Lend Lease Engineering Pty Ltd (formerly known as Abigroup Contractors Pty Ltd) (ACN 000 201 516)

[2014] FWC 5499

[2014] FWC 5499

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.318 - Application for an order relating to instruments covering new employer and transferring employees in agreements

Lend Lease Engineering Pty Ltd (formerly known as Abigroup Contractors Pty Ltd) (ACN 000 201 516)

(AG2014/6394) (AG2014/6397)

Lend Lease Building Pty Ltd (formerly known as Lend Lease Project Management and Construction Pty Ltd) (ACN 000 098 162)

(AG2014/6395)

Lend Lease Building Contractors Pty Ltd (formerly known as Baulderstone Pty Ltd) (ACN 002 625 130)

(AG2014/6396) (AG2014/6399)

VICE PRESIDENT HATCHER SYDNEY, 15 AUGUST 2014

Application for orders relating to transfers of business - s.318.

Introduction

[1] These applications for orders under s.318 of the Fair Work Act 2009 (the Act) arise out of a restructure of the Australian construction and infrastructure businesses of the Lend Lease Group (Group) that was implemented in August 2013. This restructure involved a number of companies in the Group which previously competed with each other for construction and infrastructure contracts having their names changed and their business functions within the Group re-arranged so that each is sectorally based. Three of those companies are relevant for the purposes of these applications. Under the restructure:

● Lend Lease Project Management and Construction Pty Ltd has changed its name to Lend Lease Building Pty Ltd (LLB), and will bid for and deliver new building projects in Queensland, the Northern Territory, New South Wales and the ACT.

● Baulderstone Pty Ltd has changed its name to Lend Lease Building Contractors Pty Ltd (LLBC), and will bid for and deliver new building projects in Victoria, South Australia and Western Australia.

● Abigroup Contractors Pty Ltd has changed its name to Lend Lease Engineering Pty Ltd (LLE), and will bid for and deliver new engineering projects nationally.

[2] However, existing projects being delivered by the above companies will continue to be delivered by them until they are completed, regardless of the above structure.

[3] The following enterprise agreements apply to the companies identified above:

● The Lend Lease Project Management & Construction/CFMEU Joint Development Agreement Mark 8 2012-16 (Joint Development Agreement) applies to LLB’s projects.

● The Baulderstone Pty Ltd NSW Civil Engineering Enterprise Agreement 2012 (Baulderstone NSW Agreement) applies to LLBC’s civil engineering projects in NSW.

● The Baulderstone Building Victoria Enterprise Agreement 2011-2015 (Baulderstone Building Victoria Agreement) applies to LLBC’s building projects in Victoria.

● The Baulderstone Civil Engineering Victoria Enterprise Agreement 2010-2013 (Baulderstone Engineering Victoria Agreement) applies to LLBC’s civil engineering projects in Victoria.

● The Abigroup Contractors Pty Ltd New South Wales Engineering Agreement 2013-2016 (Abigroup NSW Agreement) applies to LLE’s projects in NSW.

● The Abigroup Southern Region Engineering Division Agreement 2012-2016 (Abigroup Southern Engineering Agreement) applies to LLE’s engineering projects in Victoria.

● The Abigroup Contractors Pty Ltd Southern Region Building Division and the CFMEU Building and Construction Industry Enterprise Agreement 2011-2015 (Abigroup Southern Building Agreement) applies to LLE’s building projects in Victoria.

[4] Arising out of the restructure, the employment of a number of employees with each of the three companies identified has terminated or may in the future terminate, and they have commenced or may in the future commence employment with another of those companies. Each of these companies has formed the view that where this occurs, the enterprise agreement which applied to the employee at the previous employment will transfer to the new employment by virtue of the operation of s.313 of the Act. They seek to avoid that result by obtaining orders under s.318(1).

[5] Six applications were originally filed in this connection. One of the applications (AG2014/6398) was subsequently discontinued. The remaining applications are as follows:

(1) AG2014/6394 (first application): LLE has applied for orders that the Baulderstone NSW Agreement will not cover, and the Abigroup NSW Agreement will cover, transferring employees in NSW who are currently employed by LLBC and may in the future be employed by LLE. The Australian Workers Union (AWU) and the Construction, Forestry, Mining and Energy Union (CFMEU) have appeared in relation to this application and oppose the making of the orders sought.

(2) AG2014/6395 (second application): LLB has applied for orders that the Baulderstone NSW Agreement will not cover, and the Joint Development Agreement will cover, transferring employees in NSW who were previously employed or who are currently employed by LLBC and have been or may in the future be employed by LLB. The CFMEU has appeared in relation to this application and consents to the making of the orders sought.

