DT Infrastructure Pty Ltd
[2023] FWC 1773
•20 JULY 2023
| [2023] FWC 1773 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.319 - Application for an order relating to instruments covering new employer and non-transferring employees
DT Infrastructure Pty Ltd
(AG2023/2134)
| Building, metal and civil construction industries | |
| DEPUTY PRESIDENT BEAUMONT | PERTH, 20 JULY 2023 |
Application for an order relating to instruments covering new employer and non-transferring employees
This decision concerns an application by DT Infrastructure Pty Ltd (the Applicant) for an order under s 319(1)(b) of the Fair Work Act 2009 (Cth) (the Act) that the Downer EDI Works Pty Ltd Rail (WA) Enterprise Agreement 2020 (the Downer EA)[1] will cover the Applicant and any new or non-transferring employees of the Applicant (non-transferring employees).
The application arises in the context of a transfer of business between Downer EDI Works Pty Ltd (ABN 66 008 709 608) (Downer) and the Applicant. The Applicant is a subsidiary of Gamuda Holding Pty Ltd and the ultimate holding company is Gamuda Berhad (Gamuda).[2]
In February 2023, Downer EDI Limited (Downer Group) announced an asset sale. The announcement set out that the Downer Group had entered into an agreement to sell its Australian Transport Projects business to a wholly owned Australian subsidiary of Gamuda, a large engineering and construction company listed in Malaysia.[3] The sale completion date was 20 June 2023. According to the Applicant, the transfer of business occurred on or shortly after 20 June 2023, with the transfer of assets (Downer’s current projects, plant, and equipment) from the older employer to the new employer, the Applicant.[4]
As of 20 June 2023, there were 127 employees covered by the Agreement (transferring employees).[5] Prior to the transferring employees’ transfer of employment, communications took place traversing the changed circumstances. Further to those initial communications, transferring employees were provided with a letter that set out, amongst other matters, that there would be continuity of their employment between Downer and the Applicant.[6]
It is uncontroversial that the work to be performed by the transferring employees in their employment with the Applicant is identical to the work they were performing as employees of Downer.[7] Further, it was communicated to the employees that there would be no changes to their work conditions, roster, or work locations.[8]
Regarding the 127 transferring employees, the Applicant submits that upon the transfer of business occurring on or shortly after 20 June 2023, pursuant to s 313 of the Act, the Downer EA (a transferable instrument) covered the transferring employees and the Applicant. However, the Applicant submits that it will need to employ new employees from time to time, hence its request for those non-transferring employees to be covered by the Downer EA.[9] In the absence of the Downer EA coverage, the non-transferring employees would be covered by the Building and Construction General On-Site Award 2020 (Award).[10]
It is accepted that s 317 empowers the Commission to make certain orders, including orders under s 319 of the Act, if there is, or is likely to be, a transfer of business from an old employer to a new employer.
The Applicant has articulated the order sought in the following terms:
a)That the Downer EDI Works Pty Ltd Rail (WA) Enterprise Agreement 2020 (Agreement) covers non-transferring employees who perform or who are likely to perform the transferring work covered by the Agreement, as employees for DT Infrastructure Pty Ltd, and who are employed in roles that fall within the classifications set out in the Agreement.
b)The above order shall take effect in respect of each non-transferring employee from the date from which they commence performing the transferring work as employees of DT Infrastructure Pty Ltd.
In deciding whether to make the order, I am obliged to consider whether the Applicant has standing under s 319(2)(a) of the Act to apply for the order sought and to take into account various factors. Briefly stated, I am satisfied that there has been a transfer of business and that the Applicant has standing to make the application under s 319(2)(a).
The factors relevant to the application are set out in s 319(3) of the Act, and include:
a) the views of the Applicant and the employees affected by the order;
b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment;
c) the nominal expiry date of the Downer EA;
d) whether the Downer EA would have a negative impact on productivity of the Applicant’s workplace;
e) whether the Applicant would incur significant economic disadvantage as a result of the Downer EA covering it;
f) the degree of business synergy between the Downer EA and any workplace instrument that already covers the Applicant; and
g) the public interest.
