GRail (NSW) Pty Limited T/A GRail

[2019] FWC 3779

[2019] FWC 3779

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
Section 319 - Application for an order relating to instruments covering new employer and non-transferring employees

GRail (NSW) Pty Limited T/A GRail
(AG2019/1672)

UGL NEWCASTLE OPERATIONS ENTERPRISE AGREEMENT 2017-2020
(ODN AG2017/4092)  [AE426089]

Manufacturing and associated industries
DEPUTY PRESIDENT ANDERSON	ADELAIDE, 13 JUNE 2019

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

[1] The Fair Work Commission (the Commission) received an application from GRail (NSW) Pty Limited (GRail) for an order pursuant to section 319 of the Fair Work Act 2009 (the FW Act) that the UGL Newcastle Operations Enterprise Agreement 2017-2020(the Agreement) will cover non-transferring employees of GRail who perform maintenance services.

[2] The Agreement is a single enterprise agreement. It was approved by the Commission on 14 November 2017 1. It was approved to operate from 21 November 2017 with a nominal expiry date of 22 April 2020. A variation to the Agreement was approved on and operated from 10 April 20192.

[3] The “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU), and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) are the named employee organisations covered by the Agreement.

[4] Prior to acquisition, UGL Rail Services Pty Ltd provided maintenance services to GRail, this work will now be insourced through GRail’s acquisition of UGL Rail Services Pty Ltd effective 1 July 2019.

[5] I issued directions on 22 May 2019 seeking the views of transferring employees and of the AMWU and CEPU.

[6] The matter was the subject of a hearing on 3 June 2019, at which time the AMWU and CEPU appeared and registered an objection to the application.

[7] On 12 June 2019, following further discussion with the employer the AMWU and CEPU advised that their objections to the application were withdrawn. As a result there are no objecting parties to this application.

[8] Section 311 of the FW Act sets out the circumstances in which a transfer of business occur. It states:

“311 When does a transfer of business occur

Meanings of transfer of business, old employer, new employer and transferring work

(1) There is a transfer of business from an employer (the old employer ) to another employer (the new employer ) if the following requirements are satisfied:

(a) the employment of an employee of the old employer has terminated;

(b) within 3 months after the termination, the employee becomes employed by the new employer;

(c) the work (the transferring work ) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;

(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).”

[9] Section 312 of the FW Act further states that a ‘transferable instrument’ includes “an enterprise agreement that has been approved by the FWC”.

[10] I am satisfied that there was a transfer of business and that the employees of UGL Rail Services Pty Ltd transferred to GRail under the terms of the FW Act. I am also satisfied that the Agreement is a transferable instrument and that it now covers GRail and the transferring employees.

[11] Section 314 of the Act provides for a transferable instrument to cover other employees in certain circumstances. It states:

“314 New non-transferring employees of new employer may be covered by transferable instrument

(1) If:

(a) a transferable instrument covers the new employer because of paragraph 313(1)(a); and

(b) after the transferable instrument starts to cover the new employer, the new employer employs a non-transferring employee; and

(c) the non-transferring employee performs the transferring work; and

(d) at the time the non-transferring employee is employed, no other enterprise agreement or modern award covers the new employer and the non-transferring employee in relation to that work;

then the transferable instrument covers the new employer and the non-transferring employee in relation to that work.

(2) A non-transferring employee of a new employer, in relation to a transfer of business, is an employee of the new employer who is not a transferring employee.

(3) This section has effect subject to any FWC order under subsection 319(1).

[12] In their application, GRail contends that the Manufacturing and Associated Industries Award 2010 (the Manufacturing Award) is a modern award that would apply to the non-transferring employees. The Manufacturing Award is likely to be relevant as the new business will perform maintenance services. Given the coverage of a modern award, the Agreement does not cover the non-transferring employees and as such, section 314(1) does not operate.

[13] However, section 319 of the FW Act allows the Commission to make an Order that a transferring instrument covers non-transferring employees. It relevantly states:

“319 Orders relating to instruments covering new employer and non-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 non-transferring employee because of subsection 314(1) does not, or will not, cover the non-transferring employee;

(b) an order that a transferable instrument that covers, or is likely to cover, the new employer, because of a provision of this Part, covers, or will cover, a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer;

(c) an order that an enterprise agreement or a modern award that covers the new employer does not, or will not, cover a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer.

Note: Orders may be made under paragraphs (1)(b) and (c) in relation to a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer, whether or not the non-transferring employee became employed by the new employer before or after the transferable instrument referred to in paragraph (1)(b) started to cover the new employer.

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 non-transferring employee who performs, or is likely to perform, the transferring work for the new employer;

(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 non-transferring employee before the later of the following:

(a) the time when the non-transferring employee starts to perform the transferring work for the new employer;

(b) the day on which the order is made.

[14] The applicant employer is entitled to apply to extend coverage of the Agreement to the non-transferring employees pursuant to section 319(1)(b) of the FW Act.

[15] I am required to be satisfied as to each of the matters contained in section 319 of the FW Act in determining whether an Order should be made. I now consider each of the criteria in section 319 of the FW Act.

The views of the new employer – section 319(3)(a)(i)

[16] GRail as the applicant employer (that is, the new employer) support the application and the Order that it proposes should be made.

The views of the new employees – section 319(3)(a)(ii)

[17] In accordance with my directions, employees to be covered by the Agreement were provided an opportunity to indicate whether any objection would be taken to the application or if they sought to be heard.

[18] No objection has been indicated by any of the employees to be covered by the Agreement and no employee has sought to be heard.

Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment – section 319(3)(b)

[19] I am satisfied that the employees would not be disadvantaged in relation to their terms and conditions of employment by the making of an Order.

Expiry date of the agreement – section 319(3)(c)

[20] The nominal expiry date of the Agreement is 22 April 2020, as such the Agreement remains on foot under the terms of the FW Act and it is desirable that pending the making of any new enterprise agreement, the terms of the Agreement also apply to the non-transferring employees.

Negative impact on Productivity – section 319(3)(d)

[21] I am satisfied that there will be no negative impact on productivity if the Order is made. In contrast, if the Order is not made and transferring and non-transferring employees are on different terms and conditions of employment, this may have a negative impact on team engagement and in turn upon workplace productivity.

Economic disadvantage – section 319(3)(e)

[22] The Agreement’s coverage of non-transferring employees will not cause any significant economic disadvantage.

Degree of business synergy – section 319(3)(f)

[23] If the Order is granted it will confirm a single framework of regulation that has been negotiated and approved in the context in which it has and will continue to apply. This is likely to enhance the degree of synergy that exists within the insourced business.

Public interest – section 319(3)(g)

[24] The public interest in this matter is served by facilitating arrangements that permit the maintenance of the presently approved employment conditions across the entire insourced business pending the making of any new instrument that might apply.

Conclusion

[25] Having considered each of the matters in section 319(3) of the FW Act I am satisfied that it is appropriate for an Order to be made.

[26] In accordance with section 319(4) of the FW Act, the Order will not come into operation in relation to each non-transferring employee until the later of the following:

•  the time when the non-transferring employee starts to perform the transferring work for the new employer; or

•  the day on which the order is made.

[27] An Order to this effect will be issued.

DEPUTY PRESIDENT

Appearances:

E. Lawrie and V. Hoey, for the Applicant

K. Presdee and C. Wright, for the AMWU

D. Austin, for the CEPU

Hearing details:

2019.

Adelaide; by telephone.

3 June.

Printed by authority of the Commonwealth Government Printer

<AE426089  PR708898 >

 1   [2017] FWCA 5973

 2   [2019] FWCA 2401