Fresh Fields Aged Care Pty Ltd T/A Hall & Prior

[2019] FWC 1869

[2019] FWC 1869

FAIR WORK COMMISSION

DECISION

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

Fresh Fields Aged Care Pty Ltd T/A Hall & Prior
(AG2019/758)

Aged care industry
DEPUTY PRESIDENT BEAUMONT	PERTH, 28 MARCH 2019

Application by Fresh Fields Aged Care Pty Ltd.

[1] Fresh Fields Aged Care Pty Ltd T/A Hall & Prior (Hall & Prior) own and operate numerous and various aged care facilities, including several aged care facilities in the Perth metropolitan region. 1 Within its organisation there are approximately 878 employees who are covered by theHall & Prior Aged Care Organisation Employee (Non-RN) Enterprise Agreement 2018 (Hall & Prior Agreement).2 Come 12:00am on 1 April 2019,3 Hall & Prior will take over the lease and operation of a premises currently operated by Juniper Aged Care t/as Juniper Tranby (Juniper), and in the process three Juniper employees will transfer over to Hall & Prior.

[2] Hall & Prior, the new employer, have applied for an order that the Hall & Prior Agreement cover any former employees of Juniper, who were covered by the Juniper Enterprise Agreement 2017 (Juniper Agreement), 4 but are now employed by Hall & Prior, and for the order to apply on and from 12:00am on 1 April 2019.5

[3] Section 317 of the Fair Work Act 2009 (Cth) (the Act) allows the Commission to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer. It is uncontroversial that a ‘transfer of business’ is to occur as that term is understood under s 311 of the Act. And it follows, that the transferring employees are likely to be ‘transferring employees’, and the Juniper Agreement will be a ‘transferable instrument’ within the meaning of Part 2-8.

[4] The discretion to make the order sought can only be exercised after having taken into account the factors under s 318(3). 6 These factors are:

(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.

[5] These factors, which must be read having regard to the objects of Part 2-8, are intended to enable the Commission to balance appropriately the protection of employees’ entitlements under certain instruments with the need for some flexibility to depart from the default rules about coverage of instruments following a transfer of business.

[6] The question is whether I should make a decision that departs from the default rules about coverage of instruments following a transfer of business, because I am satisfied, having considered the factors in s 318(3), that to do so strikes the appropriate balance between the protection of the transferring employees’ entitlements under the Juniper Agreement with the need for providing Hall & Prior with the flexibility to operate efficiently.

[7] Having regard to all of the matters raised by s 318 of the Act, I am satisfied that I should exercise my discretion to grant the application and to make the order sought. I will issue an order in conjunction with the decision that operates in accordance with s 318(4) of the Act. 7

BACKGROUND

[8] Like Hall & Prior, Juniper owns and operates numerous aged care facilities in the Perth metropolitan region. 8 The Juniper Agreement is said to cover 12 aged cared facilities in Western Australia.9

[9] On 1 April 2019, Hall & Prior will take over the lease and operation of a premises currently operated by Juniper and the facility will then be known as Mertome Aged Care (the Site).

[10] Between 21 February 2019 and 5 March 2019, Hall & Prior made 26 offers of employment to employees of Juniper currently covered by the Juniper Agreement. Initially, four employees accepted those offers, but at a later point one of the employees retracted his or her acceptance. From 1 April 2019, the transferring employees will be employed by Hall & Prior.

[11] Hall & Prior anticipates that the transferring employees are likely to be ‘transferring employees’, and that the Juniper Agreement will be a ‘transferable instrument’ within the meaning of those terms in Part 2-8. For various reasons, Hall & Prior consider the Juniper Agreement would impede its operations. Consequently it now applies for the following orders:

A. That the Hall & Prior Agreement will cover any former employees of Juniper Aged Care, t/a Juniper Tranby (Juniper Aged Care) who were employed by Juniper Aged Care under the Juniper Agreement, but are now employed by the Applicant.

B. That these Orders shall apply in respect of each employee transferring from Juniper Aged Care to the Applicant on and from 12:00 am on 1 April 2019.

[12] The application is not opposed by the Australian Nursing & Midwifery Federation (ANMF), or United Voice (UV), being employee organisations covered by the Juniper Agreement.

[13] In the circumstances, I have decided to deal with the application on the papers without conducting a hearing.

The statutory provisions

[14] For the purpose of the application, s 318 is the pertinent and it reads in full:

318 Orders relating to instruments covering new employer and transferring employees

Orders that FWA may make

(1) FWA 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) FWA 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 FWA must take into account

(3) In deciding whether to make the order, FWA 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.

