Cascade Brewery Company Pty Ltd T/A Cascade Brewery Company Pty Ltd

[2020] FWC 1724

[2020] FWC 1724

FAIR WORK COMMISSION

DECISION

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

Cascade Brewery Company Pty Ltd T/A Cascade Brewery Company Pty Ltd
(AG2020/804)

COMMISSIONER LEE MELBOURNE, 31 MARCH 2020

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

[1] An application has been made by Cascade Brewery Company Pty Ltd T/A Cascade Brewery Company Pty Ltd (Cascade) to the Fair Work Commission (the Commission) for an order pursuant to s. 318 of the Fair Work Act 2009 (the Act).

[2] The application seeks an order that the Frontline Electrical Pty Ltd Enterprise Agreement 2012 – 2016 (Frontline Agreement) not cover Cascade Brewery Company Pty Ltd and employees of Cascade, formerly employed by Frontline Electrical Pty Ltd (Frontline) under the Frontline Agreement who performed electrical trade services work at Cascade’s brewery in South Hobart, Tasmania. Further, that the Cascade Brewery Maintenance Enterprise Agreement 2016 (Cascade Agreement) cover any employees of Cascade formerly employed by Frontline under the Frontline Agreement who performed the services. The Applicant seeks that these Orders shall apply in respect of each employee transferring to Cascade from Frontline who performed the Services on and from the day after Frontline ceases to administer their pay and other employment entitlements.

[3] The application consisted of a Form F40 - Application for orders in relation to transfer of business. Following the Mention listed on 27 March 2020, a witness statement of Mr Andrew Bolton, People Business Partner of the Applicant was provided.

Relevant Legislation

“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.”

Background

[4] Cascade owns and operates a brewery in South Hobart, Tasmania.

[5] Frontline provides electrical services to industrial customers in Tasmania, including electrical trade services work at the Cascade Brewery.

[6] Cascade does not currently employ any employees to carry out this work, however, tradespersons with electrical trade skills are covered by the Cascade Agreement.

[7] Relevant to this Application, Cascade had previously outsourced electrical trade

services work required at the Brewery to Frontline. Historically, this work was performed by two employees of Frontline. Since approximately 2001, this has been Kyle Wiggins and Martin McCarthy, both of whom are covered by the Frontline Agreement.

[8] On or around 25 February 2020, Cascade made offers of employment to the two Frontline employees presently covered by the Frontline Agreement, who perform the electrical trade services work at Cascade (transferring employees).

[9] Cascade currently employees 55 employees at the brewery including 7 employees to perform maintenance services work. All maintenance employees are covered by the Cascade Agreement.

[10] In or around late January 2020, Cascade determined to cease outsourcing the

electrical services work at the Brewery to Frontline

[11] Cascade anticipates that the transferring employees will be ‘transferring employees,’ and that the Frontline Agreement will be a ‘transferable instrument’ within the meaning of those terms in Part 2-8 of the Act.

[12] The nominal expiry day for the Frontline Agreement was 1 July 2016. The nominal expiry day for the Cascade Agreement was 30 June 2019. Both agreements are presently subject to enterprise bargaining.

Transferrable instrument

[1] Section 311 of the Act sets out when a transfer of business occurs. On the evidence before me, it is likely that there will be a transfer of business within the meaning of s. 311(1) of the Act.

[2] 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.”

[3] The Cascade Agreementwas approved by the Fair Work Commission on 22 December 2016 and pursuant to s. 312(1) of the Act is a transferrable instrument.

Who may apply for an order?

[4] The application has been made by Cascade, the new employer. The requirements of s. 318(2) have therefore been met.

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

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

[6] The witness statement of Mr Andrew Bolton, People Business Partner for Cascade supplied in this matter provides that Mr Bolton attended meetings and discussed the transfer of business and this application with the two transferring employees. The transferring employees were issued letters of offer which included the following:

“(a) that Cascade intended to make an application to the Fair Work Commission for an order that the Frontline Agreement no longer apply to their employment;

(b) that if that application was successful, the Cascade Agreement would apply to their employment instead;

(c) that Cascade would recognise continuity of service and their period of service with Frontline for the purposes of personal/carer’s leave, determining notice periods pursuant to the FW Act, redundancy pay, the right to request flexible working arrangements and parental leave, but not for the purposes of annual leave and any period of service where they had already had the benefit of any entitlement based on that service;

(d) that they would retain any entitlement to personal/carer’s leave which was accrued and untaken immediately prior to their employment with Cascade; and

(e) that they would not retain any entitlement to long service leave which was accrued and untaken immediately prior to their employment with Cascade and this entitlement must be accessed via TasBuild within four years of exiting the construction industry.”

[7] Mr Bolton states that the offers were accepted by the transferring employees on 27 February 2020 and from 31 March 2020 they will perform the electrical services work at the Brewery as employees of Cascade. This is the same work they performed at the brewery when employed by Frontline.

[8] Mr Bolton advises that both transferring employees provided positive feedback regarding the proposal and signed letters in support which have been provided to the Commission. The letters were in the following terms:

“On 25 February 2020, I was offered employment by Cascade Brewery Company Pty Ltd to perform the electrical trade services work at the Brewery. To that date, I had been performing electrical trade services work at the Brewery via my previous employer, Frontline Electrical Pty Ltd (Frontline), and was covered by the Frontline Electrical Pty Ltd Enterprise Agreement 2012 -2016 (Frontline Agreement).

Following the offer, I was provided with access to the Cascade Brewery Maintenance Enterprise Agreement 2016 (Cascade Agreement) and the Frontline Agreement, and the key differences between the Cascade Agreement and the Frontline Agreement were explained to me. I understand those key differences.

