Electricity Generation Corporation T/A Verve Energy

[2014] FWC 1460

[2014] FWC 1460

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.318—Transfer of instrument

Electricity Generation Corporation T/A Verve Energy
(AG2013/12148)

COMMISSIONER WILLIAMS PERTH, 12 MARCH 2014

Transfer of instrument.

Background

[1] The applicant Electricity Generation Corporation t/a Verve Energy (Verve) and the Electricity Retail Corporation (ABN: 71 743 446 839) (Synergy) are bodies corporate established under the Electricity Corporations Act 2005 (W.A.) (the EC Act). They are wholly owned entities of the Western Australian State Government

[2] Verve and Synergy are employers covered by the Electrical Power Industry Award 2010 (the Electrical Power Award).

[3] Verve is covered by the Electricity Generation Corporation (Verve Energy) & Salaried Employees’ Enterprise Agreement 2012 [AE895307](the Verve Agreement). The classifications in the Verve Agreement were always intended to cover generation functions. There was never any intention that the classifications would cover employees performing retail functions because Verve, pursuant to the EC Act, was only empowered to perform generation work and related functions.

[4] Synergy is covered by the Synergy Enterprise Agreement 2012 [AE894900](the Synergy Agreement). The classifications of the Synergy Agreement were always intended to cover employees performing retail functions. The Synergy Agreement was never intended to cover employees performing generation functions because Synergy, pursuant to the EC Act was only empowered to perform retail work and related functions.

[5] The Australian Municipal, Administrative, Clerical and Services Union (the ASU) is covered by both the Verve and Synergy Agreements.

[6] The Western Australian Parliament passed the Electricity Corporations Amendment Bill 2013 (the EC Amendment Bill) in December 2013. The purpose of the EC Amendment Bill is to amend the Electricity Corporations Act 2005 to implement the merger of the Electricity Retail Corporation (then trading as Synergy) and the Electricity Generation Corporation (then trading as Verve Energy) effective 1 January 2014.

[7] Royal Assent was given to the EC Amendment Bill, as the Electricity Corporations Amendment Act 2013 Number 25 of 2013 (the EC Amendment Act) on 18 December 2013.

[8] The EC Amendment Act discontinues the Electricity Retail Corporation and transfers its assets, liabilities and rights in the Electricity Generation Corporation. The continuing Electricity Generation Corporation is then to be renamed the Electricity Generation and Retail Corporation trading as Synergy which will operate using the applicant’s (Verve) ABN, and therefore Verve will be the new employer (albeit under the new name of Synergy).

[9] Section 206 of the EC Amendment Act provides that a person who immediately before the merger time was a member of staff of the merging corporation becomes a member of staff of the Electricity Generation and Retail Corporation.

[10] This EC Amendment Act at section 207 expressly guarantees transferring employees will continue to be employed on their current terms and conditions.

[11] Given this background the merger is a transfer of business for the purposes of section 311(1) of the Fair Work Act 2009 (the FW Act).

[12] Synergy employees will be transferring employees within the meaning of section 311(2) of the FW Act and will continue to be covered by the Synergy Agreement, which will become a transferable instrument within the meaning of section 312 of the FW Act.

[13] The applicant does not intend to disturb the industrial arrangements of any current or transferring employees, who will remain covered by their currently applicable industrial arrangement.

[14] The applicant is seeking orders pursuant to section 319 of the FW Act regarding future employees who will be performing transferring work such that the Verve Agreement not cover these new employees and that the Synergy Agreement does cover these new employees.

The legislation

[15] The relevant section of the FW Act is set out below:

“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.”

Submissions

[16] The applicant has addressed the provisions of section 319 of the FW Act. The assertions in the applicant’s submissions set out below are I accept supported by the affidavit of Mr Jeff Sheridan (Mr Sheridan). Mr Sheridan is employed as the Manager People and Culture of the applicant, as of 1 January 2014, having transferred to the applicant on that date from the Electricity Retail Corporation where he had commenced employment in 2009.

[17] The applicant has also provided a copy of a Memorandum of Understanding (the MOU) between the Electricity Generation and Retail Corporation t/a Synergy and the ASU which forms part of the evidence in this application. Attached to and referred to in the MOU is a letter from the ASU in support of this application.

[18] The MOU also details the parties agreed position on a ‘Rollover’ of the Synergy Agreement and future agreement negotiations.

[19] The MOU will be retained on the Commission file for this application.

[20] The ASU has made submissions confirming its broad support for the applicant whilst not agreeing with all of the applicant’s submissions.

The view of the employer and employees who would be affected by the order

[21] The applicant, as the new employer, has made the application to ensure all employees performing transferring work are employed on the same terms and conditions. The applicant submits this is conducive to a harmonious and productive workplace.

[22] The orders sought are to allow the Synergy Agreement to cover new employees engaged to perform transferring work.

[23] Currently, the Synergy Agreement is a transferrable instrument that continues to apply to transferring employees. The orders sought seek to extend that coverage to new employees performing transferring work.

