Hari Om Brothers Pty Ltd

[2016] FWC 6447

[2016] FWC 6447

FAIR WORK COMMISSION

DECISION

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

Hari Om Brothers Pty Ltd
(AG2016/5230)

Fast food industry
COMMISSIONER GREGORY	MELBOURNE, 16 SEPTEMBER 2016

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

[1] This decision deals with an application by Hari Om Brothers Pty Ltd (“the Applicant”) for an Order under s.319 of the Fair Work Act 2009 (Cth) (“the Act”) which deals with instruments covering a new employer and non-transferring employees.

Introduction

[2] The application was dealt with by the Commission in a hearing on 8 September 2016. Mr Brenton Allen from MST Lawyers was granted permission to appear on behalf of the Applicant under s.596(2)(a) as the matter involves a degree of complexity and his involvement might enable it to be dealt with more effectively.

[3] The Commission indicated at the conclusion of the proceedings it was prepared to grant the application and an order would issue as a consequence. This decision sets out the reasons for the decision handed down in transcript.

The Evidence and Submissions

[4] The Applicant submits that on 27 January 2016 a transfer of business from the old employer to the Applicant occurred within the meaning of s.311 of the Act. It also submits that the business assets associated with Houd Enterprises Pty Ltd (“the old employer”) transferred to the Applicant on this date, and since this time the Applicant has carried on the business previously carried on by the old employer.

[5] Section 311(1) sets out the circumstances in which a transfer of business occurs. It states:

“S. 311 When does a transfer of business occurs

(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).”

[6] The transferring employees are covered by the IPCA Enterprise Agreement 2014 (“the Agreement”), which was approved by the Commission on 14 May 2015 1 and has a nominal expiry date of 13 May 2019. The Agreement was made between various employer parties, including the old employer and various employees employed in the following job classifications:

• Sandwich Artist;



• Senior Sandwich Artist; and;



• Restaurant Supervisor/Manager.

[7] Since taking on the business in 27 January 2016 the Applicant has employed five non-transferring employees who are currently covered by the Fast Food Industry Award 2010. It now seeks an order that the Agreement cover all employees, including current and future non-transferring employees, who will perform the transferring work. Eight of the original eleven transferring employees continue to be employed by the Applicant.

[8] The Applicant submits the work now performed by the transferring employees for the new employer is the same or substantially the same as the work performed for the old employer. It continues to submit there is a connection between the old employer and the Applicant in that all of the business assets owned by the old employer were transferred to the Applicant on 27 January 2016. Therefore, under s.311 of the Act there is a transfer of business and the employees of the old employer are transferring employees within the meaning of the Act.

[9] The Applicant also submits that the Agreement is a transferable instrument by virtue of s.312(1)(a) of the Act, and s.313 continues to provide for the transferable instrument (the Agreement) to transfer to the new employer (the Applicant) along with the transferred employees. It submits the Applicant and the transferring employees are therefore already covered by the Agreement.

[10] The application also makes reference to the various matters the Commission is required to consider when issuing an Order under s.319. It also attaches a witness statement provided by Mr Parimal Patel, a Director of the Applicant, together with five separate statements provided by each of the non-transferring employees, confirming their desire to be covered by the Agreement.

Consideration

[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] The Applicant is covered by the Fast Food Industry Award 2010, which is a modern award within the meaning of s.314(1)(d) of the Act. It follows that because some or all of the non-transferring employees were employed after the transfer of business the coverage of the Agreement does not extend to those employees at this time.

[13] However, the operation of s.314 is subject to s.319 which allows for the Commission to make an order that a transferring instrument cover non-transferring employees.

[14] Section 319(3) sets out the matters that the Commission must take into account in considering whether to issue an order under s.319. It states:

“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.

[15] I now turn to deal with each of the matters that the Commission is required to have regard to in s.319(3).

The views of the new employer - s.319(3)(a)(i)

[16] The Applicant has made this application on the basis that it will avoid having some employees being covered by one industrial instrument and receiving more beneficial entitlements, while other employees in the same workplace are covered by another instrument that contains lesser entitlements.

[17] Secondly, the Applicant submits that by making the orders sought it will avoid the administrative challenges and difficulties of having to apply two different industrial instruments to employees in what is a relatively small workplace.

The views of the employees - s.319(3)(a)(ii)

[18] The Applicant submits that the employees have been given a copy of the Agreement, together with an explanatory “FAQ document” explaining the differences between the Agreement and the Fast Food Industry Award 2010. It is also noted that the application attached five employee statements completed by the non-transferring employees expressing their wish to be covered by the Agreement.

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

[19] The Applicant submits that the non-transferring employees will be entitled to better terms and conditions of employment under the Agreement than those contained in the Fast Food Industry Award 2010 if the orders are made.

Expiry date of the agreement s.319(3)(c)

[20] The nominal expiry date of the IPCA Enterprise Agreement 2014 is 13 May 2019. The Applicant submits that this extended period provides certainty and security for the employees if the orders are made.

Productivity s.319(3)(d)

[21] The Applicant submits there would be no negative impact on the productivity of the workplace if the orders are made. It continues to submit to the contrary that having employees in a small workplace under two different industrial instruments, providing for different entitlements, will potentially create dissatisfaction among the employees, particularly the non-transferring employees who are in receipt of lesser entitlements.

[22] As indicated previously the Applicant also states that if the order is not granted there will be operational and administrative inefficiencies arising from having to administer two different industrial instruments within a small workplace.

Economic disadvantage s.319(3)(e)

[23] There is there is no evidence indicating that there will be any economic disadvantage if the order is made.

Degree of business synergy s.319(3)(f)

[24] As indicated already the Applicant submits that there is little business synergy between the Agreement and the Fast Food Industry Award 2010 as they provide for different minimum employment conditions.

Public interest s.319(3)(g)

[25] The evidence does not indicate any public interest considerations that need to be taken into account in dealing with the present application.

Conclusion

[26] I am satisfied, in conclusion, having regard to each of the matters set out in s.319(3) that the Commission must have regard to, together with the information contained in the various attachments to the application, that it is appropriate for an order to be made. In accordance with the requirements of s.319(4) the order will come into operation on
8 September 2016. The order is issued in conjunction with this decision.

COMMISSIONER

Appearances:

Mr B Allen appeared on behalf of the Applicant.

Hearing details:

2016.

Melbourne:

8 September.

 1   AE413846

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<Price code C, AE413846  PR585191 >