Commonwealth of Australia, represented by the Department of Parliamentary Services
[2017] FWC 3562
•5 JULY 2017
| [2017] FWC 3562 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Commonwealth of Australia, represented by the Department of Parliamentary Services
(AG2017/2210)
Australian Capital Territory | |
DEPUTY PRESIDENT KOVACIC | CANBERRA, 5 JULY 2017 |
Application for an order relating to instruments covering new employer and transferring employees – orders made that IHG Canberra Enterprise Agreement 2011-2012 will not cover the Commonwealth of Australia, represented by the Department of Parliamentary Services, and that the Department of Parliamentary Service Enterprise Agreement 2011 will apply to any transferring employees.
[1] This decision concerns an application made pursuant to s.318 of the Fair Work Act 2009 (the Act) by the Commonwealth of Australia, represented by the Department of Parliamentary Services (DPS), seeking orders that:
- the IHG Canberra Enterprise Agreement 2011-2012 1(the IHG Agreement) not apply to DPS or any of the transferring employees (see s.311(2) of the Act) listed in a Schedule to the application in respect of their employment with DPS; and
- the Department of Parliamentary Service Enterprise Agreement 2011 2 (the DPS Agreement) or any replacement enterprise agreement will apply to DPS and any of transferring employees in respect of their employment with DPS.
[2] The application arises in circumstances where in December 2016 IHG’s contract for the provision of catering services to DPS expired and DPS decided to insource those services. DPS subsequently engaged a number of IHG staff within three months of their employment terminating with IHG, with those employees performing the same, or substantially the same, work as they performed for IHG thereby enlivening s.318 of the Act.
[3] A witness statement by Ms Kerry Collins, the Acting Director of DPS’s Enterprise Agreement Project Team, was provided in support of the application. Further, United Voice (UV) which is covered by the IHG Agreement, wrote to the Fair Work Commission (the Commission) on 14 June 2017 indicating, inter alia, its support for the application.
[4] DPS requested that the application be dealt with by the Commission on the papers. Given UV’s support for that approach, I have decided to determine the matter on the papers.
Relevant legislation
[5] The relevant sections of the Act are ss.313 and 318 which provide as follows:
“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).
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.”
[6] Before turning to consider each of the matters specified in s.318(3) of the Act, I note that DPS, as the new employer, has standing pursuant to s.318(2)(a) of the Act to make the application for the orders sought.
The views of the new employer [s.318(3)(a)(i)]
[7] DPS stated among other things in its application that making the orders sought would encourage a single and harmonious workplace culture, promote consistency and certainty in employment terms and conditions and positively impact productivity and efficiency in the workplace.
[8] Ms Collins in her witness statement reiterated that view and also deposed that the continued application of the IHG Agreement would impede the proper integration of the transferring employees into the DPS workforce, impede the effective integration and operation of the catering group, increase costs and administrative pressures and create inequality in the conditions applicable to employees performing the same work.
The views of the employees who would be affected by the order [s.318(3)(a)(ii)]
[9] DPS stated in its application that it organised a meeting on 17 May 2017 with interested transferring employees to discuss the application, adding that UV also attended that meeting. DPS further stated that at that meeting its legal representative outlined the main differences between the terms and conditions contained in the IHG Agreement and the DPS Agreement after which UV met with interested transferring employees, with UV subsequently advising it that those transferring employees at the meeting unanimously supported the termination of the IHG Agreement.
[10] UV in its correspondence of 14 June 2017 confirmed the accuracy of the statements set out in DPS’ application and stated that at the meeting there was unanimous support for the order sought by DPS.
Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment [s.318(3)(b)]
[11] DPS in its application contended that overall the transferring employees would receive more generous terms and conditions of employment under the DPS Agreement than under the IHG Agreement. UV agreed with that statement.