(3) AG2014/6396 (third application): LLBC has applied for orders that the Joint Development Agreement will not cover, and the Baulderstone Building Victoria Agreement will cover, transferring employees in Victoria who were previously employed or who are currently employed by LLB and have been or may in the future be employed by LLBC. The CFMEU has appeared in relation to this application and consents to the making of the orders sought.

(4) AG2014/6397 (fourth application): LLE has applied for orders that the Baulderstone Engineering Victoria Agreement will not cover, and the Abigroup Southern Engineering Agreement will cover, transferring employees in Victoria who are currently employed by LLBC and may in the future be employed by LLE.

(5) AG2014/6399 (fifth application): LLBC has applied for orders that the Abigroup Southern Building Agreement will not cover, and the Baulderstone Building Victoria Agreement will cover, a transferring employee who was previously employed by LLE and has now been employed by LLBC. The CFMEU has appeared in relation to this application and consents to the making of the orders sought.

The statutory scheme

[6] Part 2-8 of the Act contains a scheme of provisions concerning transfers of business. The object of the Part is described in s.309 as follows:

309 Object of this Part

The object of this Part is to provide a balance between:

(a) the protection of employees’ terms and conditions of employment under enterprise agreements, certain modern awards and certain other instruments; and

(b) the interests of employers in running their enterprises efficiently;

if there is a transfer of business from one employer to another employer.

[7] What constitutes a “transfer of business” for the purpose of Part 2-8 is defined in s.311:

311 When does a transfer of business occur

Meanings of transfer of business, old employer, new employer and transferring work

(1) There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:

(a) the employment of an employee of the old employer has terminated;

(b) within 3 months after the termination, the employee becomes employed by the new employer;

(c) the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;

(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).

Meaning of transferring employee

(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.

Transfer of assets from old employer to new employer

(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:

(a) the old employer or an associated entity of the old employer; and

(b) the new employer or an associated entity of the new employer;

the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):

(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and

(d) that relate to, or are used in connection with, the transferring work.

Old employer outsources work to new employer

(4) There is a connection between the old employer and the new employer if the transferring work is performed by one or more transferring employees, as employees of the new employer, because the old employer, or an associated entity of the old employer, has outsourced the transferring work to the new employer or an associated entity of the new employer.

New employer ceases to outsource work to old employer

(5) There is a connection between the old employer and the new employer if:

(a) the transferring work had been performed by one or more transferring employees, as employees of the old employer, because the new employer, or an associated entity of the new employer, had outsourced the transferring work to the old employer or an associated entity of the old employer; and

(b) the transferring work is performed by those transferring employees, as employees of the new employer, because the new employer, or the associated entity of the new employer, has ceased to outsource the work to the old employer or the associated entity of the old employer.

New employer is associated entity of old employer

(6) There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employed by the new employer.

[8] Section 312(1) defines the expression “transferable instrument” as it is used in Part 2-8. Relevantly, it includes an enterprise agreement that has been approved by the Commission. Section 313(1) prescribes the circumstances in which a transferring employee and the employee’s new employer will be covered by a transferable instrument:

313 Transferring employees and new employer covered by transferable instrument

(1) If a transferable instrument covered the old employer and a transferring employee immediately before the termination of the transferring employee’s employment with the old employer, then:

(a) the transferable instrument covers the new employer and the transferring employee in relation to the transferring work after the time (the transfer time) the transferring employee becomes employed by the new employer; and

(b) while the transferable instrument covers the new employer and the transferring employee in relation to the transferring work, no other enterprise agreement or named employer award that covers the new employer at the transfer time covers the transferring employee in relation to that work.

[9] Section 313(3) provides that s.313(1) is subject to any order made by the Commission under s.318(1).

[10] Division 3 empowers the Commission to make orders which have the effect of displacing the operation of s.313(1). Relevantly, ss.317 and 318 provide:

317 FWC may make orders in relation to a transfer of business

This Division provides for the FWC to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer.

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 317 establishes a pre-condition for the making of orders under Division 3 of Part 2-8, namely that such orders may only be made “if there is, or is likely to be, a transfer of business from an old employer to a new employer” (it being apparent that the expression “transfer of business” bears the meaning prescribed in s.311(1)). The applicants and the AWU and the CFMEU accepted that s.317 imposed a pre-condition of this nature. This pre-condition appears to be in the nature of a jurisdictional fact which must “truly exist” in order for any orders to be able to be made, since there is nothing in the language of the provision which suggests that the pre-condition depends merely upon the opinion or satisfaction of the member of the Commission hearing the particular application as to that matter. 1 This interpretation is consistent with s.308, which identifies the object of Part 2-8 as operating by reference to a similar condition, namely “if there is a transfer of business from one employer to another employer”. Section 310 likewise makes provision for the transfer of rights and obligations under particular instruments “if there is a transfer of business from one employer to another employer”. These provisions indicate that the purpose of the Part is to deal with the legal effect upon employee entitlements of any actual occurrence of a transfer of business.