[15] The exercise of the discretion given to the Commission in this regard is undertaken within the objects of Part 2-8, which state:

309 Object of this Part

The object of this Part is to provide a balance between:

(a) the protection of employees’ terms and conditions of employment under enterprise agreements, certain modern awards and certain other instruments; and

(b) the interests of employers in running their enterprises efficiently;

if there is a transfer of business from one employer to another employer.

Has a valid application been made?

[16] The application was filed on 18 March 2019, being before the transfer of business is to take place. Hall & Prior is the new employer for the purposes of s 318(2)(a) and I find that the application is validly before the Commission.

What are the views of Hall & Prior (s 318(3)(a)(i))?

[17] Hall & Prior provided its view regarding the continued coverage by the Juniper Agreement through the evidence of its Corporate Services Manager, Mr Hitchcock. In short, Mr Hitchcock gave evidence:

a) that were the Juniper Agreement to continue to apply to the transferring employees there would be differences in the terms and conditions between those employees and the remainder of the Hall & Prior workforce covered by the Hall & Prior Agreement; 10

b) administering two lots of entitlements under two enterprise agreements would result in the potential for a decrease in productivity and economic losses to be incurred by Hall & Prior’s central payroll function because of the need to administer different terms and conditions; 11

c) Hall & Prior operate a ‘shared workforce’ model whereby shifts are made available to employees across a number of Hall & Prior facilities. If the Juniper Agreement continued to apply to the transferring employees, and there were differences between the terms and conditions of the transferring employees and those employees covered by the Hall & Prior Agreement, then there would be a potential for productivity and economic loss because of limited ability to operate the ‘shared workforce model; 12 and

d) Juniper had operated as a religious charitable organisation, and as such, was not required to pay payroll or company tax. This enabled Juniper to operate in a particular space, and offer unique efficiencies which were not available to Hall & Prior given it was not a religious charitable organisation; 13

[23] The differences referred to above would, in Hall & Prior’s view, lead to a risk of a disgruntled workforce and disputes between employees due to the lack of business synergy between the Hall & Prior Agreement and Juniper Agreement. 14 Hall and Prior submitted that having one enterprise agreement cover its workforce would deliver greater flexibility and thereby productivity, consistent with the objects of the Act.

Consideration

[18] The views put forward by Hall & Prior regarding the integration of the transferring employees within the business, the maintenance of productivity and parity in terms and conditions, in addition to limiting unnecessary administrative costs, have, in my view, a legitimate basis. Accordingly, these are aspects that weigh significantly in favour of granting the application.

[19] I accept that continuing to apply an enterprise agreement that applied to an old employer’s business is likely to have a negative impact on productivity in the workplace because of the disparity in the terms and conditions of employment applying to employees performing the same work. To require employees to work alongside each other performing the same work, but attributing to it a different value, inevitably will lead to discord between these workers should this become known. It would be naïve to think otherwise.

[20] The requirement to then administer payroll and provide human resource services to a sub-group of transferring employees whose terms and conditions of employment differ to the employees to which the Hall & Prior Agreement applies, is particularly onerous in the circumstances of this case.

What are the views of the employees who would be affected by any order (318(3)(a)(ii))?

[21] Hall & Prior submitted that it had undertaken a comprehensive communication process with each of the transferring employees. The first step was the issuing of letters of offer accompanied by an information pack. 15 Thereafter, Mr Hitchcock visited the Site with Hall & Prior’s CEO, and three other members of the Hall & Prior human resources team.16 The purpose of the Site visit was to attend a Juniper staff meeting and have the CEO provide a short presentation, in addition to the human resources team answering questions in both an open and private forum.17 Finally, the transferring employees were asked to complete an online feedback survey.18

[22] Mr Hitchcock gave evidence that of the online surveys, as at 18 March 2019, all transferring employees indicated:

a) they wanted to be covered by the Hall & Prior Agreement;
b) they are satisfied that the terms of employment offered by Hall & Prior are the same or similar to their previous employment conditions with Juniper;
c) support for the application to the Commission; and
d) held no opinion as to whether they would prefer to be employed under Hall & Prior’s terms and conditions of employment.

