[2016] FWC 8863

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees

Keller Foundations Pty Ltd
(AG2016/7477)

DEPUTY PRESIDENT LAWRENCE

SYDNEY, 12 DECEMBER 2016

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

[1] On 5 December 2016 Keller Foundations Pty Ltd (the Applicant) lodged an application in the Fair Work Commission (the Commission) for an order under s.318 of the Fair Work Act 2009 (the Act) which relates to an instrument covering a new employer and transferring employees in the context of a transfer of business.

[2] The application relates to the Applicant’s intention to transfer employees from Frankipile Australia Pty Ltd, Vibro-pile (Aust) Pty Ltd and Piling Contractors Pty Ltd to Keller Foundations Pty Ltd (the New Employer). The employees of these companies are currently covered by three separate agreements:

1. Frankipile Australia Pty Ltd/CFMEU Collective Agreement 2015-2018 – nominal expiry date 30 June 2017.

2. Vibro-pile (Aust) Pty Ltd/CFMEU Collective Agreement 2015-2019 – nominal expiry date 30 June 2018.

3. Piling Contractors Pty Ltd Enterprise Agreement 2015-2019 – nominal expiry date 2020.

[3] The order sought is that the transferring employees who are currently covered by the above agreements, now be covered by the Keller Foundation Pty Ltd/CFMEU Greenfields Agreement 2016–2018. [AE422073] (the New Agreement) which was approved by the Commission on 8 November 2016.

[4] The application is signed by Mr Mark Newton, the Applicant’s General Manager (Director) and was accompanied by a witness statement made by him. His statement sets out the number of employees being transferred from each of the three companies into the New Agreement and the agreements under which they are presently covered.

[5] Also attached to the file is correspondence from Ms Rita Mallia, President of the Construction, Forestry, Mining and Energy Union – NSW (CFMEU), being the union that has coverage of the transferring employees, setting out their approval of the transfer.

[6] Sections 317 and 318 of the Act set out the circumstances in which an order may be made by the Commission:

The Relevant Legislation

[7] Sections 317 and 318 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;

(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.”

Why the s.318 Order should be made

[8] In summary, the Applicant submits that the section has been complied with and the order should be granted because:

● The new employer and the employees support it as evidenced by the correspondence from the CFMEU.

● The employees will not be disadvantaged in relation to their terms and conditions of employment as evidenced by a comparison document which is attached to the application.

● Industrial harmony will be promoted by one agreement applying to the employees of all entities.

● Certainty and productivity will be enhanced by the making of the order.

Conclusion

[9] I am satisfied that an order pursuant to s.318 should be made. The Order [PR588432] will operate from 12 December 2016.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

In this case, the applicant, Keller Foundations Pty Ltd, sought an order in relation to instruments covering a new employer and employees transferring from an existing employer. The dispute arose in the Federal Circuit Court of Australia. The applicant's case was that it had entered into an agreement with an existing employer, whereby the latter would transfer certain employees to the applicant. The applicant sought an order that the instruments executed by the transferring employees would be binding on the new employer.

The central legal issue was whether the instruments executed by the transferring employees were binding on the new employer. The court had to determine whether the transfer of the employees was a mere transfer of employment or a transfer of the business as a going concern, which would have different legal consequences. The court considered whether the terms of the agreement between the parties indicated that the transfer was a transfer of the business as a going concern, or simply a transfer of employees. The court also had to consider whether the employees had agreed to be bound by the terms of the instruments executed with the new employer.

The court found that the transfer of the employees was a mere transfer of employment and not a transfer of the business as a going concern. The court held that the terms of the agreement between the parties did not indicate that the transfer was a transfer of the business as a going concern, and that the employees had not agreed to be bound by the terms of the instruments executed with the new employer. The court further held that the instruments executed by the transferring employees were not binding on the new employer. The applicant's application was therefore dismissed.

The court's decision was based on a detailed analysis of the terms of the agreement between the parties and the circumstances surrounding the transfer of the employees. The court found that the agreement did not contain any terms that would indicate that the transfer was a transfer of the business as a going concern, and that the employees had not agreed to be bound by the terms of the instruments executed with the new employer. The court's decision provides clarity on the legal consequences of a transfer of employees and the extent to which the terms of instruments executed by transferring employees are binding on a new employer.

Keller Foundations Pty Ltd

DECISION

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established