Kmart Australia Limited
[2018] FWC 7773
•20 DECEMBER 2018
| [2018] FWC 7773 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Kmart Australia Limited
(AG2018/6462)
COMMISSIONER GREGORY | MELBOURNE, 20 DECEMBER 2018 |
Application for an Order relating to instruments covering new employer and transferring employees.
Introduction
[1] This decision deals with an application made under s.318 of the Fair Work Act 2009 (Cth) (“the Act”) by Kmart Australia Limited (“Kmart”). It arises as a consequence of a decision by Wesfarmers Limited to close its Target Australia Pty Ltd (“Target”) store at Gladstone in Queensland, and to offer employment at its Kmart store to Ms Arrizona Bates, who has expressed an interested in being redeployed. Target and Kmart are both wholly-owned subsidiaries of Wesfarmers Limited. It is understood the Target store will be closed with effect from 29 December 2018.
[2] The application accordingly seeks an Order that the Target Australia Retail Agreement 2012 1 (“the Target Agreement”) will not cover Kmart (“the new employer”) or Ms Bates in the event that she is subsequently redeployed to work at Kmart.
[3] The application also seeks that the Kmart Australia Ltd Agreement 2012 2 (“the Kmart Agreement”) will instead cover the new employer and Ms Bates. It is intended that this occur from the time she is employed by the new employer.
[4] The application consists of the Form F40 - Application for Orders in Relation to Transfer of Business, together with a Draft Order and a copy of the Target Agreement. It is also supported by Statutory Declarations made by Mr Sandro Mazzotta, the National Employee Relations Advisor at Kmart, and Mr David Riby, Zone Manager for Queensland West at Kmart.
The Relevant Legislation
[5] Section 311(1) defines when a transfer of business occurs under the Act.
[6] Section 312 continues to set out the “Instruments that may transfer.” It states:
“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)).” 3
[7] Section 317 then provides that the Commission may make certain orders if there is, or is likely to be, a transfer of the business from a previous employer to a new employer.
[8] Section 318 continues to set out what orders may be made, who may apply for an order, and the matters the Commission must take into account in making any order. It states:
“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.”4
[9] This decision accordingly deals with whether it is appropriate in all the circumstances to make the Order sought by Kmart.
Grounds on which the application is made
[10] Kmart relies on the following grounds in support of its application. Kmart and Target are both wholly owned subsidiaries of Wesfarmers Limited and it has decided that the Target store at Gladstone will be closed with effect from 29 December 2018.
[11] However, the Kmart store in Gladstone intends to offer employment to an existing Target employee, Ms Arrizona Bates, who has expressed an interest in being redeployed. If she accepts this offer she would become a transferring employee for the purposes of s.313 of the Act.
[12] Kmart also submits that the making of the Order will assist in:
• management of employee relations by ensuring all employees engaged by Kmart are on common terms and conditions;
• enabling Ms Bates to be fully integrated into the employee management systems currently operating in all other Kmart stores;
• avoiding the administrative costs involved in establishing two separate payroll systems and other employee management arrangements in regard to Ms Bates; and
• removing any disincentive to Kmart offering employment to Ms Bates.
Consideration
[13] As indicated s.318(3) sets out the matters that the Commission must take into account in determining an application made under s.318. I now turn to deal with each of those matters.
(a) the views of:
(i) the new employer or a person who is likely to be the new employer;
[14] The application is made by the new employer, Kmart, and it obviously supports the application, and seeks that an Order in the form of the draft order attached to the application is made. It has also provided two separate Statutory Declarations from Mr David Riby, Kmart’s Zone Manager for Queensland West, and Mr Sandro Mazzotta, the National Employee Relations Adviser at Kmart, in support of the application. They both indicate that the proposed Order would ensure that common employment conditions are maintained in Kmart’s stores, as well as enabling Ms Bates to be fully integrated into Kmart’s management systems. The Order would also avoid Kmart having to maintain separate payroll systems and related arrangements, which would occur if employees remain covered by different enterprise agreements.
