FES Coal Pty Ltd
[2018] FWC 7491
•20 DECEMBER 2018
| [2018] FWC 7491 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
FES Coal Pty Ltd
(AG2018/6470 & AG2018/6478)
Miscellaneous | |
DEPUTY PRESIDENT ASBURY | BRISBANE, 20 DECEMBER 2018 |
s.318 - Application for an order relating to instruments covering new employer and transferring employees.
1. Introduction
[1] FES Coal Pty Ltd (FES Coal) applies to the Fair Work Commission (the Commission) pursuant to s.318 of the Fair Work Act 2009 (the Act) for orders in relation to transfer of business. This decision deals with two related applications made by FES Coal. FES Coal is part of the One Key Resources group of companies (One Key Group). FES Coal, and employees of FES Coal, are covered by an enterprise agreement known as the FES Coal Pty Ltd Greenfields Agreement (the FES Coal Agreement).
[2] The following companies are also part of the One Key Group;
• One Key Resources (Mining) Pty Ltd;
• One Key Resources (NSW) Pty Ltd;
• One Key Resources (Qld) Pty Ltd; and
• One Key Resources Pty Ltd.
[3] These companies, amongst others, are covered by an enterprise agreement known as the One Key Group Collective Agreement (the Collective Agreement). The Collective Agreement nominally expired on 7 August 2016. Each of these companies employ employees who work in coal mines in Queensland and New South Wales. Another company in the One Key Group is OKR Coal Australia Pty Ltd (OKR Coal), which is covered by an enterprise agreement known as the Valley Labour Services Pty Ltd Enterprise Agreement 2017 (the Valley Agreement). OKR Coal also employ employees who work in coal mines in Queensland and New South Wales.
[4] The companies listed above at [2] and OKR Coal are related entities of FES Coal. FES Coal has entered into a “greenfields” agreement entitled the FES Coal Pty Ltd Greenfield Agreement 2018 (the FES Coal Agreement). The FES Coal Agreement is made with the Construction, Forestry, Maritime, Mining and Energy Union (the CFMMEU) and FES Coal intends to make offers of employment to employees who are currently covered by either the Collective Agreement or the Valley Agreement.
[5] Accordingly FES Coal applies for the following orders under s.318(a) of the Act in relation to the Collective Agreement:
“1. The One Key Group Collective Agreement does not, and will not, cover:
(a) FES Coal Pty Ltd; or
(b) Employees of any of the entities listed below, whose employment will or has transferred to FES Coal Pty Ltd:
(i) One Key Resources (Mining) Pty Ltd;
(ii) One Key Resources (NSW) Pty Ltd;
(iii) One Key Resources (Qld) Pty Ltd; and
(iv) One Key Resources Pty Ltd.
2. This order operates from the day on which the order is made.”
[6] FES Coal also applies for the following orders in relation to the Valley Agreement:
“1. The Valley Labour Services Pty Ltd Enterprise Agreement 2017 does not, and will not, cover:
(a) FES Coal Pty Ltd; or
(b) Employees of OKR Coal Australia Pty Ltd, whose employment will or has transferred to FES Coal Pty Ltd.
2. This order operates from the day on which the order is made.”
[7] FES Coal filed submissions in support of the application. The application was also accompanied by an affidavit of Mr Ben Hudson Lewis1, General Manager of Operations for the One Key Group, and a statutory declaration of Mr Anthony John Maher 2, President of the Construction, Forestry, Maritime, Mining and Energy Union (the CFMMEU).
[8] FES Coal negotiated the FES Coal Agreement with the CFMMEU. Mr Lewis states that the FES Coal Agreement was negotiated as part of a resolution of certain industrial matters with the CFMMEU. The CFMMEU supported the approval of the FES Coal Agreement and is covered by it.
[9] Mr Lewis states that consistent with the resolution reached between One Key Group and the CFMMEU, it is the intention of both parties that One Key Group will undertake a process of transitioning employees covered by the Collective Agreement and the Valley Agreement to employment with FES Coal under the FES Coal Agreement, and as part of that process the parties jointly seek the Orders sought in this application. Accordingly, the CFMMEU supports these applications.
