Downer Utilities Australia Pty Ltd T/A Downer

[2019] FWC 6634

[2019] FWC 6634

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees

Downer Utilities Australia Pty Ltd T/A Downer
(AG2019/3013)

Electrical power industry
DEPUTY PRESIDENT MASSON	MELBOURNE, 2 OCTOBER 2019

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

[1] An application has been made pursuant to s 318 of the Fair Work Act 2009 (the Act) by Downer Utilities Australia Pty Ltd (Downer) seeking orders from the Fair Work Commission (the Commission) that;

(i) The AusNet Services – ETU Enterprise Agreement 2017 1 (the AusNet Agreement) not cover Downer and employees of Downer formerly employed by AusNet Electricity Services Pty Ltd and AusNet Transmission Group Pty Ltd (AusNet Services) under the AusNet Agreement who performed operations and maintenance services on AusNet Services’ Victorian electricity distribution network (the Services);

(ii) The Downer Utilities Australia Pty Ltd and ETU Power, Construction and Maintenance Enterprise Agreement 2016-2020 2 (the Downer Agreement) cover any employees of Downer formerly employed by Ausnet Services under the AusNet Agreement who performed the Services; and

(iii) The orders will come into operation in respect of each Transferring Employee on and from the day AusNet Services ceases to administer pay and other employment entitlements.

[2] Directions were issued by the Commission on the 6 September 2019 allowing for submissions and materials to be filed in relation to the application by; Downer, any Transferring Employees and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union (the ETU).

[3] Downer filed submissions which were accompanied by a witness statement of Mr Brendan Fleming who is the Electricity Manager of Downer. No submissions or materials were received from any of the Transferring Employees. The ETU filed submissions in which they advised that they did not oppose the application. Based on the materials received I determined to deal with the application on the papers.

Background

[4] Downer is a major provider of integrated services in Australia and New Zealand and is involved in the designing, building, operation and maintainenec of a range of assets, infrastructure and facilities. 3

[5] AusNet Services owns and operates Victoria’s electricity transmission network and also owns and operates one of three gas distribution networks in Victoria, supplying natural gas to residential and business customers in Melbourne’s west and central and Western Victoria. 4

[6] Relevantly to Downer’s application, AusNet Services owns and operates one of five electricity distribution networks in Victoria, feeding lower-voltage electricity to and from customers in Melbourne’s north and east and across all of eastern and north eastern Victoria. 5

[7] AusNet Services previously employed 254 employees to undertake operations and maintenance of its electricity distribution network, 224 of whom were covered by the AusNet Agreement. Downer is contracted to carry out some of the operations and maintenance work on AusNet Services’ electricity distribution network, and prior to the transfer of business, employed a workforce of approximately 250 to perform that work, 180 of whom were covered by the Downer Agreement. 6

[8] In mid-2019 AusNet Services determined to outsource the remainder of the operations and maintenance of their electricity distribution network in Victoria to Downer, and on 22 July 2019 AusNet Services and Downer entered into an ‘Asset and Employee Transfer Deed’ (the Transfer Deed).

[9] According to Mr Fleming, 7 Downer took a number of steps following AusNet Services and Downer entering into the Transfer Deed, in communicating with the Transferring Employees. Steps taken included the following;

•  In late July and early August 2019 letters of offer were issued to 213 of AusNet Services’ employees;

•  The letters of offer made clear that Downer was intending to make a s. 318 application, and that if the application was successful the Transferring Employees would become covered by the Downer Agreement;

•  The letter of offer also made clear that if Downer’s s. 318 application was not successful Transferring Employees would continue to be covered by the AusNet Agreement;

•  On 23 July 2019 Downer conducted ‘town hall’ meetings with affected AusNet Services employees, including the Transferring Employees, in Lilydale, Benalla and Morwell.

•  Between 29 July and 2 August 2019 senior management of Downer held ‘welcome sessions’ in Seymour, Benalla, Wodonga, Leongatha, Bairnsdale, Sale and Traralgon during which Transferring Employees were provided with an overview of Downer terms and conditions of employment and the s. 318 application;

•  Further one on one sessions were conducted by Downer with Transferring Employees in each of the various locations between 19 August and 2 September 2019; and

•  In conjunction with communicating directly with Transferring Employees, Downer also held discussions with the ETU as the ETU were covered by both the AusNet Agreement and Downer Agreement, and that the great majority of Transferring Employees were understood to be members of the ETU.

[10] A ballot of AusNet Services’ affected employees, including Transferring Employees, was conducted by Downer on the 3 September 2019, the result of which was that 97% of AusNet Services’ affected employees voted in favour of the outsourcing arrangements.

[11] All Transferring Employees accepted their letters of offer issued by Downer and commenced employment with Downer on 6 September 2019. 8 Following the commencement of Transferring Employees’ with Downer the combined workforce comprised approximately 400 employees.

Statutory Provisions

[12] Section 318 of the Act sets out the circumstances in which an order may be made by the Commission in respect of a new employer and transferring employees:

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.”

Consideration

[13] Before turning to consider the orders sought by Downer it is necessary to establish that the AusNet Agreement is a transferrable instrument and would cover Downer and the Transferring Employees, subject to any order of the Commission.