[15] The Statutory Declaration provided by Mr Mazzotta also attaches a document which contains a detailed comparison of the differences between the Kmart Agreement and the Target Agreement.
(ii) the employees who would be affected by the order;
[16] The Statutory Declaration provided by Mr Mazzotta indicates that the affected employees were informed in March of this year that the Target store would be closing at the end of December 2018, and that Target would explore other redeployment opportunities within the Wesfarmers group for those employees interested in redeployment. Mr Mazzotta now understands that one of the existing Target employees, Ms Arrizona Bates, has indicated an interest in being redeployed to work at the Kmart store in Gladstone.
[17] Target was also in contact with the Shop, Distributive and Allied Employees’ Association (“the SDA”) about the decision to close the Target store. Mr Mazzotta continues to indicate in his declaration that Kmart consulted with the SDA in September about the potential redeployment of Target employees to the Kmart store. His Statutory Declaration also provides details about a consultation session that took place on 31 October 2018 with employees at the Target store in Gladstone in conjunction with representatives from the SDA.
[18] It is also noted that the Commission received an email on 18 December 2018 from Mr Darryn Gaffy, a Senior Industrial Officer with the Queensland Branch of the SDA, indicating that “the SDA does not have any objection to the application being made nor to the action being determined on the papers.” 5
(b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment;
[19] The application and the Statutory Declarations each provide information about those aspects of the arrangements applying under the Kmart Agreement that provide more advantageous entitlements than those contained in the Target Agreement.
[20] Kmart has also made a series of additional commitments to Ms Bates in that until such time as any new enterprise agreement applies at Kmart it will:
• pay the higher Target Transport Allowance to Ms Bates if she uses her personal vehicle on Kmart business until such time as a new agreement applies at Kmart.
• pay Ms Bates a 20% higher rate than the rate which applies in the Target Agreement for any overtime work performed between Monday to Saturday until such time as any new enterprise agreement applies at Kmart.
• include in the letter of offer to Ms Bates that she has the benefit of a savings provision under the Target Agreement (that is not included in the Kmart Agreement) in respect to hours of work, and this entitlement will continue to be preserved while she works in a Kmart store. 6
(c) if the order relates to an enterprise agreement—the nominal expiry date of the agreement;
[21] Both the Target and Kmart Agreements have passed their nominal expiry dates, which are respectively 31 July 2016 and 30 April 2016.
(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace;
[22] Kmart submits that the proposed order will avoid any potential negative impact on its productivity by eliminating unnecessary administrative costs that would otherwise be incurred if it was required to establish and manage separate payroll systems and different employee management arrangements for the transferring employee.
(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer;
[23] I am satisfied that the main issues in this context have already been canvassed in response to the matters the Commission is required to take account of. However, there is no suggestion that Kmart would incur significant economic disadvantage if the transferable agreement continued to apply to it.
(f) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer;
[24] Kmart submits that there is a lack of business synergy between the Target Agreement and the Kmart Agreement. It is understood in this context that if the Order is not made Kmart would be required to administer different sets of conditions for Ms Bates, resulting in a situation where employees in the Kmart store at Gladstone would be on different terms and conditions of employment.
[25] The granting of the Order would accordingly assist as Ms Bates would be on the same terms and conditions as other Kmart employees.
(g) the public interest;
[26] I am not aware of any public interest considerations that need to be taken account of in the context of this application.
Conclusion
[27] I have considered the details contained in the application, and the materials provided in support, including the Statutory Declarations of Mr Riby and Mr Mazzotta. I have also had regard to each of the matters in s.318(3) that the Commission is required to take account of. I am satisfied, in conclusion, that it is appropriate to make the Order in the terms sought by the Applicant. The Order is issued in conjunction with this decision.
COMMISSIONER
Printed by authority of the Commonwealth Government Printer
<PR703405>
1 AE898762.
2 AE896430.
3 Fair Work Act 2009 (Cth) s 312.
4 Ibid, s 318.
5 Email correspondence from Shop, Distributive and Allied Employees Association to Fair Work Commission, dated 18 December 2018.
6 Statutory declaration of Sandro Mazzotta, dated 5 December 2018, [27].
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