DTR Holdings Pty Ltd

Case •

[2023] FWC 3141

•

5 DECEMBER 2023
[2023] FWC 3141

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.319 - Application for an order relating to instruments covering new employer and non-transferring employees

DTR Holdings Pty Ltd

(AG2023/4440)

COMMISSIONER LIM

PERTH, 5 DECEMBER 2023

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

  1. DTR Holdings Pty Ltd (Applicant or DTR Holdings) has applied to the Fair Work Commission pursuant to s 319 of the Fair Work Act 2009 for an order in relation to a transfer of business.

  1. The application arises in the context of a transfer of business between Pressure Fresh Australia[1] (PFA) and DTR Holdings. PFA is an associated entity of DTR Holdings.

  1. DTR Holdings seeks an order for the Pressure Fresh Australia Pty Ltd Enterprise Agreement 2023[2] (PFA Agreement) to cover non-transferring employees of DTR Holdings who perform, or are likely to perform, work in the horticultural industry.

  1. If the order is not granted, the non-transferring employees will continue to be covered by the DTR Holdings Pty Ltd Certified Agreement 2004 (DTR Agreement)[3].

  1. In support of the application, DTR Holdings provided the witness statement of Geoff Fisher, Chief Financial Officer for DTR Holdings.

  1. Having considered all of the factors set out in s 319, I am of the view that it is appropriate and not contrary to the public interest to make the order sought.

  1. Detailed reasons for my decision follow.

Background

  1. DTR Holdings operates in the horticultural industry. It produces and processes chillies at its farms.

  1. PFA also operates in the horticultural industry, but at a different location to DTR Holdings.

  1. PFA employees are currently covered by the PFA Agreement. The PFA Agreement was approved by Deputy President Dean on 15 June 2023.

  1. On 30 October, 17 PFA employees transferred their employment to DTR Holdings. These employees still perform the same type of horticultural work that they engaged in at PFA.

  1. On 13 November 2023, two meetings were held with DTR Holdings’ employees to notify them of this transfer. Present at this meeting was:

  • DTR Holdings CEO, Allan Bryant;

  • DTR Holdings Group Operations Manager, Andrew Halpin; and

  • 111 employees of DTR Holdings.

  1. Mr Halpin subsequently held further meetings with individual work teams over 14, 16 and 17 November 2023.

  1. At these meetings, Mr Bryant and Mr Halpin told employees that DTR Holdings intended to seek an order pursuant to s 319(1)(b) of the Act so that the PFA Agreement would also apply to all of the DTR Holdings employees who had not transferred across from PFA.

  1. At the meetings, DTR Holdings gave a commitment that employees’ terms and conditions of employment would not be worse off and that any transfer to the PFA Agreement would not see any employees suffering any reduction to any of the terms and conditions of their employment.

  1. The Applicant’s employees were invited to express their views via email on the proposed transfer of the PFA Agreement to their employment.

  1. On 13 November 2023, DTR Holdings also sent the below letter to its employees:

“13 November 2023

To:      All DTR Staff

As you are aware, all DTR employees are covered by the DTR Holdings Pty Ltd Certified Agreement 2004 (No CA 117 of 2004). As we notified to all staff on 5th June 2023, the Federal Government commenced “sunsetting” of this agreement on 7th December 2022 and with the end date being 7th of December 2023.

This enterprise agreement has provided great stability and above award conditions for all our DTR employees. It is law that an employee covered by an enterprise agreement must be better off than if they were not covered by the enterprise agreement.

I wish to assure all employees that during this time, none of your existing work conditions will be negatively impacted. This means hours of work and hourly rates of pay will continue on the same basis you have been receiving.

We feel it is better for our employees to be covered by an enterprise agreement in order to help maintain and protect the conditions that you have been working to currently. Employees with another company within our Austchilli Group, Pressure Fresh Australia Pty Ltd (PFA), are covered by the Pressure Fresh Australia Pty Ltd Enterprise Agreement 2023 (PFA Agreement). This is an enterprise bargaining agreement that was recently approved by the Fair Work Commission on 15 June 2023.