Consideration

[23] The letter of offer clearly set out that Hall & Prior would be applying to the Commission for an order that the Juniper Agreement no longer cover the four transferring employees and that they would be covered by the Hall & Prior Agreement. 19

[24] Further, the letter of offer acknowledged that the Juniper Agreement was favourable when compared to the Hall & Prior Agreement with regard to rates of pay. 20 Hall & Prior therefore committed to match the current rate of pay for the relevant employees observing that future wage escalations would be calibrated. Detail of the wage escalations was provided in addition to noting that the purpose of the calibration was to ultimately achieve parity with the rates under the Hall & Prior Agreement.

[25] The responses of the transferring employees were supportive of the proposed order, and it is acknowledged that the ANMF and UV did not oppose the application.

[26] Given the evidence of the process undertaken regarding consultation with the transferring employees, provision of documentary information and advice to the employees that an application had been made to the Commission to seek orders, I am satisfied that the feedback forms represent the genuine views of those that completed them.

[27] In these circumstances these factors weigh toward the granting of the order.

Is there any disadvantage to the employees in relation of their terms and conditions of employment (s 318(3)(b))?

[31] Material has been provided to the Commission analysing the differences between the Juniper Agreement and the Hall & Prior Agreement. Whether overall any of the transferring employees would be disadvantaged if covered by the Hall & Prior Agreement is a matter that must be taken into account. 21

[32] While the making of the order will incur a reduction in gross pay, Hall & Prior has raised some salient points that cannot simply be discounted when considering disadvantage from an overall perspective. 22

[33] As observed, Hall & Prior conceded that there were discrepancies between the rates of pay under the Juniper Agreement and the Hall & Prior Agreement. However, the undertaking given would ensure, according to Hall & Prior, that none of the transferring employees would receive a reduced hourly rate. I find this to be accurate.

[34] The Hall & Prior Agreement provides for a favourable annual leave benefit (up to seven weeks for shift workers), but with respect to afternoon and night shift penalties the Hall & Prior Agreement results in a 5% drop regarding such penalties.

[35] While there is a difference in the penalties with Juniper providing 20% for an afternoon shift in comparison to the 15% provided by Hall & Prior, penalties for Saturday, Sunday and public holidays are equivalent. 23 Leave loading is provided in both the Juniper Agreement and the Hall & Prior Agreement. However, because of the additional leave for shift workers under the Hall & Prior Agreement (six to seven weeks instead of five), the leave loading of 17.5%, which is equivalent to the loading provided under the Juniper Agreement, is in effect stretched across 6 or 7 weeks instead of 5 weeks.24 Clearly having additional paid time away from work, with a guarantee that remuneration would be at least equal to that one would have received) if at work (or the provision of a 12.5% penalty whichever is better), is advantageous.

[36] Casual employees benefit under the Hall & Prior Agreement with penalty rates at 25% in comparison to 20% under the Juniper Agreement. 25 Depending on minimum hour requirements, Hall & Prior employees receive an additional week of paid parental leave.26

[37] Having regard to both the terms of the Juniper Agreement and the Hall & Prior Agreement, there would not be a considerable reduction in the entitlements of the transferring employees if the order was granted. Therefore, I am unpersuaded that overall the transferring employees would be disadvantaged such that granting the application and issuing the order sought would not be appropriate.

What impact does the nominal expiry date of the enterprise agreement have? (s 318(3)(c)):

[38] The nominal expiry date of the Juniper Agreement is 30 June 2020. This means that Hall & Prior will be required to administer it for at least another 15 month period. The Hall & Prior Agreement expires on 30 June 2021.

Consideration

[39] Hall & Prior appear content to carry the administrative burden of maintaining a differential between the pay of the transferring employees and its existing employees, for a period. However, were the Juniper Agreement to continue to cover the transferring employees, the administrative burden would extend to maintaining different penalty rates for afternoon shifts, a difference in leave accruals, in addition to leave loading. Hall & Prior have traversed the administrative burden this would have but the evidence regarding economic burden is imperceptible with little said regarding the resources necessary, and cost that would be incurred. I therefore find this to be a neutral factor.

Would there be any negative impact on productivity in the workplace (s 318(3)(d))?

[40] These considerations have been broadly outlined in discussing the employer’s position under s 318(3)(a)(i) above.

[41] Hall & Prior have submitted that it operates a ‘shared workforce’ model where shifts are made available across a number of Hall & Prior facilities. If the Juniper Agreement continued to cover the transferring employees, it says that it would have limited ability to operate this particular model with regard to those employees. This is because of the difference in the terms and conditions of employment.

Consideration

[42] The consideration outlined under s 318(3)(a)(i) remains pertinent in taking account this matter under s 318(3)(d). I can see the continued coverage by the Juniper Agreement would be inconsistent with Hall & Prior’s desire to integrate the transferring employees into the Hall & Prior ‘shared workforce’ model, which clearly has been established to ensure productivity in the provision of aged care services. This is a factor that weighs toward the granting of the order sought.

