FMG Personnel Services Pty Ltd

[2014] FWC 1702

[2014] FWC 1702

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.318—Transfer of instrument

FMG Personnel Services Pty Ltd
(AG2014/3771)

COMMISSIONER WILLIAMS PERTH, 13 MARCH 2014

Transfer of instrument.

[1] This is an application, pursuant to section 318 of the Fair Work Act 2009 (the Act) filed by FMG Personnel Services Pty Ltd which is a wholly owned subsidiary of Fortescue Metals Group Ltd (FMG) on 24 February 2014. The application seeks orders:

a) That the WA Surface Mining Enterprise Agreement 2011 [AE884657] (the WASM Agreement) not cover employees of FMG and its subsidiaries, and any employees of those companies formerly employed by Mesa West Pty Ltd the trustee for Mesa West Trust t/a Global Surface Mining (ABN 11 356514943) (GSM) (formerly known as WA Surface Mining).

b) That the Fortescue Team Member Agreement 2013 [AE401428](the FTM Agreement) will cover any employees of FMG and its subsidiaries formerly employed by GSM under the WASM Agreement.

c) That these orders shall apply in respect of each employee transferring from GSM to FMG or any of its subsidiaries on and from the day after GSM ceases to administer their pay and other employment entitlements.

The legislation

[2] Section 318 of the Act sets out the circumstances in which such orders may be made by the Commission, as follows:

“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.”

Background

[3] The applicant has provided detailed submissions in support of its application and statutory declarations sworn by Ms Melanie Atkinson who is the Human Resources Superintendent - Christmas Creek Mine Site for the applicant and by Mr Cody Faryna the Principal Surface Mining Specialist - Chichester Operations for the applicant. These statutory declarations are evidence of the factual matters detailed in the applicant’s submissions which are set out below.

[4] The applicant, FMG Personnel Services Pty Ltd (ACN 159 057 646) is a wholly owned subsidiary of Fortescue Metals Group Ltd (ACN 002 594872) hereinafter collectively referred to as FMG.

[5] FMG owns and operates the Christmas Creek Mine and is covered by the FTM Agreement.

[6] FMG employs approximately 88 employees at the Christmas Creek Mine who are covered by the FTM Agreement.

[7] GSM was contracted by FMG to provide surface mining services at the Christmas Creek Mine and employs approximately 234 employees at the Christmas Creek Mine to perform this work. Some of these employees are covered by the WASM Agreement.

[8] In January 2014, FMG made a decision to terminate its contract with GSM and take over their mining services and to offer employment to 208 of the GSM employees.

[9] FMG anticipates that these employees are likely to be “transferring employees”, and that the WASM Agreement will be a “transferable instrument” within the meaning of the Act.

[10] Of the 208 transferring GSM employees, 193 are covered by the WASM Agreement.

[11] By agreement between FMG and GSM, a transition period was implemented, (commencing on 23 January 2013 and due to conclude on 16 March 2014). During this period GSM is handing over the management and operation of their mining services to FMG.

[12] Consequently from 17 March 2014 FMG will be the sole provider of their mining services and the transferring employees will be moved from their current 2:1 roster (7 days shifts, 7 night shifts and then 7 rostered days off), to a 8:6 - 7:7 roster (8 day shifts followed by 6 rostered days off, then 7 night shifts and then 7 rostered days off).

[13] The current FTM Agreement employees work an 8:6 - 7:7 roster.

[14] The WASM Agreement permits, at clause 7, changes to the roster with reasonable notice.

Matters the Commission must take into account

Views of the employees who would be affected by the order

[15] FMG has undertaken a comprehensive communication process with the transferring employees including briefing sessions, contacting the transferring employees by telephone, providing various letters setting out items such as the new terms and conditions of employment, indicative remuneration and summary documents outlining the differences between the WASM Agreement and the FTM Agreement.

[16] The transferring employees were provided with a “Feedback Form” to complete and return to FMG for the purpose of providing their opinions in relation to the proposal that the terms and conditions under the FTM Agreement become applicable to them.

[17] Of the 138 feedback forms completed and returned to FMG by 21 February 2014:

a) 138 indicated that they want to be covered by the FTM Agreement.

b) 137 transferring GSM employees have indicated that they are satisfied that the terms of employment offered by FMG are the same or similar to their previous employment conditions with GSM and one transferring GSM employee did not respond to this question.

c) 136 transferring GSM employees have indicated their support for this application by FMG to the Commission and 2 transferring GSM employees had no opinion.

d) 138 transferring GSM employees have indicated they would prefer to be employed under FMG’s terms and conditions of employment.

[18] If the FTM Agreement was to apply to the transferring employees, there are 20 GSM employees who are currently covered by the WASM Agreement, who would fall outside the scope of the FTM Agreement. These are employees in the “Maintenance Supervisor” and “Pit Supervisor” classifications in the WASM Agreement. These are managerial-type positions which are not covered by the FTM Agreement.

[19] FMG has offered these employees employment on the same terms and conditions as its other management employees.

[20] Each of these employees:

a) has accepted FMG’s offer;

b) is aware in substance that if the orders sought in this application are granted, that no agreement would apply to them; and

c) supports this application by FMG.

[21] Overall, the transferring GSM employees will not be disadvantaged by the orders sought. In many instances they will be better off, as the FTM Agreement provides for a number of incentives that are not currently available to the transferring GSM employees under the WASM Agreement.

Views of FMG

[22] FMG supports the making of these orders.

Impact on productivity

[23] FMG’s view is that having one enterprise agreement to cover its workforce at the

Christmas Creek Mine will deliver better productivity and flexibility.

Business synergy

[24] FMG is currently in the process of employing a further 100 new employees to work with the transferring employees. These employees will be employed under the FTM Agreement.

[25] If the WASM Agreement continued to apply to the transferring employees there will be some employees work covered by the WASM Agreement and others covered by the FTM Agreement doing the same work. This will lead to a number of discrepancies between the terms and conditions of the transferring employees and the new FMG employees, who will be working directly together.

[26] These discrepancies will lead to a considerable risk of a disgruntled workforce and disputes between employees due to the lack of business synergy between the FTM Agreement and the WASM Agreement. This raises the potential for a decrease in productivity and economic losses to be incurred which can be avoided by harmonising the employment arrangements as proposed by the orders sought.

Nominal expiry date

[27] The nominal expiry date of the WASM Agreement is 17 March 2015. The nominal expiry of the FTM Agreement is 23 May 2017.

[28] Therefore, the FTM Agreement will be within its nominal term for two years longer than the WASM Agreement which will ensure a longer period of stability in industrial relations for surface mining operations at the Christmas Creek Mine. Additionally, this will provide consistency in employment for the transferring employees.

[29] Further, if the orders sought are not made FMG will have to renegotiate the terms of the WASM Agreement well before the renegotiation of the FTM Agreement.

Public Interest

[30] There are no issues of public interest in this matter that would impact the orders sought being made.

Consideration

[31] The view of the new employer FMG is that the Commission should make the orders sought and the statutory declarations provide evidence that the likely transferring employees whom would be affected are overwhelmingly in favour of these orders being made and that their views have been informed following an appropriate consultation process.

[32] I am also satisfied that there is no disadvantage for the likely transferring employees if these orders are made and indeed some will be better off.

[33] Considering the matters I have mentioned above and the additional submissions addressing the other matters the Commission must taken in to account set out in section 318(3) of the Act, I am satisfied that it is appropriate that this application be granted and orders to that effect will be issued in conjunction with this decision.

COMMISSIONER

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