Chicken Enterprises Queensland Pty Limited
[2018] FWC 2044
•16 APRIL 2018
| [2018] FWC 2044 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Chicken Enterprises Queensland Pty Limited
(AG2018/152)
| Road transport industry | |
| SENIOR DEPUTY PRESIDENT HAMBERGER | MELBOURNE, 16 APRIL 2018 |
Application for an order that the Darwalla Farming and Plant Co. Pty. Ltd. Enterprise Agreement 2011 will not cover employees who have transferred to Chicken Enterprises Queensland Pty Limited – application granted – order issued.
Background
On 19 January 2018, Chicken Enterprises Queensland Pty Limited (the applicant) applied to the Fair Work Commission (the Commission) under s. 318 of the Fair Work Act 2009 (Cth) (the FW Act) for orders that:
1.the Darwalla Farming and Plant Co. Pty. Ltd. Enterprise Agreement 2011[1] (the Darwalla agreement) will not apply to employees that may transfer to the applicant; and
2.the Road Transport and Distribution Award 2010[2] (the award) will apply to employees that may transfer to the applicant.
The application was signed by Arthur Spottiswood as the applicant’s representative.
The Transport Workers’ Union of Australia (TWU), which is covered by the Darwalla agreement, indicated its opposition to the proposed orders. The application was heard in Sydney on 10 April 2018 with video links to Brisbane and Canberra.
Darwalla Farming and Plant Co. Pty. Ltd. (Darwalla) is a Brisbane based chicken processor. It recently entered into a contract with Multiquip Transport Pty Ltd (Multiquip) to perform chicken catching and transport functions. Darwalla previously carried out these functions itself. The Darwalla agreement applies to transport workers employed by Darwalla.
The applicant provides labour in Queensland to Multiquip. Multiquip intends to use the employees of the applicant to perform the work under its contract with Darwalla. A number of former Darwalla employees have been offered and accepted positions to do the work they previously performed for Darwalla. The applicant is seeking the proposed orders to prevent the Darwalla agreement continuing to apply to those employees.
The Darwalla agreement was approved in November 2011 and has a nominal expiry date of 24 November 2014.
The relevant legislation
Part 2-8 of the Act describes when a transfer of business occurs and provides for the transfer of enterprise agreements, certain modern awards and certain other instruments if there is a transfer of business from one employer to another employer.
Section 311(1) contains the definition of transfer of business:
‘(1) There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:
(a) the employment of an employee of the old employer has terminated;
(b) within 3 months after the termination, the employee becomes employed by the new employer;
(c) the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;
(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).
(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.
(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:
(a) the old employer or an associated entity of the old employer; and
(b) the new employer or an associated entity of the new employer;
the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):
(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and
(d) that relate to, or are used in connection with, the transferring work.
(4) There is a connection between the old employer and the new employer if the transferring work is performed by one or more transferring employees, as employees of the new employer, because the old employer, or an associated entity of the old employer, has outsourced the transferring work to the new employer or an associated entity of the new employer. …’
Sections 317 and 318 of the Act provide:
‘317 FWC may make orders in relation to a transfer of business
This Division provides for 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.
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. …’
The evidence
The applicant led evidence from Jason Mikosic (General Manager, Multiquip) and Visha Lachi Smith (Director of the applicant).
Mr Mikosic said Multiquip operates (amongst other things) a business providing transport and other services to the poultry industry. He said that their drivers in Queensland are employed under the award, though the drivers also receive over award payments. He said that after a chicken processing establishment closed in Queensland, he looked for more work, which led him to enter into an arrangement with Darwalla, another chicken processing establishment in that state, to subcontract their transport work to Multiquip. Darwalla terminated the employment of all the affected employees and paid them redundancy pay and other entitlements. Around eight of the Darwalla employees took up casual positions to work on the Multiquip contract for Darwalla, though one has subsequently left. Around 22 drivers in all are employed by the applicant to perform the Darwalla work.
Mr Mikosic said that the applicant had been set up about three to four years ago as a labour hire company. He said there was an external director of that company (Ms Smith):
‘She doesn’t do much with the company, but she does make a small profit out of it and it’s a bit of an investment for her and we have it as a labour hire company, really.’[3]
The drivers performing the Darwalla work are employed by the applicant (rather than directly by Multiquip). The applicant employs around 50 employees in total.
Mr Mikosic noted that the Darwalla agreement included a 30 per cent loading on all wage rates in lieu of a shift loading. He said this may have worked in the past when there was significant night work, but it did not reflect the way the work was done now.
‘Now they’ve moved to a more just-in-time basis where you’re basically bringing the chickens in between one and three hours before they’re getting processed. So, really, the majority of the work now is during the day, whereas in the past – and I’m assuming this, but from what I understand of how other processing plants work, the majority of the work used to be all done at night, basically bring as much as you can in at night because that’s the easiest – when it’s easiest to do the work and then let the processing plant go through the day. But nowadays there’s environmental regulations, there’s animal welfare regulations and all the processing plants around the country are moving to a more just-in-time basis which means you’re working a lot more day shift than what you would in the past.’[4]
Mr Mikosic said that the former Darwalla employees taken on by the applicant had been told at the time the positions were offered that there would be an application to the Commission for them to be covered by the award, rather than by the Darwalla agreement. They were also told the rates of pay that the applicant was proposing to pay them. Eight of the 12 employees that had been made redundant by Darwalla took up the offer of a job with the applicant.