Transferable Instrument

[14] I am satisfied that the AusNet Agreement is a transferrable instrument pursuant to s 312(1)(a) of the Act. I am further satisfied that;

(i) The employment of the Transferring Employees with AusNet Services has terminated (s. 311(1)(a));

(ii) Within 3 months of termination of employment, the Transferring Employees became employed by Downer (s. 311(1)(b));

(iii) The work of the Transferring Employees performed for Downer is substantially the same or similar to the work formerly performed by the Transferring Employees for AusNet Services (s. 311(1)(c)); and

(iv) There is a connection between AusNet Services and Downer as described in s 311(4), in that AusNet Services has outsourced work it performs to Downer (s. 311(1)(d)).

[15] As a consequence of the above I am satisfied that the AusNet Agreement will cover Downer and the Transferring Employees, subject to any order the Commission may make. It is also the case that Downer, the new employer, has made the application, thus satisfying the requirements of s. 318(2) of the Act.

[16] Having been satisfied as to the necessary jurisdictional requirements of ss. 311 and 312 being present, I will now turn to each of the matters that I am required to consider under s. 318(3).

The views of the new employer

[17] Downer seeks that the AusNet Agreement not operate in its business in respect of the Transferring Employees and that the Downer Agreement covers those employees. This weighs in favour of the granting of the orders sought by Downer.

The views of the employees who would be affected by the order

[18] No Transferring Employees responded to the Directions issued by the Commission. The ETU advised that it did not object to the application. In the circumstances I regard the views of the affected employees as a neutral consideration.

Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment

[19] Downer states that Transferring Employees will not be disadvantaged in their key terms and conditions of employment. A comparison of those terms and conditions was provided by Mr Fleming in his witness statement. 9 To address any residual concerns held by Transferring Employees in relation to their terms and conditions, Downer committed to a number of further measures including;

(i) Recognition of Transferring Employees’ prior service with AusNet Services for the purposes of leave, redundancy pay, time off in lieu, days in lieu and access to the unfair dismissal jurisdiction of the Commission;

(ii) Transferring employees would retain a more generous redundancy pay entitlement than that provided for in the Downer Agreement;

(iii) Transferring Employees who are currently members of Defined Benefit Superannuation funds would retain the right to remain in those funds;

(iv) Transferring Employees would be entitled to remain members of EquiSuper for the purposes of superannuation accumulation fund contributions;

(v) Transferring Employees would retain their existing long service leave accrual rates;

(vi) Transferring Employees would retain the flexibility to take up to 10 single day annual leave absences each year;

(vii) Downer agreed to vary the Downer Agreement in relation to particular provisions dealing with OHS representatives and meetings, dual trade training arrangements and provisions dealing with involuntary redundancy arrangements as they apply to Transferring Employees.

[20] Having reviewed the comparison of key terms and conditions in the Downer Agreement versus the AusNet Agreement and having regard to the additional measures committed to by Downer summarised above at [19], I am satisfied in the circumstances that Transferring Employees will not be disadvantaged by the orders sought in relation to their terms and conditions of employment. The absence of any demonstrable disadvantage weighs in favour of the granting of the orders sought.

If the order relates to an enterprise agreement—the nominal expiry date of the agreement

[21] The nominal expiry date of the AusNet Agreement is 1 April 2021. The Downer Agreement will reach its nominal expiry date on 31 August 2020. If the orders sought are granted then Transferring Employees will be covered by the Downer Agreement and will be able to participate in bargaining for a replacement agreement on the Downer Agreement reaching its nominal expiry date. This factor does not weigh against the application for the orders sought. It is therefore a neutral consideration.

Whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace

[22] The transferable instrument would require Downer to maintain divergent terms and conditions of employment in respect of employees performing similar duties and functions. I am satisfied that it would also create operational inefficiencies arising from the requirement to administer the terms of an enterprise agreement covering the 213 Transferring Employees out of a combined workforce of approximately 400 employees. This weighs in favour of granting the orders sought.

Whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer

[23] Downer submits that it would suffer significant economic disadvantage and specifically payroll administrative difficulties arising from the maintenance of and compliance with two agreements covering employees performing the same functions. I agree. This weighs in favour of granting the orders sought.

The degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer

[24] The Downer Agreement already covers Downer and its employees within the scope of that agreement. While the terms of that agreement on balance may be comparable to the AusNet Agreement there are differences that would be problematic if both agreements applied to the same class of employees. To that extent there is a lack of synergy between the transferable instrument and the existing Downer Agreement which covers Downer and its employees. This weighs in favour of the orders sought by Downer.

The public interest

[25] I am satisfied that it is not contrary to the public interest to grant the orders sought by Downer. This weighs in favour of granting the orders sought.

Timing of the order sought

[26] Downer seeks that, should the orders be made by the Commission as sought, the orders take effect from 10 October 2019 for payroll administrative purposes. This request was not opposed by the ETU.

Conclusion

[27] Having considered the application and supporting material and taking into account each of the requirements in s. 318(3) of the Act, I am satisfied that the orders sought should be granted.

[28] An Order (PR712727) will be separately issued with this Decision and will take effect on 10 October 2019.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<PR712726>

 1   PR609289

 2   PR702818

 3   Witness Statement of Mr Brendan Fleming, dated 9 September 2019, paragraph [5]

 4   Ibid at paragraph [6]

 5   Ibid

 6   Ibid at paragraphs [7]-[9]

 7   Ibid at paragraphs [11]-[23]

 8   Ibid at paragraphs[25]-[26]

 9   Ibid at paragraph [29] & Attachment 5