Eastern Australia Airlines Pty Limited

[2013] FWC 8759

[2013] FWC 8759

FAIR WORK COMMISSION

DECISION

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

Eastern Australia Airlines Pty Limited
(AG2013/11122)

VICE PRESIDENT WATSON SYDNEY, 10 DECEMBER 2013

Application in relation to a transfer of business - transferrable instrument - application that transferrable instrument not cover transferring employees –conditional offer of employment - application not opposed - Qantas Airways Limited - Fair Work Act 2009 ss.311, 312, 317 and 318.

Introduction

[1] This decision concerns an application by, Eastern Australia Airlines Pty Limited (Eastern) (the applicant) for an Order under s.318 of the Fair Work Act 2009 (the Act) which relates to instruments covering a new employer and transferring employees in the context of a transfer of business.

[1] The application concerns, Mr Leighton Davis who is employed as a Customer Service Agent by Qantas Airways Limited (Qantas) under the Australian Services Union (Qantas Airways Ltd) Agreement 10 (the Qantas Agreement). The terms of the Order are sought under s.318(1) and provide that in relation to Mr Davis, where there is a transfer of business from Qantas to Eastern within the meaning of Division 2, Part 2-8 of the Act, the Qantas Agreement will not cover Eastern.

[2] For the purpose of s.311(6) of the Act, Eastern is a subsidiary of Qantas, as that term is defined by s.50 of the Corporations Act 2001.

Background

[3] Eastern is a regional airline operation trading under the name QantasLink.

[4] The Eastern Australia Airlines Pty Limited Group 2 Ground Staff Enterprise Agreement 2013 (the Eastern Agreement) regulates pay and conditions of Eastern employees performing a range of airport ground operations duties across Eastern’s operations in New South Wales, including Operations Support Officer Positions.

[5] Eastern intends to offer Mr Davis the Operations Support Officer Position, subject to it obtaining an order from the Fair Work Commission (the Commission) that any industrial award or agreement that applies at Qantas will not cover Mr Davis or Eastern when he commences his position at Eastern.

[6] Eastern submits that the work Mr Davis would be required to perform as an Operations Support Officer with Eastern is the same or substantially the same, as the work which is involved in his current position as a Customer Service Agent at Qantas.

[7] Qantas and the Australian Services Union (ASU) are parties to the Sunstate Agreement.

[8] The ASU has been served with a copy of the application. The Commission has not received any objection to this application from the ASU.

The relevant legislation

[9] Part 2-8 of the Act describes when a transfer of business occurs and 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.

[10] Section 311(1) contains the definition of transfer of business in a wider manner than the ordinary English or legal meaning of the term. The definition is:

“(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).”

[11] Sections 317 and 318 of the Act relevantly provide:

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

This Division provides for 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.

318 Orders relating to instruments covering new employer and transferring employees

Orders that FWC may make

(1) 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) 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 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.”

Transfer of the Qantas Agreement

[12] In relation to the factors set out in s.318(3) of the Act, the applicant submits that the proposed orders should be made in order to facilitate the transfer of Mr Davis and ensure the interest of the applicant is realised. The applicant submits that despite enlivening the provisions of Part 2-8 of the Act, there is no transfer of business that would cause a concern by way of a reduction in terms and conditions of employment. Rather what is taking place is a voluntary transfer of employment as distinct from a transfer of business and Mr Davis will experience similar terms and conditions of his employment with a significant improvement in his salary.

[13] Eastern submits that Mr Davis supports and consents to the orders being made and that the transfer is in his interests as it will facilitate his career aspirations. The decision to transfer between Qantas and Eastern is a decision he has made voluntarily.

[14] It is submitted, on balance, that Mr Davis will not be disadvantaged if the orders are made.

[15] If the Qantas Agreement transferred to Eastern, there would be a negative impact on the productivity of the workplace due to the need to administer different terms and conditions of employment and divergent classifications systems for employees performing the same positions by reference to different industrial instruments. The application of different terms and conditions of employment would be likely to create division amongst employees and have a diverse impact on employee morale and productivity.

[16] A transfer of the Qantas Agreement to Eastern has the potential to cause significant economic disadvantage. It could create additional administrative and financial complexity by requiring the application of different industrial instruments and work rules to employees doing the same or substantially similar work to Mr Davis.

[17] There is very little business synergy between the Qantas and the Eastern Agreements. The Qantas Agreement is reflective of Qantas’ position as a premium international and domestic airline which operates a substantially different business to that of Eastern which is a regional airline.

[18] I am satisfied that the Qantas Agreement is a transferable instrument as described in s.312(1)(d) of the Act 1 and this circumstance is a transfer of business within s.311 of the Act as commencing employment with Eastern may be regarded as the termination of employment with Qantas. The application has been made pursuant to s.318(1) of the Act. The matters that I am required to take into account when considering whether to grant an order in the terms sought are prescribed by s.318(3) of the Act, as set out above.

[19] I have considered the factors set out in s 318(3). I am of the view that it is appropriate to make orders in relation to the transfer of Mr Davis’s employment. I have given weight to the fact that Mr Davis will undertake the transfer voluntarily. It is also significant that Qantas and Eastern operate as two substantially different business; efficiency would be compromised if the Qantas Agreement was to apply to Eastern and that the transfer is conditional on the non-coverage of the Qantas Agreement not applying to Mr Davis’ employment with Eastern.

Conclusion

[20] For the reasons above I will make an order that the Qantas Agreement will not cover Mr Davis during the period of his employment with Eastern.

VICE PRESIDENT WATSON

 1 As amended by Schedule 11, item 8 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.

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