[12] Section 318(1) empowers the Commission to make an order that a transferable instrument “that would, or would be likely” to cover the new employer and a transferring employee because of the operation of s.313(1)(a) will not cover them. For there to be a “transferring employee” upon which s.313(1)(a) can operate, there must (as s.311(2) makes clear) be an employee in relation to whom the requirements in paragraphs (a), (b) and (c) of the definition of “transfer of business” in s.311(a) are satisfied in relation to a “transfer of business” (for which all the requirements of s.311(1) must be satisfied). The effect of this, in summary, is that in order for s.318(1)(a) orders to be made, there must be, or be likely to be, a transfer of business affecting a transferring employee upon which s.313(1)(a) operates or will operate. This is effectively the same jurisdictional fact requirement as prescribed in s.317.

[13] Section 318(2), which identifies who has the capacity under the Act to make application for orders under s.318(1)(a), operates consistently with the identified jurisdictional fact requirement in s.317 and s.318(1)(a). Under s.318(2)(a), only an employer which is a “new employer or a person likely to be a new employer” - that is, by reference to s.311(1), an employer who has employed or is likely to employ a transferring employee in relation to a transfer of business - can make application for orders. Under s.318(2)(b), only an employee who is a “transferring employee, or an employee likely to be a transferring employee” can apply. Paragraphs (c) and (d) of s.318(2) allow employee organisations to apply in specified circumstances; where the application relates to a particular award, the organisation must be entitled to represent the industrial interests of an employee referred to in paragraph (b) - that is, an employee who is or likely to be a transferring employee. In the absence of an actual or likely transfer of business, an employer cannot make an application for orders under s.318(1).

[14] I will therefore proceed on the basis that, with respect to each application, it is necessary for the applicant to demonstrate that there are transferring employees (as defined in s.311(2)) in relation to a transfer of business (as defined in s.311(1)) which has occurred or is likely to occur. Unless that is demonstrated, there is no power to make the orders sought in the application.

First Application - AG2014/6394

Evidence

[15] Mr Jeremy Hanrahan, who is the National IR Manager of LLE and the Manager of Employee Relations of Lend Lease Construction and Infrastructure (which oversees LLE, LLBC and LLB), and who is responsible for providing industrial relations and legal advice to the Lend Lease building, engineering and infrastructure services businesses, gave evidence for the applicant in relation to each application. In respect of the first application, he gave the following evidence:

● The first application concerns current employees of LLBC who may in the future be employed by LLE on projects being delivered by LLE, including the Nambucca Heads to Urunga Pacific Highway Upgrade Project (Nambucca project) and the Oxley Highway to Kundabung upgrade (Oxley project).

● LLBC currently employs 121 construction workers on two engineering projects in New South Wales: 36 at the Barangaroo Headland Park project (Headland Park project) and 85 construction workers at the Pacific Highway Upgrade - Tintenbar to Ewingsdale project (T2E project).

● The Baulderstone NSW Agreement covers construction workers on the Headland Park project and the T2E project.

● As a result of the Lend Lease restructure, LLBC will not be tendering for any future engineering projects in New South Wales.

● As particular stages of the Headland Park and T2E projects are completed, LLBC may no longer require construction workers currently employed on those projects. Consequently, LLBC will be seeking to redeploy construction workers on those projects to projects being delivered by LLE, including the Nambucca project and the Oxley project. However, that is conditional upon LLE obtaining the orders sought in the first application, and subject to the suitability of particular LLBC employees for particular roles with LLE.

● The Abigroup NSW Agreement would, but for the operation of s.313(1) of the Act, apply to all construction workers engaged by Abigroup on the Nambucca project and the Oxley project.

● LLE has made (by way of letters dated 23 May 2014) conditional offers of employment to three employees of LLBC currently employed on the T2E project: Paul Jones, Scott Perrot and Ryan Pomeroy. The condition upon each offer is that LLE is successful in obtaining orders by way of the first application that the Abigroup NSW Agreement will cover their employment with LLE. If such orders are not obtained, they will not be employed by LLE. At the time of the hearing, Messrs Jones, Perrot and Pomeroy remained employed by LLBC.

