Legg Mason Asset Management Australia Limited T/A Legg Mason Australia
[2020] FWC 642
•10 FEBRUARY 2020
| [2020] FWC 642 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
s.319 Application for an order relating to instruments covering new employer and non-transferring employees
Legg Mason Asset Management Australia Limited T/A Legg Mason Australia
(AG2020/111)
DEPUTY PRESIDENT MASSON | MELBOURNE, 10 FEBRUARY 2020 |
Application for orders relating to instruments covering new employer and transferring and non-transferring employees.
[1] An application has been made pursuant to s. 318 and s. 319 of the Fair Work Act 2009 (the Act) by Legg Mason Asset Management Australia Limited T/A Legg Mason Australia (the Applicant) seeking orders from the Fair Work Commission (the Commission);
(i) that the IFS Agreement 2019 1 (the IFS Agreement) does not cover the Applicant and each person who is a transferring employee within the meaning of s 311(2) of the Fair Work Act 2009; and
(ii) that the IFS Agreement does not cover the Applicant and each person who is a non-transferring employee within the meaning of s 314(2) of the Fair Work Act 2009.
[2] The application was accompanied by a signed witness statement dated 17 January 2020 prepared by Mr. Andy Sowerby who is the Applicant’s Head of Asia Pacific.
[3] Directions were issued by the Commission on the 23 January 2020 allowing for submissions and materials to be filed in relation to the application by; the Applicant, any Transferring Employees and any Unions that are party to the IFS Agreement.
[4] No submissions or materials were received from any of the Transferring Employees, or from the Finance Sector Union of Australia (the FSU) who is covered by the IFS Agreement.
Background
[5] Mr Sowerby provided the following relevant information in his witness statement.
[6] The Applicant provides investment management services and is a member of Legg Mason Inc, a global asset management group of companies that is listed on the New York Stock Exchange. The Applicant is the employing entity in Australia. The Applicant has entered into a Sale of Assets Agreement (the Sale Agreement) with Industry Fund Services Limited (IFS) in relation to the purchase of a non-superannuation investment management service owned and operated by IFS. Within a year of the Applicant owning and operating this service, its name will change to LM Invest. The sale of assets is scheduled to take effect on 29 February 2020 under the terms of the Sale Agreement.
[7] The Applicant has entered into contracts of employment with four current employees of IFS (the Transferring Employees) who will commence working for the Applicant on 1 March 2020 in the same or substantially the same roles as with IFS, those being the Managing Director, Head of Investment Operations, Financial Planner and Client Operations Manager. The Transferring Employees are covered in their employment with IFS by the IFS Agreement.
[8] The Applicant also intends to employ new employees (Non-Transferring Employees) to perform the same or similar work as the Transferring Employees in the LM Invest service.
[9] The relevant underpinning award is that of the Banking, Finance and Insurance Award 2020 2 (the Award).
Statutory Provisions
[10] Section 318 of the Act sets out the circumstances in which an order may be made by the Commission in respect of a new employer and transferring employees:
“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.”
[11] Section 319 of the Act sets out the circumstances in which an order may be made by the Commission in respect of a new employer and non-transferring employees:
“319 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) 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
[12] Before turning to consider the orders sought by the Applicant it is necessary to establish that the IFS Agreement is a transferrable instrument and would cover the Applicant, the Transferring Employees and Non-Transferring Employees, subject to any order of the Commission.
Transferable Instrument
[13] I am satisfied that the IFS Agreement is a transferrable instrument pursuant to s 312(1)(a) of the Act. I am further satisfied that;
(i) The employment of the Transferring Employees with IFS will terminate on the date of the sale of assets which is scheduled for 1 March 2020 (s. 311(1)(a));
(ii) Within 3 months of termination of employment, the Transferring Employees will be employed by the Applicant (s. 311(1)(b));
(iii) The work of the Transferring Employees to be performed for the Applicant is substantially the same or similar to the work performed by the Transferring Employees for IFS (s. 311(1)(c)); and
(iv) There is a connection between IFS and the Applicant as described in s 311(3), in that the Applicant will assume the beneficial use of some or all of the assets formerly held by IFS and which relates to or are used in connection with the transferring work (s. 311(1)(d)).
[14] As a consequence of the above I am satisfied that the IFS Agreement will cover the Applicant, the Transferring Employees and Non-Transferring Employees, subject to any order the Commission may make. It is also the case that the Applicant, the new employer, has made the application, thus satisfying the requirements of s. 318(2) and s. 319(2) of the Act.