Ms Smith confirmed that the applicant’s drivers only performed work on Multiquip contracts. She said that the day-to-day management of the applicant’s employees was done by Multiquip (and another company, IMQ Services, which provides the accounting, HR, payroll and administrative services etc. for Multiquip). She said during cross-examination that she had been aware of the application, though she had not discussed it in detail with Mr Spottiswood prior to 22 March 2018.
Consideration
It is not in contention that the applicant is a ‘new employer’ as defined in s.311 of the FW Act, and that the Darwalla agreement is a ‘transferable instrument’ which would apply to any ‘transferring employees’ previously employed by Darwalla. Nor is it in contention that the pay and conditions in the Darwalla agreement would apply to the transferring employees unless the proposed orders are made.
The TWU submitted that the Commission lacked jurisdiction to grant the application because it was signed by Mr Spottiswood in his capacity as the applicant’s representative rather than by Ms Smith, the applicant’s sole Director and Secretary.
I am satisfied that the day-to-day management of the applicant is in the hands of Multiquip, that Ms Smith was aware of the application and that Mr Spottiswood was authorised to make the application (though initially via Multiquip). Ms Smith has subsequently indicated that she has authorised Mr Spottiswood to act on the applicant’s behalf.[5] The Commission is required to perform its functions in a way that avoids unnecessary technicalities.[6] I do not consider that there is any jurisdictional bar to the Commission dealing with the application.
I will now deal in turn with each of the factors I am required to take into account under s.318.
The new employer clearly supports the proposed orders. I invited the transferring employees to advise my chambers if they opposed the proposed orders. None did so. While the TWU opposes to the orders, there is no evidence that it is authorised to speak on behalf of the affected employees. It is reasonable to infer that none of the transferring employees oppose the proposed orders.
The pay and conditions in the Darwalla agreement are superior to those in the award. In particular, the agreement includes a 3.5 per cent annual wage increase and a 30 per cent loading on the base wage rate.
The Darwalla agreement nominally expired over three years ago.
The new employer would suffer a significant economic disadvantage if the orders are not made. I infer from the evidence that it may be difficult for it to continue to perform the work if it was required to pay the former Darwalla employees under the Darwalla agreement.
No evidence was presented about any productivity effects on the applicant’s workplace.
Most of the applicant’s employees performing work on the Darwalla contract are already covered by the award. There is a clear lack of business synergy between the Darwalla agreement and the award. The 30 per cent loading in the agreement is expressed to reflect the ‘unique operational requirements of the business’. While these are not expressly identified in the agreement, I note Mr Mikosic’s evidence about changes in the balance between night and day work. I am satisfied that the loading is unlikely to be relevant to the applicant’s work.
With regard to the public interest, the TWU submitted that the new employer is a ‘puppet company’. It submitted that the application:
‘… reeks of being an artifice brought by the incoming contractor. Multiquip Transport Pty Ltd are not “at arm’s length” to the incoming employer. It appears that they are controlling the incoming employer.
Section 318 was not enacted for these purposes, its purpose and intent was to potentially relieve an incoming employer from an inappropriate burden. Using it to set up a stratagem of “contracting out” and exploiting the award via a puppet company are not within its purview.’
I do not consider that there is any evidence of anything untoward in the relationship between the applicant and Multiquip. The issues I need to determine would not be significantly different if the transferring employees were to be directly employed by Multiquip.
I do not consider that the public interest is greatly engaged one way or the other by the application. Ultimately, I am primarily swayed by the fact that the transferring employees do not oppose the making of the proposed orders, that they took up the offer of employment with the applicant in the clear understanding that they were unlikely to continue to be paid in accordance with the Darwalla agreement, the lack of business synergy between the Darwalla agreement and the industrial instrument that covers the applicant’s other employees – namely, the award – and the fact that the Darwalla agreement reached its nominal expiry some years ago.
Conclusion
I will make an order that the Darwalla agreement does not cover the applicant and any transferring employees. The order will issue concurrently with this decision. This will mean that the transferring employees will be covered by the award. There is no power (or need) to make a separate order to this effect.
SENIOR DEPUTY PRESIDENT
Appearances:
A Spottiswood with J Mikosic for Chicken Enterprises Queensland Pty Limited and Multiquip Transport Pty Ltd.
L Norris with R Fitzpatrick for the Transport Workers’ Union of Australia – Queensland Branch.
Hearing details:
Sydney with video links to Brisbane and Canberra.
2018.
April 10.
<AE889558 PR601866 >
[1] AE889558.
[2] MA000038.
[3] PN125.
[4] PN184.
[5] Exhibit 1.
[6] Fair Work Act 2009 (Cth) s.577(b).
Printed by authority of the Commonwealth Government Printer
0
0
0