JTMEC Projects Pty Ltd
[2024] FWC 2558
•18 SEPTEMBER 2024
| [2024] FWC 2558 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
JTMEC Projects Pty Ltd
(AG2024/3223)
| Electrical contracting industry | |
| COMMISSIONER CRAWFORD | SYDNEY, 18 SEPTEMBER 2024 |
Application for orders relating to instruments covering new employer and transferring employees – orders made
BACKGROUND
An application has been made by JTMEC Projects Pty Ltd (JTMEC Projects) to the Fair Work Commission (the Commission) for orders pursuant to s.318 of the Fair Work Act 2009 (FW Act).
JTMEC Projects is part of the JTMEC Group which specialises in delivering electrical contracting services and products.
JTMEC Holdings Pty Ltd is the holding company for the JTMEC Group, which also relevantly includes JTMEC Projects and JTMEC Pty Ltd.
The majority of the JTMEC Group’s blue-collar workers are currently employed by JTMEC Pty Ltd, which is covered by the JTMEC Pty Ltd – Construction Services Enterprise Agreement 2015.[1]
The JTMEC Group has decided to transition to a structure where all of its employees are employed by JTMEC Projects for commercial reasons. The implementation of this strategy involves seeking the agreement of existing JTMEC Pty Ltd employees to transfer to employment with JTMEC Projects.
JTMEC Projects seeks orders in the following terms:
1. The JTMEC Pty Ltd – Construction Services Enterprise Agreement 2015 (Construction Agreement) does not cover JTMEC Projects and any employees of JTMEC Projects formerly employed by JTMEC Pty Ltd (Transferring Employees).
2. The JTMEC Projects Pty Ltd & ETU NSW/ACT Construction Union Agreement 2024-2025 (Union Agreement) will cover the Transferring Employees.
3. The orders will come into operation as follows:
a.For those Transferring Employees who have commenced employment with JTMEC Projects, the date of these orders; and
b.For those employees of JTMEC Pty Ltd who have not commenced employment with JTMEC Projects, on the day on which the Transferring Employees become employed by JTMEC Projects.
The application was supported by a witness statement from Scott Bell (General Manager and Managing Director for JTMEC Pty Ltd) dated 19 August 2024. Mr Bell’s statement had the following documents attached:
· Annexure 1: Correspondence sent to the Transferring Employees on 6 August 2024 regarding the JTMEC Group’s employment strategy.
· Annexure 2: A power point presentation provided by Lara McLauchlan (HR & HSE Business Partner for JTMEC Pty Ltd) to the Transferring Employees and future potential Transferring Employees on 8 August 2024 which provided information about the JTMEC Group’s employment strategy and a summary of the conditions in the Construction Agreement and the Union Agreement.
· Annexure 3: A summary of the conditions in the Construction Agreement and the Union Agreement.
JTMEC Projects also filed the following documents in support of the application:
· A copy of the JTMEC Holdings Pty Ltd board resolution to transition employees to employment with JTMEC Projects.
· A copy of the Construction Agreement.
· A copy of signed employment contracts between JTMEC Projects and the Transferring Employees that have already ceased working for JTMEC Pty Ltd and commenced working for JTMEC Projects.
The effect of the orders is for the Union Agreement to apply instead of the Construction Agreement for Transferring Employees who agree, or have agreed, to transfer their employment from JTMEC Pty Ltd to JTMEC Projects.
There are no employee organisations covered by the Construction Agreement. The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) is covered by the Union Agreement. The CEPU confirmed on 11 September 2024 that it does not oppose the application.
Given Mr Bell’s statement, I am satisfied the affected employees are aware of the application and none have indicated they wish to be heard in relation to the application.
I am satisfied that it is appropriate to deal with the application on the papers.
LEGISLATION
The relevant provisions in the FW Act are:
“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.”
CONSIDERATION
Transfer of business
Section 311 of the Act sets out the circumstances in which a transfer of business occurs. I am satisfied it is likely that there will be a transfer of business within the meaning of s.311(1) of the Act based on Mr Bell’s statement which confirms:
· JTMEC Pty Ltd and JTMEC Projects are associated entities within the meaning of the Corporations Act 2001.
