Konecranes Pty Ltd

[2020] FWC 6743

[2020] FWC 6743

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
Section 318 - Application for an order relating to instruments covering new employer and transferring employees

Konecranes Pty Ltd
(AG2020/3614); (AG2020/3615); (AG2020/3616); (AG2020/3617)

Manufacturing and associated industries
DEPUTY PRESIDENT ANDERSON	ADELAIDE, 17 DECEMBER 2020

Applications for orders relating to instruments covering new employer and transferring employees

[1] On 26 November 2020 Konecranes Pty Ltd (Konecranes or the Applicant) made four applications to the Commission under section 318 of the Fair Work Act 2009 (FW Act) for orders in relation to a transfer of business.

[2] The orders sought concern Konecranes agreements currently applying in New South Wales, 1 Victoria,2 Queensland3 and South Australia4 (collectively, the Agreements). I refer later in these reasons to the connection between MHE-Demag Australia Pty Ltd (MHE-Demag) and Konecranes.

[3] The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia – Electrical, Energy and Services Division (CEPU) is covered by the NSW Agreement, the SA Agreement and the Victorian Agreement. The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers’ Union (AMWU) is covered by the NSW Agreement and the Victorian Agreement.

[4] On 1 December 2020 I issued directions requiring the CEPU and AMWU to advise the Commission and Konecranes of their position(s) in relation to the applications in which they have standing by Friday 11 December 2020.

[5] Additionally, I directed that any objection(s) to the applications be advised to the Commission and Konecranes by the same date and that the objection(s), if any, be accompanied by a written submission outlining the objection(s).

[6] I indicated in the Directions that the applications will be determined on the papers in the absence of any objections notified or expressions of intent to be heard.

[7] On 11 December 2020 my Chambers received notifications from the CEPU 5 and the AMWU6 that neither oppose the applications in relation to the Agreements they are covered by.

[8] As no objections were received, I proceed to deal with the applications on the papers.

[9] The materials before me are the four applications lodged by Konecranes on 26 November 2020 and the aforementioned correspondence from the CEPU and AMWU. The applications themselves each contain a statement of Monica Riccardi, Human Resources Manager Pacific Region for Konecranes. The New South Wales application 7 also contains a statement of Peter Clark, a Service Technician working for MHE-Demag Australia Pty Ltd at the Smithfield site as well as a statement of Siamani Kolone Collins Taua, a Storeman working for MHE-Demag Australia Pty Ltd at Smithfield. The Victorian application8 contains the statement of Ms Riccardi as well as a statement of Stuart Fontyn a Service Technician working for MHE-Demag Australia Pty Ltd employed at the Mulgrave site.

Facts

[10] The facts can be briefly stated.

[11] The Agreements were originally entered into by MHE-Demag as the employer of the relevant employees. On 2 January 2020 MHE-Demag became a fully-owned subsidiary of the parent company of the Applicant in these matters. At this time Konecranes and MHE-Demag became related bodies corporate and associated entities with common ownership.

[12] From mid-2020 Konecranes has been merging its business with MHE-Demag’s Australian operations to create a single entity. As part of this merger, Konecranes has encouraged MHE-Demag’s Australian employees to become employees of Konecranes. MHE-Demag, at the time the applications were lodged, employed persons under the Agreements in various Australian jurisdictions, being:

•  New South Wales – 28 employees;

•  Victoria – 10 employees;

•  Queensland – 7 employees; and

•  South Australia – 3 employees.

[13] In late October 2020, Konecranes provided each of these employees (the Transferring Employees) with an offer of ongoing employment with Konecranes. Konecranes submits, and no contrary view has been advanced, that all offers were accepted and that no Transferring Employee has rejected the offer to transfer from MHE-Demag to Konecranes. The Transferring Employees are due to commence employment with Konecranes from 1 January 2021.

[14] The Applicant is seeking orders under section 318(1)(a) and (b) of the FW Act:

•  that, upon the transfer, the relevant MHE-Demag Agreements will not apply to the Transferring Employees previously covered by it; and

•  that, upon the transfer, the MHE-Demag Agreements will not cover Konecranes Pty Ltd.

Statutory provisions

[15] Section 318 of the Act provides:

“318 Orders relating to instruments covering new employer and transferring employees

Orders that FWC may make

(1) 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) 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 FWC must take into account

(3) In deciding whether to make the order, 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.”

Consideration

[16] I turn to the factors required to be taken into account by section 318(3) of the FW Act.