Having taken into account each of the above factors, I am satisfied that they weigh in favour of granting the order sought.
An Order[11] that provides that the Downer EA will cover the non-transferring employees of the Applicant who perform the same or similar work as the transferring employees is issued concurrently with this decision.
Background
I am assisted in this matter by the detailed application filed by the Applicant,[12] and the witness statements of its employees Adam Leary, General Manager People and Culture, Cormac Brady, General Manager WA/SA, and Ashleigh Freeman, People and Culture Operations Manager.
As noted, in April 2023, Downer employees were provided with a memorandum from Downer about the imminent changes in their employment situation.[13]
Between 5 May 2023 and 9 May 2023, Downer employees were sent a letter of offer of employment with the Applicant, and between 10 May 2023 and 19 June 2023, new employees of Downer were provided with the same letter of employment from the Applicant.[14] The letters of offer detailed that upon acceptance of the offer with the Applicant, transferring employees would have taken to have resigned from their employment with Downer.[15] The transferring employees commenced work for the Applicant on and from 21 June 2023.
On 12 May 2023, Downer formally informed the Rail Tram and Bus Industry Union of Western Australia (RTBU), an employee organisation that is a signatory to the Downer EA and has members covered by it, of the proposed transfer of employment of the transferring employees to Downer to the Applicant.[16] On 12 June 2023, the RTBU wrote to Mr Leary expressing that it formally confirmed to both the Applicant, and by extension, the Commission, that the RTBU supported the Applicant’s application regarding new non-transferring employees.[17] The letter continued that the RTBU understood that the letter it had provided to Mr Leary would be furnished to the Commission as part of its application under s 319 of the Act.[18]
On 17 July 2023, two employees commenced work for the Applicant who were non-transferring employees. Whilst the application was on foot, the Applicant considered it appropriate to engage the new non-transferring employees and to inform them that the application had been made to the Commission with a view of having them covered by the Downer EA. According to Ms Freeman, the two employees indicated that they wanted to be paid the same as other employees.[19] The employees were provided with the opportunity to ask questions and to provide any further feedback regarding the application.[20] None was forthcoming.[21]
Transfer of business
Section 311 of the Act sets out the circumstances in which a transfer of business occurs.
Section 312 of the Act indicates that a ‘transferable instrument’ includes ‘an enterprise agreement that has been approved by the FWC’.
The Applicant submitted that the work carried out by the transferring employees for the Applicant was the same, or substantially the same, as the work that they carried out for Downer within the three months prior to their employment ending with Downer and commencing with the Applicant.[22] The evidence of Mr Leary supports this contention.
The Applicant asserts that there has been a transfer of business within the meaning of s 311(1) of the Act. It contends that the transferring employees:
a) ceased employment with Downer as required by s 311(1) on or by 20 June 2023;
b) commenced employment with the Applicant on 21 June 2023, this being within the three months prescribed by s 311(1)(b);
c) perform the same or substantially the same work for the Applicant as they did for Downer as required by s 311(1)(c); and
d) there has been a transfer of assets between Downer/Downer Group and the Applicant as per s 311(3) of the Act.
I am satisfied that there was a transfer of business and that the transferring employees transferred to the Applicant under the terms of the Act. I am, in addition, satisfied that the Downer EA is a transferable instrument[23] to which this application relates, and it is evident that the Applicant is the new employer. As such, I consider the Applicant has standing to make the application under s 319(2)(a).
Legislative framework regarding transferable instruments
Section 314 of the Act makes provision for a transferable instrument to automatically cover non-transferring employees in certain circumstances. It provides:
314 When 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).
The Applicant is covered by the Award, which is a modern award within the meaning of s 314(1)(d) of the Act. Therefore, the coverage of the Downer EA to the non-transferring employees, as contemplated by s 314, does not operate in relation to those employees.
However, the operation of s 314 is subject to s 319, which allows for the Commission to make an order notwithstanding the provisions of s 314, that a transferable instrument covers non-transferring employees.
Section 319(1) provides:
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.
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.
