Delivery Hero Pty Ltd
[2015] FWC 7386
•28 OCTOBER 2015
| [2015] FWC 7386 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.318 and s.319 - Application for an order relating to instruments covering new employer , transferring employees and non-transferring employees
Delivery Hero Pty Ltd
(AG2015/5504)
HRO INITIATIAVES PTY LIMITED
EMPLOYEE COLLECTIVE AGREEMENT 2007
Industries not otherwise assigned
DEPUTY PRESIDENT BULL | SYDNEY, 28 OCTOBER 2015 |
Application for an order relating to instruments covering new employer, transferring employees and non-transferring employees
[1] This decision concerns an application by Delivery Hero Pty Limited (the applicant) for an Order under s.318 and s.319 of the Fair Work Act 2009 (the Act). The application was lodged on 15 September 2015. Further submissions were requested from the applicant on 1 October 2015 and received by the Commission on 7 October 2015.
[2] The HRO Initiatives Pty Limited Employee Collective Agreement 2007 (the Agreement) is the transferrable instrument to which this application relates, it has a nominal expiry date of 5 years after lodgement with the Office of the Employment Advocate and the applicant is the new employer of the business. The applicant therefore has standing under s.318(2)(a) and 319(2)(a) to apply for the relevant orders.
[3] Section 318 relates to instruments covering a new employer and transferring employees in the context of a transfer of business. Section 319 relates to instruments covering a new employer and non-transferring employees.
[4] The applicant seeks the following orders:
1. Pursuant to s.318(1)(a) of the Act, the Agreement that covers the applicant and the transferring employees because of s.313(1)(a) of the Act does not, or will not, cover the applicant and the transferring employees.
2. Pursuant to s.319(1)(a) of the Act, the Agreement that covers the applicant and would or would likely cover a non-transferring employee because of s.314(1) of the Act does not, or will not, cover the applicant and the transferring employees.
[5] And that accordingly, the relevant modern award will apply, which the applicant submits is the Fast Food Industry Award 2010.
Background
[6] The applicant operates a food and takeaway delivery service. Prior to 7 September 2015, the applicant obtained its customer care staff from HRO Initiatives Pty Ltd on an outsourced, on-hire basis. The industrial instrument applicable to those staff was the Agreement which is the subject of this application.
[7] On 7 September 2015, the applicant terminated its relationship with HRO Initiatives Pty Limited and insourced the customer care staff. All 25 staff from 7 September 2015 onward have been directly employed by the applicant (insourcing).
Relevant Legislation
[8] The application under s.318 is brought on the basis that the transferring employees of the old employer are already covered by the Agreement. On the basis that there will be a transfer of business, the Agreements will transmit along with the transferring employees as a result of the operation of the Act.
[9] Section 311 of the Act provides:
“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).”
[10] The applicant submits that the ‘insourcing’ constitutes a transfer of business for the purposes of s.311 of the Act, by satisfying the tests set out in s.311(1):
a. the employment of an employee of the old employer has terminated
The employment of the customer care staff by HRO Initiatives Pty Limited terminated on 7 September 2015
b. within 3 months after the termination, the employee becomes employed by the new employer
The customer care staff were employed by the applicant on 7 September 2015, which is within 3 months of the termination by HRO Initiatives Pty Limited
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
The work the customer care staff perform for the applicant is the same, or is substantially the same, as the work performed for HRO Initiatives Pty Limited
d. there is a connection between the old employer and the new employer as described in any of subsections (3) to (6)
There is a connection between HRO Initiatives Pty Limited, and then the outsourcing ceased (by reason of the ‘insourcing’) 1
[11] Transferring employees were employed by the new employer (the applicant) on 7 September 2015. The work that the transferring employees will perform for the new employer is the same or substantially the same as the work performed for the old employer. There is a connection between the old employer and the new employer in that the transferring work will be performed by one or more transferring employees, as employees of the new employer, because the old employer has transferred work to the new employer.
[12] 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 along with the employees who are transferred.
[13] Therefore, the applicant and the transferring employees will be covered by the Agreement.
Application for an order under s.318 – employer and transferring employees
[14] Section 318 of the Act 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 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.”