Views of the employer (section 318(3)(a))

[17] Ms Riccardi’s witness statement provides the view of the prospective employer (Konecranes) in relation to each of the applications. By way of summary, the prospective employer submits that:

•  the transfer of former MHE-Demag employees will allow Konecranes to provide a single service to its Australian customers;

•  employing each of the Transferring Employees within the collective Konecranes workforce will allow access to global promotion opportunities, training and career development;

•  the Transferring Employees have been offered employment with contractual entitlements to a number of preserved benefits that are substantially similar, or no less favourable when considered overall to the benefits in the transferrable instruments;

•  preserving the Agreements will incur operational and administrative inefficiencies. These inefficiencies include having to change human resources information systems, the creation of two additional payroll cycles, and administering the terms and conditions of multiple Agreements;

•  preserving the Agreements may make Konecranes less competitive as maintaining the Agreements may require Konecranes to charge customers higher rates to cover additional compliance costs; and

•  the nominal expiry date of each of the Agreements has passed whereas the offer of ongoing employment with Konecranes is prospective (1 January 2021).

[18] Each of these grounds advanced by the Applicant weigh in favour of granting the applications.

Views of employees (section 318(3)(a))

[19] Whilst provided an opportunity to do so, no employees individually participated in these proceedings.

[20] The views of individual employees currently before the Commission were provided in the statement of Stuart Fontyn (regarding the Victorian Agreement) and the statements of Peter Clark and Siamani Taua (regarding the New South Wales Agreement). These employees support the applications relevant to their employment circumstances.

[21] As noted earlier, the CEPU and AMWU do not oppose the applications in respect of which they have standing.

[22] I am satisfied that the Transferring Employees, and their representative Union, do not object to the applications being granted. This factor weighs in favour of making the orders sought.

Whether employees will be disadvantaged (section 318(3)(b))

[23] Konecranes submit that employees will not be disadvantaged as the offers of ongoing employment accepted by the relevant employees entitle those employees to terms and conditions substantially similar to, or no less favourable than, the current terms.

[24] The Applicant submits that overall employees will be better off under the direct employ of Konecranes. On the material before me, I am satisfied that employees will not be disadvantaged.

Nominal expiry dates (section 318(3)(c))

[25] Each of the Agreements has passed its relevant nominal expiry date. This factor weighs in favour of making the orders sought.

Productivity, economic impact and business synergy (sections 318(3)(d), (e) and (f))

[26] I note that the work conducted by employees of MHE-Demag and the employees of Konecranes is highly related and that having such employees on the same site performing work under common terms is likely to lessen the administrative burden of processing payroll and managing employment issues. It may also avoid potential disputes.

[27] This factor weighs in favour of making the orders sought.

Public interest (section 318(3)(g))

[28] There was no evidence that making the orders would be contrary to the public interest. This is a neutral factor.

Conclusion

[29] Being the proposed new employer of the Transferring Employees, Konecranes has standing to make these applications. 9 I am satisfied that the jurisdictional facts necessary for the exercise of the Commission’s powers under section 318(1)(a) and (b) of the FW Act have been made out.

[30] Having taken into account the considerations under section 318(3) of the FW Act, I am satisfied that these factors collectively weigh in favour of making the proposed orders. That both of the relevant Unions consent to the relevant applications, and in the absence of any other employee objection, I am satisfied that any potential disadvantage to the transferring employees has been addressed by the Applicant’s offers of employment entitling the transferring employees to substantially similar or equivalent benefits.

[31] Consistent with section 318(4)(a), the date of effect of my orders will be the day upon which the employees employed under the Agreements come to be transferred from the employment of MHE-Demag to the employment of Konecranes. From that date they will be employed under the offers of ongoing employment with Konecranes.

[32] In conjunction with this decision, I issue four orders in the foregoing terms. 10

DEPUTY PRESIDENT

Written submissions:

Konecranes Pty Ltd – 26 November 2020

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia – Electrical, Energy and Services Division – 11 December 2020

Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers’ Union (AMWU) – 11 December 2020

Printed by authority of the Commonwealth Government Printer

<PR725434>

 1   MHE-Demag Australia Pty. Ltd. NSW Enterprise Bargaining Agreement 2018-2019 (NSW Agreement)

 2   MHE-Demag Australia Pty. Ltd. Victoria Enterprise Bargaining Agreement 2017 (Victorian Agreement)

 3   MHE-Demag Australia Pty. Ltd. Queensland Enterprise Bargaining Agreement 2017 (Queensland Agreement)

 4   MHE-Demag Australia Pty Ltd South Australia Enterprise Bargaining Agreement 2018-2019 (SA Agreement)

 5   Email received 11 December 2020 at 08:33am (ACDT)

 6   Email received 11 December 2020 at 09:38am (ACDT)

 7   Commission matter number AG2020/3616

 8   Commission matter number AG2020/3617

 9 Section 318(2)(a)

 10   PR725495 (NSW Agreement); PR725562 (SA Agreement); PR725566 (Qld Agreement); and PR725568 (Victorian Agreement)