Illawarra Retirement Trust
[2023] FWC 1596
•30 JUNE 2023
| [2023] FWC 1596 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Illawarra Retirement Trust
(AG2023/1658)
| Aged care industry | |
| COMMISSIONER MATHESON | SYDNEY, 30 JUNE 2023 |
Application for an order relating to instrument covering new employer and transferring employees.
Illawarra Retirement Trust (Applicant) has made an application under s.318 of the Fair Work Act 2009 (Cth) (Act). The Applicant is an aged care provider that operates in New South Wales, the Australian Capital Territory and Queensland. The Applicant and its employees are covered by the IRT Enterprise Agreement 2018 (IRT Agreement).
On or around 3 July 2023, the Applicant will purchase and acquire all assets and businesses run by Marco Polo Aged Care Services Limited (Old Employer). The Old Employer is a community-based, not-for profit organisation that provides aged care services for people living in the Illawarra region of New South Wales and operates two aged care facilities. Following the acquisition the Old employer will not require employees to perform aged care services as it will cease to trade.
The Old Employer has approximately 250 employees who will be impacted. As a part of the acquisition, the Applicant made offers of employment to 238 employees of the Old Employer (Transferring Employees). Transferring Employees who have accepted their offers of employment with the Applicant will be employed directly by the Applicant from the date the acquisition takes effect.
The Old Employer and its employees are covered by the Marco Polo Aged Services Ltd, NSWNMA and HSU Enterprise Agreement 2015-2017 (Transferable Instrument). The Applicant and its employees are covered by the IRT Enterprise Agreement 2018.
The application seeks orders from the Fair Work Commission (Commission) that:
·the Transferable Instrument will not cover the Applicant and the Transferring Employees from 3 July 2023 or the Transfer Date, whichever is later; and
·the IRT Agreement will cover the Transferring Employees from 3 July 2023 or the Transfer Date, whichever is later.
In deciding whether or not to make an order pursuant to s.318(1) of the Act, the Commission must take into account the matters set out in s.318(3) of the Act.
Legislation
Part 2-8 of Chapter 2 of the Act describes when a transfer of business occurs and s.312(1) of the Act provides for the transfer of certain instruments if there is a transfer of business from one employer to another employer.
Section 311 of the Act relevantly provides:
“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).
Meaning of transferring employee
(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.
Transfer of assets from old employer to new employer
(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:
(a)the old employer or an associated entity of the old employer; and
(b)the new employer or an associated entity of the new employer;
the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):
(c)that the old employer or the associated entity of the old employer, owned or had the beneficial use of; and
(d)that relate to, or are used in connection with, the transferring work.
….”
Section 313 of the Act 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
(b)while the transferable instrument covers the new employer and the transferring employee in relation to the transferring work, no other enterprise agreement or named employer award that covers the new employer at the transfer time covers the transferring employee in relation to that work.
…
(3) This section has effect subject to any FWC order under subsection 318(1).”
Sections 317 and 318 of the Act relevantly provide:
“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
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 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) 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.”
Initial matters
Based on the material before the Commission, I am satisfied that:
·The employment of the Transferring Employees with the Old Employer will terminate because following the acquisition, the Old Employer will not require any employees to perform aged care services as it will cease to trade (s.311(1)(a) of the Act).
·The Transferring Employees who have accepted their employment with the Applicant will become employees of the Applicant from the date of the acquisition and this will be within three months after the termination of their employment with the Old Employer (s.311(1)(b) of the Act).
·The work the Transferring Employees perform for the Applicant will be substantially the same as the work they performed for the Old Employer (s.311(1)(c) of the Act).
·There is a connection between the Old Employer and the Applicant as the Applicant will own or have beneficial use of all the Old Employer’s previous assets, which related to, or are used in connection with, the transferring work, being the provision of aged care services, pursuant to a commercial agreement between the Applicant and Old Employer (s.311(3).
·The Transferring Employees will be transferring employees in relation to the transfer of business (s.311(2) of the Act).
·The Transferable Instrument will cover the Old Employer and Transferring Employees immediately before the termination of the Transferring Employees’ employment with the old employer.
·The Transferable Instrument will cover the Applicant and the Transferring Employees in relation to the transferring work subject to any order of the Commission under s.318(1) of the Act (s.313 of the Act).
·The Applicant has standing to apply for the orders it seeks pursuant to s.318(2) of the Act.
Section 318(3) considerations
Section 318(3)(a)(i) - the views of the Applicant (new employer)
The Applicant supports the order sought. By way of summary, the Applicant’s stated reasons for making the application are that it has its own enterprise agreement in place and continuing to apply the Transferable Instrument would mean that two sets of different terms and conditions would apply to employees performing the same type of work, giving rise to an increased regulatory and administrative burden and cost. The Applicant also submits that the application of two instruments would not promote a cohesive workplace culture and foresees that its current employees may want to or will be asked to perform duties at the newly acquired sites and Transferring Employees may want to or will be asked to perform duties at the Applicant’s existing facilities. If the Transferable Instrument were to apply to the Applicant it would result in employees performing the same duties at the same site but under different terms and conditions.
The views of the Applicant weigh in favour of the making of the order.
Section 318(3)(a)(ii) - the views of the employees who would be affected by the order
A statement of Nia Briguglio was filed with the Commission. This statement indicates that the Applicant has worked with the Old Employer to take a number of steps to notify the Transferring Employees and their union representatives of the application and the intention for the Transferring Employees to be covered by the IRT Agreement. This included, among other things, written information about the Transferring Employees’ proposed terms and conditions of employment with the Applicant, a presentation, site visits where employees could ask questions about their terms and conditions of employment and provision of written responses to questions asked by the Transferring Employees.
