Direct Access and Equipment Pty Ltd
[2015] FWC 6308
•14 SEPTEMBER 2015
| [2015] FWC 6308 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Direct Access and Equipment Pty Ltd
(AG2015/911)
DEPUTY PRESIDENT WELLS | HOBART, 14 SEPTEMBER 2015 |
Application for an order relating to instruments covering new employer and non-transferring employees in agreements – benefit of single industrial instrument not sufficient to grant order – application dismissed.
[1] This decision concerns an application that was made on 22 April 2015 by Direct Access and Equipment Pty Ltd (the Applicant) to the Fair Work Commission (the Commission) for an order pursuant to s.319 of the Fair Work Act 2009 (the Act).
[2] Mr Fred Lester of Clarke and Gee, lawyers sought, at the telephone hearing of this matter on 13 May 2015, and was granted leave to appear for the applicant. In the application and at the hearing, the Applicant advised that it had purchased a plant and equipment hire business in mid-2014 which was covered by a workplace agreement. The Applicant sought an order from the Commission that the transferrable instrument in existence not cover the new employer and the transferring employees.
Background
[3] Two transferring employees employed within the business are covered by the Boom Sherrin Drivers, Mechanics and Workshop Personnel – Victoria and Tasmania Enterprise Agreement 2013-2016 (the Agreement). It is this Agreement which the applicant seeks not to cover the transferring employees who, at the time of the making of the application, were Mr Tim Lowe and Mr Bruce Kennett.
[4] It was submitted that the Applicant sought to employ the transferring employees on an “inclusive salary”1 which involved a change to their hourly overtime rate and that “the conditions of employment remained substantially the same”.2
The proceedings
[5] At the telephone hearing of this matter the Applicant submitted that it currently employed 12 staff, two of which were covered by the Agreement and that this created a negative impact as to recording and payment of overtime, although this was said not to be significant as it related to productivity. On 9 September 2015, preceding a telephone hearing, the Applicant advised that Mr Kennett’s position had been made redundant and Mr Kennett was no longer an employee. At the time of writing this decision, there was only one transferring employee, Mr Tim Lowe.
[6] It was submitted that the Application’s business involved common law contracts and an inclusive salary arrangement and that for business synergy purposes, it was preferred that the two transferring employees also be covered by the same arrangements. It was said this involved a difference in the hourly rate paid to the transferring employee in relation to overtime, but was not considered a disadvantage and was not contrary to the public interest.
[7] At the conclusion of the initial hearing on 13 May 2015, the Applicant was advised that they had not satisfied the Commission, pursuant to s.318(3), on issues which included whether the employee would not be disadvantaged by the making of the order sought. A direction for further written submissions was issued at that time. Those submissions were due by close of business 20 May 2015. The transferring employees (then Mr Lowe and Mr Kennett) were notified of this requirement. No submissions were forthcoming from the Applicant.
[8] On 29 May 2015 the Commission contacted the Applicant’s representative, Mr Lester, requesting the submissions or advice as to whether they wished to proceed with the application. No response was received from Mr Lester.
[9] On 16 June and 14 July 2015 the Commission again contacted Mr Lester seeking the further submissions or an indication of their intention or otherwise to proceed with the application. On 14 July 2015 Mr Lester advised he would provide the further submissions later that day. The submissions were not provided.
[10] On 22 July 2015 the Commission wrote to Mr Lester advising that due the past failure to provide the further submissions as directed, the application would be dismissed, should the submissions not be received by 4pm the following Monday, 27 July 2015.
The further submissions
[11] On 27 July 2015 Mr Lester provided further written submissions which included a letter and copies of the proposed contracts for Mr Kennett and Mr Lowe. It was submitted that Mr Kennett and Mr Lowe were “content with their pay and conditions under these contracts”.3 It was also submitted that the main variation to be experienced by the transferring employees was that they would now be on a salary; that there would now be an expectation for reasonable overtime; and that leave and other provisions were in accordance with the NES and current arrangements under the Enterprise Agreement.