2. Legislation
[10] 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.
3. Consideration
[11] The effect of the order sought by FES Coal would be that the Collective Agreement and the Valley Agreement would not cover FES Coal as the new employer or the transferring employees. FES Coal and the transferring employees would be covered by the FES Coal Agreement. I will consider each of those matters in s.318(3) of the Act in turn.
The views of the new employer or a person who is likely to be the new employer
[12] I accept that FES Coal is the new employer, and wishes to ensure that the FES Coal Agreement applies to transferring employees. FES Coal submits the FES Coal Agreement provides significant benefits to the transferring employees and is more favourable to employees than the collective agreement. Mr Lewis’ evidence is that the FES Agreement represents a significant benefit to the employees for the following reasons:
● The rate of pay starts at 6.5% above the Black Coal Mining Industry Award 2010 (the Award) rate that applied from 1 July 2018;
● It provides three additional 2.5% annual increases on 1 July each year;
● It contains an industry-leading casual conversion clause that will require an offer of permanent or fixed term employment after 12 months continuous employment if the employee request conversion. Importantly, FES cannot refuse to accept the conversion of employment, even on reasonable business grounds;
● It limits fixed term employment contracts to a maximum two year term, with only one extension by mutual agreement allowed which is limited to 12 months;
● It “grandfathers” any existing rate of pay applicable to an employee that is higher than that contained in the FES Agreement (regardless of previous employing entity), provided that the employee remains in the same position and site;
● Its dispute settlement procedure provides for arbitration of disputes at the election of either party and encompasses all matters pertaining to the employment relationship;
● It contains provisions that guarantee rights for CFMMEU delegates to attend to employee representative duties during working hours and also contains and agreed pool of paid days off for representatives to attend union training or off-site meetings; and
● It provides that where it is silent on any matter, the relevant Award provision is to apply. 3
[13] The views of the employer are a consideration that favours the making of the Order.
Views of the employees affected by the order
[14] FES Coal relies on the evidence of Mr Maher, which relevantly states that;
● The CFMMEU has a substantial number of members employed under the Collective Agreement, the Valley Agreement and the FES Agreement;
● The CFMMEU supports the Applications;
● The FES Agreement has superior terms and conditions of employment to both the Group Agreement and the Valley Agreement, and in fact provides for the most beneficial terms of employment for employees of any enterprise agreement applying to a labour hire company in the coal mining industry; and
● He strongly believes that there is no utility or benefit for employees of related entities to FES to remain subject to the inferior terms and conditions of employment contained in the Collective and Valley Agreements, regardless of whether the employees are CFMMEU members.
[15] Mr Maher further states that Agreement contains the following beneficial provisions:
● A strong casual conversion clause, that requires mandatory conversion to permanent or fixed term employment after a minimum period of 12 months at the request of the employee.
● Time limits on the duration of fixed term contracts being a maximum of two years, plus one extension up to a period of 12 months by mutual agreement.
● Rates of pay that start at 6.5% above the minimum rates in the Award (exclusive of the July 2018 national wage case increase of 3.5%), plus three further annual increases of 2.5%.
● The capacity for rates under the FES Agreement to be increased in the event that site rates are introduced in respect of a particular mine site.
● The “grandfathering” of any higher rates of pay currently applying to employees in respect of any prior employing entity within the group of companies, whilst the employee remains on the same site performing the same role.
● The explicit incorporation of the terms and conditions of the Award, so that if the FES Agreement is silent in any respect, the Award term shall apply.
● Arbitration of disputes by the Fair Work Commission at the behest of either party.
● Rights for union representatives to undertake functions during work time and the provision of a pool of paid leave for union training or representative duties. 4
[16] Mr Maher also states that absent the granting of the orders sought, it is likely that employees working side by side, and performing the same duties, could be subject to different terms and conditions of employment.
[17] FES Coal submits that in light of the evidence of Mr Maher of the CFMMEU – the Union to which the relevant employees belong or to which they are entitled to belong – the Commission can be satisfied that the employees affected would support the making of the Orders.
