Eastcoast Management Services Pty Ltd

[2013] FWC 8442

[2013] FWC 8442

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.319—Transferable instrument

Eastcoast Management Services Pty Ltd
(AG2013/7127)

COMMISSIONER SIMPSON BRISBANE 14 NOVEMBER 2013

Application for an order re instruments covering new employer and non transferring employees - Section 319 considered - Application dismissed.

[1] An application was made under section 319 of the Fair Work Act 2009 (the Act) by Eastcoast Management Services Pty Ltd (the Applicant) seeking an order that the Kensington Gardens Management Services Pty Ltd Greenfields Agreement 2007 (the Agreement) cover all non-transferring employees of the Applicant.

[2] The Applicant filed an affidavit with its application from its General Manager Mr Peter Lollo that explained a partnership called Kensington Gardens Lifestyle Estate operates two retirement villages and has previously used a labour hire management company, Kensington Management Services Pty Ltd (which is now known as Wilson and Curry Pty Ltd) to engage labour. In February 2013, that company was placed in Voluntary Administration.

[3] As a result of that company being placed in Voluntary Administration, its agreement to supply labour to the retirement village was cancelled, and Eastcoast Management Services Pty Ltd engaged the staff previously engaged by Wilson Curry Pty Ltd. The Applicant said these employees were covered by the Agreement. According to the Applicant the labour hire companies are associated entities, and the partnership is made of up of two corporate entities that are also associated entities of the labour hire companies. Eastcoast Management Services Pty Ltd seeks to be able to continue to supply labour including transferring employees and new employees to the retirement villages paid on the Agreement.

[4] Mr Lollo’s affidavit set out that a Deed of Company Arrangement was entered into by Wilson and Curry Pty Ltd. The effect of the Deed of Company Arrangement is that the control of the company has been handed back to the original directors. It is said it would now be possible for Wilson Curry Pty Ltd to start employing new staff to work at the retirement villages, however it is the preference of the operator to have only one deal with the one company. Accordingly the Applicant seeks an order that the Agreement applies to all employees transferring and non-transferring to allow it to continue to supply labour to the retirement villages.

[5] The matter was listed for hearing on 26 July. At the hearing the Applicant submitted that it expected in practical terms only a small number of casual bar staff employed from time to time at bars located in each of the retirement villages would be covered by the Agreement if the order were made. The Applicant likened the arrangement to that of a social club, where a bar was located in the communal area in the retirement village and no food is served.

[6] The Applicant’s initial submission was that this classification was the only classification for which the order was needed because its caretakers were covered by a separate recently approved enterprise agreement, personal carers and nurses would not be employed in the retirement villages, cleaning work is outsourced and it was understood by the Applicant cooking staff were not employed either but this would need to be confirmed. It was put by the Applicant that bar staff were award free as there was no such classification in the Aged Care Award 2010 and no other Modern Award applied to such work performed in a retirement village.

[7] The Applicant was asked to provide further submissions regarding the issues of firstly, whether the arrangement was a transfer of business, secondly what it believed was the modern award coverage applying to work intended to be covered by the application, and thirdly the appropriateness of making an order in circumstances where the Applicant only required the order because of one non transferring classification.

[8] On 5 August the Applicant provided a further written submission addressing the first question advising the transfer was part of an internal restructure, and the relevant entities were associated entities. The Applicant made further submissions on the second issue to support its argument that any bar staff would be award free. On the third question the Applicant submitted the language in section 319 contemplates an order applying to an individual employee.

[9] On 6 August 2013 further correspondence was received from the Applicant stating that, contrary to the position put at the hearing on 26 July it now sought an order pursuant to Section 319 to cover non-transferring employees engaged as kitchen hands, chefs, cooks, head cooks, gardeners and cleaners in addition to bar attendants, but not secretaries, personal carers or caretakers.

[10] At a further hearing on 25 October 2013 the Applicant accepted that the further classifications of non-transferring employees it sought for the order to cover would otherwise be covered by the Modern Aged Care Award if employed by the Applicant.

[11] Section 319(3) of the Fair Work Act 2009 says 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.

[12] In terms of the considerations under Section 319(3) I deal with them each in turn.

Section 319(3)(a)

[13] The new employer or likely new employer supports the application. I have no evidence before me concerning the views of employees who would be affected by the order. The Applicant said it was unable to make a submission on this point as it doesn’t have any new employees at this stage.

