JJTJ Pty Ltd T/A Bromar Electrical Services (Aust)

[2019] FWC 7620

[2019] FWC 7620

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.319—Enterprise agreement

JJTJ Pty Ltd T/A Bromar Electrical Services (Aust)
(AG2019/4036)

Electrical contracting industry
DEPUTY PRESIDENT CLANCY	MELBOURNE, 7 NOVEMBER 2019

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

[1] JJTJ Pty Ltd T/A Bromar Electrical Services (Aust) (JJTJ)has made an application to the Fair Work Commission (the Commission) pursuant to s.319 of the Fair Work Act 2009 (the Act) for an order in relation to a transfer of business.

[2] Previously operating as Bromar Electrical Services (Aust) Pty Ltd with ABN 116 106 711 (Bromar), the Managing Director was bought out by an existing director and a former director to form the current company, JJTJ Pty Ltd with ABN 45 634 835 939.

[3] On 1 October 2019, nine employees were terminated by Bromar and their employment transferred to JJTJ. They are covered by the Bromar Electrical Services (Aust) Pty Ltd Enterprise Agreement 2018-2022 (the Agreement) by virtue of s.313 of the Act. JJTJ now seeks an Order for the Agreement to cover non-transferring employees pursuant to s.319. There are currently no non-transferring employees employed by JJTJ.

The relevant legislation

[4] 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 enterprise agreements, certain modern awards and certain other instruments if there is a transfer of business from one employer to another employer.

[5] 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.”

[6] Sections 317 and 319 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.

…

319 Orders relating to instruments covering new employer and non-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 non-transferring employee because of subsection 314(1) does not, or will not, cover the non-transferring employee;

(b) an order that a transferable instrument that covers, or is likely to cover, the new employer, because of a provision of this Part, covers, or will cover, a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer;

(c) an order that an enterprise agreement or a modern award that covers the new employer does not, or will not, cover a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer.

Note: Orders may be made under paragraphs (1)(b) and (c) in relation to a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer, whether or not the non-transferring employee became employed by the new employer before or after the transferable instrument referred to in paragraph (1)(b) started to cover the new employer.

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 non-transferring employee who performs, or is likely to perform, the transferring work for the new employer;

(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 non-transferring employee before the later of the following:

(a) the time when the non-transferring employee starts to perform the transferring work for the new employer;

(b) the day on which the order is made.”

Transfer of business

[1] I am satisfied that there has been a transfer of business from Bromar to JJTJ and that JJTJ is a “new employer” pursuant to s.311(1) of the Act, having regard to the material before me by virtue of:

•  The employment of the nine transferring employees with Bromar having terminated on 1 October 2019 (s.311(1)(a));

•  The transferring employees having become employed by JJTJ within three months after the termination (s.311(1)(b));

•  The work the transferring employees are performing for JJTJ being the same, or substantially the same, as the work they performed for Bromar (s.311(1)(c)); and

•  There being a connection between Bromar and JJTJ (s.311(1)(d)), as described in s.311(3), in that JJTJ owns or has the beneficial use of some or all of the assets that Bromar owned or had beneficial use of and that relate to or are used in connection with, the transferring work.

[2] As I am satisfied that JJTJ is a “new employer” as defined pursuant to s.311(1) of the Act, it may apply to the Commission under s.319 of the Act for orders relating to a transferable instrument.

Transferable instrument

[3] As it is an enterprise agreement that was approved by the Commission on 16 July 2019, the Agreement is a transferable instrument pursuant to s.312(1)(a) of the Act.

[4] Section 313 of the Act provides that the Agreement covers JJTJ and the transferring employees, subject to any order of the Commission under s.318(1) of the Act.

[5] Section 314 of the Act provides that the Agreement covers JJTJ and any non-transferring employees, subject to any order of the Commission under s.319(1) of the Act. In this matter, JJTJ has advised that it has no current non-transferring employees.

Who may apply for an order?

[6] The application has been made by JJTJ, the new employer. This meets the requirements of s.319(2) of the Act.

[7] JJTJ seeks an Order that the Agreement covers it and any non-transferring employees pursuant to s.319 of the Act.

Matters that the FWC must take into account – Section 319

Section 319(3)(a) the views of the new employer or a person who is likely to be the new employer and the employees who would be affected by the order

[8] JJTJ, the new employer, has made the application under s.319 of the Act and supports the making of the Order sought. It also submits that the transferring employees agree to the making of the Order sought.

[9] There are no current non-transferring employees from whom I can receive views in considering the application.

[10] Having regard to these matters, I have formed the view that this factor weighs in favour of granting the Order.

Section 319(3)(b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment

[11] JJTJ submits that no transferring employees will be disadvantaged by the Order sought and equally, that no non-transferring employees would be disadvantaged because there are currently none. Further, it submits that any employees hired in the future will be better off overall as the Agreement has higher wages. A comparison of the wage rates in the Agreement and the Electrical, Electronic and Communications Contracting Award 2010 reveals the ordinary rates of pay in the Agreement are substantially higher and will be increased annually by 3.5% during the life of the Agreement.

[12] I have also had regard to the fact that the Agreement was approved by the Commission on 16 July 2019 and has a nominal expiry date of 16 July 2023.

[13] Having considered all the material before me, I am satisfied that the non-transferring employees will not be disadvantaged by the Order in relation to their terms and conditions of employment and therefore, this factor weighs in favour of granting the Order sought.

Section 319(3)(c) if the order relates to an enterprise agreement—the nominal expiry date of the agreement

[14] The nominal expiry date of the Agreement is 16 July 2023. This does not weigh against the granting of the Order sought.

Section 319(3)(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace

[15] JJTJ submits having the Agreement will not negatively impact on the productivity in the workplace. It also submits that if the Agreement did not cover non-transferring employees, it would be required to go through the process of terminating the Agreement and re-bargaining for a new one. It says this would have a negative impact on its productivity as this process was recently undertaken in July 2019.

[16] I am persuaded these submissions have merit and have formed the view that this factor weighs in favour of granting the Order.

Section 319(3)(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer

[17] JJTJ submits that there would be no economic disadvantage in transferring the Agreement as the old employer was procured from within by the new employer. I consider this to weigh in favour of granting the Order sought.

Section 319(3)(f) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer

[18] JJTJ submits that it does not currently have an existing enterprise agreement and currently only has transferring employees employed. It further contends that if there were no transferring employees, JJTJ would fall under the Electrical, Electronic and Communications Award 2010 (Award). It asserts that the Agreement was prepared and approved in line with that Award.

[19] I consider this factor weighs in favour of granting the Order sought.

Section 318(3)(g) the public interest

[20] JJTJ submits that the decision to allow the Agreement to apply to any new non-transferring employees would have no impact on the public.

[21] Given the circumstances and having regard to the material before me, I am not of the view that there are any public interest reasons not to make the Order sought.

Conclusion

[22] Having considered each of the matters set out in s.319(3) of the Act, I am satisfied that the following order should be made, with immediate effect (s.319(4)(b)):

•  The Bromar Electrical Services (Aust) Pty Ltd Enterprise Agreement 2018-2022 (or any agreement that may replace it) will cover all non-transferring employees in respect of their employment with JJTJ Pty Ltd T/A Bromar Electrical Services (Aust).

[23] An Order to this effect will be issued along with this decision.

DEPUTY PRESIDENT

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