Evans Petroleum Pty Ltd

[2013] FWC 3096

[2013] FWC 3096

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.318—Transfer of instrument

Evans Petroleum Pty Ltd
(AG2013/81)

Road transport industry
COMMISSIONER CRIBB	MELBOURNE, 16 MAY 2013

Application for an order relating to instruments covering new employer and transferring employees in agreements.

[1] Evans Petroleum Pty Ltd (the Applicant, new employer) has lodged an application under section 318(1) of the Fair Work Act 2009 (the Act) for orders relating to an instrument covering a new employer and the transferring employees.

[2] It was submitted by the Applicant that, on 1 February 2013, there will be a transmission of business from Centrel Pty Ltd trading as Reliance Petroleum (the old employer) to Evans Petroleum Pty Ltd (the new employer). Within three months of their termination, two employees of the old employer will be employed by the new employer. It was stated that the work that the transferring employees will perform for the applicant (new employer) is the same or substantially the same as the work that they performed with the old employer. In accordance with section 311(1) of the Act, a transfer of business has occurred.

[3] The transferring employees were covered by the BP Australia (Rural & Regional) Consolidated Bulk Fuel Transport (VIC & NSW) Agreement 2012 1 (the BP Australia Agreement), being an enterprise agreement approved by a decision2 of Fair Work Australia (FWA) on 23 January 2012.

[4] An enterprise agreement is a transferable instrument by operation of the Act at section 312(1)(a). Section 313(1) provides that a transferable instrument that covered the old employer and the transferring employees, immediately before the termination of the employment, will cover the new employer, being the applicant. The operation of these sections means that the Applicant (the new employer) would be covered by the BP Australia Agreement in relation to the transferring employees.

[5] However, the Applicant seeks an order pursuant to section 318(1) of the Act to displace the operation of section 313(1) in relation to the BP Australia Agreement so that the transferring employees are covered by the new employer’s existing industrial instrument - the Evans Petroleum Gippsland Transport Agreement 2012 3 (the Evans Petroleum Agreement). The Evans Petroleum Agreement currently covers the applicant’s employees.

Relevant legislation

[6] Section 313 of the Act provides:

“313 Transferring employees and new employer covered by transferable instrument

(1) If a transferable instrument covered the old employer and a transferring employee immediately before the termination of the transferring employee’s employment with the old employer, then:

(a) the transferable instrument covers the new employer and the transferring employee in relation to the transferring work after the time (the transfer time) the transferring employee becomes employed by the new employer; and

b) while the transferable instrument covers the new employer and the transferring employee in relation to the transferring work, no other enterprise agreement or named employer award that covers the new employer at the transfer time covers the transferring employee in relation to that work.

(2) To avoid doubt, a transferable instrument that covers the new employer and a transferring employee under paragraph (1)(a) includes any individual flexibility arrangement that had effect as a term of the transferable instrument immediately before the termination of the transferring employee’s employment with the old employer.

(3) This section has effect subject to any FWC order under subsection 318(1).”

[7] Section 318 of the Act provides:

“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.”

CONSIDERATIONS

[8] The Applicant was requested to provide further materials in support of the application, particularly referencing those matters that the FWC must take into account by virtue of section 318(3). Mr Stuart Evans, Managing Director of Evans Petroleum Pty Ltd, provided extensive documentation including comparison schedules of the general entitlements of the two instruments, a comparison of the expected earnings of the two transferring employees between the two instruments, together with statements in support of the orders by the two transferring employees.

[9] The material is considered below in relation to each of the matters in section 318(3).

Section 318(3)(a)(i): the views of the new employer

[10] The Applicant, as the new employer, seeks that the transferable instrument (the BP Australia Agreement) not cover or apply to it. Several reasons were advanced for this including the cost of setting up a bespoke payroll system for the wages of the two transferring employees and the burden of having to administer two enterprise agreements, both of which are underpinned by the same modern award.

Section 318(3)(a)(ii): the views of the employees

[11] Both of the affected employees provided to the Commission statements that they agreed to changing from the BP Australia Agreement to the Evans Petroleum Agreement.

Section 318(3)(b): any disadvantage to the employees

[12] The Applicant provided a detailed comparison of the wages and entitlements and expected earnings for both employees. While some conditions are more favourable under the BP Australia Agreement, overall, there is no great disadvantage to the employees by being covered by the Evans Petroleum Agreement.

Section 318 (3)(c): the nominal expiry date of the transferable instrument

[13] The nominal expiry date of the BP Australia Agreement is 30 January 2015. The nominal expiry date of the Evans Petroleum Agreement is 19 September 2015.

Section 318(3)(d): any negative impact on the employer’s workplace

[14] As set out above, the Applicant identified some potential impacts on the workplace if the order sought was not issued. It was submitted that there would be a negative impact on the productivity of Evans Petroleum if the business was required to set up a bespoke payroll system to facilitate the wages of two employees. Further, there would be a resulting economic impact if required to do this. In addition, there is the potential for workplace conflict where workers on one enterprise agreement may perceive that the employees on the other enterprise agreement are at an advantage. The Applicant stated that, allowing all employees to be covered by the Evans Petroleum Agreement, would enable the company to operate in a way that was better aligned to the working arrangements of the business.

Section 318(3)(e): any significant economic disadvantage to the employer

[15] It was stated by the Applicant that there was an economic cost if the business had to build a bespoke payroll system and was required to administer two different agreements within the same business.

Section 318(3)(f): business synergy between the transferable instrument and existing agreement

[16] It was conceded that there may be some degree of business synergy between the transferring BP Australia Agreement and the Evans Petroleum Agreement. However, it was stated that the primary reason for seeking the order was based on the fact that it potentially places Evans Petroleum at a significant economic disadvantage, if not granted.

Section 318(3) g): the public interest

[17] There is no evidence that the public interest is agitated in this matter.

CONCLUSION

[18] On balance, taking into account each of the matters stipulated in section 318(3) of the Act, I am satisfied that the order sought should be granted.

[19] A separate order 4 will issue. The order will come into operation, in accordance with section 318(4), namely, from the later of:

• the time when the transferring employee becomes employed by the new employer, or



• the day on which the order is made.

COMMISSIONER

 1   AE891126

 2   2012 [FWAA] 610

 3   AE896800

 4   PR 536974

Printed by authority of the Commonwealth Government Printer

<Price code C, AE896800  PR536973 >