Estia Investments Pty Ltd

[2016] FWCA 1249

[2016] FWCA 1249

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 Ltd
(AG2016/2276)

Aged care industry
COMMISSIONER JOHNS	SYDNEY, 26 FEBRUARY 2016

Application for an order relating to instruments covering transferring employees - Evergreen Life Care Limited Enterprise Agreement 2013.

[1] In or about December 2015 Estia Investments Pty Ltd (EI or New Employer) acquired East Coast Community Care Pty Ltd (Old Employer) and the business assets related to Tea Gardens Manor (TGM), a residential aged care facility on the NSW Hunter Coast. Despite the acquisition, the former operators of TGM continued to manage the day-to-day operations of the facility. That arrangement will cease on 1 March 2016. Thereafter all aspects of the management of TGM will transfer to the EI.

[2] This decision is in response to an application made by EI pursuant to s.318 of the Fair Work Act 2009 (FWAct) seeking orders from the Fair Work Commission (Commission) that, with effect from 29 February 2016:

a) the Evergreen Life Care Limited Enterprise Agreement 2013 (Evergreen Agreement) not cover it and not apply to former employees of TGM who commence employment with EI on 29 February 2016 or within three months of ceasing employment with the Old Employer (Transferring Employees);

b) the Cook Care Group NSW, NSWNA & HSU East Branch Enterprise Agreement 2012 (Industry Agreement) cover each Transferring Employee.

[1] The application was supported by an affidavit and detailed submissions from Mr Ricky Ison, the National Employee Relations Manager of Estia Health Limited (the parent company of the applicant).

The Legislation

[2] Section 318 of the Fair Work Act 2009 (Cth) (Act) sets on the circumstances in which an order may be made by the Commission:

318 Orders relating to instruments covering new employer and 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 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) 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 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 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 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.

[3] The Commission will now consider each of the matters it is required to consider under s.318(3).

s.318(3)(a)(i) - the views of the new employer

[4] EI wants to ensure that all employees at TGM are covered by the Industry Agreement. The primary reason is to provide consistency and simplicity in administration of employee entitlements both within TGM and EI’s other facilities in NSW.
s.318(3)(a)(ii) - the view of the employees who would be affected by the order
[5] In his affidavit Mr Ison details the steps taken by the applicant to consult with current employees of TGM about the acquisition and the intention to end the coverage of the Evergreen Agreement. The consultation included staff information sessions and the provision of background information about this application that EI intended to make to the Commission.
[6] Further, all employees were provided with a Transfer Letter, the present application, a one-page comparison document that summarise the key terms conditions under the Evergreen Agreement and the Industry Agreement, a copy of the Industry Agreement and a feedback form allowing employees to provide feedback and/or raise any concerns relating to the present application.
[7] Mr Ison explained that employees where requested to return the Feedback Forms, with the majority doing so. EI submits that the majority of affected employees demonstrated their support for the proposed Orders. Employees who expressed concerns had these concerns resolved and confirmed resolved by either, amending their Form, submitting a new Form, or orally recognising the resolution.
[8] On 22 February 2016 both the NSW Nurses and Midwives Association (NSW NMA) and the Health Services Union East (HSU) were invited by the Commission to indicate either their support for the present application or their non-objection to the same. On the same day:

a) the HSU advised the commission that it had no objection to the orders being sought by EI; and
b) the NSW NMA did not oppose the proposed Orders.

s.318(3)(b) - whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment

[1] EI submitted that the proposed Orders would not significantly disadvantage any employee. EI submitted that under the Agreement, employees would have, amongst other entitlements, the same position previously held, a base hourly rate of pay at least equal to their existing rate, continuity of service and recognition of pre-transfer accrued entitlements and special conditions to compensate for any loss of conditions. EI acknowledged that there are minor differences remaining, and aims to manage these through EI’s human resource and operational management process.

s.318(3)(c) - if the order relates to an enterprise agreement—the nominal expiry date of the agreement

[2] The nominal expiry date of the Evergreen Life Care Limited Enterprise Agreement 2013 was 30 June 2016.

s.318(3)(d) - whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace

[3] EI submitted that the transferable instrument would have a negative impact upon productivity, particularly increasing administrative costs for the facility in order to ensure compliance with more than one agreement.

s.318(3)(e) - whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer

[4] EI submitted that economic disadvantage could be sustained in the event that EI had to apply two separate enterprise agreements to its staff.
s.318(3)(f) - the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer
[5] The Commission, as presently constituted, is satisfied a degree of synergy exists between the transferable instrument and the existing Agreement.

s.318(3)(g) - the public interest

[6] The Commission, as presently constituted, is satisfied that it is not against the public interest to grant the Orders sought by EI.
[7] Having considered the application and the materials filed in support of the application, the Commission is satisfied that all the requirements of s.318 of the FW Act have been met. An order will be issued with this decision.

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