Kinetic (Melbourne Urban) Pty Ltd

Case •

[2023] FWC 2484

•

27 SEPTEMBER 2023
[2023] FWC 2484

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.319 - Application for an order relating to instruments covering new employer and non-transferring employees

Kinetic (Melbourne Urban) Pty Ltd

(AG2023/3325)

COMMISSIONER WILSON

MELBOURNE, 27 SEPTEMBER 2023

Application for an order relating to instruments covering non-transferring employees

  1. This decision concerns an application by Kinetic (Melbourne Urban) Pty Ltd (Kinetic Urban) for an order pursuant to s.319 of the Fair Work Act 2009 (Cth) (the Act) that the Kinetic Melbourne Bus Driver Enterprise Agreement 2022–2025[1] cover Non-Transferring Employees who perform transferring work for Kinetic Urban.

  1. This is one of two related applications made to the Fair Work Commission (the Commission). Kinetic (Melbourne) Pty Ltd (Kinetic Melbourne) has made an application under s.318 of the Act for an order in relation to transferrable instruments for transferring employees and Kinetic Urban has made this application under s.319 of the Act for an order relating to instruments covering non-transferring employees. These applications are dealing with the same circumstances. The circumstances are set out below.

  1. This decision concerns the s.319 application.

  1. Kinetic Melbourne and Kinetic Urban are associated entities within the meaning of s.50AAA of the Corporations Act 2001 (Cth). Both entities are subsidiaries within the Kinetic Group. The Kinetic Group is a global mass transit service operator. It provides public transport, airport, school and charter bus services.[2]

  1. Kinetic Melbourne will be the initial employer of the Transferring Moreland Employees. It has made an application under s.318 of the Act for orders to prevent the MorelandBus Enterprise Agreement 2023[3] from covering it. Kinetic Melbourne is also seeking orders from the Commission that the Transferring Moreland Employees will be covered by the Kinetic Melbourne Bus Driver Enterprise Agreement 2022–2025 on the commencement of their employment with Kinetic Melbourne. This enterprise agreement currently covers Kinetic Melbourne.

  1. After completion of the sale of business agreement, the Transferring Moreland Employees employment with Kinetic Melbourne will transfer employment to Kinetic Urban. By virtue of s.313 of the Act, the Kinetic Melbourne Bus Driver Enterprise Agreement 2022–2025 will transfer with the Transferring Moreland Employees to Kinetic Urban if the s.318 orders are made by the Commission. Kinetic Urban has applied to the Commission for new Non-Transferring Employees to also be covered by the Kinetic Melbourne Bus Driver Enterprise Agreement 2022–2025.

BACKGROUND

  1. On 9 August 2023, Kinetic (Melbourne Urban) Pty Ltd entered into a sale of business agreement (Sale Agreement) with Moreland Bus Lines Proprietary Limited (Moreland Bus Lines). The application arises in the context of Kinetic Urban’s purchase from Moreland Bus Lines of certain business assets of Moreland Bus Lines including (but not limited to) buses, key service contracts (including those between Moreland Bus Lines and Public Transport Victoria), confidential information which relates to the Moreland Bus Lines business and other tangible and intangible assets owned or used by Moreland Bus Lines.[4] These assets are collectively referred to as the “Transaction”.

  1. The completion date of the Transaction is expected to be Monday, 2 October 2023.[5]

  1. The Sale Agreement requires Kinetic Urban to make offers of employment to 15 employees engaged as bus drivers who are currently employed by Moreland Bus Lines (Transferring Moreland Employees). These employees are engaged as bus drivers based at the Moreland Bus Lines Brunswick depot to operate services under a contract between Moreland Bus Lines and Public Transport Victoria (PTV). This contract will be acquired by Kinetic Urban as a part of the Transaction.[6] Kinetic Urban has made employment offers to all of the Transferring Moreland Employees. The offers of employment have been made jointly with Kinetic Melbourne.

