Estia Investments Pty Limited
[2023] FWC 2319
•11 SEPTEMBER 2023
| [2023] FWC 2319 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Estia Investments Pty Limited
(AG2023/2721)
| DEPUTY PRESIDENT COLMAN | MELBOURNE, 11 SEPTEMBER 2023 |
Application for orders relating to transferrable instruments
Estia Investments Pty Ltd (Estia) has made an application under s 318 of the Fair Work Act 2009 (Act) that asks the Commission to make orders in relation to transferrable instruments. The application arises in the context of Estia’s purchase from Royal Freemasons Ltd (RFL) of two residential aged care businesses known as Royal Freemasons Bendigo (the Bendigo Business) and Royal Freemasons Benalla (the Benalla Business), as well as Estia’s purchase from the trustees of the Royal Freemasons’ Homes of Victoria (Freemasons Trustees) of associated land and buildings. RFL currently owns and operates the two businesses and employs all staff. The purchases of the relevant business, assets, plant and equipment will occur pursuant to agreements between the relevant parties that were made on 31 July 2023. The completion date will be the later of 3 October 2023, the first day of the calendar month following the making of any orders under s 318 by the Commission, or the first day of the calendar month following satisfaction or waiver of all conditions precedent under the business sale agreements. From the completion date, Estia will own and operate the two businesses and employ all staff.
From on or about 11 August 2023, Estia made offers of employment to employees of RFL who work at the Benalla and Bendigo facilities. The employment of these employees with Estia will commence immediately following the date of completion date. The employees of RFL are covered by the Royal Freemasons Residential Aged Care Enterprise Agreement 2022 (Freemasons Agreement). The offers that Estia has made to employees of RFL relate to work that is essentially the same as that which they have been performing for RFL: they will continue to be employed at the aged care businesses in Benalla and Bendigo that will now be operated by Estia. The offers are not conditional on the outcome of the present application.
Estia considers that these arrangements will constitute a transfer of business for the purposes of Part 2-8 of the Act, and that, absent an order of the Commission to the contrary, the Freemasons Agreement will cover transferring employees of RFL in their employment with Estia. Estia seeks orders from the Commission that the Freemasons Agreement not cover Estia and the transferring employees and that instead such employees will be covered by the enterprise agreement that applies to Estia’s existing aged care workers, the Estia Health Victoria Enterprise Agreement 2021 (Estia Agreement).
Section 318(1) of the Act provides that the Commission may, on application by a person or organisation identified in s 318(2), 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.”
The Commission may make orders under s 318 if there is, or is likely to be, a transfer of business from an ‘old employer’ to a ‘new employer’ for the purposes of s 311 of the Act (see s 317). Having considered the information in the application and the affidavit of Mr Nicholas Gold, I am satisfied that there is likely to be a transfer of business from RFL to Estia and that the applicant is a person who is likely to be the new employer (see s 318(2)(a)), for the following reasons. First, the employment of relevant employees of RFL will terminate and within three months they will become employees of Estia (ss 311(1)(a) and (b)). Secondly, the work to be performed by the transferring employees for Estia will be the same or substantially the same as the work they have performed for RFL (s 311(1)(c)). Finally, there will be a ‘connection’ between the old employer (RFL) and the new employer (Estia) as described in s 311(3), because in accordance with an arrangement between the parties, Estia will own some or all of the assets that RFL owned or had the beneficial use of and that relate to or are used in connection with the transferring work (s 311(1)(d)).
Next it is necessary to consider s 318(3), which states that, in deciding whether to make an order under s 318(1), the Commission must take into account certain matters that are set out in ss 318(3)(a) to (g).
The views of the new employer - s 318(3)(a)(i)
Estia’s view is that the application should be granted. The company submitted that it wants to apply uniform conditions of employment to existing and transferring employees in order to ensure consistency, foster an equitable environment, and avoid unnecessary administrative costs and challenges. In particular, it wants to avoid disparities in working conditions which might cause unfairness to transferring employees who undertake the same work as other Estia employees, and to avoid the burden of administering two sets of conditions for the same work. These are sensible reasons that weigh in favour of granting the application.
