CT StoreCo Pty Ltd

[2014] FWC 3960

[2014] FWC 3960

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.319—Transferable instrument

CT StoreCo Pty Ltd
(AG2014/6068)

Fast food industry
COMMISSIONER BULL	SYDNEY, 13 JUNE 2014

Application for an order re instruments covering new employer and non-transferring employees in agreements.

[1] This decision concerns an application by CT StoreCo Pty Ltd (the Applicant) for an order under s.319 of the Fair Work Act 2009 (the Act) which relates to instruments covering a new employer and non-transferring employees.

Background

[2] This application was considered together with another application under s.319 of the Act made by RR StoreCo Pty Ltd. Both the Applicant and RR StoreCO Pty Ltd are entities within the Quick Service Restaurant Pty Ltd Group (the Group). These applications arise due to an internal restructure within the Group.

[3] It is intended that on 30 June 2014 the business from Australian Fast Foods Pty Ltd (Australian Fast Foods), the old employer, will be transferred to the Applicant.

[4] The Applicant submits that the work the transferring employees perform is the same or substantially the same as the work that the transferring employees performed for the old employer.

[5] The transferring employees were covered by the Chicken Treat Employees, SDA Agreement 2009 (the Agreement) which was approved by the Fair Work Commission (the Commission) on 30 March 2010. The Agreement has a nominal expiry date of 30 September 2013. Australian Fast Foods intends to terminate all employees covered by the Agreement and they will be offered employment by the Applicant.

[6] There are currently no non-transferring employees; however, once the restructure is complete, new employees will be hired in the usual course.

[7] The application is brought on the basis that the Applicant will be covered by the Agreement. Once the transfer of the business has been complete, the Agreement will cover the Applicant along with any transferring employees as a result of the operation of the Act.

[8] Pursuant to s.311(1) the Act provides for when a transfer of business occurs:

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).

[9] In this application, the any transferring employees will be re-employed by the new employer within three months after their termination from Australian Fast Foods. The work that the transferring employees perform for the new employer is the same or substantially the same as the work performed for the old employer. Further, there is a connection between the old employer and the Applicant in that all of the business assets owned by the old employer will be transferred the Applicant on 30 June 2014. Accordingly pursuant to s.311 of the Act, there will be a transfer of business and the employees of the old employer employed by the Applicant will be transferring employees within the meaning of the Act.

[10] The Agreement is a transferable instrument by virtue of s.312(1)(a) of the Act. Section 313 provides for the transferable instrument (the Agreement) to, in effect, transfer to the new employer (the Applicant) along with the employees who are transferred.

[11] Therefore, the Applicant and any transferring employees will be covered by the Agreement.

Non-transferring employees

[12] With respect to whether the Agreement should also cover any non-transferring employees, s.314 of the Act makes provision for a transferable instrument to automatically cover other employees in certain circumstances.

[13] Section 314 of the Act 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).

[14] The Applicant is covered by the Fast Food Industry Award 2010 which is a modern award within the meaning of s.314(1)(d) of the Act. As some or all of the non-transferring employees will be engaged subsequent to the Agreement covering the new employer and the employer is covered by a modern award, the broader coverage of the Agreement to the ‘new’ employees, as contemplated by s.314 above does not operate.

[15] However, the operation of s.314 is subject to s.319 of the Act which allows for the Commission to make an order notwithstanding the provisions of s.314, that a transferring instrument cover non-transferring employees.

[16] Section 319(1) provides for Orders that the Commission may make:

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.

[17] Section 319(3) sets out the matters that the Commission must take into account when issuing an order pursuant to s.319.

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.

Applicant’s submissions

[18] In its application the Applicant has addressed each of the matters that I am required to consider when issuing an Order under s.319.

[19] I will deal with each of the matters under s.319(3) of the Act.

Views of the new employer - s.319(3)(a)(i)

[20] The Applicant is the new employer and supports the application.

Views of the employees - s.319(3)(a)(ii)

[21] The Applicant employs 400 employees. The Shop Distributive and Allied Employees’ Association (SDA) represents 63 of those employees supports the application. As no non-transferring employees have been employed to date, it is not possible to obtain their views.

Whether any employees would be disadvantaged by the order - s.319(3)(b)

[22] It was submitted by the Applicant that no transferring employees will be disadvantaged as they would continue to be paid their existing wages and conditions.

[23] The Applicant submits that any disadvantage to non-transferring employees when compared with the terms and conditions under the Modern Award would only be a transition matter as the parties have agreed to phase in pay increases and make a new enterprise agreement by 1 July 2017.

[24] The Applicant also submits that the majority of employees would be better off under the Agreement as they will receive a phased-in increase resulting in a rate 9% above the Modern Award.

[25] A memorandum of understanding has been entered into between the Applicant and the SDA to ensure a new enterprise agreement is made by 1 July 2017. A copy of that memorandum has been provided with this application.

Expiry date of the Agreement s.319(3)(c)

[26] The nominal expiry date of the Agreement is 30 September 2013.

[27] The Applicant submits that whilst the nominal expiry date has passed, this does not indicate a lack of preparedness to bargain for a new agreement nor should it be a bar to approving the application.

[28] The Applicant submits:

● the parties have agreed a 9% increase on the rates contained within the Modern Award;
● a Memorandum of Understanding has been signed by the Applicant and the SDA agreeing to a new enterprise agreement to be made by 1 July 2017; and
● the Agreement has not been replaced due to a difficulty of transitioning from a different underpinning safety net to the Modern Award.

Productivity s.319(3)(d)

[29] The Applicant submitted that the Agreement would not have a negative impact on the productivity of the workplace. This was because the Agreement is tailored and therefore better suited to Applicant’s operations when compared to the Modern Award. Furthermore, the Applicant submits that productivity issues may arise if they had to apply different industrial instruments to the same group of employees.

Economic disadvantage s.319(3)(e)

[30] It was stated by the Applicant that it would not incur any significant economic disadvantage as it would be providing the same wages and conditions as currently provided to all employees.

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

[31] The Applicant submits that it will be operating a nearly identical operation as the old employer. The Applicant does not employ any staff at present and the employees from the current employer who transfer to the Applicant will have the same terms and conditions applying.

Public interest s.319(3)(g)

[32] The Applicant submits that by making the order sought, there would be a platform to facilitate bargaining for a new enterprise agreement and provide certainty and consistency in relation to employment conditions.

Conclusion

[33] Taking into account each of the matters set out in section 319(3), I am satisfied that the order sought should be granted.

An order (PR552041) will be issued to provide thatthe Chicken Treat Employees, SDA Agreement 2009 will cover non-transferring employees of CT StoreCo Pty Ltd who perform similar or the same work as the transferring employees. The order shall take effect in respect of each non-transferring employee on and from the date of this decision, 13 June 2014, or from the date from which the employment commences, whichever is the later.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

<Price code C, PR552039>