Cape Byron Management Pty Ltd

[2016] FWC 2576

[2016] FWC 2576

FAIR WORK COMMISSION

DECISION

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

Cape Byron Management Pty Ltd
(AG2016/2350)

Sugar industry
COMMISSIONER SPENCER	BRISBANE, 28 APRIL 2016

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

[1] This application was filed by Cape Byron Management Pty Ltd (the Applicant), and concerns an application pursuant to s.318(1) of the Fair Work Act 2009 (the Act) for orders relating to an instrument covering a new employer (the Applicant) and transferring employees. The Applicant, as the new employer, has standing to make the application pursuant to s.318(2)(a).

[2] The Applicant set out the background to this application as follows:

“1. Cape Byron Management Pty Ltd (CBM) manages Cape Byron Power I Pty Ltd (CBP1) and Cape Byron Power II Pty Ltd (CBP2). CBP1 and CBP2 are asset companies that jointly own two Power Plants situated adjacent to sugar milling sites at Condong and Broadwater (both located in northern NSW). The Sugar Mills at each site are owned by New South Wales Sugar Milling Co-operative Limited (NSWSMC).

2. There is no association between CBM and NSWSMC of the kind defined under the Act.

3. The Power Plants sell their output into the National Electricity Market serving the local electricity needs of some 60,000 homes. The Power Plants also provide steam and electricity to the Sugar Mills situated adjacent to the Power Plants at each site. More than 90% of the Power Plants electricity export capacity is sold to into the National Electricity Market for distribution to local homes. For part of the year, and when available, the Power Plants are powered by bagasse (the dry, pulpy residue left after the extraction of juice from sugar cane). Alternative fuel sources are used when bagasse is not available.

4. Up until now, NSWSMC operated and maintained the Power Plants under a Restated Operations and Maintenance Agreement (O&MA) for CBM. All of the employees who currently operate and maintain the Power Plants (and the Sugar Mills) are employed by NSWSMC. The Sunshine Sugar Enterprise Agreement 2011 (SSEA2011) covers NSWSMC and applies to employees of NSWSMC, including employees who operate and maintain the Power Plants.

5. NSWSMC has served notice on CBM that it intends to terminate the O&MA on 23 May 2016.

6. CBM will assume full responsibility for the operation and maintenance of the Power Plants on a date to be confirmed by CBM between 23 May 2016 and 31 July 2016.”

[3] In accordance with s.311(1) of the Act, a transfer of business will occur. The transferring employees were covered by the Sunshine Sugar Enterprise Agreement 2011 (the SS Agreement/the transferable instrument), being an enterprise agreement approved by a Decision of the Fair Work Commission (FWC) on 9 September 2011. 1 An enterprise agreement is a transferable instrument by operation of s.312(1)(a) of the Act. Section 313(1) provides that a transferrable instrument that covered the old employer and the transferring employees immediately before the termination of the employment will cover the new employer (being the Applicant). The operation of these sections means that the Applicant (the new employer) would be covered by the SS Agreement in relation to the transferring employees, however s.313(3) operates subject to s.318(1). Pursuant to s.318(1), the new employer (the Applicant) has sought that the transferable instrument/the SS Agreement will not cover the new (transferring) employees.

[4] The Applicant applies for an Order pursuant to s.318(1)(a) to displace the operation of s.313(1) in relation to the Agreement.Further, the Applicant is seeking an Order pursuant to s.318(1)(b) that the transferring employees will then be covered by the CBM Enterprise Agreement, being an enterprise agreement approved by a Decision of the Fair Work Commission on 5 January 2016 2, which covers the Applicant (the CBM Agreement).

Relevant legislation

[5] Section 313 provides:

313 Transferring employees and new employer covered by transferable instrument

(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
....

(3) This section has effect subject to any FWC order under subsection 318(1).

[6] Section 318 provides:

318 Orders relating to instruments covering new employer and transferring employees

Orders that FWC may make

(1) 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) 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 FWC must take into account

(3) In deciding whether to make the order, 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.

Consideration

[7] The Australian Workers’ Union (AWU), the Communication, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU), and the Automotive, Food, Metals, Engineering, Printing, and Kindred Industries Union (AMWU), being organisations covered by the SS Agreement, indicated that they wished to be heard in relation to the application.

[8] Accordingly, the matter was listed for mention with the Applicant and the above organisations, and a representative from the New South Wales Sugar Milling Co-Operative (NSWSMC) was also in attendance.

[9] A process for the exchange of information in relation to the conditional offers of employment to (potential) transferring employees was agreed upon, and the date of the transfer was extended to allow for this. The Applicant was represented by Mr Peter Ryan, and Ms Theresa Moltoni of IRIQ, and the NSWSMC was represented by Mr Tim Capelin of Piper Alderman.

[10] The Applicant issued revised conditional offers of employment to the employees on 16 March 2016.

[11] Directions were set for the filing of material in relation to the application.

[12] The Applicant filed revised submissions and a Statement of Mr Brian Restall, the Chief Executive of the Applicant.

[13] The AWU, CEPU and AMWU did not file any material in opposition to the application. The parties confirmed their consent to the matter being determined on the papers.

[14] The material is considered below in relation to each of the matters in s.318(3).

Section 318(3)(a)(i): the views of the new employer

[15] The Applicant, as the new employer, seeks that the transferable instrument (the Agreement) not cover or apply to it, or to the transferring employees.