  1. The Transferring Moreland Employees are currently covered by the MorelandBus Enterprise Agreement 2023. Once the Transaction is completed, the Transferring Moreland Employees will continue to operate their existing bus route pursuant to the PTV Contract which will be purchased by Kinetic Melbourne as part of the Transaction however they will operate out of the Kinetic Group depot in North Fitzroy as the Sale Agreement does not include the Moreland Bus Lines Brunswick depot.[7]

  1. Due to the ownership of the Kinetic Group, the Transaction requires approval under the Foreign Acquisition and Takeovers Act 1975 (Cth).[8] The Treasurer issued a “no objection” notification (FIRB Approval) on 5 July 2023 in relation to:

  • Kinetic Melbourne’s acquisition of Moreland Bus Line’s assets – 15 Transferring Moreland Employees; and

  • Kinetic Urban’s acquisition of the Metropolitan Bus Services contract (and any ancillary agreement) (PTV Contract) and 10 buses from Moreland Bus Lines.[9]

  1. The FIRB Approval authorises Kinetic Urban, rather than Kinetic Melbourne, to purchase the PTV Contract:[10]

“To ensure compliance with the FIRB Approval, it is necessary for the Transferring Moreland Employees to initially commence employment with Kinetic Melbourne. However, due to the contractual arrangements with PTV, it is necessary for the Transferring Moreland Employees to ultimately be employed by Kinetic Urban when performing work under the PTV Contract, as this is the entity that operates the contract with the State of Victoria.”[11]

  1. The Transferring Moreland Employees must therefore firstly be employed by Kinetic Melbourne and then subsequently be employed by Kinetic Urban.

  1. Kinetic Urban considers that these arrangements will constitute a transfer of business for the purposes of Part 2-8 of the Act, and that in the absence of an order of the Commission to the contrary, the MorelandBus Enterprise Agreement 2023 will cover Transferring Moreland Employees of Moreland Bus Lines in their employment with Kinetic Urban. Kinetic Urban seeks an order from the Commission that the MorelandBus Enterprise Agreement 2023 not cover Kinetic Urban and the Transferring Moreland Employees and that instead such employees be covered by the enterprise agreement that applies to Kinetic Melbourne’s current bus driver employees that provide public bus services, the Kinetic Melbourne Bus Driver Enterprise Agreement 2022-2025.[12]

  1. Kinetic Urban wishes to employ the Transferring Moreland Employees and all new employees who Kinetic Urban may employ in the future (Non-Transferring Employees), who would otherwise be employed under the Passenger Vehicle Transportation Award 2020 (the Award), under the terms of the Kinetic Melbourne Bus Driver Enterprise Agreement 2022-2025.

New non-transferring employees of new employer to be covered by transferable instrument

  1. I am satisfied that the Agreement is a transferable instrument within the meaning of s.312 of the Act, and I observe that the Applicant accepts that the Agreement is a transferable instrument. Section 314 of the Act sets out when new non-transferring employees may be covered by a transferring instrument. The section provides:

“New non-transferring employees of new employer may be covered by transferable instrument

(1) If:

(a) a transferable instrument covers the new employer because of paragraph 313(1)(a); and

(b) after the transferable instrument starts to cover the new employer, the new employer employs a non-transferring employee; and

(c) the non-transferring employee performs the transferring work; and

(d) at the time the non-transferring employee is employed, no other enterprise agreement or modern award covers the new employer and the nontransferring employee
In relation to that work;

then the transferable instrument covers the new employer and the non-transferring employee in relation to that work.

(2) A non-transferring employee of a new employer, in relation to a transfer of business, is an employee of the new employer who is not a transferring employee.

(3) This section has effect subject to any FWC order under subsection 319(1).”

  1. The Agreement, the transferable instrument, in accordance with s.313(1)(a) is an instrument that covers the new employer and the transferring employee in relation to the transferring work after the transfer time that the employee becomes employed by the new employer.

  1. Section 319 of the Act sets out the matters the Commission must have regard to in determining if the orders sought should be granted. Section 319 provides:

“Orders relating to instruments covering new employer and non-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 non-transferring employee because of subsection 314(1) does not, or will not, cover the non-transferring employee;

(b) an order that a transferable instrument that covers, or is likely to cover, the new employer, because of a provision of this Part, covers, or will cover, a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer;

(c) an order that an enterprise agreement or a modern award that covers the new employer does not, or will not, cover a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer.

Note:  Orders may be made under paragraphs (1)(b) and (c) in relation to a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer, whether or not the non-transferring employee became employed by the new employer before or after the transferable instrument referred to in paragraph (1)(b) started to cover the new employer.

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 non-transferring employee who performs, or is likely to perform, the transferring work for the new employer;

(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 non-transferring employee before the later of the following:

(a) the time when the non-transferring employee starts to perform the transferring work for the new employer;

(b) the day on which the order is made.”

CONSIDERATION

  1. It is necessary to consider s.319(3), which states that, in deciding whether to make an order under s.319(1), the Commission must take into account certain matters that are set out in ss.319(3)(a) to (g) which I now do.

The views of the new employer – s.319(3)(a)(i)

  1. Kinetic Urban’s view is that the Kinetic Melbourne Bus Driver Enterprise Agreement 2022-2025 should apply to any Non-Transferring Employees.

