Hartfell Pty Ltd T/A Emerald Carrying Company

[2014] FWC 6923

[2014] FWC 6923

FAIR WORK COMMISSION

DECISION

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

Hartfell Pty Ltd T/A Emerald Carrying Company
(AG2014/1359)

Road transport industry
COMMISSIONER SPENCER	BRISBANE, 29 OCTOBER 2014

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

Background

[1] This application was filed by Hartfell Pty Ltd T/A Emerald Carrying Company (the Applicant), and concerns an application pursuant to s.318(1) of the Fair Work Act 2009 (the Act) for orders relating to an instrument covering a new employer (the Applicant) and the transferring employees. The Applicant’s representative has standing to make the application pursuant to s.318(2)(a).

[2] The Applicant wishes to acquire a number of assets from Reliance Petroleum and has made conditional offers of employment to drivers who are currently employed by Reliance Petroleum.

[3] In accordance with s.311(1) of the Act, a transfer of business has occurred. The transferring employees were covered by the Reliance Petroleum Consolidated Bulk Fuel Transport (Queensland) Agreement 2013 (Reliance Agreement), being an enterprise agreement approved by a Decision of Fair Work Commission (FWC) on 9 December 2013. 1 An enterprise agreement is a transferable instrument by operation of the Act s.312(1)(a). Section 313(1) provides that a transferrable instrument that covered the old employer and the transferring employees immediately before the termination of the employment will cover the new employer (being the Applicant). The operation of these sections means that the Applicant (the new employer) would be covered by the Reliance Agreement in relation to the transferring employees, however s.313(3) operates subject to s.318(1). Pursuant to s.318(1), the new employer (the Applicant) has sought that the transferable instrument not cover the new (transferring) employees.

[4] The Applicant applies for an Order pursuant to s.318(1)(a) to displace the operation of s.313(1) in relation to the Reliance Agreement. The transferring employees will then be covered by the Applicant’s existing industrial instrument, the Emerald Carrying Company Collective Agreement 2012 (Emerald Agreement), which currently covers the drivers employed by the Applicant.

Relevant legislation

[5] Section 313 provides:

313 Transferring employees and new employer covered by transferable instrument

(1) If a transferable instrument covered the old employer and a transferring employee immediately before the termination of the transferring employee’s employment with the old employer, then:

(a) the transferable instrument covers the new employer and the transferring employee in relation to the transferring work after the time (the transfer time) the transferring employee becomes employed by the new employer; and

....

(3) This section has effect subject to any FWC order under subsection 318(1).

[6] Section 318 provides:

318 Orders relating to instruments covering new employer and transferring employees

Orders that FWC may make

(1) 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) 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 FWC must take into account

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

Consideration

[7] The Applicant was requested to provide further materials in support of the application particularly referencing those matters that the Commission must take into account by virtue of s.318(3). Mr Chris Mossman, Solicitor of Macpherson and Kelley Lawyers, on behalf of the Applicant, filed material and submissions in support of the application, a statement by the General Manager of the Applicant and conditional offers of employment signed by the six transferring employees. Additionally, the Applicant filed a comparison of the Agreements and statements of the six transferring employees.

[8] A comparison was undertaken by the Commission in relation to the two Agreements. The Applicant provided further information in relation to the results of the comparison, which is discussed further below.

[9] The material is considered below in relation to each of the matters in s.318(3).

Section 318(3)(a)(i): the views of the new employer

[10] The Applicant, as the new employer, seeks that the transferable instrument (the Reliance Agreement) not cover or apply to it.

Section 318(3)(a)(ii): the views of the employees prospectively affected by any order

[11] The Applicant provided statements of all of the transferring employees and copies of the accepted conditional offers of employment. The statements indicated that the transferring employees are agreeable to the Order being issued.

Section 318(3)(b): any disadvantage to the employees

[12] The submissions of the Applicant stated that it was difficult to assess whether there was any disadvantage to the transferring employees. A comparison was undertaken by the Commission which indicated that an a Grade A Road Train Driver performing 38 hours work within the spread of ordinary hours under the Reliance Agreement would not be better off under the Emerald Agreement. However, if these employees worked 3.8 hours or more in overtime in any week or perform any weekend work, they would be better off under the Emerald Agreement.

[13] The Commission’s comparison indicated that given the provisions in the Emerald Agreement for employees to work reasonable overtime, this may not have a huge effect in practice. The Applicant was asked to provide further material to address the effect on the transferring employees.

[14] The Applicant further submitted that there was one Grade A Road Train Driver, who had the potential to be affected as above, but that he would not be so affected due to the number of hours (60) that the employee worked each week.

Section 318(3)(c): the nominal expiry date of the transferable instrument (the Agreement)

[15] The nominal expiry date of the Reliance Agreement is 24 September 2016. The nominal expiry date of the Emerald Agreement, the Agreement that will cover the transferring employees, is 21 August 2016.

Section 318(3)(d): any negative impact on productivity on the employer’s workplace

[16] The Applicant submitted that the Reliance Agreement would have a negative impact on productivity as it is a complex document which was obviously negotiated for a large and sophisticated business. The Applicant submitted it would not be suitable for the operation of a small employer located in regional Queensland.

Section 318(3)(e): any significant economic disadvantage to the employer

[17] The Applicant submitted that it was difficult to assess whether the Applicant would suffer significant economic disadvantage if the transferable instrument was to cover the new employer. The Applicant submitted that this factor should be treated as a neutral consideration.

Section 318(3)(f): business synergy between the transferable instrument and the existing agreement

[18] The Applicant submitted that the Reliance Agreement would not fit well with the Applicant’s operations as it is designed to meet the need of a large business with a large workforce and contains some complex arrangements. The Applicant submitted that it was only a small employer and is happy to operate under the arrangements in the Emerald Agreement.

Section 318(3)(g): the public interest

[19] The Applicant submitted that it was not in the public interest for a small regional employer to take over a complex agreement which applies to a large and sophisticated national operation and that it would create significant inefficiencies for the Applicant.

[20] The Applicant relied on the case of Optus Administration Pty Ltd v Australian Municipal, Administrative, Clerical and Services Union; Communications, Electrical, Electronic, Energy, Information, Postal and Plumbing and Allied Services Union of Australia - Communication Division[2010] FWA 3567, in which Deputy President Sams stated that ensuring the efficient and effective operation of the business was a matter within the public interest.

CONCLUSION

[21] On balance, taking into account each of the matters stipulated at s.318(3), I am satisfied that the Order sought should be granted.

[22] A separate Order will issue [PR557193]. The Order will come into operation, in accordance with s.318(4).

COMMISSIONER

 1   Application by Centrel Pty Ltd T/A Reliance Petroleum [2013] FWCA 9613.

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