To help standardise all employment across the Austchilli Group, we want to apply to the Fair Work Commission for an order to apply the PFA Agreement to all DTR employees. This means that if an order is granted, your employment conditions will be governed by the PFA Agreement.

We are able to make this application to the Fair Work Commission because recently several PFA employees transferred their employment to DTR and this means that a “transfer of business” has occurred within the meaning of Part 2-8 of the Fair Work Act 2009 (Cth) (FW Act). This means that the PFA Agreement will continue to apply to those transferring workers and to DTR.

DTR intends to make an application to the Fair Work Commission for this order. Before doing so it would like to obtain the views of its existing staff. Particularly, if you wish to give any views then please do so by return email by no later than 4pm, 17 November 2023. A copy of the PFA Agreement is attached for your reference.

All employees can rest assured that there will be no reduction in their current pay or conditions if the order is granted by the Fair Work Commission.

Otherwise, if you have any queries, then please do not hesitate to contact me.

Yours sincerely,

Geoff Fisher CFO”

  1. No DTR employee has provided any objection.

  1. The DTR employees are currently covered by the DTR Agreement. The DTR Agreement is a ‘zombie agreement’ and will sunset on 7 December 2023. After that, the DTR employees will be covered by the Horticulture Award 2020.

Relevant legislation

  1. Part 2-8 of Chapter 2 of the Act describes when a transfer of business occurs. Section 312(1) provides for the transfer of enterprise agreements, certain modern awards and certain other instruments if there is a transfer of business from one employer to another employer.

  1. Section 311 of the Act relevantly provides:

“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).

Meaning of transferring employee

(2)  An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.

Transfer of assets from old employer to new employer

(3)  There is a connection between the old employer and the new employer if, in accordance with an arrangement between:

(a)  the old employer or an associated entity of the old employer; and

(b)  the new employer or an associated entity of the new employer;

the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):

(c)  that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and

(d)  that relate to, or are used in connection with, the transferring work.

Old employer outsources work to new employer

(4)  There is a connection between the old employer and the new employer if the transferring work is performed by one or more transferring employees, as employees of the new employer, because the old employer, or an associated entity of the old employer, has outsourced the transferring work to the new employer or an associated entity of the new employer.

New employer ceases to outsource work to old employer

(5)  There is a connection between the old employer and the new employer if:

(a)  the transferring work had been performed by one or more transferring employees, as employees of the old employer, because the new employer, or an associated entity of the new employer, had outsourced the transferring work to the old employer or an associated entity of the old employer; and

(b)  the transferring work is performed by those transferring employees, as employees of the new employer, because the new employer, or the associated entity of the new employer, has ceased to outsource the work to the old employer or the associated entity of the old employer.

New employer is associated entity of old employer

(6)  There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employed by the new employer.

  1. Sections 317 and 319 of the Act provide:

“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.

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.

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.

Transfer of business

  1. I am satisfied that there will be a transfer of business from PFA to the Applicant and that the Applicant is a “new employer” pursuant to s 311(1) of the Act. This is because:

  • The employment of the transferring employees terminated on 30 October 2023 when they commenced their employment with DTR: s 311(1)(a).

  • The transferring employees were employed by DTR within three months of the termination: s 311(1)(b).

  • The work that the transferring employees perform for DTR is the same or substantially the same as the work they performed for PFA: s 311(1)(c).

  • There is a connection between PFA and DTR: s 311(1)(d). This is because PFA and DTR are associated entities: s 311(6).

Is there an instrument that may transfer?

  1. The PFA Agreement is an enterprise agreement that was approved by the Commission on 15 June 2023. It is therefore a transferable instrument pursuant to s 312(1)(a) of the Act.

  1. Section 313 of the Act provides that the PFA agreement covers DTR and the transferring employees, subject to any order of the Commission made under s 318 of the Act. I am not aware of any such order.