The views of the employees who would be affected by the order - s 318(3)(a)(ii)
Estia submitted that it had taken reasonable steps to seek the views of the employees who would be affected by the proposed orders, and the unions that represent many of these employees, the Health Workers Union (HWU) and the Australian Nursing and Midwifery Federation (ANMF). On 1 August 2023, Estia provided employees of RFL with a letter explaining its transaction with RFL and foreshadowing the making of offers of employment. On 3 August 2023, it conducted meetings with employees at both facilities to discuss the transaction and the proposed offers of employment, and invited them to consult with it about the company’s application under s 318. On the same day, Estia sent further correspondence to the employees of RFL enclosing documents relating to the proposed transfer of employment to Estia, including a proposed application under s 318. These included a form by which employees had the opportunity to provide feedback to Estia about its s 318 application. In early August 2023, Estia sent correspondence about the transaction and the proposed transfer of employment to the HWU and the ANMF, which are covered by the Freemasons Agreement.
At a mention on 18 August 2023, I made directions that allowed employees to make submissions on the present application directly to my chambers, and ordered that Estia provide a copy of my directions to employees. I did not receive any submissions from employees. At the mention, I also made directions for the HWU and ANMF to provide any written submissions in relation to the application, which they subsequently did. As discussed further below, the unions now support the application.
In my view the transferring employees have been afforded a reasonable opportunity to express their views about the applications. None have expressed any concern about the application. I infer that those employees who are members of the HWU and the ANMF support the application.
Whether any employees would be disadvantaged by the order - s 318(3)(b)
Section 318(3)(b) requires the Commission to consider whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment. In my view this consideration is concerned with the question of whether any employees would be disadvantaged on an overall, rather than a line-by-line, basis.
Estia submitted a document comparing wages and allowances under the Estia Agreement and the Freemasons Agreement. Current wages in the Estia Agreement are higher than those in the Freemasons Agreement for all classifications except direct care workers WSG 3 year 1. From 1 November 2023, when the next wage increases will occur under the Freemasons Agreement, there will be three principal classifications of workers whose wages will be lower under the Estia Agreement than those provided under the Freemasons Agreement: direct care worker registered nurse grades 1, 2, 3A and 4B, at certain year levels; enrolled nurse levels 1 and 2 (certain year levels); and WSG groups 3 and 6 (certain year levels). From 1 July 2024, when the next wage increases occur under the Estia Agreement, one classification of worker under the Estia Agreement will receive wages lower than those in the Freemasons Agreement, namely the registered nurse grade 2 year 1.
Mr Gold said in his affidavit that Estia understood that some transferring employees would receive lower wages rates under the Estia Agreement and that in the interests of ensuring that RFL employees would not be worse off for accepting employment with Estia, the company would create a ‘separate payroll rule for affected employees and pay those employees what they would otherwise have been paid under the [Freemasons Agreement] until such time that any wage rate in the [Estia Agreement], or in a future Estia Health enterprise agreement, is greater than the wage rate in the RFL EA wage rate that applied to their comparable classification’ (the wages undertaking).
In relation to allowances and other conditions of employment, Estia submitted that the Estia Agreement generally provided better or equivalent conditions that those in the Freemasons Agreement. It listed a number of areas where this was not, or arguably not, the case, but contended that an overall comparison showed transferring employees from RFL would not be worse off under the Estia Agreement. In their submissions, the HWU and the ANMF proposed that Estia consider providing certain undertakings in relation to allowances and other conditions for transferring employees. On 7 September 2023, Estia’s solicitor advised the Commission that the parties had reached an agreed position in relation to these matters, whereby, in addition to the wages undertaking, Estia provided the following undertakings in relation to conditions as follows:
“1. Estia Health will recognise and provide the motor vehicle allowance rate for motor vehicles 35 PMU and over under the RFL EA for transferring RFL employees, until such time that the current Estia Health EA is replaced.
