CUB Pty Ltd T/A CUB

Case •

[2022] FWC 2991

•

16 NOVEMBER 2022
[2022] FWC 2991

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

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

CUB Pty Ltd T/A CUB

(AG2022/4436)

COMMISSIONER LEE

MELBOURNE, 16 NOVEMBER 2022

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

  1. An application has been made by CUB Pty Ltd T/A CUB (the Applicant or CUB) to the Fair Work Commission (the Commission) for an order pursuant to s.318 of the Fair Work Act 2009 (the Act). The Applicant seeks an order in the following terms:

“1.         The Chelgrave Contracting Australia Pty Ltd AMWU & ETU (CUB Abbotsford) Agreement 2020 (Chelgrave Agreement) will not cover CUB Pty Ltd or any transferring employees as defined in Part 2-8 of the Act, being employees formerly employed by Chelgrave Contracting Australia Pty Ltd at the CUB Abbotsford site who become employees of CUB Pty Ltd at the CUB Abbotsford site.

2.        The transferring employees referred to above previously covered by the Chelgrave Agreement will be covered in their employment with CUB Pty Ltd by the CUB Abbotsford Trades Enterprise Agreement 2022 (AG2022/4340).

3. In accordance with s.318(4) of the Act, this order shall come into operation in relation to each transferring employee upon the commencement of their employment with CUB Pty Ltd.”

  1. The Applicant seeks that the order come into operation in relation to each transferring employee upon the commencement of their employment with CUB.

  1. The application consists of a Form F40 - Application for orders in relation to transfer of business. The application is also accompanied by submissions made by the Australian Manufacturing Workers’ Union (AMWU) and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (ETU).

  1. On 28 October 2022, my Chambers wrote to the parties as follows:

“It is the Commissioner’s provisional view that the application for an order relating to instruments covering new employer and transferring employees can be approved.

The Commissioner also considers it appropriate to determine the matter on the papers.

Should there be any objection to the above course of action, please advise by no later than close of business on Tuesday, 1 November 2022.

In the absence of a response, the matter will be determined based on the material before the Commission.”

  1. No objections were received pursuant to the above email. In the circumstances I have determined the matter on the papers without the need for a hearing.

Legislation

“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.

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 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 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.

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.”

Background

  1. The background of this matter as set out in the application is as follows. For many years, CUB has outsourced the majority of its maintenance function to a labour hire provider, Chelgrave Contracting Australia Pty Ltd (Chelgrave). Those Chelgrave employees are currently engaged under the terms of the Chelgrave Contracting Australia Pty Ltd AMWU & ETU (CUB Abbotsford) Agreement 2020 (Chelgrave Agreement).

  1. Over these same years, CUB has also retained approximately 6 direct maintenance employees employed by CUB. CUB has recently negotiated a new enterprise agreement to cover its 6 direct employees, the CUB Abbotsford Trades Enterprise Agreement 2022 (the CUB Agreement). At the time this application was made, the CUB Agreement was pending approval by the Commission (AG2022/4340). I note that the CUB Agreement was subsequently approved on 28 October 2022.[1]

  1. CUB would like to insource all its maintenance function and have all maintenance employees employed by CUB under the same terms and conditions of employment, namely the CUB Agreement.

  2. CUB has made conditional offers of employment to all Chelgrave employees, the condition being that the Commission makes the order the subject of this application.

  1. The AMWU and the ETU are covered by the CUB Agreement and have both provided statements expressing their support of the application. The AMWU makes the following submissions:

“The AMWU is a party covered by the Chelgrave Agreement and the CUB Agreement and represents the industrial interests of the Transferring Employees who are members of the AMWU (the Transferring AMWU Members). All metal trades employees within the group of Transferring Employees, are members of the AMWU.

…

The reference to employees contained within s318(3)(a)(ii) includes the Transferring
AMWU Members.

The AMWU, on behalf of the Transferring AMWU Members, has reviewed the terms of the CUB Agreement and believe, overall, that the terms are more beneficial than those contained in the Chelgrave Agreement.

