Cleanaway Operations Pty Ltd T/A Cleanaway

[2019] FWC 5043

[2019] FWC 5043

FAIR WORK COMMISSION

DECISION

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

Cleanaway Operations Pty Ltd T/A Cleanaway
(AG2018/6721)

COMMISSIONER GREGORY MELBOURNE, 19 JULY 2019

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

Introduction

[1] Cleanaway Operations Pty Ltd T/A Cleanaway (“Cleanaway”) had made application to the Fair Work Commission for an order under s.319 of the Fair Work Act 2009 (Cth) (“the Act”). The application is made with the intention that a transferable instrument, being the SteriHealth Victorian Enterprise Agreement 2015 (“the SteriHealth Agreement”), which will cover Cleanaway as the new employer, will also cover any new or non-transferring employees who are employed by Cleanaway in classifications set out in the Agreement.

[2] The SteriHealth Agreement was made with SteriHealth Pty Ltd (“SteriHealth”). It is the former name of the entity now known as Daniels Health Services Pty Ltd (“Daniels Health”). Daniels Health is a subsidiary of Toxfree Solutions Limited, which was acquired by Cleanaway Waste Management Limited in May of last year. Cleanaway Operations Pty Ltd is a wholly owned subsidiary of Cleanaway Waste Management Limited.

[3] The Applicant submits that in the absence of the order being made some of the new non-transferring employees would be covered by the Cleanaway (Medical Waste & Hygiene Services) Enterprise Agreement 2015, while others would be covered by the Waste Management Award 2010 (“the Award”). However, Cleanaway now seeks to have any new employees employed on or after 1 January 2019, and who perform or are likely to perform the transferring work, being covered in the same manner as the transferring employees.

Relevant legislation

[4] Part 2-8 of the Act describes when a transfer of business occurs, and also provides for the transfer of industrial instruments from one employer to another when a transfer of business occurs. Section 311 of the Act sets out the circumstances in which a transfer of business occurs. It states:

“311 When does a transfer of business occur

Meanings of transfer of business, old employer, new employer and transferring work

(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).” 1

[5] Section 312 also indicates that a “transferable instrument” includes “an enterprise agreement that has been approved by the FWC”. 2

[6] Section 313 continues to state, “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” 3

[7] Section 314 of the Act continues to provide for a transferable instrument to cover other employees in certain circumstances. It states:

“314 New non-transferring employees of new employer may be covered by transferable instrument

(1) If:

(a) a transferable instrument covers the new employer because of paragraph 313(1)(a); and

(b) after the transferable instrument starts to cover the new employer, the new employer employs a non-transferring employee; and

(c) the non-transferring employee performs the transferring work; and

(d) at the time the non-transferring employee is employed, no other enterprise agreement or modern award covers the new employer and the non-transferring employee in relation to that work;

then the transferable instrument covers the new employer and the non-transferring employee in relation to that work.

(2) A non-transferring employee of a new employer, in relation to a transfer of business, is an employee of the new employer who is not a transferring employee.

(3) This section has effect subject to any FWC order under subsection 319(1).” 4

[8] As indicated, the provisions contained in s.314 are subject to s.319, which allows for the Commission to make an Order that a transferring instrument cover non-transferring employees. Section 319 states:

“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.

Note: Orders may be made under paragraphs (1)(b) and (c) in relation to a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer, whether or not the non-transferring employee became employed by the new employer before or after the transferable instrument referred to in paragraph (1)(b) started to cover 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.” 5

[9] Therefore, in dealing with the application the Commission is required to have regard to each of the matters in s.319(3) in determining whether an order should be made.

Consideration

[10] The SteriHealth Agreement was approved by the Commission on 8 April 2016 and it came into force on 15 April 2016. The nominal expiry date of the Agreement is 30 June 2019.

[11] I am satisfied that there has been a transfer of business between Toxfree and Cleanaway for the purposes of s.311(1) as the employment of the employees covered by the SteriHealth Agreement terminated with Toxfree, and the employees were subsequently employed by Cleanaway. The work they now perform is the same as the work they performed previously, and Toxfree and Cleanaway are related entities.

The views of the new employer – s.319(3)(a)(i)

[12] The Applicant is the new employer and obviously supports the making of the order sought.

The views of the new employees – s.319(3)(a)(ii)

[13] The Applicant submits that no new employees had been engaged at the time that the application was made. However, it also submits that the classifications in the SteriHealth Agreement are more appropriately focused on the type of work being performed, and they are therefore better suited to any new employees who are engaged.

Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment – s.319(3)(b)

[14] The Applicant submits that any new employees will not be disadvantaged by an order being made for the reasons indicated above.

Expiry date of the agreement – s.319(3)(c)

[15] The nominal expiry date of the SteriHealth Agreement is 30 June 2019.

Negative impact on Productivity – s.319(3)(d)

[16] The Applicant submits that there will be no negative impact on the productivity of the workplace, and there would be a negative impact if the order is not made, as different terms and conditions of employment would apply to employees performing the same work at the same location.

Economic disadvantage – s.319(3)(e)

[17] The Applicant submits that there would be no apparent economic disadvantage if the application is granted.

Degree of business synergy – s.319(3)(f)

[18] The Applicant submits that business synergy will be enhanced if a single industrial instrument regulates the employment conditions of all employees in the workplace. This outcome will also avoid the possibility of any conflict or confusion arising from employees performing similar work at the same location, but receiving different terms and conditions of employment.

Public interest – s.319(3)(g)

[19] Nothing has been identified in this context.

Conclusion

[20] I am satisfied, in conclusion, after having considered each of the matters in s.319(3) that it is appropriate for the Order sought to be made.

[21] In accordance with s.319(4) the Order will not come into operation in relation to each non-transferring employee until the later of the following:

•  the time when the non-transferring employees starts to perform the transferring work for the new employer; or

•  the day on which the order is made.

[22] The Order is issued in conjunction with this decision.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

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 1   Fair Work Act 2009 (Cth) s 311(1).

 2   Fair Work Act 2009 (Cth) s 312(1)(a).

 3   Fair Work Act 2009 (Cth) s 313(1)(a).

 4   Fair Work Act 2009 (Cth) s 314(1).

 5   Fair Work Act 2009 (Cth) s 319(1)-(3).