2. Estia Health will recognise and provide the 'Champion' allowance under the RFL EA for any enrolled nurse and/or personal care workers who are paid the 'Champion' allowance in their employment with RFL at the time their employment transfers to Estia Health, until such time that the current Estia Health EA is replaced.
3. Estia Health will recognise and provide the food services allowance under the RFL EA for any RFL employee who receives that allowance at the time their employment transfers to Estia Health, until such time that the current Estia Health EA is replaced.
4. Estia Health will provide any transferring RFL employee with early access to long service leave in accordance with clause 33(v) and (vi) of the RFL EA, that is, Estia Health will provide all transferring RFL employees with at least eight (8) years' service early access to long service leave, at half of their accrual rate ie a maximum of 0.8666 weeks per year of service. Estia Health will recognise this until such time that the current Estia Health EA is replaced.
5. Estia Health will provide transferring RFL employees with the parental leave entitlements under clause 24 of the RFL EA, until such time that the current Estia Health EA is replaced.
6. Estia Health will provide all transferring casual RFL employees with a penalty rate of 250% (inclusive of the 25% casual loading) for all overtime hours worked on a Saturday, in accordance with clause 23 of the RFL EA. This will apply until such time that the current Estia Health EA is replaced.
7. Estia Health will provide transferring casual aged care RFL employees with a penalty rate of 275% (inclusive of the 25% casual loading) for all hours worked on a public holiday, until such time that the current Estia Health EA is replaced.”
On 7 September 2023, the HWU advised the Commission that in light of the agreed undertakings, the union supported Estia’s application under s 318 of the Act. On 8 September 2023, the ANMF advised the Commission that it too supported the application. The company has confirmed that the undertakings referred to above are given to the Commission in connection with these proceedings. Estia and the unions stated that they would be content for the Commission to determine the application on the papers, and I consider that this is the appropriate course.
Having reviewed the table of conditions and the submissions that have been provided to the Commission, and based on the undertakings that Estia has provided to the Commission, I consider that employees will not be disadvantaged by the proposed orders in relation to their terms and conditions of employment. The consideration in s 318(3)(b) weighs in favour of granting the applications.
The nominal expiry date of enterprise agreements - s 318(3)(c)
The nominal expiry dates of the Freemasons Agreement and the Estia Agreement are 30 June 2023 and 30 November 2024. These are neutral considerations.
Whether negative impact on productivity etc - s 318(3)(d)
The Commission must consider whether the transferrable instrument would have a negative impact on the productivity of the new employer’s workplace. Estia submitted that having employees performing the same work on different conditions may lead to dissatisfaction and disharmony. I agree. I accept that this could have a negative impact on productivity, but not that it necessarily would have such an impact. I consider this to be a neutral consideration.
Whether significant economic disadvantage - s 318(3)(e)
Section 318(3)(e) requires the Commission to consider whether the new employer would incur ‘significant economic disadvantage’ as a result of the transferrable instrument covering the new employer. Estia did not contend that it would incur significant economic disadvantage as a result of the transferrable instrument covering it, nor do I believe this would be the case. This factor does not support the granting of the applications in this case.
Whether there is business synergy between instruments etc - s 318(3)(f)
The Commission must consider ‘the degree of business synergy’ between the transferrable instrument and any existing workplace instrument of the new employer. I agree with Estia that there is little business synergy between the two instruments. This weighs moderately in favour of granting the applications.
The public interest - s 318(3)(g)
In my view, this matter does not engage the public interests. It is a neutral consideration.
Conclusion
Having taken into account the matters in s 318(3), I consider that it is appropriate for the Commission to exercise its discretion under s 318(1) to make the orders that are sought.
I will make orders under s 318(1)(a) that the Freemasons Agreement will not cover Estia or any of the transferring employees of RFL and that such employees will be covered by the Estia Agreement. An order will be issued separately in PR766087.
DEPUTY PRESIDENT
Determined on the papers
Printed by authority of the Commonwealth Government Printer
<PR766086>
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