● LLE would prefer to retain existing LLBC employees for future vacant roles, but any further offers of employment to LLBC will likewise be conditional upon the Commission making the orders sought in the first application.

● No further offers of employment will be made to LLBC employees if the first application is unsuccessful.

The jurisdictional issue

[16] In accordance with my earlier analysis of the statutory scheme, it is necessary to determine on the basis of Mr Hanrahan’s evidence whether there are transferring employees in relation to a transfer of business which has occurred or is likely to occur. It is immediately apparent from that evidence that, as at the date of the hearing, there has been no transfer of business and no transferring employees. No relevant employees have yet been terminated by LLBC and then employed by LLE within a three month period to perform the same or substantially the same work; accordingly the requirements of paragraphs (a), (b) and (c) of s.311(1) have not yet been satisfied.

[17] That leaves the question of whether there is likely to be a transfer of business. On Mr Hanrahan’s evidence, current employees of LLBC will only be employed by LLE on the Nambucca project, the Oxley project or otherwise if the orders sought in the first application are made by the Commission. That, therefore, is the only circumstance in which the requirements in paragraphs (b) and (c) of s.311(1) could be satisfied.

Submissions

[18] LLE submitted that the word “likely” as used in s.317 and s.318(1)(a) should be interpreted in accordance with its ordinary meaning - that is, “probable, might well happen, or reasonably expected to happen”. On that basis, LLE submitted that a likely event included one that probably or might well happen but which was conditional upon the occurrence of another event. In that sense, it was submitted, it could be concluded that a transfer of business from LLBC to LLE was likely to occur even though it was conditional upon the making of orders under s.318(1).

[19] The AWU submitted that the Commission must determine whether jurisdiction exists under s.317 of the Act before any orders are made under s.318(1) and accordingly cannot take into account orders which do not exist in determining jurisdiction under s.317. The conditional nature of LLE’s current or future offers of employment meant, it was submitted, that there was no possibility of LLBC employees being employed by LLE in the future and therefore that there was no jurisdiction to make the orders sought in the first application.

[20] The CFMEU submitted that unless it could be demonstrated that the employment of any relevant employee had actually been terminated, there could be no transfer of business because the requirement in s.311(1) would not be satisfied, with the result that no order could be made under s.318(1). Because no relevant employee had yet been terminated by LLBC, the CFMEU submitted, there was no power to make the order sought in the first application.

Consideration

[21] To grant LLE’s application would require a form of circular reasoning. On its case, there will be no transfer of business and no transferring employees unless the Commission exercises its jurisdiction to make the orders it seeks under s.318(1). The Commission cannot exercise that jurisdiction unless it first finds that there is likely to be a transfer of business and transferring employees. Therefore, LLE effectively asks the Commission to conclude that the jurisdictional fact finding which is the necessary prerequisite to the exercise of jurisdiction is established by the likelihood that the jurisdiction will be exercised and the transfer of business will therefore occur.

[22] There is clearly a logical fallacy in this. To interpret and apply ss.317 and 318 in the manner contended for by LLE would put the Commission in the position of determining whether a transfer of business actually occurs or not. I do not consider such an approach to be consistent with the intended purpose and effect of the provisions of Part 2-8. Section 318(1) orders are for the purpose of altering, where appropriate, the default position established by s.313 as to the transferring instrument which will apply to transferring employees in relation to a transfer of business which has occurred or is likely to occur. That is, the role of the Commission is to consider whether to act in relation to a set of events which, it is independently established, has actually occurred or is actually likely to occur. The Commission is not empowered to exercise jurisdiction in relation to a transfer of business which will only occur if it exercises jurisdiction. I accept the AWU’s submissions in this respect.

[23] The conditional nature of the offers of employment made to Messrs Jones, Perrot and Pomeroy and any future offers that would be made to any other current employees of LLBC means that there is no proper basis to find that there is likely to be any transferring employees in relation to a transfer of business. It may be added that, apart from Messrs Jones, Perrot and Pomeroy, no offers have yet been made to anybody, so that in any event it could not be said that it was anything more than possible that there would be future transferring employees in relation to a transfer of business.

[24] There is no power to make the orders sought in the first application, and it must therefore be dismissed.

Second Application - AG2014/6395

[25] The second application, made by LLB, has two aspects. In the first instance it concerns one particular employee, Dean Hackett. He was formerly employed by LLBC on the Headland Park project as a construction worker, at which the Baulderstone NSW Agreement applies. Whilst still employed by LLBC, Mr Hackett received a written offer of employment from LLB dated 20 June 2014. That offer was made subject to the condition that LLB obtained an order from the Commission that the Joint Development Agreement would apply to his employment with LLB as sought in the second application. Mr Hackett accepted the offer by signing it on 23 June 2014. Notwithstanding the conditional nature of the offer and the date of its acceptance, Mr Hackett’s employment with LLBC terminated on 20 June 2014, and he commenced employment with LLB as a construction worker at its Darling Harbour Live project on 23 June 2014. In effect therefore the condition upon the offer of employment has been waived.

