Kingmill Pty Ltd T/A Thrifty Car Rental
[2021] FWC 6472
| [2021] FWC 6472 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Kingmill Pty Ltd T/A Thrifty Car Rental
(AG2021/8366)
| Retail industry | |
| COMMISSIONER HUNT | BRISBANE, 29 NOVEMBER 2021 |
Application for an order relating to instruments covering new employer and transferring employees – Jonday Holdings Pty Ltd Queensland, Australian Workplace Collective Agreement (AWCA) - application granted.
On 15 November 2021, Kingmill Pty Ltd T/A Thrifty Car Rental (referred to as Kingmill, or the new employer) made an application to the Fair Work Commission (the Commission) for an order pursuant to s.318 of the Fair Work Act 2009 (the Act) that the Jonday Holdings Pty Ltd Queensland, Australian Workplace Collective Agreement (AWCA) (the Agreement) not cover Kingmill and any transferring employees from Jonday Holdings Pty Ltd (referred to as Jonday, or the old employer).
The application made by Kingmill contained a Form F40 – ‘Application for orders in relation to a transfer of business’ (Form F40 application) and attached a document titled, “Letter of Offer” dated 7 November 2021 (Attachment A).
Kingmill sought the following orders:
“1. That the Jonday Holdings Pty Ltd Queensland, Australian Workplace Collective Agreement not cover Kingmill Pty Ltd (‘new employer') and any transferring employees of Jonday Holdings Pty Ltd ACN 011 049 531 (‘old employer’) in respect of their employment with the new employer.
2. In accordance with section 318(4) of the FW Act, the order will operate from the day on which it is made, or the time when the transferring employees becomes employed by the new employer, whichever occurs later.”
Relevant legislation
The application seeks for the Commission to make an order under s.318 of the Act, which is set out below:
“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.”
Background
Kingmill provided the following background in its Form F40 application:
“Background
1. Kingmill Pty Ltd (Kingmill) has standing to make this application pursuant to s318(2)(a) of the FW Act.
2. Kingmill is a wholly-owned business of National Roads and Motorists’ Association Limited (the NRMA) and trades as Thrifty Car Rental. Kingmill owns/manages approximately 140 car rental sites throughout Australia.
3. Kingmill employs approximately 190 award-covered employees in its car rental business including frontline customer service, car cleaning and detailing, and back office customer sales teams, all of whom are covered by and have applied to their employment, either the Clerks - Private Sector Award 2020 (Clerks Award) or the Vehicle Repair, Services and Retail Award 2020 (VRSR Award).
4. Kingmill signed a contract on 4 November 2021 with Jonday Holdings Pty Ltd ACN 011 049 531 (Jonday) to purchase their car rental business which includes around 42 car rental sites across northern NSW and Queensland, effective 15 December 2021.
5. Jonday employs employees in its car rental business who fall within the coverage clause of the Jonday Holdings Pty Ltd Queensland, Australian Workplace Collective Agreement (Jonday Agreement) and who would otherwise be covered by a modern award (Jonday Employees). No steps have ever been taken by Jonday to terminate the Jonday Agreement. However, Kingmill has been advised by Jonday that since around late 2011, Jonday has applied the applicable modern awards instead of the Jonday Agreement.
6. As part of the acquisition, Kingmill has offered employment to 95 Jonday Employees. By 14 November 2021, 83 of the Jonday Employees had accepted employment with Kingmill which is due to commence on 15 November 2021.
7. When the Jonday Employees commence employment with Kingmill, this will give rise to a transfer of business within the meaning of section 311 of the FW Act in respect of the Transferring Employees. As the Jonday Agreement has not been terminated or replaced, absent an order from FWC, it would transfer to Kingmill in respect of the Transferring Employees (even though it is not currently being applied to those employees by Jonday). This application is being made for the avoidance of doubt to ensure that does not occur.
8. Depending on the work performed by the particular employee, either the Clerks Award or the VRSR Award would otherwise apply to the employment of the Transferring Employees with Kingmill.
The views of the new employer who would be affected by the order (section 318(3)(a)(i) of the FW Act)
9. Kingmill will be the new employer affected by the order. Kingmill is of the view that FWC should grant the order on the grounds set out in this application.