· On 13 August 2024, JTMEC Holdings Pty Ltd (the parent entity for the JTMEC Group) passed a board resolution to further insulate its business from risk by confining employment risk to one entity, JTMEC Projects, and to have its commercial risk (loans, leases and contracts) sit with another JTMEC Group entity.
· On 20 August 2024, seven Transferring Employees ceased employment with JTMEC Pty Ltd and commenced employment with JTMEC Projects performing substantially the same work as they performed as an employee of JTMEC Pty Ltd.
Transferable instrument
Section 312 of the Act details instruments that may transfer:
“312 Instruments that may transfer
Meaning of transferable instrument
(1) Each of the following is a transferable instrument:
(a) an enterprise agreement that has been approved by the FWC;
(b) a workplace determination;
(c) a named employer award.
…”
The Construction Agreement was approved by the Commission on 8 October 2015 and it is a transferrable instrument within the meaning of s.312(1) of the FW Act.
Who may apply for an order?
The application has been made by JTMEC Projects, the new employer of the Transferring Employees. The requirement under s.318(2) has therefore been met.
Section 318(3) – Matters that the FWC must take into account
Section 318(3)(a) – the views of the new employer and the employees who would be affected by the order
Section 318(3)(a)(i) – the views of the new employer
JTMEC Projects and the broader JTMEC Group clearly support the making of the orders sought.
Section 318(3)(a)(ii) – the views of the employees
I am satisfied based on Mr Bell’s statement that the relevant employees support the application.
The views of JTMEC Projects and the employees weigh in favour of making the orders.
Section 318(3)(b) – whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
I am satisfied based on a comparison of the Construction Agreement and the Union Agreement, and the material filed by JTMEC Projects, that employees will not be disadvantaged by the orders. This factor weighs in favour of making the orders.
Section 318(3)(c) – if the order relates to an enterprise agreement—the nominal expiry date of the agreement
The Construction Agreement nominally expired on 8 October 2019. The Union Agreement is within its nominal term and does not nominally expire until 31 October 2025. I consider this weighs in favour of making the orders because the result will be employees being covered by a more contemporaneous instrument.
Section 318(3)(d) – whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
JTMEC Projects has provided evidence that it considers the transferable instrument may create disharmony, resulting in impacts on production, because the terms of the transferable instrument are inferior to the Union Agreement, which would cover the other blue-collar employees of JTMEC Projects. I accept this evidence, and it weighs in favour of making the orders.
Section 318(3)(e) – whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer
JTMEC Projects has provided evidence of some clients expressing concern about having employees on their sites covered by the Construction Agreement, given it has nominally expired. JTMEC Projects has also provided evidence that additional administrative costs will be incurred if its employees are covered by two separate industrial instruments. I accept this evidence, and it weighs in favour of making the orders.
Section 318(3)(f) – the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer
JTMEC Projects accepted there is some business synergy between the Construction Agreement and the Union Agreement but stated the orders will provide greater consistency across its workforce. I consider this to be a neutral factor.
Section 318(3)(g) – the public interest
I am satisfied it is in the public interest to make the orders sought. The orders will generate operational benefits for JTMEC Projects in relation to its important electrical work for critical parts of the Australian economy. The orders will also result in improved employment conditions for the Transferring Employees. This factor weighs in favour of making the orders.
Conclusion
Having considered the matters above, while there is one neutral consideration, it is apparent that all other matters weigh towards the granting of the application. Taking into account each of the matters set out in s.318(3) of the Act, I am satisfied that the orders as sought should be granted. The orders will be issued concurrently with this decision.
The orders will come into operation on the date the orders are made for employees that have already transferred from JTMEC Pty Ltd to JTMEC Projects. The orders will come into operation for the remaining JTMEC Pty Ltd employees on the date they become employed by JTMEC Projects.
COMMISSIONER
Determined on the papers.
[1] AE416054.
Printed by authority of the Commonwealth Government Printer
<AE416054 PR779374>
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