The views of the employees who would be affected by the order - s 319(3)(a)(ii)

  1. It is not possible to obtain the views of the employees who will be affected by the order because there are no non-transferring employees currently employed by Kinetic Urban. This is therefore a neutral consideration.

Whether any employees would be disadvantaged by the order - s 319(3)(b)

  1. Mr Waluga in his Witness Statement says that the transferable instrument is more beneficial than the Award that would otherwise apply and I accept his evidence on the subject. Accordingly, the Non-Transferring Employees will not be disadvantaged in relation to their terms and conditions of employment if the s.319 orders are made. This weighs in favour of granting the order.

The nominal expiry date of enterprise agreement - s 319(3)(c)

  1. The Kinetic Melbourne Bus Driver Enterprise Agreement 2022-2025 nominally expires on 30 June 2025.[13] I consider that the granting of the order sought would not disadvantage employees. It is therefore a neutral consideration.

Whether negative impact on productivity etc - s 319(3)(d)

  1. It is submitted that the Kinetic Melbourne Bus Driver Enterprise Agreement 2022-2025 applying to Non-Transferring Employees would have a positive impact on the productivity of Kinetic Urban’s workplace.[14]

  1. I am satisfied there will be no negative impact on productivity if the order is granted. It is therefore a neutral consideration.

Whether significant economic disadvantage - s 319(3)(e)

  1. Kinetic Urban submits it would not incur any economic disadvantage in making the order.[15] I consider that if the order sought were made, the Agreement’s coverage of Non-Transferring Employees will not cause any significant economic disadvantage. It is therefore a neutral consideration.

Whether there is business synergy between instruments etc - s 319(3)(f)

  1. Kinetic Urban submits that if the order is not made, there will be two separate frameworks of regulation applying to employees performing the same or substantially similar work across Kinetic Urban’s business. This would reduce synergy.[16]

  1. I am satisfied this criterion weights in favour of granting the order.

The public interest - s 318(3)(g)

  1. I am not satisfied this matter engages the public interest. It is therefore a neutral consideration.

CONCLUSION

  1. Having taken into account the matters in ss.314 and 319(3), I consider that it is appropriate for the Commission to exercise its discretion under s.319(1) to make the orders that are sought.

  1. I order under s.319(1)(a) that the Non-Transferring Employees will be covered by the Kinetic Melbourne Bus Driver Enterprise Agreement 2022-2025. An order will be issued separately in PR766602.

COMMISSIONER

Determined on the papers


[1] AE516799.

[2] Witness Statement of Dennis Waluga, 20 September 2023, [9].

[3] AE521104.

[4] Kinetic (Melbourne) Pty Ltd Form F40 Application for orders in relation to a transfer of business, 20 September 2023, item 2.3, [3] and Witness Statement of Dennis Waluga, 20 September 2023, [16].

[5] Kinetic (Melbourne) Pty Ltd Form F40 Application for orders in relation to a transfer of business, 20 September 2023, item 2.3, [4] and Witness Statement of Dennis Waluga, 20 September 2023, [17].

[6] Witness Statement of Dennis Waluga, 20 September 2023, [18].

[7] Witness Statement of Dennis Waluga, 20 September 2023, [21].

[8] Kinetic (Melbourne) Pty Ltd Form F40 Application for orders in relation to a transfer of business, 20 September 2023, item 2.3, [6].

[9] Kinetic (Melbourne) Pty Ltd Form F40 Application for orders in relation to a transfer of business, 20 September 2023, item 2.3, [7] and Witness Statement of Dennis Waluga, 20 September 2023, [24].

[10] Witness Statement of Dennis Waluga, 20 September 2023, [25].

[11] Kinetic (Melbourne) Pty Ltd Form F40 Application for orders in relation to a transfer of business, 20 September 2023, item 2.3, [8].

[12] AE516799.

[13] Kinetic (Melbourne Urban) Pty Ltd Form F40 Application for orders in relation to a transfer of business, 20 September 2023, item 2.3, [28].

[14] Kinetic (Melbourne Urban) Pty Ltd Form F40 Application for orders in relation to a transfer of business, 20 September 2023, item 2.3, [31].

[15] Kinetic (Melbourne Urban) Pty Ltd Form F40 Application for orders in relation to a transfer of business, 20 September 2023, item 2.3, [32].

[16] Kinetic (Melbourne Urban) Pty Ltd Form F40 Application for orders in relation to a transfer of business, 20 September 2023, item 2.3, [33].

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<PR766601>

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