On 27 February 2020, I accepted the offer of employment made to me on 25 February.

I am satisfied that the terms of employment offered to me by Cascade Brewery Company Pty Ltd (Cascade) are the same or similar to my previous terms of employment with Frontline.

As such, I seek to be covered by the Cascade Agreement.

I support Cascade's application to the Fair Work Commission for orders that I be covered by the Cascade Agreement instead of the Frontline Agreement, from the date my employment commences with Cascade.”

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

[9] From the analysis provided by Mr Bolton, Cascade’s recognition of their service with Frontline and the commitment for transferring employees to to retain their entitlements accrued and untaken immediately prior to their employment with Cascade, it does not appear that employees would be disadvantaged by the order sought.

[10] I agree with the submission of Cascade, that transferring employees will have more favourable overall terms and conditions of employment pursuant to the Cascade Agreement, including a more beneficial wages model, personal leave entitlements, annual leave loading, superannuation contributions, redundancy entitlements, paid paternity leave and quarterly bonuses. Mr Bolton has attached to his witness statement, a comprehensive comparison of the terms of the Frontline Agreement and the Cascade Agreement which demonstrates the more beneficial terms under the Cascade Agreement. I am satisfied that neither transferring employee would be disadvantaged as a result of the Cascade Agreement covering them during their employment with Cascade.

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

[11] The Frontline Agreement’s nominal expiry date was 1 July 2016. The nominal expiry date for the Cascade Agreement was 30 June 2019. The Cascade Agreement continues to operate in respect of Cascade’s employment of its existing employees in relevant classifications. This is a neutral consideration.

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

[12] The transferring employees will be integrated into the existing Cascade workforce at the brewery which comprises approximately 55 employees. The transferring employees will be performing work alongside other Cascade employees.

[13] The differences between the two agreements means that there are potential divergent terms and conditions for the transferring employees, depending on whether they are covered by the Cascade Agreement or the Frontline Agreement. This could impact the morale across the workforce.

[14] In addition, the transfer of the Frontline Agreement with the transferring employees will require the Cascade payroll team and the Maintenance Controller to ensure compliance with a non-Cascade agreement which contains different terms and conditions. This would include applying different superannuation contributions, setting up different leave accruals and allowances, monitoring an additional roster pattern with applicable RDOs, and establishing different pay codes in the time and attendance system. The Cascade payroll system is set up to apply the Cascade Agreement terms and conditions automatically to relevant employees and has safeguards in place to ensure compliance. There would be additional administrative costs associated with having to apply the Frontline Agreement, as well as considerable time spent by payroll and the Maintenance Controller in managing two different sets of terms and conditions for such a small team.

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

[15] While there would not be significanteconomic disadvantage as a result of the transferable instrument applying to Cascade, compliance with the transferable instrument will likely result in additional and avoidable administrative costs.

[16] Making the orders sought by the Application would eliminate any economic or administrative burden of managing the older Frontline Agreement.

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

[17] Cascade’s brewery is a lean and agile operation which is why it is the dedicated small batch craft brewing hub for CUB. Cascade’s operation relies on flexibility, both from an employee perspective, and in the way Cascade structures and organises its business. Cascade strives for simplicity and consistency to free up room for creativity and innovation.

[18] Cascade’s maintenance team requires little supervision. Team members support each other in relation to skills development, leave coverage, and safety. The team understands Cascade’s expectations, and in turn their expectations of each other, because of the agreed terms and conditions which apply to their employment. Introducing a new agreement (the Frontline Agreement) to this small team, including different roster patterns and an alternate wages model would likely create a sense of divergence and instability amongst the workforce.

[19] Additionally, Cascade’s KPI quarterly bonus program for operators and trades, whereby employees are aligned and focused on achieving site KPI targets, provides motivation for teamwork. If the transferring employees remained covered by the Frontline Agreement, they would miss out on the opportunity to work as a team towards a common goal.

[20] Within a small, collective workforce the above seemingly small matters of disparity could impact the optimisation of work at the Cascade brewery.

Section 318 (g) - the public interest

[21] Maintaining a cohesive, harmonious and productive workplace is a matter of public interest. This is particularly so for a local Tasmanian workplace like Cascade’s brewery.

[22] It is also in the public interest for Cascade’s 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 Cascade having to:

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

•  incur avoidable costs in time and administration to establish and manage a separate payroll system for the Transferring Employees.

[23] Further, the interests of Cascade in achieving efficiencies and productivities through the orders sought in the Application, are aligned with the interests of the transferring employees. The transferring employees have a legitimate interest in protecting their terms and conditions of employment under the Frontline Agreement. This interest is satisfied by the fact the Cascade Agreement provides terms and conditions which are no less favourable overall, and in a number of instances more beneficial than those under the Frontline Agreement. This is supported by the fact that both transferring employees, who were provided with offers of employment and an explanation that Cascade would be making the Application, accepted those terms and support Cascade’s Application.

[24] Further, the longer-term interests of the transferring employees are likely to be better served by being treated as an integrated agreement-covered cohort together with their other Cascade colleagues who are covered by the Cascade Agreement.

Conclusion

[25] Having considered the matters above, it is apparent that most matters weigh towards the granting of the application sought, while some are a neutral consideration. Taking into account each of the matters set out in s. 318(3) of the Act, I am satisfied that the order as sought should be granted. An order to that effect will be issued concurrently with this decision.

[26] I note that the transferring employees become employed by the new employer from the date of this decision. The order is also made on today’s date. Therefore, in accordance with s.318(4) of the Act, the order will come into operation from the date that it is made.

COMMISSIONER

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