The Applicant has stated that on 29 May 2023, it sent draft copies of the application and the statement of Nia Briguglio to the Health Services Union and NSW Nurses and Midwives’ Association asking them to urgently raise any comments or questions and have not received responses.
On 8 June 2023 I issued directions requiring the Applicant to serve a copy of the directions, application and accompanying material on the Transferring Employees. The Applicant provided a statutory declaration to the Commission as evidence of compliance. None of the Transferring Employees raised any objections in relation to the application.
As no employee provided their views, this is a neutral consideration.
Section 318(3)(b) - whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
Nia Briguglio’s statement indicates that it is the Applicant’s intention that the Transferring Employees will not be disadvantaged overall under the IRT Agreement compared to the Transferable Instrument. In particular, Nia Briguglio’s evidence is that:
· in most cases, the Transferring Employees will receive a higher base rate of pay under the IRT Agreement compared to the Transferable Instrument for the equivalent classification;
· if the application is granted and a Transferring Employee received a higher base rate of pay under the Transferable Instrument compared to what they would receive for an equivalent classification under the IRT Agreement, the Applicant will maintain the higher base rate of pay under the Transferable Instrument until:
othe IRT Agreement catches up (at which point the Transferring Employee will receive the base rate of pay under the IRT Agreement for the remainder of the life of the IRT Agreement); or
oa new enterprise agreement that applies to the Transferring Employee takes effect;
· the allowance rates under the IRT Agreement are higher than equivalent allowance rates in the Transferable Instrument, and in some cases over 40 percent higher;
· the Transferring Employees will not receive uniform or laundry allowances under the IRT Agreement because the Applicant orders, pays for and provides its corporate and operational employees uniform to wear for the performance of their duties. This is in contrast to the practice of the Old Employer that requires employees to provide their own uniform;
· the Applicant will recognise the Transferring Employees’ service with the Old Employer for the purpose of calculating entitlements to annual leave, long service leave, parental leave, personal/carer’s leave and redundancy pay;
· leave provisions in the IRT Agreement and Transferable Instrument are similar with both agreements largely applying the terms and conditions of the National Employment Standards (NES) regarding leave entitlements. Further, the IRT Agreement provides employees with an additional day of paid leave each year to be taken on their birthday or a nominated day within three months of their birthday.
Having regard to the above matters and having considered the differences between the IRT Agreement and Transferable Instrument and measures taken by the Applicant, I am satisfied that employees would not be disadvantaged by the order.
Section 318(3)(c)- The nominal expiry date of the agreement
The Transferable Instrument has passed its nominal expiry date of 30 June 2017.
Sections 318(3)(d), (e) and (f) – negative impact on productivity, significant economic disadvantage and degree of business synergy between instruments
The Applicant submits that:
· Continuing to apply the Transferable Instrument following the acquisition will have a negative impact on the Applicant’s productivity as there will be two sets of different terms and conditions applying to employees performing the same type of work. This would increase the administrative burden and cost to the Applicant and impact negatively on productivity.
· The Applicant would need to implement a new payroll system to accommodate all terms, conditions, classifications and pay rates in the Transferable Instrument. An estimate of the total costs over three years for implementing the relevant software, maintaining it and employing a dedicated payroll officer to administer it is $319,972.
· Applying the Transferable Instrument will not promote a cohesive workplace culture as Transferring Employees may not feel part of the Applicant’s workplace culture and may not feel connected with the Applicant’s employees if they are employed under a different set of conditions.
While, on my review of the Transferable Instrument and IRT Agreement, there is a degree of business synergy between them, they are nonetheless different in their terms, and I accept having to administer both instruments will give rise to additional costs and inefficiencies and will have a negative impact on the productivity of the Applicant’s workplace. The Applicant will incur economic disadvantage as a result of having to administer the Transferable Instrument and the estimated additional cost of doing so is significant. These considerations weigh in favour of the making of the orders.
Section 318(3)(g)- The public interest
The Applicant submits that the making of the orders sought will be in the public interest because the majority of the transferring employees have already consented to being employed under the terms of the IRT Agreement and the Transferring Employees will be no worse off and will have access to additional benefits. The Applicant submits there are no other issues of public interest that would impact the orders sought being made.
The notion of public interest refers to matters that might affect the public as a whole.[1] I have not identified any interests in relation to the application that are distinct in nature from the interests of the parties. In all the circumstances, and having considered the materials before the Commission, I am satisfied that there are no public interest considerations that weigh against making the orders sought.
Conclusion
Having taken into account the considerations in s.318(3) of the Act, I consider that the following orders should be made:
The Marco Polo Aged Care Services Ltd, NSWNMA and HSU NSW Enterprise Agreement 2015-2017 will not cover:
(a)Illawarra Retirement Trust (IRT); and
(b)any employees who are transferring employees in accordance with Part 2-8 of the Fair Work Act 2009 (Cth), being employees currently employed by Marco Polo Aged Care Services Limited (Marco Polo) and who will become employees of Illawarra Retirement Trust following the acquisition of Marco Polo’s businesses and assets by IRT on or around 3 July 2023 (Transferring Employees).
The IRT Enterprise Agreement 2018 will cover the Transferring Employees.
For the purposes of s.318(4) of the Act, the orders will come into operation in relation to each Transferring Employee at the later of the day on which the order is made or the time the Transferring Employee becomes employed by Illawarra Retirement Trust. The order [PR763814] will be issued in conjunction with this decision.
COMMISSIONER
[1] Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (2005) 139 IR 34, [23].
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