Section 319(3)(b)

[14] The Applicant argues that if the order is not granted then Wilson and Curry Pty Ltd is in a position to continue to employ all new employees under the terms of the existing Agreement and accordingly there would be no disadvantage to new employees in those circumstances. It appears this submission is made on the basis that if the Commission does not grant the order than Kensington Gardens Lifestyle Estate, the operator of the two retirement villages may withdraw from its agreement with the Applicant to supply labour, and make a new arrangement with Wilson and Curry Pty Ltd to again supply labour to it. This describes a possible future scenario, it is not known. It is known however that if the order is not granted and the Applicant is not displaced as the supplier of labour then any future employees engaged by the Applicant in the classifications of kitchen hands, chefs, cooks, head cooks, gardeners and cleaners would be covered by the Modern Aged Care Award.

[15] The Applicant did not make any submissions comparing the conditions of the Agreement with the Modern Aged Care Award. The Agreement provides at Clause 4.2 as follows:

“4.2 To avoid any doubt this Agreement replaces and operates to the exclusion of any or all clauses which fall within the definition of “protected conditions” in accordance with Schedule 8 of the Act or any other part of the Act which would have otherwise applied to the employment of the Employees by operation of the Act. Protected conditions mean Protected Award Conditions. Protected Notional Conditions and Protected Preserved Conditions as those terms are defined in the Act. Protected conditions, as defined, include but are not limited to:-

(a) rest breaks;

(b) incentive-based payments and bonuses;

(c) annual leave loadings;

(d) observance of days declared by or under State or Territory to be observed generally within that State or Territory, or a region of that State or Territory as public holidays by Employees who work in that State, Territory or region, and entitlements of Employees to payment in respect of those days;

(e) days to be substituted for, or a procedure for substituting days referred to in paragraph (d);

(f) monetary allowances for:-

(i) Expenses incurred in the course of employment; or

(ii) responsibilities or skills that are not taken into account in rates of pay for employees; or

(iii) Disabilities associated with the performance of particular tasks or work in particular conditions or locations;

(g) loading for working overtime or for shift work;

(h) penalty rates;

(i) outworkers conditions; and

(j) any other matter referred to in the regulations of the Act as amended from time to time.”

[16] Further the Agreement provides that permanent employee’s ordinary hours are averaged over a 12 month period. In addition an employee could be required to perform reasonable additional hours without penalty. Clause 8 provides the spread of hours may be worked over any time during the week from midnight Monday to midnight the consecutive Monday.

[17] Clause 10 of the Agreement provides the rates of pay in the Agreement are inclusive of all penalties, disabilities, loadings and allowances associated with the work including (but not limited to) rest breaks, incentive based payments and bonuses, leave loadings, public holiday loadings, monetary allowances for expenses incurred in the course of employment, responsibilities or skills that are not taken into account in rates of pay for employees or disabilities associated with the performance or particular conditions or locations, loadings for working overtime or for shift work, penalty rates and outworker conditions.

[18] The Agreement says no employee will be financially worse off as a result of the classification structure contained in Schedule A when compared to any entitlement that an employee may have had pursuant to a preserved Australian Pay and Classification Scale. The rates of pay contained in Schedule A of the Agreement are expressed at each classification to be within a minimum and maximum range. The minimum figure is below current minimum modern award rates. The maximum figure in some classifications is also below current minimum award rates for the relevant classification.

[19] The Applicant said it did not engage employees as a secretary, nurse or personal carer. However if the order was granted nothing would prevent the Applicant in the future deciding to employ new non transferring employees in those classifications under the Agreement. If this occurred it would create a significant disadvantage for such employees if they were engaged under the Agreement instead of under the appropriate modern award that would otherwise apply. This concern, in addition to the significant potential disadvantage for other future non transferring employees if ever engaged under the other classifications in the Agreement weights against the granting of the order as sought.

Section 319(3)(c)

[20] It was requested at the hearing on 25 October that the Applicant advise the Commission of the nominal expiry date of the Agreement as it could not be determined from a copy of the Agreement provided. The Applicant provided information to the Commission on 13 November 2013 including a Declaration Receipt from the Workplace Authority confirming the Workplace Authority received a declaration from the employer on 3 August 2007. The Declaration Receipt advised an employer Greenfield agreement started operating from the date of lodgement. The Agreement is described in its title as a 2007 Agreement and at clause 3.1 states that it is to remain in force for a period of twelve months. The material provided by the Applicant indicates that the Agreement would have reached its nominal expiry date in August 2008 which would mean it reached its nominal expiry date over 5 years ago.

