Cambridge Clothing Pty Ltd T/A Cambridge Clothing

[2016] FWC 6091

[2016] FWC 6091

FAIR WORK COMMISSION

DECISION

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

Cambridge Clothing Pty Ltd T/A Cambridge Clothing
(AG2016/5229)

DEPUTY PRESIDENT CLANCY MELBOURNE, 2 SEPTEMBER 2016

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

[1] Cambridge Clothing Pty Ltd has applied for an order under s.319(1)(b) of the Fair Work Act 2009 (the Act) that the Cambridge Clothing Company Enterprise Agreement 2014 [AE413192] (the Agreement) will cover any non-transferring employee who commences employment with it on or after 1 August 2016.

[2] The Agreement was approved by the Commission on 1 April 2015 1 and nominally expires four years from that date. In the absence of an order in the form sought, the relevant non-transferring employees would otherwise be covered by the General Retail Industry Award 2010 (the Award).

[3] Given the material that has been filed and the fact that there are currently no non-transferring employees, I have determined that the matter can be dealt with on the papers.

The applicable legislation

[4] Sections 317 and 319 of the Act relevantly provide:

317 FWC may make orders in relation to a transfer of business

This Division provides for the FWC to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer.

…

319 Orders relating to instruments covering new employer and non-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 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.

Background

[5] The Form F40 – Application for orders in relation to a transfer of business filed in support of this Application is accompanied by an affidavit of Mr Warren Philip, Chief Financial Officer for both Cambridge Clothing Pty Ltd (the new employer) and Cambridge Clothing Company Ltd (the old employer).

[6] Mr Philip said that in May 2016, a decision was made to separate the retail clothing business and property interests of the old employer. The new employer was established for this purpose, with the intention that all retail employees would be employed by it. The assets of the old employer, including property, leases in respect of premises, equipment and inventory, were transferred to the new employer on 1 August 2016.

[7] Mr Philip confirmed that as the new employer is not party to an enterprise agreement, any non-transferring employee would be covered by the Award.

Consideration

[8] The application for an order under s.319(1)(b) of the Act has been made by the new employer. 2 In deciding whether to make the order sought, I must take into account the matters outlined in s.319(3) of the Act.

Section 319(3)(a) – views of the new employer and employees who would be affected

[9] Mr Philip said that the new employer wishes to engage employees in retail classifications on a common set of conditions, regardless of whether they are transferring employees or non-transferring employees. He said if the order is not made, it would be necessary to reconfigure time, attendance and pay systems to accommodate two sets of employment conditions, increasing the complexity of rostering staff working side-by-side in the same roles.

[10] Mr Philip said that one person, Ms Carolyn Berry, is responsible for accounts payable, assisting accounts and human resources for both the new employer and the old employer and that administering the two systems would create complication and inefficiency with already limited payroll resources. He said that excess time and resources would need to be expended to install a new and separate record system which staff would need to be trained in.

[11] Mr Philip also expressed the opinion based on his knowledge of the old employer that if the Agreement was not to apply to all employees, there would be negative effects on staff relations, and possibly on staff and management relations.

[12] There are currently no non-transferring employees and I have noted that the Agreement will apply to transferring employees from the commencement of their employment with the new employer, pursuant to s.313(1) of the Act.

Section 319(3)(b) - whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment

[13] While there are currently no non-transferring employees, I have noted that Mr Philip has said the Agreement contains terms and conditions of employment which are more favourable than those in the Award, including higher base rates of pay, a commission scheme, an additional in-charge allowance, provision for cashing out of annual leave and a clothing allowance/provision of clothing.

[14] The higher hourly base rate of pay is said to compensate for the fact that the Agreement does not provide for penalty rates for weekends and public holidays. As to this, I have noted that in approving the Agreement, the Commission’s concerns regarding weekend penalties were satisfied following the submission of a number of indicative rosters that included employees who work a significant number of hours on the weekend and its concerns regarding public holidays were addressed with an undertaking that all employees who work on a public holiday will receive time off in lieu equal to the ordinary hours worked on a public holiday. 3

Section 319(3)(c) - if the order relates to an enterprise agreement--the nominal expiry date of the agreement

[15] As noted above, the nominal expiry date of the Agreement is 1 April 2019.

Sections 319(3)(d) - whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace

[16] I have noted that the new employer currently has 94 employees and 38 retail outlets but no non-transferring employees. I have also noted the submission of the new employer that were the application to be granted in full, the Agreement would not be expected to have any negative impact on the Applicant’s productivity in respect of the employees who will be covered by the Agreement. The new employer has submitted the granting of the application is expected to enhance productivity, including by avoiding the need for “a complex integration of disparate terms and conditions for 2 groups of employees (i.e. Transferring Employees and non-transferring employees)”.

Section 319(3)(e) - whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer

[17] It was not submitted and nor do I consider that the new employer would incur significant economic disadvantage as a result of the Agreement covering the new employer.

Section 319(3)(f) - the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer

[18] I have noted the identified differences between the Agreement and the Award, suggesting there would be reduced business synergy if both were to apply to the new employer.

[19] I have also noted that the new employer has submitted that the processes that would be required to ensure compliance with the Award after the transfers of employment, should this be required, would have a negative impact on the productivity of the new employer’s workplace and result in it incurring significant economic disadvantage in the following ways:

(i) the new employer would experience a significant increase in administration costs in order to ensure compliance with different industrial instruments for employees otherwise performing the same work on the same roster;

(ii) the new employer’s limited payroll resources would be subjected to further pressures in order to ensure compliance with different industrial instruments for employees otherwise performing the same work on the same roster;

(iii) productivity is likely to be reduced because of the investment of time and energy by management staff in managing different industrial instruments within the same stores, rather than managing customer service delivery functions; and

(iv) the inequity between the terms and conditions of employment of employees at the same stores performing the same work is likely to create confusion among employees, interpersonal disputes and ultimately, lost productivity for both management and the employees concerned.

Section 319(3)(g) – the public interest

[20] There were no submissions regarding the public interest but having considered the material filed, I am satisfied that granting the order would not be contrary to the public interest.

Conclusion

[21] Having considered each of the matters outlined in s.319(3) of the Act and the material that has been filed, I am satisfied that an order pursuant to s.319(1)(b) of the Act should be made. The Order (PR584727) will take effect on 2 September 2016.

DEPUTY PRESIDENT

 1   [2015] FWCA 2015.

 2 Section 319(2)(a) of the Fair Work Act 2009.

 3   [2015] FWCA 2015 at [13] and [14].

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<Price code C, PR584726>