Crèche & Kindergarten Association

[2010] FWA 6281

[2010] FWA 6281

FAIR WORK AUSTRALIA

DECISION

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

Crèche & Kindergarten Association
(AG2010/7904)

Crèche & Kindergarten Association
(AG2010/11663)

Children's services
SENIOR DEPUTY PRESIDENT RICHARDS	BRISBANE, 17 AUGUST 2010

Summary: business transfer - transferable instrument

[1] These matters were filed on 8 April 2010 1 and 8 July 20102 by the Crèche and Kindergarten Association of Queensland (“C&K Association”), and concern applications for orders relating to an instrument covering a likely new employer (the C&K Association) and likely transferring employees under s.318(1) of the Fair Work Act 2009 (“the Act”).

[2] These matters were heard originally on 14 July 2010 but were adjourned in view of deficiencies in each of the two Applications. The principal issue was that the applications sought Fair Work Australia (“FWA”) to exercise powers in relation to the scope of orders that it did not possess. The Applicant subsequently refiled amended applications and supporting materials on 11 August 2010.

[3] Division 3 of Part 2-8 of the Act invests FWA with a power to make such orders as referred to above. The relevant provisions are set out below.

[4] The background to these Applications involve the same material facts which are as follows:

• The C&K Association has been approached by the Queensland University of Technology (“QUT”) Student Guild to take over the operation of its Carseldine and Kelvin Grove child care facilities (“the two child care centres”);



• The two child care centres appear to be unable to operate on the current cost structures and are likely to cease providing services if a new operator, such as the C&K Association, is not identified;



• The two child care centres currently are each covered by the QUT Student Guild Certified Agreement 2008-2011 (“the Agreement”), which is the transferable instrument for purposes of the Act;



• The C&K Association is currently negotiating with the Liquor, Hospitality and Miscellaneous Union (“LHMU”) a new enterprise agreement to cover the employees who work in its various kindergarten and child care centres;



• The current terms and conditions under the Agreement are superior to those that apply in the C&K Association facilities; and



• The C&K Association has undertaken to maintain the terms and conditions of employment for any transferring employees by providing terms and conditions commensurate with those in the Agreement for a period of 12 months from the date of the transfer of the business in respect of the two child care centres.

[5] As a consequence of the transfer, the C&K Association will be a “new employer” and for the purposes of both applications the Applicant is a “likely new employer” (within the meaning of s.308 of the Act and s.311(1) of the Act) in relation to both child care centres.

[6] Further, as a result of the transfer those employees currently engaged by the QUT Student Guild to work at the two child care centres who are subsequently engaged by the Applicant to perform substantially the same work as they performed whilst engaged by the QUT Student Guild will be “transferring employees” (within the meaning of s.308 of the Act and s.311(2) of the Act).

[7] The applicable transferring instrument is the Agreement (as cited above) and it applies to the employees at the two child care centres.

[8] The Applicant seeks orders that if there is a transfer of business (of the kind described below), the Agreement will not cover the Applicant and any transferring employees. The Applicant has not provided any draft orders in respect of its amended applications.

[9] By virtue of sub item 2(3), Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (“the Transitional Act”), the Agreement is a transitional instrument. 3

[10] In ordinary circumstances (and but for this application), the transferable instrument should arguably apply to the (likely) new employer and (likely) transferring employees, for purposes of s.313 of the Act:

“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

(b) while the transferable instrument covers the new employer and the transferring employee in relation to the transferring work, no other enterprise agreement or named employer award that covers the new employer at the transfer time covers the transferring employee in relation to that work.

(2) To avoid doubt, a transferable instrument that covers the new employer and a transferring employee under paragraph (1)(a) includes any individual flexibility arrangement that had effect as a term of the transferable instrument immediately before the termination of the transferring employee’s employment with the old employer.”

[11] Despite s.313(1) and s.313(2) of the Act, s.313(3) of the Act reads as follows:

“(3) This section has effect subject to any FWA order under subsection 318(1).”

[12] Section 318(1) of the Act relevantly reads:

“318 Orders relating to instruments covering new employer and transferring employees

Orders that FWA may make

(1) FWA 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) FWA 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 FWA must take into account

(3) In deciding whether to make the order, FWA 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.”

[13] I note that the exercise of FWA’s conditioned discretion is also framed within the objects of the Part, which state 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.”

Section 318(3)(a)(i): the views of the new employer

[14] The Applicant seeks that the transferable instrument not apply to any former employees of two child care centres. The principal reason for this is that the Applicant, despite being a not for profit organisation, is unable to operate the two child centres indefinitely under the terms of the current Agreement, which are more beneficial than those that apply in the child care industry generally.

Section 318(3)(a)(ii): the views of the employees prospectively affected by any order

[15] I have before me a large number of statutory declarations from the employees who are currently employed in each of the two child care centres cited above. They support the application and the basis of their terms and conditions of employment following the transfer of business to the C&K Association.

Section 318(3)(b): any disadvantage to the employees

[16] There will be no disadvantage for at least 12 months to the employees given the undertakings cited above. After 12 months the disadvantages resulting from the employees being bound by a new C&K agreement may not be as great as if they were to be subject to the existing terms and conditions that apply to the C&K Association employees.

Section 318(3)(c): the nominal expiry date of the transferable instrument (the Agreement)

[17] The Agreement expires, it appears, on 23 December 2011.

Section 318(3)(d): any negative impact on the employer’s workplace

[18] No negative impacts would arise from the transferable instrument applying as the same terms and conditions will apply by other means following the business transfer.

Section 318(3)(e): any significant economic disadvantage to the employer

[19] The employer is not able to sustain the benefits under the transferable instrument for the term of its operation, especially in relation to a number of its enhanced accruals.

Section 318(3)(f): business synergy between the transferable instrument and the existing agreement

[20] The long term cost structures are excessive for the likely new employer and if sustained would not permit it to operate the two centres. The application, if granted, would see the two child care centres operate on terms and conditions which are the same as those applying around Queensland (after 12 months).

Section 318(3)(g): the public interest

[21] There is no evidence that the public interest is agitated in some manner by this application, though if the two child care centres were not able to be operated by the C&K Association their services to parents and children alike may be unlikely to be provided.

CONCLUSION

[22] On balance, and having given account to each of the matters stipulated at s.318(3) of the Act, I have concluded that I should make an order of the kind as sought.

[23] Accordingly I will order as follows:

“That the QUT Student Guild Certified Agreement 2008-2011 not cover the Crèche and Kindergarten Association of Queensland and any employees of the Crèche and Kindergarten Association of Queensland who were formerly employed by the QUT Student Guild to work at the Carseldine Child Care Centre and \or the Kelvin Grove Child Care Centre.”

[24] Any order I might make is subject to s.318(4) of the Act, which reads:

“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.”

[25] I consider it prudent to give effect to this order as of today’s date: 17 August 2010, even though the transfer of business may not take place until a date in the future.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr J Sneddon of Shand Taylor Lawyers for the Crèche & Kindergarten Association

Hearing details:

14 July 2010

Final written submissions:

11 August 2010

 1   AG2010/7904 - Application by Crèche & Kindergarten Association

 2   AG2010/11663 - Application by Crèche & Kindergarten Association

 3   I have examined previously the status of such instrument in these circumstances. See my decision in the Application by Queensland Nickel Pty Ltd [2009] FWA 335.

Printed by authority of the Commonwealth Government Printer

<Price code {C}, AG870306  PR500626 >