The views of the employees who would be affected by the order (section 318(3)(a)(ii) of the FW Act)
10. Of the Transferring Employees who have accepted employment with Kingmill and who would be affected by the order, almost all have indicated their support for the order being made by signing and accepting an offer of employment from Kingmill which contains the following statement:
“Kingmill will be making an application to the Fair Work Commission (FWC) seeking to have the Jonday Holdings Pty Ltd Queensland, Australian Workplace Collective Agreement (AWCA) terminated. By signing this letter of engagement, you acknowledge that your offer is made on the basis that we will make this application to the FWC and you are indicating your support for the application.”
Attached and marked “Attachment A” is a de-identified copy of one contract of employment offered to and accepted by a Transferring Employee which is in substantially the same form as the other contracts for the Transferring Employees.
Whether any employees would be disadvantaged by the order considering their terms and conditions of employment (section 318(3)(b) of the FW Act)
11. Overall, no Transferring Employee will be disadvantaged by the order in relation to their terms and conditions of employment as Jonday is applying the modern awards and not the Jonday Agreement.
12. Kingmill’s terms and conditions as per the Clerks Award and VRSR Award are, on an overall basis, substantially similar, and no less favourable than the existing terms and conditions of the Transferring Employees.
The nominal expiry date of the enterprise agreement (section 318(3)(c) of the FW Act)
13. The Jonday Agreement is well out of term, having reached its nominal expiry date sometime in 2011. It is understood by Kingmill that there has been no enterprise bargaining between Jonday and its employees seeking to replace the Jonday Agreement.
Whether the transferable instrument would negatively impact on the new employer’s workplace productivity (sections 318(3)(d) of the FW Act)
If the new employer would be significantly economically disadvantaged should the transferable instrument cover the new employer (sections 318(3)(e) of the FW Act)
The degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer (sections 318(3)(f) of the FW Act)
14. Kingmill wishes to avoid a situation where the Transferring Employees who transition across to Kingmill are employed under different terms and conditions of employment compared to approximately 190 other existing Kingmill employees who are performing the same type of work in its car rental business.
15. The Jonday Agreement contains different and distinct provisions, which are particular to Jonday’s business and are not suitable for Kingmill’s business.
16. The Jonday Agreement has outdated terms and conditions which have not been modernised, unlike the Clerks Award and the VRSR Award which have been regularly reviewed and updated by FWC since 2010.
17. There is little synergy between the Jonday Agreement and the Clerks Award and the VRSR Award, which would inevitably lead to unnecessary inconsistencies and complications in Kingmill’s employment arrangements.
18. The Kingmill payroll system is already configured to ensure payroll compliance in accordance with Clerks Award and the VRSR Award provisions.
19. Kingmill would be subject to administrative challenges and not insubstantial costs if it were required to integrate the Jonday Agreement into the Kingmill payroll system. This would need to be undertaken with the assistance of an external payroll provider and would take quite some time.
The public interest in making the order (sections 318(3)(g) of the FW Act)
20. It would not be contrary to the public interest for FWC to make the order sought.
21. The only parties affected by the making of the order sought are Kingmill and the Transferring Employees.
22. This application does not raise any broader issues of public policy to which the FWC should have regard.”
Transferrable instrument
Section 311 of the Act sets out when a transfer of business occurs. On the evidence before me, having regard to the acquisition of the business that now occurred, I am satisfied that there has been a transfer of business within the meaning of ss.311(1)(a)-(d) of the Act. Pursuant to s.311(3) of the Act, there is a connection between two entities because of an arrangement between Jonbay, the old employer, and Kingmill, the new employer, under which Kingmill has the beneficial use of some or all of the assets of the old employer that relate to the work of any potential transferring employees. Any employees still in employment are transferring employees within the meaning of s.311(2) of the Act.
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.
Meaning of named employer award
(2) Each of the following is a named employer award:
(a) a modern award (including a modern enterprise award) that is expressed to cover one or more named employers;
(b) a modern enterprise award that is expressed to cover one or more specified classes of employers (other than a modern enterprise award that is expressed to relate to one or more enterprises as described in paragraph 168A(2)(b)).
Note: Paragraph 168A(2)(b) deals with employers that carry on similar business activities under the same franchise.”
The Agreement was approved by the Workplace Authority, which existed until 1 July 2009 when it was replaced by Fair Work Australia (now the Commission). Accordingly, it is a transitional instrument.
