John Holland Pty Ltd
[2021] FWC 4483
•26 JULY 2021
| [2021] FWC 4483 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
John Holland Pty Ltd
(AG2021/5532)
Building, metal and civil construction industries | |
COMMISSIONER HARPER-GREENWELL | MELBOURNE, 26 JULY 2021 |
Application for an order relating to instruments covering new employer and transferring employee.
[1] This matter involves an application by John Holland Pty Ltd t/as John Holland (John Holland) under s.318 of the Fair Work Act 2009 (the Act). The application seeks an order from the Fair Work Commission (the Commission) relating to former employees of Ground Hog Civil (Vic) Pty Ltd(Ground Hog) who became employed by John Holland between 1 March and 6 March 2021 inclusive and are engaged to perform tunnelling and tunnelling civil construction work described in the West Gate Tunnel Project (Tunnelling) Agreement 2021 1(the Transferring employees).
[2] John Holland is seeking an order that the Ground Hog Civil (Vic) & Australian Workers’ Union Agreement 2018 2 (GH Agreement ortransferable instrument), does not cover John Holland and any of the Transferring Employees, and that the West Gate Tunnel Project (Tunnelling) Agreement 2021 (WGTP Agreement) will cover John Holland and each of the Transferring Employees.
[3] John Holland makes the application in its capacity as the new employer.
Background
[4] John Holland is contracted to undertake the construction and tunnelling work for the West Gate Tunnel Project (WGTP) in Melbourne. From approximately November 2018, John Holland outsourced its tunnelling and supporting civil construction work to Ground Hog, which provided workers to John Holland to perform work on the WGTP. Ground Hog’s employees on the WGTP undertook a range of tunnelling work and civil construction work supporting the tunnelling work (Transferring Work) under the GH Agreement.
[5] In settlement of a dispute over shift work between Ground Hog and its employees in November 2020, it was agreed that the GH Agreement would, subject to a vote of the Ground Hog employees, be varied consistent with the outcomes of the dispute and then the work would be insourced to John Holland in early 2021. The employees subsequently voted to vary the GH Agreement and this variation was approved by the Commission in December 2020. 3
[6] In or around March 2021, John Holland proceeded to insource the Transferring Work on the WGTP by directly employing workers formerly employed by Ground Hog (Transferring Employees). The Transferring Employees were employed by John Holland on the basis that there would be a transfer of business and that they would have their employment regulated by the GH Agreement until they had the opportunity to make and vote on a new enterprise agreement (new Agreement) specifically for the WGTP. All Transferring Employees have continued to perform the same work for John Holland as previously performed for Ground Hog since the transfer and will continue to do so while employed on the WGTP for John Holland.
[7] Between March 2021 and May 2021, a negotiation process occurred between John Holland, the employees and their representative, the Australian Workers’ Union (AWU). As part of the explanatory materials for that process, the employee cohort for the vote (whom John Holland advises are essentially all the Transferring Employees) were provided with a document which explained that this particular Commission process in respect of a transfer of business would follow and that their support for the new Agreement would also be taken as support for this process, i.e. that the effect of the transfer of the GH Agreement would be terminated by the Commission from the time that any such order was made.
[8] On 16 June 2021, I made the following directions:
a) John Holland was to serve a copy of the directions, the Form F40 Application and accompanying documents to any Transferring Employee and any potentially transferring employee covered by the GH Agreement and provide confirmation of service by no later than 4.00pm on 23 June 2021.
b) John Holland and any party supporting the making of the order(s) sought were to file and serve on any relevant employee organisation, Transferring Employee or potentially transferring employee any further submissions, statement(s) of evidence or other documents they intend to rely upon in support of the application, and a draft of the order(s) sought by no later than 4.00pm on 30 June 2021.
c) Any party opposing the making of the order(s) was to file in the Commission and serve on John Holland any submissions, statement(s) of evidence or other documents they intend to rely upon in opposition to the application by no later than 4.00pm on 14 July 2021.
d) Any request for a formal hearing was to be made (with reasons) by no later than 4.00pm on 16 July 2021, failing which the matter would be determined on the papers without a formal hearing.
[9] On 21 June 2021, the lawyers for John Holland advised by email that John Holland had provided a copy of the directions, the Form F40 Application and accompanying documents to all Transferring Employees. Further, on 30 June 2021 the lawyers for John Holland filed a draft of the order sought and advised that John Holland otherwise relied on the submissions and evidence contained in the application. No other material has been filed in response to the directions and there having been no request for a formal hearing, I have proceeded to determine the matter by reference to and reliance upon the grounds, submissions and other materials filed with the application.
The relevant legislation
[10] 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.
[11] 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.
…….
New employer is an associated entity of old employer
(6) There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employer by the new employer.”
[12] 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.
Transfer of Business?
[13] I am satisfied that has been a transfer of business from Groundhog to John Holland and that John Holland is a “new employer” pursuant to s.311(1) of the Act, having regard to the material before me, by virtue of:
a) the employment of the Transferring Employees with Groundhog having been terminated (s.311(1)(a)).
b) the Transferring Employees having become employed by John Holland within three months after the termination, (s.311(1)(b));
c) the work the Transferring Employees will perform for John Holland being the same, or substantially the same, as the work they performed for Groundhog (s.311(1)(c)); and
d) there is a connection between Groundhog and John Holland (s.311(1)(d)), as described in s.311(5), in that the John Holland has ceased to outsource the Transferring Work to Groundhog.