[15] Section 318(3) of the Act sets out the matters that the Commission must take into account when issuing an order pursuant to s.318. The Act states:
“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
[16] The applicant addressed each of the matters that I am required to consider when issuing an Order under s.318. At the request of the Commission, the applicant has provided the following in support of its application:
1. Letters of notification regarding the application to the transferring employees ;
2. Explanatory emails and letters to transferring employees outlining differences between the transferrable instrument and the applicable modern award (which the applicant submits is the Fast Food Industry Award 2010 (the Fast Food Award));
3. Questionnaire survey sent to the employees seeking the views of the employees in relation to this application; and
4. Questionnaire results showing the responses of the employees who participated in the questionnaire survey.
[17] I will now deal with each of the matters under s.318(3) of the Act that I am required to consider.
Views of the new employer or the likely new employer - s.318(3)(a)(i)
[18] The applicant is the new employer and supports the Order.
[19] It is further submitted that the relevant modern award (whether it be the Fast Food Industry Award 2010 (Fast Food Award) or the Clerks Private Sector Award 2010 (Clerks Award)) is more beneficial on terms and conditions than the Agreement.
Views of the employees who would be affected by the Order - s.318(3)(a)(ii)
[20] The applicant states that transferring employees were extensively consulted with prior to the offers of employment by:
1. Thoroughly informing the affected employees of the application and the impact of the changes;
2. Providing updates of the application process to the relevant employees;
3. Inviting employees to express their views to the Commission with respect to the application, as well providing a questionnaire to the affected employees to ascertain their views.
[21] The applicant has provided the responses of the employees who participated in the online questionnaire. Out of the 29 transferring employees, 18 responded to the questionnaire, with 12 out of the 18 in favour of the application. The majority of the employees who were not in favour of the application, expressed the view that the Fast Food Award was not the applicable modern award, with one employee stating preference for the Clerks Award.
Expiry date of the agreement s.318(3)(c)
[22] The Agreement has passed its nominal expiry date; which the applicant submits as being 4 May 2012.
Productivity s.318(3)(d)
[23] The applicant submits that there would not be a negative impact on the productivity of the workplace
Economic disadvantage s.318(3)(e)
[24] The applicant submits that this is would not apply.
Degree of business synergy s.318(3)(f)
[25] The applicant submits that there is no business synergy between the Agreement and any applicable award.
Public interest s.318(3)(g)
[26] The applicant submits that the public interest is best served by employees receiving the superior benefits of the relevant award rather than the Agreement.
[27] There is no evidence that it would be against the public interest to issue this order.
Application for an order under s.319 – employer and non-transferring employees
[28] With respect to whether the Agreement should also cover the non-transferring employees, s.314 of the Act makes provision for a transferable instrument to automatically cover other employees in certain circumstances.
[29] 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)”
[30] By reason of s.314(1) of the Act, the Agreement would cover any new non-transferring employees, in the event that no modern award has application.
Applicant’s submissions
[31] There are currently no non-transferring employees employed by the applicant. It is submitted that a modern award will apply to any newly engaged, non-transferring employee in the future (which the applicant submits should be the Fast Food Award) as per s.314(1) of the Act.
[32] The applicant concedes that an order under s.319 may not be strictly necessary; however, given the application already needed to be brought under s.318, orders are also sought under s.319 to ensure that the Agreement can have no continued operation within the applicant’s business moving forward.
[33] 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 not cover non-transferring employees.
[34] Section 319(1) provides for Orders that the Commission may make in relation 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 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.”
[35] 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.”
[36] In addressing the criteria prescribed under s.319(3), it is submitted that an order be made under s.319 will enable equal coverage of the transferring and non-transferring employees. The applicant relies on the same submissions as addressed in the s.318 application, where relevant and further submits that it would be contrary to the public interest if new employees were treated differently to transferring employees.
Conclusion
[37] The applicant employer and majority of employees support the application. The applicant submits that the out of term collective agreement is inferior in terms and conditions than any of relevant modern awards. The issues of productivity, economic disadvantage, business synergy and public interest, I regard as being neutral in this application. I make no observation as to which award has application other than to accept that both the Fast Food Award and the Clerks Award provide better benefits than the Agreement.
[38] Taking into account each of the matters set out in sections 318 and 319, I am satisfied that the orders sought should be granted.
[39] Pursuant to s.318(1)(a) and s.319(1)(a)of the Act, an Order [PR573324] will be issued to provide that the transferrable instrument does not, and will not cover the applicant, the transferring employees and any non-transferring employees, and that the relevant awards apply accordingly.
DEPUTY PRESIDENT
1 See also s.311(5) of the Act
Printed by authority of the Commonwealth Government Printer
<Price code C, PR573323>
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