kikki.K Pty Ltd T/A kikki.K

[2017] FWC 3170

[2017] 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

kikki.K Pty Ltd T/A kikki.K
(AG2017/1757)

Retail industry
DEPUTY PRESIDENT CLANCY	MELBOURNE, 9 JUNE 2017

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

[1] kikki.K Pty Ltd T/A kikki.K (kikki.K) has applied under s.318 of the Fair Work Act 2009 (the Act) for an order in relation to a transfer of business.

[2] kikki.K is a stationery, gifts and organisation solutions retailer and its casual store workers, of which there are approximately 360, are currently engaged through a labour hire group called Employment Innovations. The terms and conditions of the casual store workers’ employment are governed by the HRO Initiatives Pty Ltd Employee Collective Agreement 2007 (EI Collective Agreement), which kikki.K says was made in May 2007 and which nominally expired on 4 May 2012.

[3] In its Form F40 – Application, kikki.K advised it intends to terminate the labour hire arrangement with Employment Innovations and directly employ the casual store workers with effect from early July 2017. kikki.K would like all employees to be employed under one enterprise agreement, the kikki.K Enterprise Agreement 2016 (kikki.K Agreement).

The Application

[4] In addition to the Form F40, an affidavit of Mr Iain Nairn, CEO of kikki.K, was filed.

[5] On 24 May 2017, I caused correspondence to be sent to kikki.K’s legal representative, Ms Louise Houlihan, directing that a letter from the Fair Work Commission be posted in each workplace of kikki.K and be distributed via email or post to all transferring employees who would be affected by the Order sought by close of business, Monday 29 May 2017. Ms Houlihan confirmed this direction had been complied with. Ms Houlihan also advised on 6 June 2017 that it was her client’s preference for the matter to be determined on the papers.

[6] The letter to transferring employees outlined the Order sought and noted that if it was made, their employment would be covered by the kikki.K Agreement, which may have an effect on the terms and conditions of their employment. It was advised that the Commission is required to take into account the views of employees that would be affected by the Order and whether any employees would be disadvantaged. Any views of transferring employees were invited to be provided by email to my chambers by noon, Friday 9 June 2017. No employee filed any material in the Commission.

The relevant legislation

[7] Part 2-8 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.

[8] Section 311(1) contains the definition of transfer of business:

“(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).”

[9] 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

(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.”

Transferable Instrument

[10] The EI Collective Agreement is a transferable instrument pursuant to s.312(1)(a) of the Act. On the material before me, it is likely there will be a transfer of business within the meaning of s.311(1) of the Act. Section 313 of the Act provides that the EI Collective Agreement would cover kikki.K and the transferring employees, subject to any Order of the Commission under s.318(1) of the Act.

Who may apply for an order

[11] The Application has been made by kikki.K, the likely new employer. This meets the requirements of s.318(2) of the Act.

Matters that FWC must take into account

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

[12] kikki.K, the likely new employer, has made the application and supports the making of the Order sought.

[13] Mr Nairn, through his affidavit, said that on 12 May 2017, kikki.K conducted a survey of casual store workers asking:

“Having considered the conditions of the kikki.K EA and the conditions of the EI Collective Agreement, I have decided that:

1. Yes, I would like the terms and conditions of my employment to be governed by the kikki.K EA; or

2. No, I would like the terms and conditions of my employment to remain as per the EI Collective Agreement.”

[14] Mr Nairn said the survey was conducted anonymously via an online survey provider, Survey Monkey, and of 90 responses, 89 were votes in favour of the kikki.K Agreement governing the terms and conditions of their employment. Despite being given a further opportunity to provide their view directly to my chambers by noon on 9 June 2017, no employee did so.

[15] Therefore, I consider of the approximately 360 casual store workers, 89 are supportive of the Order being made and one is not. Of the remainder, I treat their views neutrally.

[16] I have formed the view that this factor weighs in favour of granting the Order.

Section 318(3)(b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment

[17] Mr Nairn said that in all material respects, the kikki.K Agreement provides significantly better terms and conditions of employment for casual store workers than the EI Collective Agreement, including a base rate of pay that is approximately 4% higher as well as the payment of Saturday, Sunday and Public Holiday penalty rates that do not apply to casual store workers under the EI Collective Agreement.

[18] Having considered all the material before me, I am satisfied that employees will not be disadvantaged by the Order in relation to their terms and conditions of employment.

Section 318(3)(c) if the order relates to an enterprise agreement—the nominal expiry date of the agreement

[19] The nominal expiry date of the EI Collective Agreement was 4 May 2012. This is a neutral factor.

Section 318(3)(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace

[20] kikki.K submitted that this factor should be treated neutrally and there is no material before me to suggest otherwise.

Section 318(3)(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer

[21] kikki.K submitted that this factor should be treated neutrally and there is no material before me to suggest otherwise.

Section 318(3)(f) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer

[22] kikki.K submitted that this factor should be treated neutrally and there is no material before me to suggest otherwise.

Section 318(3)(g) the public interest

[23] kikki.K submitted that this factor should be treated neutrally.

[24] Having regard to the material before me, I am not of the view there are any public interest reasons not to make the Order.

Conclusion

[25] Having considered each of the matters set out in s.318(3) of the Act, I am satisfied that two matters weigh towards granting the Order, with the balance being neutral considerations. I am therefore satisfied that the Order sought should be made.

[26] An Order [PR593649] will be issued to this effect.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<Price code C, AC306776  PR593641 >