[24] There are currently no employees who will be affected by the order.

[25] The applicant has consulted with the ASU regarding the application. The ASU has consulted its delegates and has advised the applicant that on behalf of its delegates, the ASU supports the application.

[26] The applicant submits this factor weighs in favour of the orders sought being made.

Whether any employees will be disadvantaged in relation to their terms and conditions of employment

[27] The Synergy Agreement is significantly more beneficial than the Electrical Power Award [MA000088] (the Award).

[28] This is relevant as, should the orders not be made new employees may be covered by the Award.

[29] Accordingly, the applicant submits the making of the orders would not result in any employee being disadvantaged in their terms and conditions of employment.

[30] I note the view of the ASU is that some new employees may be covered by the Verve Agreement.

The nominal expiry date of any relevant enterprise agreement

[31] The relevant expiry dates are:

a) the Synergy Agreement - 28 February 2015; and

b) the Verve Agreement - 18 February 2016.

[32] In Reerac & Lliks Pty Ltd [[2012] FWA 7265], the Commission held that where an agreement has a significant time to run, it may be a relevant factor in favour of granting the order on the basis that it would otherwise be some time before common conditions could be established.

[33] The applicant submits the expiry dates weigh in favour of the order being granted. If the order is not granted, there will be a significant period of time where employees performing the same work will be engaged on different terms and conditions.

Whether the transferrable instrument would negatively impact workplace productivity

[34] The applicant submits that the making of the orders sought would have a positive impact on workplace productivity as it would mean existing and new employees performing the same work are on common terms and conditions.

[35] Again in Reerac & Lliks Pty Ltd, the Commission considered the impact of a transferrable instrument on productivity and noted the adoption of common working conditions across the workforce is more likely to aid productivity rather than inhibit it.

Whether the employer will incur significant economic disadvantage as a result of the transferable instrument

[36] The applicant is currently operating the ‘retail’ and ‘generation’ businesses separately, with separate systems that had been set up for the relevant agreements. Accordingly, the applicant will not suffer any economic disadvantage from the orders being made.

[37] The applicant will incur economic disadvantage if the orders sought are not made.

[38] In that event, the applicant may need to consider applying for a variation to the Verve Agreement to add classifications for retail roles. In order to do this, the applicant will need to conduct a mapping exercise to ascertain where the retail classifications align to the classifications in the Verve Agreement.

[39] This process will require a substantial amount of time, resourcing and consultation as it is not a straightforward ‘like for like’ comparison due to the different nature of retail and generation roles.

[40] I note the ASU submits some new employees undertaking “retail” functions can be adequately accommodated under the classification structure in the Verve Agreeement.

The degree of business synergy between the transferable instrument and any workplace instrument that covers the new employer

[41] The applicant submits there is little synergy between the Synergy and the Verve Agreement because they were intended to apply to very different types of work and are therefore operationally distinct.

[42] The Verve Agreement was the result of a thorough bargaining process involving the ASU and Verve employees. Its terms are appropriate to the work performed by those employees, namely the generation of electricity. The structure, terms and conditions in the Verve Agreement are reflective of an operational and ‘blue collar’ working environment.

[43] The classifications in the Verve Agreement were not contemplated to cover employees performing retail related work as this type of work was clearly outside of the prescribed functions of Verve as a statutory authority.

[44] The applicant submits that business synergy will best be achieved by maintaining the separation of the retail and generation enterprise agreements until an opportunity arises to consider common terms and conditions having regard to the future operational environment of the Applicant’s business.

The public interest

[45] The applicant submits that maintaining a harmonious and productive workplace is a matter of public interest given the employer is a state owned statutory authority engaged in generating and selling electricity to the Western Australian public.

[46] Similarly, as a statutory authority, the public interest is met by ensuring that the post merger implementation period is undertaken as efficiently as possible.

Conclusion

[47] The applicant submits that the orders sought are reasonable and appropriate and will enable the applicant to maintain an efficient, harmonious and productive workplace.

[48] In the circumstances, the relevant factors weigh in favour of the orders requested being made.

[49] The ASU submit alternative orders should be made with the difference being new employees who are classified within identified roles of the Synergy Agreement would be covered by the Synergy Agreement and new employees who do not fit within the classifications of the Synergy Agreement would be covered by the Verve Agreement.

Consideration

[50] Having considered the affidavit and other evidence provided by the applicant and the submissions addressing the respective matters the Commission is obligated to have regard for in section 319 of the FW Act and the ASU’s submissions and alternative proposal for orders my view is that the ASU’s approach will result in significant ongoing uncertainty regarding the coverage of some new employees which has the potential to be the source of disputation in the future.

[51] I am satisfied the applicant has made a compelling case in favour of the application and that the application sought should be granted by the Commission in the terms sought. An order to that effect will be issued.

COMMISSIONER

Final written submissions:

Applicant, 24 February 2014

The ASU, 6 March 2014

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