Centurion Transport Company Pty Ltd T/A Centurion Transport Company Pty Ltd
[2023] FWC 1603
•30 JUNE 2023
| [2023] FWC 1603 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Centurion Transport Company Pty Ltd T/A Centurion Transport Company Pty Ltd
(AG2023/2064)
| Road transport industry | |
| COMMISSIONER LIM | PERTH, 30 JUNE 2023 |
Application for an order relating to instruments covering a new employer and transferring employees
Centurion Transport Company Pty Ltd (the Applicant) has made an application (Application) pursuant to s 318 of the Fair Work Act 2009 (Cth) (the Act) for orders in relation to employees who are:
a) currently engaged by Lake Fox Limited (trading as Rocky’s Own Transport Company) (Rocky);
b) currently covered by Rocky’s Own Transport Co Collective Agreement 2008 (Rocky Agreement); and
c) anticipated to commence work with the Applicant on 1 July 2023 (Transferring Employees).
The Applicant seeks the following orders (Orders):
a) that the Rocky Agreement, as a transferable instrument, not cover the Applicant and transferring employees with respect to their employment with the Applicant; and
b) that the Transferring Employees instead be covered by the following industrial instruments on commencement of employment with the Applicant (collectively, the Applicant Industrial Instruments):
i.CFC Consolidated Pty Ltd as Trustee for the CFC Employment Trust – WA and QLD Workshop Enterprise Agreement 2022 (Workshop Agreement);
ii.CFC Consolidated Pty Ltd as Trustee for the CFC Employment Trust & TWU – National Freight Officer Enterprise Agreement 2021 (NFO 2021 Agreement);
iii.CFC Consolidated Pty Ltd as Trustee for the CFC Employment Trust & TWU – national Freight Officer Enterprise Agreement 2019 (NFO 209 Agreement);
iv.Road Transport (Long Distance Operations) Award 2020 (Long Distance Award); and
v.Clerks – Private Sector Award 2020 (Clerks Award).
The Application was lodged with the Commission on 22 June 2023. The affidavit of Philip David Scott (EGM – People and Culture for the Applicant) was filed in support of the Application on 27 June 2023.
I have considered all of the factors set out in s 318(3) and have concluded that it is appropriate and not contrary to the public interest to make the orders sought under s 318. The Orders issue concurrently with this decision.
My detailed reasons for granting the Orders follow.
Background
The Applicant and Rocky are both transport and logistics companies. The Applicant reached written agreement with Rocky regarding the acquisition of Rocky and its associated assets on 16 May 2023 (the Acquisition). The Applicant anticipates the finalisation of the Acquisition will be completed on 30 June 2023.[1]
As part of the Acquisition, approximately 335 Rocky employees have been offered employment with the Applicant. Their employment is expected to transfer from Rocky to the Applicant on 1 July 2023. The Transferring Employees will perform work for the Applicant which is the same or substantially the same as that performed for Rocky.[2]
Approximately 242 of the Transferring Employees are currently covered by the Rocky Agreement. The Rocky Agreement does not cover any employee organisation and it expired on or around 3 September 2012.[3]
On 5 June 2023, Mr Scott sent an email to the Transferring Employees. The email explained that the Applicant intended to apply to the Fair Work Commission for an order that the Rocky Agreement not cover their employment with the Applicant. The email also explained that the Transferring Employees would not be worse off as a result of the application, and foreshadowed Mr Scott’s upcoming visits to various site depots.[4]
The Applicant issued written conditional offers of employment to the Transferring Employees (Offers) on 9 June 2023 and 14 June 2023.[5]
The Offers explained to the Transferring Employees:
a) the offer of employment was conditional on the completion of the Acquisition;
b) if the Acquisition does not finalise, there would be no change to their employment;
c) that any annual leave, long service leave or personal leave that is accrued and untaken at 30 June 2023 would be recognised by the Applicant;
d) that their employment with Rocky will be deemed as continuous employment with Centurion for the purpose of calculating any service based entitlements;
e) the Applicant intended to apply to the Fair Work Commission for an order that the Rocky Agreement not cover their employment with the Applicant; and
f) which relevant Applicant Industrial Instrument would apply to their employment if the application was successful.
Mr Scott held four question and answer sessions on the 7 June 2023, 12 June 2023, 19 June 2023 and 23 June 2023 with the Transferring Employees so that they could provide their views and ask any questions.[6]
As of 26 June 2023, approximately 223 Transferring Employees have confirmed, in writing, their acceptance of a position with the Applicant to commence on 1 July 2023.[7]
Legislative framework
Section 317 of the Act enables the Commission to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer.