[18] I accept in the present case that the evidence of Mr Maher is an appropriate way in which to take into account the views of the employees who would be affected by the order on the basis that the instrument covering the transferring employees – the FES Coal Agreement – is a “greenfields” agreement which provides significant advantages to employees who will be affected by the Order. I accept that the views of employees ascertained in this manner are a matter that favours the making of the Order.
Whether any employees would be disadvantaged by the order
[19] FES Coal submits the orders will not disadvantage any transferring employees, and provides them with the benefits outlined in the evidence of Mr Lewis and Mr Maher. I accept that evidence and this favours the making of the Order.
The nominal expiry date of the agreement
[20] The Collective Agreement nominally expired on 7 August 2016. The nominal expiry date of the Valley Agreement is 30 March 2020. The nominal expiry date of the FES Coal Agreement is 13 August 2022.
Whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
[21] FES Coal contends that if the Valley Agreement or the Collective Agreement transfer to its employees, there will be a negative impact on the productivity of FES Coal, due to the One Key Group having to administer multiple industrial instruments on the one site.
[22] Further, FES Coal submits that the application of different terms and conditions of employment to transferring employees compared to existing employees of FES Coal is likely to have an adverse impact on morale, workplace harmony and productivity over time. FES Coal submits the Commission has previously acknowledged that uncertainty over employment conditions could have a negative impact on productivity. 5 I accept that submission and that this is a matter that favours the making of the Order.
Whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer
[23] FES Coal submits the above mentioned negative impact on productivity is an economic disadvantage that would result if the Collective Agreement or Valley Agreement covered FES and the transferring employees. I accept that FES Coal would incur significant economic damage on this basis if the Order is not made and that it would create economic advantage if the Order was made.
The degree of business synergy between the transferable instrument and any workplace instrument that covers the new employer
[24] FES submits that as the Collective Agreement incorporates the Award, there are a number of similarities between the Collective Agreement and the FES Agreement. FES Coal also submits that there are differences which create a lack of business synergy between the Collective Agreement and the FES Agreement. For example, under the Collective Agreement, the provisions of the Award apply with respect to hours of work and meal breaks. The Award contains greater restrictions with respect to hours of work and meal breaks than those terms contained in the FES Coal Agreement.
[25] Similarly, FES also submits that there are a number of similarities between the Valley Agreement and the FES Agreement. However, there are differences which create a lack of business synergy. For example, the Valley Agreement deals with meal breaks in a manner different to the FES Agreement, which may present practical difficulties for FES Coal in the event that both agreements applied at one site.
[26] I accept that the differences between the transferrable instrument and any other instrument that covers the new employer means that there is not a high degree of synergy and this is a matter which favours making the Order.
The public interest
[27] FES Coal submits that the applications strike a balance between the protection of employees’ terms and conditions of employment and the interests of an Employer in running an enterprise efficiently, and without the burden of unnecessary complications in employment arrangements, and therefore the applications are consistent with the objects of the transfer of business provisions in the Act.
[28] Additionally, FES Coal submits the making of the Orders sought will provide the transferring emloyees with favourable terms and conditions applying under the FES Coal Agreement, and is consistent with the arrangement made between the One Key Group and the CFMMEU aimed at establishing a framework for a harmonious industrial relationship.
[29] It is in the interests of FES Coal and the employees that the Order is made however there is no evidence of any general public interest consideration that is relevant to this matter. Accordingly this is a neutral consideration.
4. Conclusion
[30] Having considered the matters required by the Act, I am satisfied that the Orders sought should be made.
[31] Separate Orders will issue concurrently with this Decision as they relate to the Collective Agreement 6 and the Valley Agreement7.
DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
<PR703005 >
1 Affidavit of Ben Hudson Lewis affirmed 19 November 2018.
2 Statutory Declaration of Anthony John Maher declared on 15 November 2018.
3 Ibid above at 1 at [15]
4 Ibid above at 2 at [12].
5 Commonwealth Scientific and Industrial Research Organisation [2009] FWA 1331.
6 PR703356
7 PR703357
0
1
0