Section 318(3)(a)(ii): the views of the employees who would be affected by the order

[16] The Applicant submitted that only employees who have accepted a conditional offer of employment would be affected by the application. The Applicant submitted that, as the offers had been made with full disclosure, the employees who accepted the conditional offers must be in a position of support for the application.

[17] Mr Brian Restall stated that the revised conditional offer of employment was provided to employees on 16 March 2016. Along with the conditional offers of employment, employees were also provided with a revised contract of employment and a revised information pack. Mr Restall also stated that employees were provided with a Memorandum on 30 March 2016 which set out the background to the offers, a summary of the changes to the offer and a response to outstanding issues. These documents were provided as attachments to Mr Restall’s statement.

[18] Mr Restall’s statement included the names of the 13 employees who accepted the conditional offer of employment, and attached their written acceptance of the conditional offers.

[19] The Applicant submitted that, under the conditional offers of employment, CBM will recognise transferring employees’ prior service with the NSWSMC for all purposes, including for notice of termination, redundancy pay, annual leave, personal leave and long service leave.

[20] In addition, the Applicant submitted that any transferring employee long service leave accrual under the SS Agreement, which is greater than the accrual that would exist under the Long Service Leave Act 1955 (NSW), will be preserved by CBM and made available to the transferring employee.

[21] Further, the Applicant submitted that the redundancy pay periods under the SS Agreement, calculated at the transfer date, will be preserved, to be paid to transferring employees in the event of a future redundancy.

[22] The Applicant also submitted that CBM will allow transferring employees to bring some or all of their SS Agreement RDO accruals across to CBM for use under CBM’s Flexible Working Time arrangements for shiftworkers.

[23] Ms Jamila Gherjestani, an Industrial Officer with the AWU, set out as follows in relation to the views of the employees:

“Eighteen of our members were offered conditional employment by Cape Byron Management Pty Ltd (CBM). Of the eighteen members, thirteen have accepted the conditional offer of employment.  For this reason, the AWU does not oppose CBM’s s318 application, thus we will not be filing any material to oppose the application.

However, it should be noted that overall, the current instrument Sunshine Sugar Enterprise Agreement 2011, which applies to our members contain better terms and conditions then the CBM enterprise agreement.

But, the alternative to not accepting the conditional offer of employment at CBM for our thirteen members were either day work in a different role at Sunshine Sugar or unemployment, both of which were not agreeable to our thirteen members.”

Section 318(3)(b): any disadvantage to the employees

[24] The Applicant submitted that discussions with the AWU and the New South Wales Sugar Milling Co-Operative had resulted in the revised conditional offers of employment, and also an agreement to vary the CBM Agreement (subject to the employment of the transferring employees and their subsequent approval of the variation). NSWSMC also provided an undertaking during the exchange of information.

[25] As set out above, whilst not making any submissions in opposition to the making of the Orders sought, the AWU wished to note that the SS Agreement contained better terms and conditions than the CBM Agreement. However, it was outlined that the alternatives to not accepting the offer were not agreeable to their members.

[26] The Applicant submitted that the transferring employees would have a “cooling-off” period, reflected in the undertaking, given by NSWSMC to re-employ any transferring employee within a 12-month period.

Section 318(3)(c): the nominal expiry date of the Agreement

[27] The nominal expiry date of the CBM Agreement is 5 January 2020.The nominal expiry date of the SS Agreement is 9 September 2015.

Section 318(3)(d): any negative impact on productivity on the employer’s workplace and section 318(3)(e): any significant economic disadvantage to the employer

[28] The Applicant submitted that the SS Agreement would have a significant cost and productivity implications and a detrimental impact on CBM. The Applicant submitted that the the SS Agreement was framed around traditional sugar industry considerations and that the operation and maintenance of power station plants was a relatively new experience in the sugar industry, and further, that the SS Agreement only deals with electrical power generation in an ancillary sense. It was submitted that the Order would allow CBM to operate with consistency in employment conditions for all employees employed by the Applicant. The Applicant submitted that the SS Agreement provisions relating to redundancy, long service leave, flood pay, travel time and paid time off for employee representatives will place CBM at an economic disadvantage by exposing it to costs it had not otherwise budgeted for, and that it had no other lines of business in which it could offset the economic disadvantages of the SS Agreement.

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

[29] The Applicant submitted that there was no business synergy between the SS Agreement and the CBM Agreement. It was submitted that the SS Agreement is inappropriate to its business due to its being underpinned by an Award that does not cover CBM (the Sugar Industry Award 2010), compared to the CBM Agreement, being based on the correct Award (the Electrical Power Industry Award 2010). Further, the Applicant submitted that the SS Agreement has a number of historical provisions that will not have meaning or clarity within the Applicant’s business.

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

[30] The Applicant submitted that it was in the public interest for transferring employees to commence employment with CBM because their skills and experience will add to a productive operation and will lessen the impact to the community in the event that NSWSMC was required to retrench some of its workforce.

CONCLUSION

[31] On balance, taking into account each of the matters stipulated at s.318(3), I am satisfied that the Order sought should be granted.

[32] A separate Order will issue [PR579400]. The Order will come into operation, in accordance with s.318(4).

COMMISSIONER

 1   Application by New South Wales Sugar Milling Co-Operative Limited [2011] FWAA 6232.

 2   Application by Brian Restall [2016] FWCA 40.

Printed by authority of the Commonwealth Government Printer

<Price code C, AE888245  PR579398 >