Consideration of factors in s 319(3)
The discretion to make the order sought by the Applicant under s 319(1)(b) of the Act will only be exercised after taking into account the matters set out in s 319(3) of the Act. These factors, which must be read having regard to the objects of the Part, are intended to enable the Commission to balance appropriately the protection of employees’ entitlements under certain instruments with the need for some flexibility to depart from the default rules about coverage of instruments following a transfer of business.[24] I now deal with each of the matters under s 319(3) of the Act.
Views of the new employer – s 319(3)(a)(i)
Expanding upon the information detailed in the background of this Decision, the Applicant supports the application. Mr Leary gave evidence that were the Award to cover and apply to the new non-transferring employees instead of the Downer EA, then it would create additional costs and pressure on the Applicant by way of the necessity to administer two payroll processes for the same workforce.[25] Further, he considered that if part of the same workforce were paid under the Award, in circumstances where the Downer EA provided superior terms and conditions, this could lead to the following difficulties:
a) difficulty in attracting employees, especially in remote locations;
b) difficulty in retaining employees, who can earn better money in other roles;
c) employee dissatisfaction; and
d) the creation of uncertainty and confusion amongst operational line managers who would be forced to manage or supervise a workforce under different rules.[26]
According to Mr Leary, the Downer EA made with the RTBU works well for the Applicant’s business, with transferring employees working for several of the Applicant’s clients in both metropolitan and regional areas.[27] Mr Leary observed that most tender processes require information to be provided by proponents about their industrial arrangements.[28] In civil infrastructure and rail sectors, being able to provide industrial certainty was important for the Applicant when bidding for work, and having an in-term enterprise agreement can be important for clients or prospective clients, said Mr Leary.[29]
It is self-evident that having made the application the Applicant is supportive of the orders sought being granted. Notwithstanding, the evidence relied upon by the Applicant also supports the making of the proposed orders.
Views of the employees who would be affected by the Order – s 319(3)(a)(ii)
At the time of making the application to the Commission, there were no new non-transferring employees.
However, insofar as it is relevant, the Applicant submitted that since that time it had employed two non-transferring employee who would be affected by the order sought. It had communicated with the two non-transferring employees about the application made under s 319 and were, for the time being, affording those employees rates of pay in accordance with the Downer EA.[30] The Applicant stated whilst the non-transferring employees were provided with information about the application and offered to opportunity to ask questions or provide feedback, they had not exercised that option and simply communicated that they wished to be paid the same as their counterparts.
Whether any employees would be disadvantaged by the Order – s 319(3)(b)
The Applicant observed that the rates of pay provided by the Downer EA are superior to those provided in the Award, therefore the non-transferring employees would not be disadvantaged. In this respect it is observed that the Applicant provided at Annexure I of its Outline of Submissions, a comparison table between the rates of pay under the Downer EA in comparison to the Award. That table demonstrates that the terms and conditions under the Downer EA, and in particular the monetary entitlements afforded to employees covered by the Downer EA, are substantially better than the Award. Furthermore, employees covered by the Downer EA receive project allowances of between $2.00–$9.00 per hour, underpinned by clause 15.3 of the Downer EA. In the circumstances, I consider this factor weighs positively toward the granting of the proposed orders.
The nominal expiry date of the agreement (s 319(3)(c))
The Downer EA has a nominal expiry date of 1 November 2024.[31] The Applicant states that if the Commission makes the order sought, the non-transferring employees will have the benefit of established terms and conditions of employment set in place until 2024.
Productivity – s 319(3)(d)
Having considered the Applicant’s evidence and submissions, particularly the evidence of Mr Leary and Mr Brady, I am persuaded that there will be no negative impact on productivity if the order sought is made. In contrast, it would seem that the administrative and operational procedures of the Applicant would run more efficiently if one industrial instrument applied consistently to each non-transferring employee, and there would be less risk of disharmony in the workplace.