[14] As I am satisfied John Holland is a “new employer” as defined pursuant to s.311(1) of the Act, it may apply to the Commission under s.318 of the Act for orders relating to a transferable instrument.
Transferable instrument
[15] As it is an enterprise agreement that was approved by the Commission on 6 July 2018, the GH Agreement is a transferable instrument pursuant to s.312(1)(a) of the Act.
[16] Section 313 of the Act provides that the GH Agreement covers John Holland and the Transferring Employees, subject to any order of the Commission under s.318(1) of the Act.
Who may apply for an order?
[17] As stated above, the application has been made by John Holland, the new employer. This meets the requirements of s.318(2) of the Act.
[18] John Holland seeks orders that the GH Agreement does not and will not cover John Holland and Transferring Employees in respect of their work with John Holland.
Matters that the FWC must take into account- Section 318
Section 318(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
[19] John Holland, as the new employer, has made the application under s.318 of the Act and state that Transferring Employees support the making of the Order sought.
[20] In the Application John Holland submits that applying the WGTP Agreementto the Transferring Employees will promote harmonious workplace relations on the basis that the new Agreement maintains an appropriate safety net for the Transferring Employees’ terms and conditions of employment in respect of work on the WGTP, while also setting a project-specific foundation for the WGTP going forward. John Holland further submits that the WGTP Agreement also promotes fairness for what will subsequently be its future new employees performing the same work as Transferring Employees on the WGTP, on the basis that under the WGTP Agreement, these employees will receive the same rates of pay as Transferring Employees. On this basis, John Holland submits that the application should be granted.
[21] As regards the employees who would be affected by the order, 4 no material was submitted by any Transferring Employee or the AWU. John Holland submits that while the Transferring Employees initially accepted employment on the basis that their employment would maintain and continue to be covered by and apply the GH Agreement, they also understood as part of the offer process that a new enterprise agreement for the project would be negotiated and offered. John Holland submits this was fairly negotiated with the Transferring Employees and their representatives, and they have voted in favour of the New Agreement and this transfer process, which would end the application of the GH Agreement.
[22] John Holland further submits that as new employees are yet to have been employed on the WGTP, it was unable to obtain their views. However, John Holland says it believes that any new employees would support this application in the interests of their engagement on the WGTP.
Section 318(3)(b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
[23] John Holland submits that while in some respects there is some minor disadvantage to the Transferring Employees in overall terms, the WGTP Agreement is a union-negotiated enterprise agreement which provides a fair and appropriate safety net. John Holland also submits there are also improvements in the WGTP Agreement and that in voting for it, the Transferring Employees have shown their support for it notwithstanding any changes
Section 318(3)(c) if the order relates to an enterprise agreement—the nominal expiry date of the agreement
[24] The nominal expiry date of the GH Agreement was 28 February 2021. The nominal expiry date of the WGTP Agreement is 1 April 2025 and John Holland submits this will provide certainty for all parties for the rest of the tunnelling component of the WGTP and therefore weighs in favour of the application being granted.
Section 318(3)(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
[25] John Holland submits making the order sought will provide them with industrial certainty in respect of its work on the Tunnel Project until 2025 in circumstances where new employees will be imminently employed and would otherwise be on different terms and conditions. John Holland also submits that making the order will enable their administrative functions to operate more efficiently as the existing payroll configurations for the WGTP Agreement will also be able to be uniformly applied in respect of work covered by the WGTP Agreement.
Section 318(3)(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer
[26] John Holland makes no submission in relation to this factor.
Section 318(3)(f) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer
[27] John Holland makes no submission in relation to this factor.
Section 318(3)(g) the public interest
[28] John Holland submits that in the interests of giving effect to the outcomes of collective bargaining, the wishes of the parties in settlement of their own arrangements and the effective and productive completion of the tunnelling on the WGTP, it is in the public interest for this application to be granted.
Conclusion
[29] I have reviewed the application documentation and the accompanying material. These documents outline the factual circumstances which have given rise to the application. Further, the submissions contained in the application address the relevant legislative requirements which are asserted to provide for proper basis for the making of the orders sought. I am satisfied that by virtue of the operation of the Act, if the orders sought were not made, the Transferring Employees would continue to be covered by the GH Agreement.
[30] I have considered each of the matters set out in s.318(3) of the Act. I have had regard to the material before me and have noted the application is not opposed. In all the circumstances, I am satisfied that it is appropriate to make the order sought under s.318(1)(a) and (b) of the Act.
[31] In accordance with s.318(4) of the Act the order 5 shall have effect from today.
COMMISSIONER
Printed by authority of the Commonwealth Government Printer
<AE429124 PR732135>
1 AE511627
2 AE429124
3 Application for variation of the Ground Hog Civil (Vic) & Australian Workers' Union Agreement 2018 [2020] FWCA 6786
4 Section 318(3)(a)(ii) of the Fair Work Act 2009
5 PR732136
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