Drinx Pty Limited

[2013] FWC 9577

[2013] FWC 9577

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

Drinx Pty Limited
(AG2013/11604)

Hospitality industry
DEPUTY PRESIDENT SAMS	SYDNEY, 10 DECEMBER 2013

Application for an order re instruments covering new employer and non-transferring employees in agreements.

[1] This decision will confirm the orders I made in this matter on 4 December 2013. What follows are my reasons for doing so.

[2] This is an application, filed by Drinx Pty Limited (the ‘applicant’), pursuant to s 319 of the Fair Work Act 2009 (the ‘Act’). The applicant seeks orders from the Fair Work Commission (the ‘Commission’), pursuant to 319(b) that the Employment Innovations Pty Ltd Enterprise Agreement 2010 [AE879340] (the ‘EI Agreement’) will cover non-transferring Drinx Pty Ltd employees who perform, or are likely to perform transferring work at the Mean Fiddler Hotel at Rouse Hill, New South Wales (the ‘Hotel’) and an order pursuant to s 319(c) of the Act that the Drinx Pty Ltd Certified Agreement 2006 [AG848911] (the ‘Drinx Agreement’) will not cover non-transferring Drinx Pty Ltd employees who perform or are likely to perform transferring work at the Hotel. The Drinx Agreement passed its nominal expiry date on 27 April 2009.

[3] These orders are sought in the context of the termination of an arrangement between the applicant and HRO Initiatives Pty Limited (HRI) under which HRI had hitherto provided outsourced workers at the Hotel. These workers’ (the ‘transferring employees’) terms and conditions were covered by the Agreement, while those of the existing employees of the applicant were covered by the Drinx Agreement. When this arrangement was terminated on 28 September 2012, the applicant subsequently offered employment to the transferring employees at the Hotel and these employees accepted employment directly with the Hotel.

The applicable legislation

[4] The following provisions of the Act are relevant to my determination of this application:

‘317 FWC may make orders in relation to a transfer of business

This Division provides for the FWC to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer.

...

319 Orders relating 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.

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 non-transferring employee who performs, or is likely to perform, the transferring work for the new employer;

(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 non-transferring employee before the later of the following:

(a) the time when the non-transferring employee starts to perform the transferring work for the new employer;

(b) the day on which the order is made.’

[5] The application was supported by a statutory declaration of Mr B Jenkins, General Manager and Licensee of the Hotel, which currently employs 103 employees. He said that between 27 May 2009 and 28 October 2012, the applicant had entered into an arrangement with HRI to provide outsourced workers at the Hotel. The terms and condition of these workers were set out in the EI Agreement. When the arrangement between the applicant and HRI was terminated, the applicant offered employment at the Hotel to transferring employees of HRI. All the employees accepted employment directly by the Hotel. Accordingly, the EI Agreement applied to the transferring employees in their employment at the Hotel.

[6] Mr Jenkins deposed that the Hotel’s Representative Manager met with the 14 non-transferring employees between 15 and 25 October 2013 to advise them of the above arrangements and the Hotel’s intention to terminate the Drinx Agreement and have all its employees covered by the EI Agreement and that applications would be made to the Commission, subject to majority employee support in a vote. The rates of pay for all employees were adjusted to the higher rates of pay, under the EI Agreement, from 13 October 2013 as a gesture of good faith. All of the employees who voted, were in favour of the Hotel’s proposal.

[7] Mr Jenkins submitted that the terms and conditions of the EI Agreement are more beneficial than those under the Drinx Agreement, and he provided a comparative table of wage rates which supported this submission. He also said that the continuation of both agreements could result in significant economic disadvantage to the Hotel. The termination of the Drinx Agreement would be consistent with the intent of the Hotel and its employees; would not result in any disadvantage to employees; would not have a negative impact on productivity; and would not be contrary to the public interest.

[8] At a hearing of the application on 4 December 2013, Mr S Morrissey of Australian Hotels Association (NSW) appeared with Mr Jenkins for the applicant. Mr Morrissey affirmed the content of Mr Jenkins’ statutory declaration. He submitted that the employees who would be newly covered by the EI Agreement would be better off under the EI Agreement as the wages are substantially higher than those under the expired Drinx Agreement. He noted that the Drinx Agreement had been made under a previous legislative regime and had not been subject to the Better Off Overall Test.

[9] Having considered the submissions of the applicant and upon reviewing the application and the statutory declaration of Mr Jenkins, I see no impediment in confirming the orders in the form sought by the applicant. In doing so, I have taken all of the matters in s 319(3) into account; in particular, that the Drinx Agreement has past its nominal expiry date, the views of the employees, the fact that the employees will be better off under this arrangement and the public interest. Orders giving effect to my decision will be published contemporaneously with this decision.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<Price code A, AE879340  PR545383>