CSRP Pty Ltd

[2017] FWC 4841

[2017] FWC 4841

FAIR WORK COMMISSION

DECISION

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

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

CSRP Pty Ltd
(AG2017/3958)

Mining industry
DEPUTY PRESIDENT BULL	PERTH, 2 OCTOBER 2017

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

[1] On 1 September 2017, CSRP Pty Ltd (the applicant/CSRP) lodged an application in the Fair Work Commission (the Commission) for orders under ss.318 and 319 of the Fair Work Act 2009 (the FW Act) which relate to an instrument covering a new employer and transferring employees and non-transferring employees in the context of a transfer of business.

[2] The applicant is the likely new employer of the business to which this application relates and therefore has standing to apply for the order under ss.318(2)(a) and 319(2)(a) of the Act.

[3] The transferable instrument to which this application relates is the TEC Operations Pty Ltd Enterprise Agreement 2013 (the TEC Agreement). The TEC Agreement came into operation on 14 January 2014 and has a nominal expiry date of 7 January 2018.

Orders sought

[4] The applicant sought the following orders:

• An order pursuant to s.318 of the FW Act that the TEC Agreement will not cover:

i. CSRP Pty Ltd (CSRP) or Fortescue Metals Group Pty Ltd (CAN 002 594 872) (Fortescue) (of which CSRP is a wholly owned subsidiary) or any related entity of CSRP or Fortescue; or

ii. The transferring employees who will perform, or are likely to perform, the transferring work for CSRP (Transferring Employees).

• An order pursuant to s.319(1)(a) of the FW Act that the TEC Agreement will not cover any new non-transferring employees who will perform, or are likely to perform, the transferring work for CSRP.



• An order pursuant to s.318(1)(b) of the FW Act that the CSRP Enterprise Agreement 2016 (CSRP Agreement) will cover the Transferring Employees.

[5] Following correspondence to the applicant’s representative from the Commission, the applicant indicated that it did not wish to proceed with naming Fortescue Metals Group Pty Ltd or any related entity of CSRP or Fortescue in the orders sought.

Background

[6] CSRP is a wholly owned subsidiary of Fortescue.

[7] In 2012, Fortescue sold the power station at the Solomon Hub in the Pilbara region of Western Australia (Solomon Power Station) to TEC Pipe Pty Ltd, a wholly owned subsidiary of TransAlta Corporation (TransAlta). On 1 November 2017 Fortescue will take over and resume full operation and control of the Solomon Power Station from TransAlta.

[8] There are 8 employees of TransAlta, employed to work at the Solomon Power Station performing electrical and mechanical maintenance work, who are covered by the TEC Agreement (Transferring Employees).

[9] The 8 Transferring Employees have received offers of employment from CSRP which are conditional on the orders as sought by CSRP in this application being made. If the orders sought are made, the employees’ acceptance of the offers of employment would result in the Transferring Employees being covered by the CSRP Agreement.

Transfer of business

[10] The applicant submits Fortescue will take over and resume full operation and control of the Solomon Power Station from TransAlta as of 1 November 2017, with CSRP being the employing entity of the Transferring Employees.

[11] Section 317 of the FW Act provides that the Fair Work Commission may make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer. The orders sought may be made ahead of the actual transfer of business as envisaged and defined in s.311 as, pursuant to ss.318(2)(a) and 319(2)(a) of the FW Act, CSRP is “likely to be the new employer”.

Relevant legislation

[12] Section 312(1) of the FW Act defines the meaning of a transferable instrument. Pursuant to s.312(1)(a), the TEC Agreement constitutes a transferable instrument for the purposes of the Act.

[13] Section 313 provides for the transferable instrument to transfer to the new employer along with the employees who are transferred.

[14] Therefore, the applicant and the transferring employees will be covered by the TEC Agreement.

[15] The applicant seeks that the TEC Agreement not cover the applicant, transferring employees and non-transferring employees.