The AMWU is supportive of the CUB Agreement being the industrial instrument under which the AMWU Transferring Members will be employed, rather than the Chelgrave Agreement. The AMWU Transferring Members have voted in support of becoming employed by CUB at the Abbotsford Site, under the CUB Agreement.

In its capacity as a representative of the Transferring AMWU Members, the AMWU
advises the following:

·   The AMWU does not have any additional views or concerns to put before the FWC for the purposes of the present application.

·   The AMWU does not oppose the FWC making an order of a kind sought by the applicant in the present application.”

  1. The ETU makes similar submissions as follows:

“The ETU is a party covered by the Chelgrave Agreement and the CUB Agreement and represents the industrial interests of the Transferring Employees who are members of the ETU (the Transferring ETU Members). All electrical trades employees within the group of Transferring Employees, are members of the ETU.

…

The reference to employees contained within s318(3)(a)(ii) includes the Transferring
ETU Members.

The ETU, on behalf of the Transferring ETU Members, has reviewed the terms of the CUB Agreement and believe, overall, that the terms are more beneficial than those contained in the Chelgrave Agreement.

The ETU is supportive of the CUB Agreement being the industrial instrument under which the ETU Transferring Members will be employed, rather than the Chelgrave Agreement. The ETU Transferring Members have voted in support of becoming employed by CUB at the Abbotsford Site, under the CUB Agreement.

In its capacity as a representative of the Transferring ETU Members, the ETU advises
the following:

·   The ETU does not have any additional views or concerns to put before the FWC for the purposes of the present application.

·   The ETU does not oppose the FWC making an order of a kind sought by the applicant in the present application.”

  1. The CUB Agreement has a nominal expiry date of 30 June 2026, meaning the Agreement continues to operate within that nominal term and thereafter until replaced or terminated.

Transferrable instrument

  1. Section 311 of the Act sets out when a transfer of business occurs. On the evidence before me, it is likely that there will be a transfer of business within the meaning of s.311(1) of the Act.

  1. Section 312 of the Act details instruments that may transfer:

“312 Instruments that may transfer

Meaning of transferable instrument

(1) Each of the following is a transferable instrument:

(a) an enterprise agreement that has been approved by the FWC;

(b) a workplace determination;

(c) a named employer award.

…”

  1. The Chelgrave Agreement was approved by the Commission on 1 June 2020 and pursuant to s.312(1) of the Act is a transferrable instrument.

Who may apply for an order?

  1. The application has been made by CUB Pty Ltd T/A CUB, the new employer. The requirement under s.318(2) has therefore been met.

Section 318(3) – Matters that the FWC must take into account

  1. The grounds relied on by the Applicant which are set out in the application are outlined below.

Section 318(3)(a) – the views of the new employer and the employees who would be affected by the order

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

  1. In the application the Applicant submits that:

“CUB Pty Ltd is the potential new employer and is the Applicant in this matter.

If the FWC does not make the proposed order, the Applicant will not proceed with the employment of the transferring employees.”

  1. I have taken into account the views of the employer who would be affected by the order, including the effect of not granting the application. In the circumstances, this matter weighs in favour of making the order sought.

Section 318(3)(a)(ii) – the views of the employees

  1. The Applicant states that:

“Significant discussions/negotiations have taken place with the representatives of the transferring employees, the AMWU and the ETU.

Both unions have provided written statements to the Commission on behalf of their members expressing their support for the order sought – see attached

CUB understands that all transferring employees are members of either union.”

  1. In their statements, the AMWU confirms that all metal trades employees within the group of transferring employees, are members of the AMWU and the ETU confirms that all electrical trades employees within the group of transferring employees, are members of the ETU. Furthermore, that transferring employees who are members of the AMWU and ETU have all voted in support of becoming employed by CUB at the Abbotsford Site, under the CUB Agreement.

  1. I have taken into account the views of the employees who would be affected by the order. The submissions made by the Applicant, alongside the statements lodged by the employee organisations demonstrate that the employees who would be affected by the order support the application. In the circumstances, this matter weighs in favour of making the order sought.

