JTMEC Projects Pty Ltd

Case •

[2023] FWC 3170

•

1 DECEMBER 2023
[2023] FWC 3170

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

(AG2023/3633)

Electrical contracting industry

COMMISSIONER CRAWFORD

SYDNEY, 1 DECEMBER 2023

Application for orders relating to instruments covering new employer and transferring employees – orders made

BACKGROUND

  1. 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).

  1. The JTMEC Group is an Australasian electrical manufacturer and contractor which provides mining, tunnelling, construction, and infrastructure companies across Australia with mining and industrial power solutions.[1]

  1. JTMEC Holdings Pty Ltd is the holding company for the JTMEC Group, which also relevantly includes JTMEC Projects and JTMEC Pty Ltd.[2]

  1. The JTMEC Group currently employs blue collar workers using JTMEC Projects, which is covered by the JTMEC Projects Pty Ltd Enterprise Agreement, and JTMEC Pty Ltd, which is covered by the JTMEC Pty Ltd – Construction Services Enterprise Agreement 2015.[3]   

  1. JTMEC Projects seeks orders in the following terms:

    1.   The JTMEC Pty Ltd – Construction Services Enterprise Agreement 2015 [2015] FWCA 6903 (AE416054) (Construction Agreement) does not cover JTMEC Projects and any employees of JTMEC Projects formerly employed by JTMEC Pty Ltd (Transferring Employees); and

    2.   The JTMEC Projects Pty Ltd Enterprise Agreement [2021] FWCA 6458 (Projects 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.        

  2. The application consisted of a Form F40 - Application for orders in relation to transfer of business dated 10 October 2023 and a witness statement from Scott Bell (General Manager – JTMEC Pty Ltd) dated 9 October 2023.

  1. The effect of the orders is for the Projects 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.   

  1. There are no employee organisations covered by the Construction Agreement or the Projects Agreement.

  1. I listed the application for Mention/Directions on 19 October 2023. I granted permission for Daniel White from Mills Oakley Lawyers to represent JTMEC Projects at the Mention/Directions. There were no other appearances.

  1. During the Mention/Directions, I raised an issue that there was evidence filed about the views of the employees that have already transferred to employment with JTMEC Projects, however, the orders sought by JTMEC Projects would also cover JTMEC Pty Ltd employees that transfer to employment with JTMEC Projects in the future. No evidence had been provided regarding the views of this cohort of employees. I directed JTMEC Projects to provide further material regarding this issue. It did so via a second statement from Mr Bell dated 23 November 2023. 

  1. Given Mr Bell’s two statements, 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

  1. 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

  1. Section 311 of the Act sets out when 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 statements which confirm:

·   JTMEC Pty Ltd and JTMEC Projects are associated entities.[4]

·   On 25 May 2023, 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.[5]

·   On 5 June 2023, the board of JTMEC Projects resolved to take steps to implement the strategy determined by the JTMEC Group.[6]

·   The first step in the process of moving all blue-collar workers to employment with JTMEC Projects was the transfer of the JTMEC Group’s NSW Projects Division based in Orange. On 19 September 2023, all relevant employees within the NSW Projects Division ceased employment with JTMEC Pty Ltd and commenced employment with JTMEC Projects.[7]

·   This same process of offering blue-collar employees of JTMEC Pty Ltd employment with JTMEC Projects will be followed in the future for the remaining blue-collar employees of JTMEC Pty Ltd.[8]  

Transferable instrument

  1. 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.

…”

  1. 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?

  1. 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

  1. 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

  1. I am satisfied based on Mr Bell’s statements that the overwhelming majority of Transferring Employees support the application. Specifically, all of the NSW Projects Division employees[9] and around 88% of the remaining JTMEC Pty Ltd employees.[10] 

  1. 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

  1. I am satisfied based on a comparison of the Projects Agreement and the Construction Agreement and the material filed by JTMEC Projects[11] 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

  1. The Construction Agreement nominally expired on 8 October 2019. The Projects Agreement will not nominally expire until 2 November 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

  1. JTMEC Projects has provided evidence it considers the transferable instrument may create disharmony, resulting in impacts on production, because the terms of the transferable instrument are inferior to the Projects Agreement, which would cover the other blue-collar employees of JTMEC Projects.[12] 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

  1. JTMEC Projects has provided evidence some clients have expressed concern about having employees on their sites that are covered by the Construction Agreement, given it has nominally expired.[13] JTMEC Projects has also provided evidence additional administrative costs will be incurred if its employees are covered by two separate industrial instruments.[14] 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

  1. JTMEC Projects accepted there is some business synergy between the Construction Agreement and the Projects Agreement but stated the orders will provide greater consistency across its workforce.[15] I consider this to be a neutral factor. 

Section 318(3)(g) – the public interest

  1. 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

  1. 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.

  1. 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] Witness statement of Scott Bell dated 9 October 2023 at [8].

[2] Witness statement of Scott Bell dated 9 October 2023 at [6].

[3] Witness statement of Scott Bell dated 9 October 2023 at [10] and [11].

[4] Witness statement of Scott Bell dated 9 October 2023 at [6].

[5] Witness statement of Scott Bell dated 9 October 2023 at [16].

[6] Witness statement of Scott Bell dated 9 October 2023 at [17].

[7] Witness statement of Scott Bell dated 9 October 2023 at [25].

[8] Witness statement of Scott Bell dated 23 November 2023 at [7].

[9] Witness statement of Scott Bell dated 9 October 2023 at [36].

[10] Witness statement of Scott Bell dated 23 November 2023 at [14].

[11] Annexure SB1 to the witness statement of Scott Bell dated 23 November 2023.

[12] Witness statement of Scott Bell dated 9 October 2023 at [44].

[13] Witness statement of Scott Bell dated 9 October 2023 at [45].

[14] Witness statement of Scott Bell dated 9 October 2023 at [47].

[15] Witness statement of Scott Bell dated 9 October 2023 at [50].

Printed by authority of the Commonwealth Government Printer

<AE416054  PR768873>

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Cases Citing This Decision

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Cases Cited

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Statutory Material Cited

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JTMEC Pty Ltd [2015] FWCA 6903
JTMEC Projects Pty Ltd [2021] FWCA 6458