[15] Having been satisfied as to the necessary jurisdictional requirements of ss. 311 and 312 being present, I will now turn to each of the matters that I am required to consider under ss. 318(3) & 319(3).
The views of the new employer
[16] The Applicant seeks that the IFS Agreement does not operate in its business in respect of Transferring Employees and Non-Transferring Employees and that the Award (if applicable) covers its employees. No Transferring Employees provided their views in relation to the application. These factors weigh in favour of the granting of the orders sought by the Applicant.
Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
[17] The Applicant provided a redacted copy of an employment contract entered into with one of the Transferring Employees. It reveals that Transferring Employees will be employed on an employment contract that contains the following conditions;
● Annual salary that comprehends annual leave loading, all allowances, penalties and overtime;
● Normal hours of work from 8.30am to 5.30pm Monday-Friday;
● Superannuation in accordance with relevant legislation;
● Leave provisions in accordance with the National Employment Standards (NES) save for Personal/Carers Leave which provides for 18 days per annum and long service leave which provides for 13 weeks after 10 years’ service;
● Rebate of 50% on private health insurance; and
● Application of company policies.
[18] The IFS Agreement by comparison provides for a range of conditions including the following;
● Ordinary hours of work of 37 hours per week;
● Accrued Days Off (ADOs) available to employees except certain specified client facing roles;
● Payment for overtime (not applicable to Executive Managers) where directed to work beyond 37 hours per week;
● Time off in lieu of overtime (TOIL);
● Specified salary ranges (minimum and maximum) for salary grades;
● Superannuation paid at 1.5 % above legislative requirement;
● Personal/carers leave of 18 days per annum;
● Long service leave of 13 weeks after 10 years’ service;
● Other leave consistent with the NES; and
● Redundancy benefits in excess of NES entitlements.
[19] The Applicant concedes that the IFS Agreement contains various benefits that are in excess of the Award and that a number of these conditions would cease to apply in the event that the applications were granted. In order to offset some of the conditions that would cease to apply the Applicant has offered salary increases to the Transferring Employees of approximately 9% for three of the employees and 45% for the remaining employee. This the Applicant contends compensates those Transferring Employees for reduced superannuation contributions and some reduced leave entitlements.
[20] It is apparent that Transferring Employees will lose a number of conditions that they are presently entitled to under the terms of the IFS Agreement. Balanced against that loss of entitlements is the significant increase in salaries that each of those employees have been offered and accepted. In these circumstances I regard any potential disadvantage to Transferring Employees as a neutral consideration.
[21] As regards Non-Transferring Employees that may be employed by the Applicant in the future on transferring work that would not otherwise be covered by the Award, I do not regard those employees to be disadvantaged as they are currently not in receipt of the benefits under the IFS Agreement. It is therefore a neutral consideration.
If the order relates to an enterprise agreement—the nominal expiry date of the agreement
[22] The nominal expiry date of the IFS Agreement is 28 October 2022. The fact that the IFS Agreement has a significant period of time to run before its nominal expiry date is a factor that weighs against the granting of the orders sought.
Whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
[23] The transferable instrument would require the Applicant to maintain terms and conditions of employment in respect of Transferring Employees performing similar duties and functions to the balance of the Applicant’s workforce who are employed under the terms of the Award. I am satisfied that it would also create operational inefficiencies arising from the requirement to administer the terms of the IFS Agreement covering 4 Transferring Employees. This weighs in favour of granting the orders sought.
The degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer
[24] The Award already covers the applicant and its existing employees within the scope of that Award. While the terms of the Award on balance may be less beneficial than the IFS Agreement, there are differences that would be problematic if both the IFS Agreement and Award continued to apply to the same class of employees. To that extent there is a lack of synergy between the transferable instrument and the Award which covers the Applicant and its employees. This weighs in favour of the orders sought by the Applicant.
The public interest
[25] I am satisfied that it is not contrary to the public interest to grant the orders sought by the Applicant. This weighs in favour of granting the orders sought.
Conclusion
[26] Having considered the application and supporting material and taking into account and weighing each of the requirements in s. 318(3) and s 319(3) of the Act, I am satisfied that the orders sought should be granted.
[27] An Order PR716485 will be separately issued with this Decision and will take effect on 1 March 2020 or when the transfer of business takes effect, whichever is the later date.
DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
< PR716486>
1 PR713564
2 MA000019
0
0
0