[16] The relevant sections of the FW Act which allow for the Commission to make the orders sought are:

“S.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.”

and

“S.319 Orders relating to instruments covering new employer and non-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 non-transferring employee because of subsection 314(1) does not, or will not, cover the new employer and 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.”

[17] Sections 318(3) and 319(3) of the FW Act set out in identical terms the considerations that the Commission must take into account in deciding whether to make the order:

“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.”

Consideration

[18] In its application, the applicant has addressed each of the matters the Commission is required to consider when issuing an order under ss.318 and 319. The application was accompanied by a statutory declaration signed by Melanie Atkinson, Manager, Fortescue People – Solomon, setting out:

● the details of the two information sessions provided to Transferring Employees;

● a copy of the offers of employment provided to Transferring Employees;

● a copy of the employee information pack provided to Transferring Employees;
● feedback forms completed by the 8 Transferring Employees;

● details regarding administrative costs potentially incurred by the applicant should the orders as sought not be made; and

● details regarding discrepancies between the terms and conditions of the two agreements and potential negative impacts this could have on productivity.

Views of the new employer or the likely new employer

[19] The application is made and supported by the likely new employer.

Views of the employees who would be affected by the order

[20] Following an extensive consultation process undertaken with the Transferring Employees by CSRP, no employee indicated any opposition to the orders sought with 7 of the employees indicating they would prefer to be covered under the CSRP Agreement and one employee not indicating a preference.

Whether any employee would be disadvantaged by the order in relation to their terms and conditions of employment

[21] In addition to higher remuneration, the applicant points to a number of other benefits under the CSRP Agreement in comparison with the TEC Agreement and efforts it has made to ensure that there is no disadvantage to the Transferring Employees should the orders sought be made.

The nominal expiry date of the agreement

[22] The CSRP Agreement has a nominal expiry of 25 May 2021, whereas the TEC Agreement has a nominal expiry of 7 January 2018. On this basis the CSRP Agreement will provide a longer guarantee of its terms and conditions than the TEC Agreement.

Whether the transferrable agreement would have a negative impact on the productivity on the new employer’s (the applicant) workplace

[23] The applicant states that the transferring agreement would negatively impact on productivity in that it would result in 2 sets of terms and conditions applying to employees performing the same work.

Whether the applicant would incur significant economic disadvantage as a result of the Agreement covering it

[24] The applicant contends that having to administer the TEC Agreement in conjunction with the CSRP Agreement will result in administrative inefficiencies and increased costs.

The degree of business synergy between the Agreement and any workplace instrument that already covers the new employer

[25] The transferring employees represent approximately 1.86% of CSRP’s workforce.

The public interest

[26] The applicant submits that the making of the orders sought would result in the Transferring Employees being able to maintain secure and permanent employment with CSRP and that the Transferring Employees have expressed their support for the orders. On this basis there are no issues of public interest to be accounted for.

Conclusion

[27] I am satisfied that the TEC Agreement is a transferable instrument as described in s.312(1)(a) of the FW Act and that the circumstances described are a transfer of business within the meaning of s.311 of the FW Act.

[28] The FW Act requires the Commission to take into account the circumstances of the transmission of business under the various headings listed above and then to balance these considerations in reaching a conclusion.

[29] Having regard to the grounds and reasons stated in support of the application, I am satisfied that the requirements of the FW Act have been met. With respect to the considerations above I am satisfied that the orders sought should be granted, particularly having regard to the views of the Transferring Employees.

[30] For the reasons set out above, orders [PR596463] will issue that:

● S.318(1)(a) the TEC Agreement will not cover the applicant;

● S.318(1)(a) the TEC Agreement will not cover Transferring Employees who will perform, or are likely to perform, the transferring work for CSRP;

● S.319(1)(a) the TEC Agreement will not cover any new non-transferring employees who will perform, or are likely to perform, the transferring work for CSRP;

● S.318(1)(b) the CSRP Agreement will cover the Transferring Employees.

DEPUTY PRESIDENT

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