[21] The Agreement was approved under the provisions of the Workplace Relations Act 1996 (Cth). Pursuant to Schedule 3, item 2 of the Fair Work (Transitional and Consequential Amendments) Act 2009 (Cth) the Agreement continues as a transitional instrument. The Declaration Receipt from the Workplace Authority stated that all employer greenfields agreements lodged after 7 May 2007 must pass a Fairness Test. The declaration went on to state that the Workplace Authority will contact the employer about the Fairness Test. The submission from the Applicant does not provide any further information concerning whether such contact was made or if any other issues arose out of the application of the Fairness Test at the time.

Section 319(3)(d)

[22] In terms of the question of whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace, the Applicant argues if it is not covered by the Agreement it may not be able to transfer the existing staff. That submission is directed to the question dealt with above concerning possible future contractual preferences of the operator. The Applicants submissions did not directly address the matter of whether the Agreement would have a negative impact on the Applicants productivity.

Section 319(3)(e)

[23] In regard to the question of whether the Applicant would incur significant economic disadvantage as a result of the transferable instrument covering it, the Applicant submitted there would be no economic disadvantage if the order is granted. This would appear to be so given the Agreement is less generous then the terms and conditions in the otherwise applicable Modern Award.

Section 319(3)(f)

[24] The Applicant applies the Agreement to its current employees who were former employees of the entity now known as Wilson and Curry Pty Ltd. The Applicant said that a new separate Agreement had been approved for its caretaker employees. It has been approved under the Fair Work Act 2009. That caretakers Agreement was made under a different legislative system to the Agreement for which the order is sought. To that extent that Agreement was required to pass the BOOT there is not a synergy between the caretakers Agreement and the Agreement for which the order is sought.

Section 319(3)(g)

[25] In regard to the public interest the Applicant referred to the decision in Optus Administration Pty Ltd v Australian Municipal, Administrative and Clerical Services Union; Electrical, Electronic, Energy, Information, Postal and Plumbing and Allied Services Union of Australia - Communication Division[2010] FWA 3567 where it was stated that ensuring the efficient and effective operation of the business was a matter in the public interest. It was also said it was not in the public interest for a business to be covered by a multiple of industrial arrangements which can create disparity in the workforce.

[26] It would appear there is at least some disparity happening at the moment. The Applicant engages employees under two different industrial instruments made under different legislative schemes. Further it is would appear apart from the Applicant itself operating as a labour hire entity inside the retirement villages operated by Kensington Gardens Lifestyle Estate there are other employers engaging cleaning staff on a contract basis, and the Applicant said secretarial employees were not employed by it.

[27] The granting of the order would create an ability otherwise not available for the Applicant to continue to pay non transferring employees under a transitional instrument that passed its nominal expiry date over 5 years ago and in many respects is significantly inferior to the modern award safety net established under the current legislative system. The public interest consideration in Section 319(3)(g) does not favour the granting of the order in those circumstances.

[28] Having taken into account all of the factors to be considered in Section 319(3) I am not satisfied the application for an order that the Agreement cover all non-transferring employees should be granted.

[29] The Agreement itself contains at Schedule A eleven different classifications. The Applicant made a submission in the alternative that if the Commission was against the Applicants primary position, then the Commission should consider granting an order to the extent that it would apply to the bar attendants only.

[30] The alternative position was put on the basis that the casual bar attendants should be viewed in a different light as in a retirement village setting their work is not covered by a Modern Award. The Applicants submission indicated the persons proposed to be covered by the order would be a small number of casuals who are residents of the retirement villages and who operate a small bar for a few hours a day, it is in a communal area in the retirement villages and where no food is served. The Applicant indicated at one point that the work could just as easily be performed by the residents on a volunteer basis but the Applicant preferred the persons be paid.

[31] Given the very narrow and limited role proposed to be covered by such an order in the context of the wider range of classifications under the Agreement that would be excluded from the order, the purpose of orders under section 319, my findings above going to the Applicants primary submission, and having regard to those findings to the extent that they pertain to the alternative submission, I am not satisfied the alternative order should be made. Having declined to make an order in the form of the primary or alternative positions put, the application is dismissed.

COMMISSIONER

Appearances:

Mr C Mossman (Macpherson+Kelley Lawyers) for the Applicant.

Hearing details:

2013.

Brisbane:

26 July;

25 October

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