Economic disadvantage – s 319(3)(e)
The Applicant pressed, through the evidence of Mr Brady, that it would not incur significant economic disadvantage as a result of the proposed order being granted. However, it noted that it would suffer some disadvantage should the order not be granted. Mr Brady noted that where the pricing of tenders is based on industrial instruments, it is important that the rates or terms and conditions are reflective of the terms of the industrial instruments.[32] Mr Brady said it would make the pricing and delivery of works more difficult where two industrial instruments set different labour conditions.[33]
In short, I am satisfied that the Applicant would not incur significant economic disadvantage as a result of the transferable instrument covering it.
Degree of business synergy – s 319(3)(f)
The Applicant submitted that the Downer EA and the Award provide different terms and conditions in several key respects, and the degree of business synergy that is lacking, between the Downer EA and the Award, was not inconsequential. Mr Leary’s Second Witness Statement referred to the fact that the Downer EA has been negotiated with employees and their representatives (i.e. the RTBU) and reflects the business and operational needs of the business. Mr Leary provided the example of ordinary hours of work where the Downer EA provides for a longer span of ordinary hours, which is more suitable to business operations.
The Applicant further submitted that the degree of business synergy is increased where all the employees are covered by the same enterprise agreement, compared to the alternative scenario in the present matter, where one group of employees could be covered by the Downer EA, and others only by the Award, even though the employees do the same work.
If the proposed order is granted, it will, in my view, confirm a single framework of regulation that has been negotiated and approved in the same general context in which it has applied and will continue to apply. This will likely enhance the degree of synergy that exists within this part of the Applicant’s business.
Public interest – s 319(3)(g)
The public interest in this context is influenced by the objects of this Part of the Act in s 309 and those adopted by the Act more broadly.
It is not apparent that it would be against the public interest to issue the order sought. The evidence before me points to the proposed order allowing for non-transferring employees to be afforded the benefit of superior terms and conditions of employment under the Downer EA than they would otherwise receive if covered by the Award.
This may lead to a conclusion that the public interest in this matter is served by facilitating arrangements that permit the maintenance of the presently approved employment conditions that apply to the transferring employees to extend to the non-transferring employees, pending the making of any new instrument that might apply in the years to come.
Conclusion
I have considered the material provided by the Applicant in support of its application and the matters set out in ss 314 and 319 of the Act. I am satisfied the materials provided by the Applicant, when considered against the matters set out in s 319(3) of the Act, support the making of the Order.[34]
In accordance with s 319(4) of the Act, the Order will not come into operation in relation to each non-transferring employee until the later of the following:
a) the time when the non-transferring employee starts to perform the transferring work for the new employer; or
b) the day on which the Order is made.
DEPUTY PRESIDENT
Matter determined on the papers.
[1] AE509424
[2] First Witness Statement of Adam Leary, [3] (First Statement Leary).
[3] Ibid annexure AL-1; Second Witness Statement of Adam Leary, [6]–[7] (Second Statement Leary).
[4] First Statement Leary (n 2) [21].
[5] Ibid [13].
[6] Ibid annexure AL-3.
[7] Ibid [20].
[8] Ibid annexure AL-3.
[9] Ibid [16].
[10] Ibid [24].
[11] PR764427.
[12] Form F40 – Application for orders in relation to a transfer of business (Application).
[13] Witness Statement of Ashleigh Freeman, [12(a)] (Freeman Statement).
[14] Ibid [12(b)–(c)].
[15] Ibid [12(e)].
[16] First Statement Leary (n 2) [14]–[19].
[17] Ibid annexure AL-4.
[18] Ibid
[19] Freeman Statement (n 13) [25(d)].
[20] Ibid [25(c)].
[21] Ibid [25(f)–(g)].
[22] Application (n 12) [2.3(7)].
[23] Fair Work Act 2009 (Cth) s 312(1)(a).
[24] Explanatory Memorandum, Fair Work Bill 2008 (Cth) [1259].
[25] Second Statement Leary (n 3) [10].
[26] Ibid [11].
[27] Ibid [12].
[28] Ibid [15].
[29] Ibid.
[30] Freeman Statement (n 13) [24].
[31] Downer EDI Works Pty Ltd [2020] FWCA 5850, [3].
[32] Witness statement of Cormac Brady, [15].
[33] Ibid [16].
[34] PR764427.
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