The discretion to make the orders sought by the Applicant under s 318(1) of the Act will only be exercised after the factors set out in s 318(3) of the Act are considered.[8] These factors, which must be read having regard to the objects of the Part, are intended to enable the Commission to balance appropriately the protection of employees’ entitlements under certain instruments with the need for some flexibility to depart from the default rules about coverage of instruments following a transfer of business.[9]
Section 318 of the Act sets out the circumstances in which an order such as that sought by the Applicant may be made by the Commission:
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.
The exercise of the discretion given to the Commission in this regard is undertaken within the object of this Part of the Act, which states as follows:
309 Object of this Part
The object of this Part is to provide a balance between:
(a) the protection of employees’ terms and conditions of employment under enterprise agreements, certain modern awards and certain other instruments; and
(b) the interests of employers in running their enterprises efficiently;
if there is a transfer of business from one employer to another employer.
Submissions and consideration
s 318(2)(a) – application by the new employer of a person who is likely to be the new employer
The Applicant has standing to make the application as the new employer or likely new employer.
s 318(3)(a)(i) – the views of the new employer of a person who is likely to be the new employer
I am satisfied that the Applicant, as the likely new employer, wishes to harmonise the terms and conditions of employment of transferring and non-transferring employees such that employees doing similar work have comparable wages and conditions of employment.
s 318(3)(a)(ii) – the views of the employees who would be affected by the order
The Applicant held multiple consultation sessions with Transferring Employees and provided conditional offers of employment to the Transferring Employees that explained the effect of the Application on their employment. I note that as of 26 June 2023, the majority of Transferring Employees have accepted a conditional offer of employment with the Applicant.
s 318(3)(b) – whether any employees would be disadvantaged by the order
The Applicant submits, and I accept, that no employees would be disadvantaged by the proposed order in relation to their terms and conditions of employment.
I have reviewed the terms of the Rocky Agreement compared to the relevant Applicant Industrial Instruments (as detailed by the Applicant in the affidavit of Mr Scott). I have also taken into account that the Transferring Employees who will be covered by the Long Distance Award and the Clerks Award if the Application is granted have been offered contractual terms and conditions which are more beneficial than the awards.[10]
s 318(3)(c) – nominal expiry date
I note that the nominal expiry date of the Rocky Agreement is 3 September 2012 and is a ‘zombie agreement’ pursuant to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) and will automatically sunset or terminate on 7 December 2023, unless an application is made to the Commission to extend the default period.
s 318(3)(d) & (e) – negative impact on productivity and significant economic disadvantage
The Applicant submits, and I accept, that the maintenance of the Rocky Agreement would likely have a negative impact on the Applicant’s workplace productivity and would cause the Applicant to incur significant economic disadvantage. It would result in the Rocky Agreement continuing to apply to the Transferring Employees, while the non-transferring employees would remain covered by the Applicant Industrial Instruments. This would be administratively burdensome and costly. I also accept that this would have the potential to cause issues amongst employees because of employees performing the same work receiving different pay and conditions.
s 318(3)(f) – degree of business synergy
I accept that there is little business synergy between the Rocky Agreement and the Applicant Industrial Instruments. Though the Rocky Agreement and the collective Industrial Instruments deal with similar employees and industry, they have different terms and practical application. I note that the Rocky Agreement was made before the commencement of the Act and contains terms that are outdated.
s 318(3)(g) – public interest
I am satisfied that it is in the public interest to grant the orders sought. I accept that the transferable instrument is a ‘zombie agreement’ and it is not in the public interest that it continues to apply to the Transferring Employees. I am also satisfied that it is in the public interest to have harmonised conditions of employment applying to employees doing the same or similar work in circumstances where there is no detriment to transferring employees.
Conclusion
In accordance with s 318(4), the orders will come into effect on the date the orders are made or from the time when the Transferring Employees commence working for the Applicant, whichever is the latter.[11]
COMMISSIONER
Matter determined on the papers.
[1] Philip David Scott Affidavit, [5] [14].
[2] Ibid [6] [7].
[3] Ibid [8].
[4] Ibid [20], annexure PS-8.
[5] Ibid [9], annexure PS-7.
[6] Ibid [21].
[7] Ibid [17].
[8] Explanatory Memorandum, Fair Work Bill 2008 (Cth) [1259].
[9] Ibid.
[10] Philip David Scott Affidavit, annexure PS-9.
[11] PR763832
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< AC321808 PR763831>
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