Fresh Fields Aged Care (NSW) No 1 Pty Ltd T/A Hall & Prior Aged Care

[2017] FWC 1806

[2017] FWC 1806

FAIR WORK COMMISSION

REASONS FOR DECISION

Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees

Fresh Fields Aged Care (NSW) No 1 Pty Ltd T/A Hall & Prior Aged Care
(AG2017/899)

Aged care industry
COMMISSIONER JOHNS	SYDNEY, 11 APRIL 2017

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

[1] On 21 March 2017 Fresh Fields Aged Care (NSW) No 1 Pty Ltd T/A Hall & Prior Aged Care (FFAC/applicant/new employer) submitted an application pursuant to s.318 of the Fair Work Act 2009 (Act) seeking orders from the Fair Work Commission (Commission) that:

a) a transferrable instrument, namely the Grafton Aged Care Home, NSWNMA, ANMF NSW Branch & HSU NSW Enterprise Agreement 2015 (Grafton Agreement), not apply to FFAC and former transferring employees who commence employment with FFAC after the date of the transfer of business; and that

b) the Fresh Field Aged Care (NSW) No.1 Pty Ltd, NSWNA & HSU East Branch Enterprise Agreement 2012 (FFAC Agreement), cover the transferring employees, on and from 1 April 2017.

Background

[2] On 23 March 2017 the applicant emailed the Commission noting the urgency pertaining to the application for the reason that on 31 March 2017 the applicant would have acquired the business of Grafton Aged Care Home Pty Ltd (Grafton/old employer). The sale would be a transfer of business for the purposes of Part 2-8 of the Act. The applicant requested that the matter be listed for hearing on an urgent basis given the short period of time before the transfer of business occurred.
[3] On 23 March 2017 the Commission directed that:

a) by 24 March 2017 the applicant must file in the Commission and serve on the New South Wales Nurses and Midwives’ Association (NSWNMA), Australian Nursing and Midwifery Federation NSW Branch (ANMF NSW) and Health Services Union (HSU) an outline of argument, statements of evidence or other documents the applicant intends to rely upon;
b) by 29 March 2017 any employee or any organisation which opposed the making of the proposed Orders must file in the Commission and serve on the applicant submissions, written statements and documents they relied upon in opposition to the proposed Orders; and
c) the applicant email a copy of the Directions to transferring employees, anticipated transferring employees and the unions mentioned in point (a) (Unions).

[4] The parties were also advised that if any party opposed the application the matter would be listed for Hearing.
[5] On 24 March 2017 Ms Kris Healy, the applicant’s General Manager, NSW, filed a statutory declaration, declaring that the Directions were emailed to all transferring and anticipated transferring employees of the new employer.
[6] On 29 March 2017 the Unions filed submissions opposing the making of the proposed Orders on two grounds, namely, that if the transferrable instrument were to apply, its policies would create disadvantageous conditions for transferring employees with respect to annual leave and casual loading provisions.
[7] Consequently the matter was heard on 30 March 2017 and an Order was issued (PR591446). At the time, the parties were advised that my reasons for Decision would follow in due course. These are those reasons.
[8] At the hearing Mr Gerard Boyce was granted permission to appear on behalf of the applicant as I was satisfied the matter was invested with sufficient complexity such that the Commission would be assisted in the efficient conduct of the matter. Permission was granted pursuant to s.596(2)(a) of the Act. Mr Toby Warnes appeared for the HSU and Ms Paula Kelly appeared for the NSWNMA and ANMF NSW.

Hearing

[9] In addition to the evidence received and submissions made at the hearing the parties had, prior to the hearing, filed the following material which the Commission, as constituted on 30 March 2017, had regard to:

a) Applicant’s Outline of Submissions dated 26 March 2017 (Exhibit A3);

b) Statutory Declaration of Kris Healy dated 24 March 2017 (Exhibit A1);

c) Affidavit of Kris Healy dated 24 March 2017 (Exhibit A2);

d) Additional Signatures Table (Exhibit A4);

e) Applicant’s Draft Order (Exhibit A5);

f) NSWNMA and ANMF NSW Joint Submissions dated 29 March 2017 (Exhibit R1);

g) Supplementary NSWNMA and ANMF NSW Joint Submissions dated 29 March 2017 (Exhibit R2);

h) HSU Outline of Submissions dated 29 March 2017 (Exhibit R3); and

i) Union’s Draft Order (Exhibit R4).

The Legislation

[10] Section 318 of the Act sets out 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.

[11] The main point of contention in the dispute between the parties related to the proposed Order and whether it disadvantaged employees, however as a matter of fullness, the Commission considered each of the matters it was required to consider under s.318(3).

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

[12] The applicant submitted that (including Grafton) it controls 11 facilities across NSW and if the proposed Order was made, employees across all facilities (existing and transferring employees) would be on very similar terms and conditions of employment. Further, Mr Boyce submitted that the applicant has a central payroll system and, consequently, if the proposed Order was not made, the payroll system would have to be substantially altered to accommodate the Grafton operation which would be costly in terms of money and time.
s.318(3)(a)(ii) - the view of the employees who would be affected by the order
[13] In the affidavit filed by Ms Healy, Annexure A was a “Petition signed by Grafton employees” (Petition) containing a list of Grafton employee signatures who supported the application for the proposed Orders. A further updated Petition was filed on 30 March 2017. Mr Boyce submitted that 75 of the 96 transferring employees supported the application for the proposed Order.
[14] The Unions made no submission on this point.

