 318(3)(a) - the views of the new employer and the employees who would be affected by the order

[14] The new employer is Calstores, the applicant for this order and it supports the making of the order.

[15] Ms Taylor is aware, having been advised by Ms Tessa Hart, HR Business Partner – Retail, that formal communication about the proposed changes outlining the proposed transition from the transferred instrument to the applicable modern award was provided to the current and prospective employees via ‘Accelerate’ on 10 March 2020 and the employees were encouraged to provide any feedback they had to the Respondent or to the Commission directly. No correspondence has been received by any employee of Calstores relevant to this application to my chambers.

Section 318(3)(b) - whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment

[16] From the analysis provided by Ms Taylor, it was submitted that all employees would not be disadvantaged by being employed under the Vehicle Award when compared to the terms of the Agreement. I am satisfied that is so.

Section 318(3)(c) - if the order relates to an enterprise agreement—the nominal expiry date of the agreement

[17] The nominal expiry date of the Agreement was 30 September 2008, a period of almost 12 years.

Section 318(3)(d) - whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace

[18] Having already determined in decision [2020] FWCA 2100 terminating the Calstores 2010 Enterprise Agreement that Calstores will apply the Vehicle Award and the Retail Award to nearly 5000 employees, if Calstores was required to apply the Agreement to the transferring employees, there would be an inconsistency of employment terms and conditions across the relevant workforce and an increased risk of discrepancies in the application of different industrial agreements.

[19] I accept the submissions of Calstores that administratively, this will create a significant burden to apply the two modern awards to its employees, in conjunction with the Agreement, which will negatively impact on the productivity of Calstores. I accept Calstores’ submissions that it has invested in preparing for all of its relevant employees to be employed pursuant to two modern awards from 3 August 2020, and this is a significant obligation.

Section 318(3)(e) - whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer

[20] The Agreement already applies to Calstores. It is submitted that if it was required to continue to apply the Agreement there would be economic disadvantage to Calstores by the provision of significant ongoing resources in its reliance on its HR employees and IT systems to continue to comply with the Agreement. Making the orders sought would eliminate any economic or administrative burden of managing the Agreement.

Section 318(3)(f) - the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer

[21] Calstores submitted that there is little degree of business synergy between the Agreement and the Vehicle Award. For example, unlike the Vehicle Award there is a minimum engagement of two hours only.

Section 318(3)(g) - the public interest

[22] Calstores submitted that it is a large employer, employing more than 5,000 employees nationally. The granting of the application will result in greater consistency in the terms and conditions which Calstores applies to employees performing the same or substantially the same work. This will assist Calstores in meeting its obligations to ensure that it is complying with workplace laws and the terms of the workplace instruments that apply to it.

[23] It was submitted that granting the application will give effect to terms and conditions that are fair to employees, are flexible for business, promote productivity and economic growth. Further, it will reduce the complexity of industrial instruments which apply to Calstores and will assist in providing a more simple, flexible and fair framework that enables future enterprise level bargaining should the employees and Calstores wish to pursue that course.

[24] Maintaining a cohesive, harmonious and productive workplace is a matter of public interest. It is also in the public interest for Calstores’ business to operate effectively and efficiently. This would not be served if the orders sought in the application are not made as it would result in Calstores having to:

(a) manage employees on terms and conditions that differ from similar maintenance employees in the same workplace; and

(b) incur avoidable costs in time and administration to manage a separate payroll system for the transferring employee.

Conclusion

[25] Having considered Calstores’ application, the accompanying materials and the statutory declaration of Ms Taylor, and taking into account each of the matters set out in s.318(3) of the Act, together with the undertaking provided at [16], I am satisfied that it is appropriate to grant the orders sought by Calstores.

[26] Having regard to s.318(4) of the Act, and Calstores’ submissions that the order should not come into effect until 3 August 2020, I consider it appropriate to ensure that the order does not come into effect until 3 August 2020. To allow the order to come into effect any earlier would result in the relevant employees being no longer covered by the Agreement, then covered for just over two months by the Calstores 2010 Enterprise Agreement, and when that Agreement’s termination comes into effect, the Vehicle Award. That would be nonsensical.

[27] Accordingly, while the order will be made today, it will state that it will not come into effect until 3 August 2020.

COMMISSIONER

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