Section 318(3)(b) – whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment

  1. The Applicant submits that:

“Great care has been taken by all parties to evaluate the 2 agreements and ensure that no transferring employee is disadvantaged by the exclusion of the Chelgrave Agreement and the application of the CUB Agreement.”

  1. The AMWU makes the following submission of behalf of the transferring employees:

“The AMWU, on behalf of the Transferring AMWU Members, has reviewed the terms of the CUB Agreement and believe, overall, that the terms are more beneficial than those contained in the Chelgrave Agreement.”

  1. The ETU makes similar submission in its statement:

“The ETU, on behalf of the Transferring ETU Members, has reviewed the terms of the CUB Agreement and believe, overall, that the terms are more beneficial than those contained in the Chelgrave Agreement.”

  1. I have taken into account whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment. It is apparent that there will be no disadvantage to employees by the exclusion of the Chelgrave Agreement and the application of the CUB Agreement. In the circumstances, this matter weighs in favour of making the order sought.

Section 318(3)(c) – if the order relates to an enterprise agreement—the nominal expiry date of the agreement

  1. The Chelgrave Agreement has a nominal expiry date of 31 December 2022. The CUB Agreement has a nominal expiry date of 30 June 2026. This matter is a neutral consideration.

Section 318(3)(d) – whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace

  1. No submissions have been made by any party indicating that the transferable instrument would have a negative impact on the productivity of the new employer’s workplace. In the circumstances, this matter weighs in favour of making the order sought.

Section 318(3)(e) – whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer

  1. The Applicant submits that:

“The economic disadvantage of the Chelgrave Agreement continuing to cover transferring employees is that the transfer would in fact not happen, and CUB would be forced to retain its outsourcing of the majority of the maintenance function. There is a significant cost impost on employers when using labour hire suppliers not incurred through direct employment.”

  1. I have taken into account whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer. I agree with the Applicant’s submissions that it will be disadvantaged if the order sought is not made because CUB would be forced to retain its outsourcing of the majority of the maintenance function, which incurs significant costs compared to direct employment. In the circumstances, this matter weighs in favour of making the order sought.

Section 318(3)(f) – the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer

  1. The Applicant submits that:

“The CUB Agreement is based on the Chelgrave Agreement with the removal of provisions that are relevant to a labour hire provider and not relevant to a direct employer. The CUB Agreement also contains benefits that only apply to direct CUB employees.”

  1. I have taken into account the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer. I agree with the Applicant’s submissions that there is a lack of business synergy between the Chelgrave Agreement and the CUB Agreement as the CUB Agreement does not contain provisions that are relevant to a labour hire provider and also contains benefits that only apply to direct CUB employees. In the circumstances, this matter weighs in favour of making the order sought.

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

  1. The Applicant submits that:

“The Applicant submits that it is in the public interest for employees to have the opportunity to transfer employment, in circumstances such as those described above, which would not be possible if the Commission did not exercise its discretion to make the Order sought.

It is also in the public interest that the Commission have regard to the clearly expressed views of the affected potential employees, their representatives and the prospective employer.”

  1. I have taken into account whether it is in the public interest to grant the order sought, including the opportunity afforded for the employees to transfer employment and the views expressed in support of the application by the employee organisations on behalf of the employees. I am satisfied it is in the public interest to make the order sought. In the circumstances, this matter weighs in favour of making the order sought.

Conclusion

  1. Having considered the matters above, while there is one neutral consideration, it is apparent that all other matters weigh towards the granting of the application sought. Taking into account each of the matters set out in s.318(3) of the Act, I am satisfied that the order as sought should be granted. The order will be issued concurrently with this decision.

  1. The order will come into operation in relation to each transferring employee upon the commencement of their employment with CUB Pty Ltd.


COMMISSIONER

Determined on the papers.


[1] [2022] FWCA 3807.

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Cub Pty Ltd [2022] FWCA 3807