IKEA Pty Limited T/A IKEA
[2018] FWC 951
•16 FEBRUARY 2018
| [2018] FWC 951 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s 318 - Application for an order relating to instruments covering new employer and transferring employees
IKEA Pty Limited T/A IKEA
(AG2017/5912)
| Retail industry | |
| Deputy President Sams | SYDNEY, 16 FEBRUARY 2018 |
Application for an order relating to instruments covering new employer and transferring employees – views of employer and employees – Union support – benefits for transferring employees – no negative impact on employer’s productivity – business synergy – overwhelming support of employees – orders not contrary to public interest – orders made.
This decision determines two applications filed by IKEA Pty Limited t/a IKEA (‘IKEA’), pursuant to s 318 of the Fair Work Act 2009 (the ‘Act’) in which IKEA seeks orders relating to the industrial coverage of certain Transferring Employees. The application concerns two enterprise agreements. These agreements are:
· IKEA Western Australia Collective Workplace Agreement (the ‘Cebas Agreement’); and
· IKEA Enterprise Agreement 2017 (the ‘IKEA Agreement’).
Prior to March 2017, a separate Company, Cebas Pty Ltd (‘Cebas’) was a franchise of IKEA’s global parent company. On 1 March 2017, IKEA acquired 100% of the issued share capital in Cebas. Cebas’s employees (of which there are 395) are currently covered by the Cebas Agreement. Relevantly, the Cebas Agreement passed its nominal expiry date on 23 September 2012. The IKEA Agreement covers IKEA and its employees. IKEA intends to transfer the employment of Cebas employees to IKEA (the ‘Transferring Employees’) with effect from 9 April 2018. IKEA seeks orders, pursuant to s 318(1)(a), that the Cebas Agreement does not cover IKEA or the Transferring Employees who will perform, or are likely to perform, the transferring work for IKEA. IKEA also seeks orders, pursuant to s 318(b) of the Act, that the IKEA Agreement will cover the Transferring Employees.
The applicable legislation
The following provisions of the Act are relevant to my determination of this application
317 FWC may make orders in relation to a transfer of business
This Division provides for the FWC to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer.
318 Orders relating to instruments covering new employer and transferring employees
(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 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 employercovers, or will cover, the transferring employee.
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 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 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 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.
Turning to the relevant considerations under s 318 of the Act, IKEA, the new employer, of course strongly supports the applications being granted (s 318(3)(a)(i). In respect to the views of employees who would be affected by the orders (s 318(a)(ii)), I am satisfied that IKEA’s efforts to secure their views have been thorough and appropriate. IKEA conducted a number of information sessions between 6 November 2017 and 25 November 2017 for the purpose of explaining the proposal to transfer to the IKEA Agreement. It conducted a survey, of which 187 employees who cast a valid vote, 175 voted in favour of the transfer. Mr G Dwyer, National Secretary-Treasurer of the Shop, Distributive & Allied Employees’ Association (the ‘Union’) also offered the Union’s support for the applications. In respect to s 318(3)(b), IKEA submitted that no employees would be disadvantaged. On the contrary, the ordinary rates of pay will be higher, including at the times penalties apply, as the ordinary rates of pay in the IKEA Agreement are higher than the Cebas Agreement. IKEA submitted that if the applications are refused, it would have a negative impact on productivity given the administrative burden of maintaining two agreements. In addition, the predicted impact in the workplace, given the employees who are performing the same roles, would have different terms and conditions applying to them (s 318(3)(d). IKEA submitted that maintaining a payroll account to administer two agreements would be expensive and an economic disadvantage (s 318(3)(e)). There is also a lack of business synergy between the Cebas Agreement and the IKEA Agreement (s 318(3)(f)). Finally, IKEA submitted that granting the application would be in the public interest (s 318(3)(g)).
At a hearing of the applications on 21 December 2017, Mr R Clarke, of Work Relations, appeared with permission granted pursuant to s 596 of the Act, with Mr G Day, Human Resources Operations Manager for IKEA and Mr M Galbraith appeared for the Union. Mr Clarke gave further details of the background to the applications and reiterated that the requested orders are consistent with the objects of Part 2-8 of the Act. Mr Galbraith confirmed the Union’s support for the proposed orders.
Having considered the materials filed by the applicant and the views of the parties, I have decided to make the orders sought by IKEA, with effect from 9 April 2018. In doing so, I have taken all of the matters in s 318(3) into account; in particular, the views of the employer and the employees. I am satisfied that there is no disadvantage to the employees if the orders are granted and, in fact, they will be benefited by the change. In addition, there would be a negative impact on the productivity of the applicant’s business should the orders not be granted. Further, I am satisfied that granting the orders would not be contrary to the public interest (s 318(3)(g)).
Orders giving effect to this decision will be published contemporaneously with this decision.
DEPUTY PRESIDENT
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