HBF Health Limited T/A HBF

[2021] FWC 3765

[2021] FWC 3765

FAIR WORK COMMISSION

DECISION

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

HBF Health Limited T/A HBF
(AG2021/5639)

COMMISSIONER PLATT ADELAIDE, 30 JUNE 2021

Application for orders in relation to a transfer of business.

Background

[1] HBF Health Limited T/A HBF (HBF) has made an application to the Fair Work Commission pursuant to s.318 of the Fair Work Act 2009 (Cth) (the Act) for an order in relation to a transfer of business.

[2] Section 318 of the Act empowers the Commission to make an order that a transferable industrial instrument that would likely cover a new employer will not do so, and that an enterprise agreement that covers the new employer will cover the transferring employee.

[3] Sections 318(2) of the Act provides who may make such an application and s.318(3) of the Act details what the Commission must take into account.

[4] HBF is a private health insurance provider. HBF employees from Grades 2 to 11 are currently covered by the HBF Enterprise Agreement 2018 – 2021.

[5] HBF has recently contracted for the share purchase of CUA Health Limited (CUA), who were previously wholly owned by Credit Union Australia Limited. HBF advises there was a transfer of business as contemplated by s.311 of the Act.

[6]  Employment has been offered by HBF to the employees who are transferring from CUA (the Transferring Employees).

[7] HBF seeks an order that the Transferring Employees will not be covered by the CUA Enterprise Agreement 2017 (CUA Agreement)but will be covered by the HBF Enterprise Agreement 2018 – 2021 (HBF Agreement).

Statutory provisions

[8] Section 318 of the Act provides as follows:

“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.”

[9]  I also note that the exercise of the discretion given to the Fair Work Commission in this regard is also undertaken within the objects of this Part of the Act, which states as follows:

“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.”

[10] This application was filed prior to the transfer of business taking place. HBF appears to fall within the requirements of s.318(2) and is thus able to make the Application.

[11]  I now turn to the matters I am required to take into account.

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

[12] HBF have made this application on grounds as set out in the Application Form F40 completed by Mr Anthony Longland of Herbert Smith Freehills, namely:

•  The industrial arrangements of all of HBF’s employees should be, as much as possible, be standardised and consistent.

•  HBF will soon be commencing negotiations for a new enterprise agreement, and as such, the Transferring Employees should be able to participate in the negotiation on the same footing as their colleagues.

•  The HBF Agreement is more beneficial than the CUA Agreement, and as such HBF wants to minimise any inequities between the Transferring Employees and the existing employees.

•  The HBF Agreement is tailored to HBF’s operations, and as such is the most efficient and effective means of governing all employees’ relationship with their employer.

Section 318(3)(a)(ii): the views of the Transferring Employees

[13] HBF submitted in its Application that all Transferring Employees provided their informed support for the Application. Evidence was provided which stated:

•  HBF held a number of information sessions in which the Application was discussed and the differences between the CUA Agreement and the HBF Agreement were explained to the Transferring Employees. Additionally, HBF provided documentation including an explanatory PowerPoint Presentation with a line-by-line comparison of the Agreements.

•  The Transferring Employees were provided with the opportunity for ‘drop-in’ sessions to discuss any questions they had about the Application.

•  HBF’s offer of employment to the Transferring Employees outlined that acceptance of the offer confirmed the employee’s support for the Application, and anyone who wished to accept employment but not support the Application was invited to raise it with Mr Matthew Rainbow, General Manager People Services.

•  One employee raised a question with Mr Rainbow, but ultimately all 55 Transferring Employees signed accepted the offer and in doing so supported the Application.

[14] On 23 June 2021, my Associate sent the Application to all of the Transferring Employees and gave them an opportunity to express any views they had on the Application. Each of the Transferring Employees who provided their views on the Application supported it.

[15] I consider the views of the Transferring Employees as a consideration in favour of the order being granted.

Section 318(3)(b): Whether any affected employees would be disadvantaged by the order

[16] The Applicant has submitted that rather than being disadvantaged, the Transferring employees will receive more beneficial terms and conditions of employment overall.

[17] HBF submits that the only terms of the CUA Agreement which provide a material advantage compared to the HBF Agreement have been included in its letter of offer to the Transferring Employees.

[18] I am satisfied the Transferring Employees would not be disadvantaged by the order.

Section 318(3)(c): The nominal expiry dates of the agreements

[19] HBF submits that given the CUA Agreement expired on 30 June 2020, and the HBF Agreement expires on October 2021, the Transferring Employees will have greater certainty of terms under the HBF Agreement for that period, which weights in favour of making the order.

[20] I regard the nominal expiry dates of the agreements to be a neutral consideration.

Section 318(d): Negative impact on productivity of the Applicant’s workplace

[21] HBF has submitted that they would incur substantial costs reconfiguring its payroll system in order to administer the CUA Agreement. Additionally, HBF believe that the differences in terms and conditions may lead to morale issues within the company.

[22] Both of these factors are described as having a negative impact on the productivity of HBF’s workplace.

Section 318(e): Significant economic disadvantage as a result of the CUA Agreement covering HBF

[23] The Applicant lists the implementation and administration of the CUA Agreement, the reconfiguration of its payroll system, and additional training for HBF managers and staff as forms of economic disadvantage which would be a result of the CUA Agreement covering the Applicant.

Section 318(f): Degree of business synergy between the HBF Agreement and the CUA Agreement

[24] HBF lists the difference in classifications of employees, difference in relation to long service leave and personal leave and difference in the types and terms of allowances as reasons as to why there is no business synergy between the HBF Agreement and the CUA Agreement.

[25] I am satisfied that the CUA Agreement is different enough to the HBF Agreement that having it apply to the Transferring Employees would lead to negative impacts on the productivity and economic position of HBF. I agree that there is little business synergy between the two agreements, and that to implement both agreements simultaneously could cause HBF significant problems.

Section 318(g): Public interest

[26] HBF submitted that the proposed order would be in the public interest on the basis that it would allow the Transferring Employees to participate in bargaining for the new HBF enterprise agreement from the same position as their colleagues, and it would reduce the complexity of the HBF’s employment arrangement and support the effective operation of their business.

[27] I accept it is in the public interest to allow the 55 Transferring Employees the unfettered opportunity to participate in bargaining for a new enterprise agreement on the same ground as their colleagues. I equally accept that it is in the public interest to support generally the effective operation of business.

Conclusions and orders

[28] Having regard to all of the considerations raised by s.318 of the Act, I am satisfied that I should exercise my discretion to grant the application and to make an order.

[29]  The Order 1 to be issued in conjunction with this decision is to the effect that the CUA Enterprise Agreement 2017 will not cover HBF and its employees who have transferred from CUA and that HBF and the transferring employees will be covered by the HBF Enterprise Agreement 2018 – 2021.

[30]  The Order will apply on and from 30 June 2021.

COMMISSIONER

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