[12] It was submitted that no employees would be disadvantaged should the Commission grant the order sought.4
[13] Part 2-8 Division 2 of the Act provides for the transfer of rights and obligations under enterprise agreements, certain modern awards and other instruments where a transfer of business occurs from an old employer to a new employer. The definition of transfer of business, old employer, new employer and transferring work is provides in s.311 of the Act. This section also sets out the circumstances in which a transfer of business occurs. Section 311(1) states:
311 When does a transfer of business occur
Meaning 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 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).
[14] In this application, the remaining transferring employee commenced employment with the new employer in mid-2014 on the transfer of business. The work performed by the transferring employee is the same or substantially the same as the work performed for the old employer. Additionally, there is a connection between the old employer and the Applicant in that the Applicant has purchased the old employer’s business. There is a transfer of business pursuant to s.311 and within the meaning of the Act.
[15] The definition of a transferable instrument is provided in s.312 of the Act. Item 8 of Schedule 11 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act) modifies Part 2-8 of the Act to establish that the definition of transferable instrument found in s.312(1) is extended to cover transitional instruments, other than workplace agreements and workplace determinations that have not yet come into operation.
[16] The Agreement is a transferable instrument by virtue of s.312(1)(a) of the Act. Section 313 provides for the transferable instrument to, in effect, transfer to the new employer (the Applicant) along with the employees who are transferred. The Applicant and the transferring employee are already covered by the Agreement.
[17] Section 318(1) of the Act provides that the Commission may make orders in relation to a new employer and transferring employees. Section 318(3) sets out the criteria that the Commission must take into account when deciding whether to make the order sought.
Transferring employees
[18] Section 313 of the Act provides:
313 Transferring employees and new employer covered by transferable instrument
(1) [Transferable instrument applied to exclusion of other instruments] If a transferable instrument covered the old employer and a transferring employee immediately before the termination of the transferring employee’s employment with the old employer, then::
(a) the transferable instrument covers the new employer and the transferring employee in relation to the transferring work after the time (the transfer time) the transferring employee becomes employed by the new employer; and
(b) while the transferable instrument covers the new employer and the transferring employee in relation to the transferring work, no other enterprise agreement or named employer award that covers the new employer at the transfer time covers the transferring employee in relation to that work.
(2) [Transferable instrument includes any individual flexibility arrangement] To avoid doubt, a transferable instrument that covers the new employer and a transferring employee under paragraph (1)(a) includes any individual flexibility arrangement that had effect as a term of the transferable instrument immediately before the termination of the transferring employee’s employment with the old employer.
(3) [Section has effect subject to orders covering new employer and transferring employees] This section has effect subject to any FWC order under subsection 318(1).
[19] Section 318(1) states:
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.
[20] As stated previously, the new employer and the transferring employee is covered by an enterprise agreement (the Agreement).
[21] Section 318(3) sets out the matters that the Commission must take into account when determining whether to issue an order pursuant to s.318 as follows:
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.
[22] I now deal with each of the matters under s.318(3) of the Act.
Views of the new employer – s.318(3)(a)(i)
[23] The Applicant favoured the granting of the order and requested the Agreement to apply to the transferring employee as it will allow that employee to enter into a common law contract.
[24] I consider this criterion weighs in favour of the granting of the order sought.
Views of the employees – s.318(3)(a)(ii)
[25] Mr Lester submitted that on his instructions from the Applicant, Mr Lowe was “content with the pay and conditions under these contracts”.5 No submissions were received from Mr Lowe relating to this criterion, however he had an opportunity to address me on this point. I find this criterion weights in favour of the granting of the order sought.
Whether any employees would be disadvantaged by the order – s.318(3)(b)
[26] In its initial submissions, the Applicant did not specifically address this criterion. As advised earlier in this decision, the Commission sought further information and the Applicant provided further submissions submitting that “no employees will be disadvantaged by the Commission making orders in the terms sought, having specific regard to the terms and conditions proposed.” Unfortunately, the Applicant did not provide an analysis of the history of overtime paid to the transferring employee, a projection of the likely overtime to be worked or an analysis of the Agreement against the proposed common law contracts. Further submissions were called for on 24 August 2015.