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

[15] The applicant submitted that no transferring employee will be disadvantaged by the proposed Orders.
[16] An Outline of Submissions and Supplementary Submissions filed by the NSWNMA and ANMF NSW (NSW Unions) raised the following concerns:

a) transferring employees will lose one week annual leave as the FFAC Agreement provides one less week of annual leave than the Grafton Agreement; and
b) there will be no casual leave loading paid to casual employees for work performed on weekends, public holidays and for periods of overtime.

[17] At the hearing Mr Warnes stated that the HSU supported the views of the NSW Unions on annual leave and casual loading.
[18] Ms Kelly stated that annual leave is of a particular significance to nurses as many of them carry parenting/grand parenting responsibilities, and that a reduction of a week’s annual leave would disadvantage employees. Further, she submitted that the benefit of an extra week of annual leave provided in the Grafton Agreement was obtained through previous bargaining efforts of the Unions specifically for the Grafton facility, and, but for the transfer to FFAC, that provision would have continued to apply.
[19] Further, the NSW Unions submitted that the pay increase offered to the employees does not properly compensate them for the loss of a week’s annual leave.
[20] In response to the objections raised by the Unions, Mr Boyce stated that FFAC will maintain the superior annual leave entitlements under the Grafton Agreement for day workers and shift workers until 31 March 2019. Further, he submitted that the casual loading that was being paid in addition to weekend and public holiday penalty rates (under the Grafton Agreement) will be maintained until a further agreement is negotiated and approved by the Commission.
[21] Mr Boyce submitted that the FFAC Agreement will be subject to negotiations for a replacement agreement in the next ten weeks. 1 He submitted that no employee will be disadvantaged by the proposed Order as the applicant undertook to ensure that the employees are provided with:

a) a pay increase;

b) the continuation of their annual leave entitlements for 2 years; and

c) the continuation of any casual loading until such time a replacement agreement is approved by the Commission.

d) no new probation period for existing employees, only for those currently serving a probationary period.

[22] Mr Boyce submitted that maintaining the above provisions will allow the Unions an opportunity to negotiate on those terms for any proposed replacement agreement.
[23] In final, Mr Boyce submitted that, in determining the matter, the Commission does not need to satisfy itself of each and every one of the matters under s.318(3), but that it is for the Commission to weigh the importance of each matter in making its determination and exercising its discretion. I accept this submission.
[24] For the following reasons, I found that the proposed Order (as amended in transcript) would not disadvantage transferring employees:

a) the applicant properly identified the more generous annual leave and casual loading provisions in the Grafton Agreement and mitigated any loss by awarding a pay increase, maintaining annual leave for 2 years and maintaining casual loading up to the time a replacement agreement is approved;

b) given it is the intention of the applicant to commence negotiations on a replacement agreement in the near future, the bargaining position for the unions has been maintained in view of the undertakings provided by the applicant; and

c) during the hearing it was discovered that the Grafton facility only employs one casual employee. Whilst the Commission recognises that there is the potential that more casual employees will be employed in the future, the applicant’s commitment to maintain the casual loading for casual employees sufficiently mitigates any likelihood that a disadvantage would arise out of a transfer of instrument.

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

[25] The nominal expiry date of theFFAC Agreement is30 June 2015.
s.318(3)(d) - whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
[26] At the hearing, Mr Boyce stated 2:

“…I can't say that at the workplace level there would be productivity impacts because the agreements are very much similar other than in a few minor respects identified by Ms Healy.”

[27] In Ms Healy’s affidavit, she stated that the making of the proposed Order would ensure a smooth transition for transferring employees.
[28] The Unions made no submission on this point.
s.318(3)(e) - whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer
[29] No significant submissions were made by the applicant about economic disadvantage, however, the applicant explained that having employees covered by the same agreement will provide ease in payroll processing.
[30] The Unions made no submission on this point.

s.318(3)(f) - the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer

[31] The Commission, as presently constituted, is not satisfied that there is a degree of synergy between the transferable instrument and the Grafton Agreement.

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

[32] Mr Boyce submitted that it was not against the public interest in granting the orders sought.
[33] Further, he referred me to Queensland Nickel Pty Ltd (2009) 190 IR 13. 3

I note and adopt the principles enunciated in that decision.

The Unions made no submission on this point.

[34] The Commission, as presently constituted, is satisfied that it is not against the public interest to grant the Orders sought by the applicant.
[35] 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.
[36] These Reasons for Decision relate to Order PR591446 issued on 30 March 2017.

COMMISSIONER

Appearances:

Mr G Boyce, for the applicant

Ms P Kelly, for the NSWNMA and ANMF NSW Branch

Mr T Warnes, for the HSU

Hearing details:

2017

Melbourne, Sydney

30 March

 1   Transcript – PN63

 2   Transcript – PN69

 3   Paragraphs 36 and 37.

Printed by authority of the Commonwealth Government Printer

<Price code A, AE415834, PR591445 >