Is there any significant economic disadvantage to Hall & Prior s 318(3)(e)?

[43] Hall & Prior candidly conceded through the evidence of Mr Hitchcock, it was unaware of any significant economic disadvantage that would arise from the continued application of Juniper Agreement to it. However, as already identified, Hall & Prior referred to the additional administrative burden and costs that would be incurred.

Consideration

[44] As observed earlier, Hall & Prior operates a ‘shared workforce’ model, evidently to streamline administration and resource coordination. However, where the factor is one that requires deference to ‘significant’ economic disadvantage, it cannot be said that this would be the case here. I find the factor is a neutral one, neither compelling me to grant the application nor dissuading me from doing so.

Is there business synergy between the Hall & Prior Agreement and the Juniper Agreement (s 318(3)(f))?

[45] Hall & Prior submitted there is little business synergy between the Hall & Prior Agreement and the Juniper Agreement. This can be quite easily deduced given that Juniper operated as a religious charitable organisation, and as such was not required to pay payroll or company tax. 27 According to Mr Hitchcock this allowed Juniper to offer unique efficiencies that otherwise are not available to Hall & Prior in the running of its operations.

Consideration

[46] It is evident that the commercial operations of the two companies differed given Juniper operated as a religious charitable organisation. It is not unreasonable to infer that this gave Juniper the advantage of offering terms and conditions of employment that Hall & Prior could not match.

[47] For example, under cl 16 of the Juniper Agreement reference is made to salary packaging within the organisation in accordance with Juniper’s Salary Packaging Policy. In the letters of offer, Hall & Prior have readily acknowledged, with the exception of superannuation contributions, it is not able to offer salary packaging. As a consequence, it has buffered the impact upon the transferring employees by committing to a fortnightly payment at the estimated equivalent benefit that would have been received through such arrangements (capped at 12 months).

[48] There is limited business synergy between the Hall & Prior Agreement and the Juniper Agreement, a factor that weighs toward the issuing of the order sought.

Are there issues of the public interest in this matter?

[49] Hall & Prior has submitted that there are no issues of public interest in this matter that would impact the orders sought being made.

Consideration

[50] The public interest in this context is influenced by the objects of this part of the Act in s 309 and those adopted by the Act more broadly.

[51] There is public interest in ensuring that agreed and statutorily approved arrangements are not put aside lightly and where they are to no longer apply, the interests of the employees concerned are safeguarded. 28 The absence of an overall disadvantage in the terms and conditions of employment of the transferring employees, the evident support of same, and lack of objection from relevant registered organisations, are important considerations.

[52] Further, and particularly given the above context, there is also public interest in ensuring that the business of Hall & Prior is able to efficiently operate without unnecessary complications in its employment arrangements.

[53] In circumstances where there is not an overall disadvantage to the transferring employees, and they have provided their views, which are positive, after having been comprehensively briefed on the impact the change will have, then the public interest in this matter is served by facilitating arrangements that permit and encourage the maintenance of employment for the employees through the transfer of business process.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<AE425807  PR706080>

 1   Statutory Declaration of Daniel Hitchcock dated 18 March 2019 (Hitchcock) [4].

 2   Hitchcock [5]; AE428915.

 3   Fair Work Act 2009 (Cth) s 318.

 4   AE425807

 5   Fair Work Act 2009 (Cth) s 318(1)

 6   Fair Work Bill 2008 Explanatory Memorandum [1259].

 7   PR706062

 8 Hitchcock [6].

 9   Ibid.

 10 Ibid [17].

 11 Ibid [18].

 12   Ibid.

 13 Ibid [20].

 14 Ibid [21].

 15   Ibid [9](a) Exhibit DH3

 16   Hitchcock [9](b).

 17   Ibid.

 18   Ibid [9](c) Exhibit DH-5.

 19   Hitchcock [9](a) Exhibit DH-3.

 20   Ibid.

 21   Fair Work Act 2009 (Cth) s 318(3)(b); Linfox Australia Pty Ltd [2013] FWC 3384 [19].

 22   Linfox Australia Pty Ltd [2013] FWC 3384 [19].

 23   Hitchcock [11] Exhibit DH-6.

 24   Ibid.

 25   Ibid.

 26   Ibid.

 27 Hitchcock [24].

 28   Linfox Australia Pty Ltd [2013] FWC 3384 [29].