[27] The Applicant submitted further information by way of a table analysing the Agreement against the common law contracts on 2 September 2015. I have marked these submissions as Exhibit A2. The written submissions stated that the granting of the order would:
● create less favourable conditions through the loss of overtime (not quantified in any way), tool allowance of $16.20 per week, meal allowance of $22.00 per day when required to work more than 12 hours, wage increases (3% annually) and access to jury service pay (reimbursement of the difference between jury pay and ordinary pay for up to 10 days)
● create more favourable conditions through an increase of $1.83 per hour (from $28.79 to $30.62), no necessity to work shift work or be on standby for callouts, no loss of pay through inclement weather (see clause 31.1 of the Agreement) although it was acknowledged this clause is rarely ever accessed, the provision of a motor vehicle and a mobile phone.
[28] At the telephone hearing held on 10 September 2015, Mr Lowe made submissions through enquiries of the Commission. Mr Lowe advised that in his employment with his old employer he would work, on average, 1 to 2 hours per week of overtime and that this pattern of work has continued with his employment with the Applicant. For the purposes of this matter, I have determined that on average Mr Lowe works 1.5 hours of overtime per week. Mr Lowe also stated that in his employment with his old employer, he was provided with the operational motor vehicle (a single-cab utility) and full use of a mobile phone. He advised that the vehicle was provided for him to travel to and from work and for use when on call. He advised that he is still required to be on call every week. Mr Lowe stated his work hours under the Agreement were 7am to 3pm which equated to a 38 hour week; but that under the proposed common law contact, his work hours would be 7am to 4pm, or a 42.5 hour week. Mr Lester, for the Applicant, advised that he had not conducted a calculation on the hours required under the proposed common law contract. The Applicant did not seek to question Mr Lowe and did not seek to make any submissions on the information provided by Mr Lowe.
[29] I turn now to consider the analysis of the Agreement against the common law contract as provided by the Applicant6 and the matters canvassed at a further telephone hearing which was held on 10 September 2015. There a number of matters contained within the analysis which provide the Commission with some concern.
[30] The Applicant failed to identify, or insufficiently identify, a less favourable entitlement would exist if the order is granted for the following entitlements contained within the Agreement:
● no access to the dispute settlement procedure for matters included in the Agreement (as per clause 10);
● loss of a paid 20 minute break within the first 5 hours of work (see clause 18.3);
● loss of a minimum call out period of 4 hours at the appropriate overtime rate (see clause 18.4(a));
● loss of a 10 hour rest break between the completion of work and the commencement of work the next day (see clause 18.3(c));
● loss of the $125.00 per week availability allowance for employees required to be available for work outside ordinary hours (whether under a roster of otherwise);
● loss of higher duties pay (see clause 20.2(b));
● loss of overnight travel allowance of $38.50 per night (see clause 20.2(e));
● loss of the entitlement to salary sacrifice additional superannuation contributions (see clause 21.3);
● loss of redundancy entitlements as the Agreement clause is more generous than the National Employment Standard (see clause 23.1);
● loss of public holiday pay at the rate of double time if worked (see clause 29.3);
● loss of consultation if a major change is introduced (see clause 33); and
● loss of access to make a flexibility arrangement (see clause 34).
[31] Whilst the Applicant submitted that the transferring employee was not required to be on call and therefore was not disadvantaged through the loss of overtime or the available allowance which would be payable for on call work, I disagree with this submission. Mr Lowe submitted that he was required to be on call and clause 4 of the proposed common law contracts both state:7
“4. DUTIES AND RESPONSIBILITIES
The Branch Manager will advise you of your duties and responsibilities. You will be expected to operate any and all assets and resources available to Direct Access and Equipment for which you are qualified and., where necessary, licensed to operate.
You will also be expected to perform such other incidental duties that fall within the reasonable scope of the job and are within your skills, training and competence. You will also be required to go on call as part of a rotational roster. It is the Company’s practice to continually review duties and responsibilities to ensure their relevance.
The Company expects that you would actively participate in such reviews and support any necessary changes for time to time.”
[32] I must now consider whether the matters identified are more beneficial under the common law contacts outweigh the less favourable matters, and therefore the transferring employee would not be disadvantaged by the granting of the order.