  1. Unless an order is made pursuant to s 319 of the Act, s 314 provides that the PFA Agreement will not cover any non-transferring employees as the DTR Agreement (and the Horticulture Award 2020 after 7 December 2023) covers DTR and any non-transferring employees.

Has an application been made in accordance with s.319(2)?

  1. The requirements of s 319(2) have been met as DTR, the new employer of the transferring employees, made the application on 16 November 2023.

Should the order be made?

  1. DTR seeks an order that the PFA Agreement will cover all non-transferring employees of DTR who perform, or are likely to perform, work in the horticultural industry. I will now consider the matters in s 319(3) that I must take into account in deciding whether to grant the order.

Section 319(3)(a)(i) – the views of the new employer

  1. DTR is the new employer and is the applicant in this matter. DTR is clearly in favour of the order being granted. This factor weighs in favour of granting the order.

Section 319(3)(a)(ii) – the views of the employees who would be affected by the order

  1. The consultation undertaken with the DTR employees who would be affected by the order is detailed at [12] – [18] of this decision.

  1. I am satisfied that the relevant DTR employees have been informed of what the order would entail for them, and I am satisfied that no objections have been raised. This weighs in favour of granting the order.

Section 319(3)(b) – Whether any employees will be disadvantaged by the order in relation to their terms and conditions

  1. The DTR employees are covered by the DTR Agreement. The DTR Agreement was approved in 2004 and nominally expired in 2012. The rates of pay in the DTR Agreement are outdated and fall well short of the Horticulture Award 2020.

  1. The PFA Agreement was approved earlier this year in June, and it was found to be better off overall than the Horticulture Award 2020.

  1. Based on the above, I am satisfied that there will be no disadvantage to the non-transferring employees. This is a factor that weighs in favour of granting the order.

Section 319(3)(c) – if the order relates to an enterprise agreement, the nominal expiry date of the agreement

  1. The PFA Agreement’s nominal expiry date is 14 June 2027.

  1. DTR submits that because of this, there will be no opportunity to renegotiate an agreement with the transferred PFA employees for a significant period of time. I accept this submission and find that this weighs in favour of granting the order.

Section 319(3)(d) – whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace

  1. DTR submits that having two different sets of industrial instruments will have a negative impact on the productivity of the business. I accept this submission and finds that it weighs in favour of granting the order.

Section 319(3)(e) – whether the applicant will incur significant economic disadvantage

  1. Mr Fisher’s evidence is that the order would have no negative impact on DTR. I accept this evidence and find that this weighs in favour of granting the order.

Section 319(3)(f) – degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer

  1. DTR made the submission that they will achieve a degree of synergy by having all its employees performing similar work, including non-transferring employees, covered by the one industrial instrument. This does not address s 319(3)(f), which requires consideration of synergy between the PFA Agreement and the DTR Agreement.

  1. Accordingly, I make no findings in relation to s 319(3)(f).

Section 319(3)(g) – public interest

  1. DTR submits that there are no public interest considerations that arise in making the order.

  1. I find that it is in the public interest to have a recently approved enterprise agreement replace a zombie agreement.

Conclusion and order

  1. Having considered the matters in s 319(3), I am satisfied that the following Order should be made:

Pursuant to s 319(1)(b) of the Fair Work Act 2009 (Cth), the Pressure Fresh Australia Pty Ltd Enterprise Agreement 2023 (the Agreement) covers non-transferring employees who perform or who are likely to perform the transferring work covered by the Agreement, as employees for DTR Holdings Pty Ltd (the Applicant), and who are employed in roles that fall within the classification set out in the Agreement.

  1. In accordance with s 319(4), the Order will take effect on the later of:

  • the day on which the order is made; or

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

  1. An Order to this effect will be issued separately.[4]

COMMISSIONER

Hearing details:

Decision on the papers


[1] ACN 126 939 268.

[2] AG2023/1725.

[3] No CA 117 of 2004.

[4] PR768784

Printed by authority of the Commonwealth Government Printer

<PR768783>

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