Consideration was given by Senior Deputy President Richards in Queensland Nickel Pty Ltd [2009] FWA 335 as to whether a transitional instrument could be a transferable instrument. His Honour found, in the matter before him then, that by virtue of sub item 2(3), Schedule 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (“the Transitional Act”), the agreement before him was a transitional instrument. He determined that Fair Work Australia (as the Commission then was) was empowered to make an order relevant to a transitional instrument being a transferrable instrument. I adopt his Honour’s findings in this decision and determine that the Agreement is a transferrable instrument pursuant to s.312(1) of the Act.
Who may apply for an order?
The application has been made by Kingmill, the new employer. The requirements of s.318(2) have therefore been met. The matters considered below are contained within the background provided by Kingmill in its Form F40 application.
Matters the Fair Work Commission must take into account (s.318(3))
Section 318(3)(a) - the views of the new employer and the employees who would be affected by the order
The new employer is Kingmill, the applicant seeking an order. Naturally, it supports making the order sought.
On 15 November 2021, my Chambers sent correspondence to Kingmill outlining s.318(3) of the Act and inviting affected employees to write to my Chambers by 23 November 2021 if they wished to provide any views. I directed that this correspondence be forwarded to affected employees along with copies of the Form F40 application and the Agreement.
On 18 November 2021, Kingmill filed a statement of Ms Angela Barton confirming that Kingmill had complied with the above directions I issued on 15 November 2021.
No views have been received from any affected employees.
This consideration weighs in favour of making the orders sought, while noting that the absence of employee views, either supporting or opposing the granting of the orders, is a neutral factor.
Section 318(3)(b) - whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
In the background provided by Kingmill, reproduced above, it advised that depending on the nature of the work performed by transferring employees, if not covered by the Agreement, the transferring employees are to be covered by either the Clerks - Private Sector Award 2020 or the Vehicle Repair, Services and Retail Award 2020 as the case may be. I am satisfied that all employees would not be disadvantaged by being employed under the relevant modern awards above when compared to the terms of the Agreement. This consideration weighs in favour of making the orders sought.
Section 318(3)(c) - if the order relates to an enterprise agreement—the nominal expiry date of the agreement
The Agreement was approved in 2006. The nominal expiry date of the Agreement was in 2011; around 10 years have since passed. This consideration weighs in favour of making the orders sought.
Section 318(3)(d) - whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
Kingmill has advised the Commission that its payroll system is “already configured to ensure payroll compliance in accordance with relevant modern awards”. If Kingmill were required to apply the Agreement to transferring employees, there would be an inconsistency of employment terms and conditions across the relevant workforce and an increased risk of discrepancies in the application of different industrial agreements.
I accept the submission made by Kingmill that it would be subject to administrative challenges and not insubstantial costs if it were required to integrate the Jonday Agreement into the Kingmill payroll system. This consideration weighs in favour of making the orders sought.
Section 318(3)(e) - whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer
I am satisfied that Kingmill would incur an economic burden upon its HR employees and IT systems in having to up-skill them in order accommodate the application of an Agreement which it has not previously applied. Making the orders sought would avoid causing Kingmill to incur this burden. This consideration weighs in favour of making the orders sought.
Section 318(3)(f) - the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer
As outlined above in the background section, Kingmill relevantly submitted that the Agreement contains different and distinct provisions, which are particular to Jonday’s business and are not suitable for Kingmill’s business. It was further submitted that there is little synergy between the Agreement and the relevant modern awards which would inevitably lead to unnecessary inconsistencies and complications in Kingmill’s employment arrangements.
I accept Kingmill’s submissions as to this consideration. This consideration weighs in favour of making the orders sought.
Section 318(3)(g) - the public interest
Kingmill has submitted that it would not be contrary to the public interest to make the orders sought. I accept that making the orders would not be contrary to the public interest.
Maintaining a cohesive, harmonious and productive workplace is a matter of public interest. It is also in the public interest for Kingmill’s business to operate effectively and efficiently. This would not be served if the orders sought in the application are not made as it would result in Kingmill having to:
(a) manage employees on terms and conditions that differ from similar employees in the same workplace; and
(b) incur avoidable costs in time and administration to manage a separate payroll system for transferring employees.
Conclusion
Having considered Kingmill’s application and taking into account each of the matters set out in s.318(3) of the Act, I am satisfied that it is appropriate to grant the orders sought by Kingmill.
Having regard to s.318(4) of the Act, and noting Kingmill commenced employment of the relevant employees on 15 November 2021, the earliest the order can come into effect is from today’s date. Accordingly, the order will come into effect today.
COMMISSIONER
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