Kmart Australia Limited
[2018] FWC 3858
•29 JUNE 2018
| [2018] FWC 3858 |
| 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
(AG2018/2341)
Retail industry | |
COMMISSIONER GREGORY | MELBOURNE, 29 JUNE 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 seeks an Order that the Target Australia Retail Agreement 2012 1 (“the Target Agreement”) will not cover Kmart Australia Limited (“the new employer”) and its employees who were employed by Target Australia Pty Ltd (“the former employer”) and worked at the Target Store at the Mid Valley Shopping Centre in Morwell, Victoria (“the Morwell store”).
[2] The application also seeks that the Kmart Australia Ltd Agreement 2012 2 (“the Kmart Agreement”) will instead cover the new employer and those employees who are former employees of Target and who worked at the Morwell store. It is also intended that this will occur from the time each employee becomes employed by the new employer.
[3] The application consists of the Form F40 - Application for Orders in Relation to Transfer of Business, together with a Draft Order and two Statutory Declarations made by Ms Courtny Keeble, the State Operations Manager at Kmart, and Mr Sandro Mazzotta, the National Employee Relations Adviser at Kmart. The application also attaches a copy of the Target Agreement.
[4] On 13 June 2018, Kmart filed an amended draft Order and advised that the amendment is intended to make clear that the Order will only apply to the potential redeployment of six casual team members referred to in the original application. 3 The SDA subsequently advised later the same day that it supports the application by Kmart and agrees with the terms of the amended draft Order and the proposed operative date.4 The SDA also confirmed that it was amenable to having the matter dealt with “on the papers.”
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)).” 5
[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] The 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.”6
[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 of support of its application. Kmart and Target are both wholly owned subsidiaries of Wesfarmers Limited. Following an announcement by Wesfarmers Limited Target’s store at Morwell was closed with effect from 2 June 2018.
[11] Kmart indicates in the application that it intends to offer employment to six casual employees who previously worked at Target in the Morwell store, and who have expressed an interest in being redeployed to work in either Kmart’s Traralgon or Moe stores. It states that in accepting such offers the employees would become transferring employees for the purposes of s.313 of the Act.
[12] Kmart also states that the making of the Order will assist in:
• management of the transferring employees by ensuring all employees engaged by Kmart are on common terms and conditions;
• enabling the transferring employees 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 for the transferring employees; and
• removing any disincentive to Kmart offering employment to the current employees of Target.
Consideration
[13] As indicated, s.318(3) sets out the matters the Commission must take into account in dealing with an application 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 amended draft Order be made, as agreed by Kmart and the SDA. It has also provided two separate Statutory Declarations from Ms Courtny Keeble and Mr Sandro Mazzotta.
[15] The Statutory Declarations of Ms Keeble and Mr Mazzotta indicate that the Order would ensure that common employment conditions are maintained in all of Kmart’s stores, and would ensure that the transferring employees are fully integrated into Kmart’s management systems. They also indicate that the Order would avoid Kmart having to maintain separate payroll systems and related arrangements as a consequence of the employees in the two stores being covered by a different enterprise agreement.
[16] The Statutory Declaration of Mr Mazzotta also attaches a document described as a “Differences Summary,” which contains a comparison of the significant differences between the Kmart Agreement and the Target Agreement.
(ii) the employees who would be affected by the order
[17] The Statutory Declaration provided by Mr Mazzotta states that the affected employees were consulted with extensively about the Kmart Agreement. On 24 May 2018 they attended an EBA consultation session at the Target store in Morwell, attended by Mr Mazzotta and representatives of the SDA, where key aspects of the Differences Summary document were explained to them and they were then able to ask questions about what was being proposed.
[18] All of the six casual employees who expressed an interest in redeployment attended the consultation meeting and each expressed their support for the Kmart Agreement to be applied to them. This was indicated by a show of hands at the conclusion of the session.
(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 in the Target Agreement.
[20] Kmart has also made a series of additional commitments to the transferring employees in that until such time as any new enterprise agreement applies at Kmart it will:
• pay the higher Target Transport Allowance to any transferring employees that use their own personal vehicle on Kmart business;
• pay the transferring employees a 20% higher rate for overtime than that which applies in the Target Agreement for overtime work performed Monday to Sunday; and
• include in the letters of offer that the transferring employees have the benefit of a savings provision under the Target Agreement (that is not included in the Kmart Agreement) in respect to the hours of work, and that they will have this right preserved whilst employed in a Kmart store. 7
(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 being 31 July 2016 and 30 April 2016 respectively.
(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
[22] It is submitted that in granting the proposed Order Kmart will avoid any potential impact to its productivity as it will preclude unnecessary administrative costs in having to establish and manage a separate payroll system and employee management arrangements for the transferring employees.
[23] The statutory declaration of Ms Keeble makes clear that, should the Order not be granted, the management teams at Kmart Moe and Kmart Traralgon will need to be trained to understand and apply two enterprise agreements, and will need to manage the transferring team members by constant reference to their transferee status in order to be able to roster team members, apply employee entitlements accurately, and manage those aspects of payroll that are carried out at a store level.
[24] Ms Keeble also states that if the Order is not made “this can readily be expected to increase the administrative burden on the management teams and will considerably impact on the productivity and efficiency of managing the team members at an ongoing cost to Kmart.” 8
(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer
[25] I am satisfied that in the main these issues have already been canvassed in response to the other matters that the Commission is required to take account of.
[26] There is no suggestion that Kmart would incur significant economic disadvantage if the transferable agreement to continue to apply to it.
(f ) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer
[27] Kmart submits that there is currently 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 the six transferring employees, resulting in a situation where employees working side by side would be on different terms and conditions of employment.
[28] The granting of the Order would also assist in the management of the six transferring employees engaged by Kmart on the basis that they would be on the same terms and conditions as other Kmart employees.
(g) the public interest
[29] I am not aware of any public interest considerations that need to be taken account of in the context of this application.
Conclusion
[30] I have considered the details contained in the application, and the materials provided in support, including the statutory declaration of Ms Keeble and Mr Mazzotta, as well as the terms contained in the amended draft Order. I have also had regard to each of the matters in s.318(3) that I am required to take account of. I am satisfied in response that it is appropriate to make the Order in the terms sought by the Applicant. The Order [608580] is issued in conjunction with this decision.
COMMISSIONER
Printed by authority of the Commonwealth Government Printer
<AE898762 PR608578 >
1 AE898762.
2 AE896430.
3 Amended Draft Order, filed 13 June 2018.
4 Email correspondence from Shop, Distributive and Allied Employees Association to Fair Work Commission, dated 13 June 2018.
5 Fair Work Act 2009 (Cth) s 312.
6 Ibid, s 318.
7 Statutory declaration of Sandro Mazzotta, dated 8 June 2018, [28].
8 Statutory declaration of Courtny Keeble, dated 7 June 2018, [30].
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