[12] Further, attached Ms Collins’ witness statement was a table 3 comparing the terms and conditions contained in the DPS and IHG Agreements. That table showed that the transferring employees would be entitled to a number of more beneficial terms and conditions under the DPS Agreement. Those more beneficial terms and conditions included:
- higher total annual salaries;
- superannuation entitlements (i.e. superannuation contributions of 15.4 per cent as opposed to 9.5 per cent);
- personal leave entitlements (i.e. 19 days per annum accrued fortnightly as opposed to 10 days per annum accrued progressively);
- overtime entitlements (i.e. overtime payable after 7.5 hours per day Monday-Friday or when required to work weekends and public holidays as opposed to being payable for work in excess of 11.5 hours per day or more than 152 hours in a four week cycle); and
- shorter working hours (i.e. 37.5 hours per week as opposed to 38 hours per week).
[13] The comparison table also showed that there were also several more beneficial terms in the IHG Agreement. They included provisions providing for additional paid breaks when working more than five hours and more than ten hours.
[14] Having regard to the views of both DPS and UV and the comparison table attached to Ms Collins’ witness statement, I consider that the more beneficial terms in the DPS Agreement significantly outweigh the more advantageous provisions of the IHG Agreement. This supports a finding that overall employees would not be disadvantaged if the orders sought by DPS were made.
The nominal expiry date of the agreement [s.318(3)(c)]
[15] The IHG Agreement passed its nominal expiry date on 31 December 2012.
[16] I also note Ms Collins’ evidence that DPS had commenced bargaining for an enterprise agreement to replace the DPS Agreement, with Notices of Employee Representational Rights issued to all employees who would be covered by the replacement agreement on or around 20 September 2016. The practical effect of this is that the transferring employees have the opportunity to participate in bargaining for an agreement to replace the DPS Agreement.
Whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace [s.318(3)(d)]
[17] DPS submitted that if the IHG Agreement were to continue to apply, the application of differing terms and conditions to transferring employees compared to DPS employees who they worked alongside and in collaboration with may adversely impact morale, workplace harmony and productivity. DPS further submitted that the continued operation of the IHG Agreement in respect of transferring employees would also be contrary to the goal of integrating the transferring employees into the broader DPS workforce and would create administrative inefficiencies and unnecessary complexities in the maintenance and administration of divergent payroll and other systems.
[18] Ms Collins witness statement reflected similar views.
[19] The material before the Commission points to the IHG Agreement having some, albeit slight, negative impact on the productivity of DPS.
Any significant economic disadvantage to the new employer [s.318(3)(e)]
[20] While DPS submitted that additional costs would be incurred as a result of administering two enterprise agreements, it conceded that this would not represent significant economic disadvantage.
[21] Ms Collins cited the negative impact on productivity resulting from the IHG Agreement covering DPS as an economic disadvantage.
[22] Against that background, I consider this factor to be a neutral consideration.
The degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer [s.318(3)(f)]
[23] DPS submitted that there was a lack of business synergy between the IHG and DPS Agreements. Ms Collins in her witness statement deposed that there was a lack of business synergy between the Agreements having regard to matters such as the different remuneration structures, classification structures, break requirements and calculation of leave entitlements provided for in each industrial instrument.
[24] UV indicated that it was not surprised by DPS’ assertion that there was a lack of business synergy between the IHG Agreement and the DPS Agreement.
[25] An examination of the IHG and DPS Agreements does not indicate any obvious business synergy between the two instruments.
The public interest [s.318(3)(g)]
[26] DPS submitted that its application was consistent with the objects of the transfer of business provisions of the Act in striking a balance between the protection of employees’ terms and conditions of employment and the interests of employers in running their enterprises efficiently without the burden of unnecessary complications in their employment arrangements.
[27] UV did not express a view in respect of this consideration.
[28] The absence of any submissions suggesting that it would be contrary to the public interest to make the orders sought and given the benefits for both transferring employees and DPS supports a finding that it would be in the public interest to make the orders sought by DPS.
Conclusion
[29] Based on the material before the Commission and having considered each of the matters set out in s.318(3)(a)-(g) of the Act, I am satisfied that it would be appropriate to make the orders sought. The orders will be issued in conjunction with this Decision.
1 AE885372
2 AE888528
3 Witness statement of Kerry Collins annexure C
Printed by authority of the Commonwealth Government Printer
<Price code C, AE885372, PR594324>
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