Dick Smith Electronics Pty Limited
[2013] FWC 7593
•1 OCTOBER 2013
[2013] FWC 7593 |
FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.319 - Application for an order re instruments covering new employer and non-transferring employees in agreements
Dick Smith Electronics Pty Limited
(AG2013/9441)
Retail industry | |
COMMISSIONER BULL | SYDNEY, 1 OCTOBER 2013 |
Application for an order re instruments covering new employer and non-transferring employees in agreements.
[1] This decision concerns an application by Dick Smith Electronics Pty Limited (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] The Applicant submits that on 8 August 2013, it entered into a sale of business agreement and retail brand management agreement with David Jones Limited (David Jones). The transaction involves the acquisition of business assets relating to the electronics retail business from David Jones (the old employer). The current completion date for the transaction is 1 October 2013.
[3] The Applicant submits that there are approximately 70 transferring employees of the Applicant who are currently covered by the David Jones Enterprise Agreement 2012 1 (the Agreement), which was approved by the Commission on 2 August 2012. The Agreement has a nominal expiry date of 3 June 2015.
[4] The Applicant submits that approximately 130 new employees (non-transferring employees) will be employed at the David Jones locations to give effect to the terms of the transaction and its operational requirements.
[5] The non-transferring employees will be covered by the General Retail Industry Award 2010 (the Award) which is a modern award within the meaning of section 314(1)(d) of the Act.
The relevant legislation
[6] The application 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 Agreement will transmit along with the transferring employees as a result of the operation of the Act.
[7] Section 311(1) 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).
[8] In this application, the transferring employees will be employed by the new employer (the Applicant) on 1 October 2013. 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 outsourced the transferring work to the new employer.
[9] 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.
[10] Therefore, the Applicant and the transferring employees will be covered by the Agreement.
Non-transferring employees
[11] 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.
[12] 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).
[13] The Applicant submits that it is covered by the General Retail Industry Award 2010, which is a modern award within the meaning of 314(1)(d) of the Act. As the Applicant is covered by a modern award, the broader coverage of the Agreement to the ‘new’ employees, as contemplated by s.314(1)(d) above, does not operate.
[14] 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.
[15] Section 319(1) 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 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.
[16] Section 319(3) of the Act sets out the matters that the Commission must take into account when issuing an order pursuant to s.319. 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
[17] The application filed on 18 September 2013, was not accompanied by any supporting documentation. The Commission requested that the Applicant provide further documentation to address each of the matters that it is required to consider when issuing an Order under s.319.
[18] On 27 September 2013, the Applicant filed a witness statement of Ms Marcella Davis, the Human Resources Director of Dick Smith Electronics Pty Limited. This witness statement has been taken into account in determining the application.
[19] I will deal with each of the matters under s.319(3) of the Act that I am required to consider.
Views of the new employer - s.319(3)(a)(i)
[20] The Applicant wishes the Agreement to apply to its non-transferring employees because it will avoid some employees being covered by one industrial agreement and receiving different entitlements, that are more beneficial, whilst other employees in the same workplace are covered by a different industrial agreement with lesser entitlements, all performing similar or the same work, which will give rise to disharmony between the employees.
[21] Attached to Ms Davis’s witness statement was a comparative table of the terms and conditions of the Agreement and the Award to demonstrate that the Agreement provides greater benefits.
Views of the employees - s.319(3)(a)(ii)
[22] The Applicant was unable to provide statements with the views of any new employees as the completion date of the transaction has not yet occurred.
[23] However, the Applicant states that it has informed all potential new employees about this application and the consequences of the Order if granted. A copy of the correspondence to potential employees was annexed to Ms Davis’s witness statement.
[24] On 26 September 2013, the Shop, Distributive & Allied Employees Association (SDAEA) sent correspondence to the Commission in support of the Application. I note that the SDAEA is covered by the Agreement.
[25] The SDAEA stated that it is appropriate for transferring employees and new employees (non-transferring employees), to be covered by the Agreement.
Whether any employees would be disadvantaged by the order - s.319(3)(b)
[26] It was submitted by the Applicant that the non-transferring employees will be entitled to better terms and conditions of employment under the Agreement as compared to the General Retail Industry Award 2010 and will not be disadvantaged by the granting of such Order.
Expiry date of the agreement s.319(3)(c)
[27] The nominal expiry date of the Agreement is 3 June 2015.
Productivity s.319(3)(d)
[28] The Applicant submitted that the Agreement would not have a negative impact on the productivity of the workplace as the Agreement is a tailored instrument, specific to the circumstances and operations of the David Jones department stores and is therefore more specific for such operations than compared to the Award.
Economic disadvantage s.319(3)(e)
[29] The Applicant submits that it would be likely to incur significant economic disadvantage if an Order was not granted as the Agreement is specific to the circumstances and operations of the David Jones department stores than compared to the Award.
Degree of business synergy s.319(3)(f)
[30] The Applicant argued that there is little business synergy between the Agreement and the General Retail Industry Award 2010 as they provide for different minimum employment conditions.
Public interest s.319(3)(g)
[31] The Applicant submits that issuing this Order will not offend the public interest. There is no evidence that it would be against the public interest to issue this order.
Conclusion
[32] Taking into account each of the matters set out in s.319(3), I am satisfied that the order sought should be granted.
[33] An Order (PR542672) will be issued to provide that the David Jones Enterprise Agreement 2012 will also cover non-transferring employees of Dick Smith Electronics Pty Limited who perform similar or the same work as the transferring employees and who perform their work on David Jones premises which are said to be in approximately 29 locations across Australia.
[34] A further Order as requested by the Applicant will issue providing that the witness statement of Ms Davis can only be provided to a third party who provides an undertaking to preserve the confidentiality of the statement.
COMMISSIONER
1 AE895833
Printed by authority of the Commonwealth Government Printer
<Price code C, AE895833 PR542671 >
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