[33] The financial advantages to the transferring employee was said to be an increase in remuneration of $1.83 per hour, or $69.54 per week; together with a fully maintained job-related motor vehicle and a mobile phone. The Commission notes that the proposed common law contracts provide that the job-related motor vehicle may be required for the use of other employees of the business during period of leave. The submissions of Mr Lowe are that the vehicle is an operational single-cab utility and is not available for his private use, and further, that he had the use of this vehicle and mobile phone when he was employed by this old employer and that their use was governed by policy. I therefore do not consider the provision of an operational vehicle and mobile phone are additional entitlements made available by the Applicant.
[34] In determining the question posed by s.318(3)(b) it is clear the transferring employee would be better off under the Agreement as the entitlements under the Agreement are greater, on balance, that those offered under the proposed common law contacts.
Expiry date of the agreement s.318(3)(c)
[35] The nominal expiry date of the Agreement is 27 August 2016 and therefore it has 12 months to run. The Applicant’s submissions did not indicate a position on this criterion.
[36] I consider this criterion neutral to the granting of the order.
Productivity s.318(3)(d)
[37] It was submitted at the telephone hearing that whilst there was some additional work in relation to the payroll system, this work did not significantly impact the productivity of the Applicant’s business. There was no evidence led by the Applicant to show a productivity impact on the business. I consider this criterion weighs against the granting of the order.
Economic disadvantage s.318(3)(e)
[38] The Applicant also submitted at hearing that whilst there was no significant economic disadvantage experienced, this was only one criterion to be considered. There was no evidence led by the Applicant to establish a significant economic disadvantage existed. I consider this criterion weighs against the granting of the order.
Degree of business synergy s.318(3)(f)
[39] The Applicant does not currently have an Enterprise Agreement and employs its other 10 employees through common law contracts. It was submitted that the Applicant’s business synergy would be affected should the order not be granted by virtue of there being two instruments of employment. However, there was no evidence led to this effect and the Applicant did not establish any facts to support its assertions, such as widely varying conditions of employment.
[40] I consider this criterion weighs against the granting of the order.
Public interest s.318(3)(g)
[41] It was said that there were no factors present that were contrary to the public interest in the granting of the order sought.
[42] The Full Bench decision in Kellogg Brown & Root Pty Ltd and others v Esso Australia Pty Ltd8 (Kellogg) a decision explaining the public interest test in a matter dealing with the termination of a certified agreement said a paragraph [23]:
“[23] The notion of public interest refers to matters that might affect the public as a whole such as the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards. An example of something in the last category may be a case in which there was no applicable award and the termination of the agreement would lead to an absence of award coverage for the employees. While the content of the notion of public interest cannot be precisely defined, it is distinct in nature from the interests of the parties. And although the public interest and the interests of the parties may be simultaneously affected, that fact does not lessen the distinction between them.”
[43] Having regard to my findings in relation to all other criteria in s.318(3) and the test established in Kellogg, I do not consider the Applicant has proven the application to be in the public interest.
Conclusion
[44] I am required, in accordance with the Act, to take account of the circumstances of the transmission of business with respect to the various criteria set out above and to balance these considerations in making my determination of whether to issue the order sought.
[45] Having regard to the objects of the Act, it is clear that the making of and existence of enterprise agreements is intended to be the principal means under the Act thereby working conditions and arrangements are negotiated to meet the needs of individual workplaces. However, it also needs to be noted that proper industrial standards via the requirements to have an appropriate safety net of “fair, relevant and enforceable minimum terms and conditions” of employment is also an object of the Act.
[46] Taking into account each of the matters set out in s.318(3) and the objects of the Act, I am not satisfied that the order sought should be granted. I accept the Applicant’s position that it is desirable to have all of its employees on common law contracts, however it is clear the Act establishes a broader consideration.
[47] For the reasons above, the application is dismissed.
DEPUTY PRESIDENT
Appearances:
Lester F for the applicant
Hearing details:
2015
Hobart
13 May 2015
2015
Hobart
10 September 2015
1 Form F40 Application
2 Ibid
3 Exhibit A1 – Further submissions dated 27 July 2015
4 Exhibit A1
5 Exhibit A1
6 Exhibit A2 – Further additional submissions dated 2 September 2015
7 Exhibit A1 - Attachment
8 [2005] AIRC 72
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