[26] I am satisfied that the circumstances of Mr Hackett’s termination of employment by LLBC and employment by LLB constitute a transfer of business as defined in s.311(1), and that Mr Hackett is a transferring employee under s.311(2), in that:

(a) Mr Hackett’s employment with LLBC has terminated;

(b) within three months of that termination Mr Hackett has become employed by LLB;

(c) the work Mr Hackett performs for LLB, namely that of a construction worker, is substantially the same as the work he performed for LLBC; and

(d) there is a connection between LLBC and LLB as described in s.311(6), in that they are “associated entities” (being related bodies corporate) 2.

[27] The effect of s.313(1)(a) is therefore that the Baulderstone NSW Agreement would cover Mr Hackett’s employment with LLB. Accordingly, in respect of Mr Hackett, the requisite jurisdictional fact is made out, and I consider that I have power to make orders in respect of his employment.

[28] Secondly the orders sought by LLB in the second application would extend beyond Mr Hackett to any future employees terminated by LLBC and then employed on projects being delivered in New South Wales by LLB. As with the first application, any future offers of employment by LLB to current LLBC employees will be conditional upon the Commission making the orders sought in the second application and subject to the suitability of particular LLBC employees for particular roles with LLB. Apart from Mr Hackett, the evidence does not disclose that any employee has yet been terminated by LLBC and then employed by LLB within a three month period to do the same or substantially similar work, or that any conditional offer of employment has yet been made by LLB to any current LLBC employee.

[29] I do not consider that there is any basis for me to conclude that, apart from Mr Hackett, there is or likely to be any transferring employee in relation to a transfer of business. As with the first application, the conditional nature of any employment offer that might be made in the future means that the jurisdictional fact requirement cannot be satisfied. Additionally, the lack of any specific information about who might be employed and when means that it cannot be said at this stage that it is anything more than possible that there will be further transferring employees. There is therefore no power to make any orders under s.318(1) which would have application beyond the employment of Mr Hackett.

[30] I will therefore consider the second application as it concerns Mr Hackett only. In respect of the matters that are required to be taken into account under s.318(3), I find as follows (using the paragraph lettering of each matter identified in s.318(3)):

(a) The new employer, LLB, wants the Joint Development Agreement to apply to Mr Hackett’s employment, and does not want the Baulderstone NSW Agreement to apply. Mr Hackett’s direct view concerning the application is not known. However I would infer from the fact that he accepted the offer of employment from LLB, which was conditional upon s.318(1) orders being made which would ensure that the Joint Development Agreement would apply to that employment and the Baulderstone NSW Agreement would not, that he is not opposed to being employed under the Joint Development Agreement.

(b) On the basis of the evidence of Mr Hanrahan, I find that Mr Hackett would not be disadvantaged by the making of the s.318(1) order sought in relation to his terms and conditions of employment, and indeed will be better off. I note that the CFMEU agrees that there will be no disadvantage.

(c) The Baulderstone NSW Agreement will nominally expire on 1 February 2015, and the Joint Development Agreement will nominally expire on 31 March 2016. The application of the latter agreement as sought by LLB will therefore result in Mr Hackett having certainty as to his terms and conditions of employment for a longer period.

(d) There will be small negative impacts on productivity if LLB is required to administer and apply two agreements at the Darling Harbour Live project instead of just one.

(e) LLB would not incur significant economic disadvantage as a result of the Baulderstone NSW Agreement covering it in respect of Mr Hackett’s employment.

(f) There are substantial similarities between the Joint Development Agreement and the Baulderstone NSW Agreement, but there are some differences, which means there is a large degree of business synergy but not complete synergy between the two agreements.

(g) It would not be contrary to the public interest to make the order sought by LLB.

[31] Having taken into account these matters, and the fact that the CFMEU consents to the making of orders, I consider that that the orders sought by LLB should be made with respect to the employment of Mr Hackett.

Third Application - AG2014/6396

[32] Like the second application, the third application, made by LLBC, has a double aspect: it firstly concerns a named individual, Mr Scott Hatton, and secondly concerns possible future transfers of employees from LLB to LLBC.

[33] Mr Hatton was formerly employed by LLB as a construction worker on its Royal Children’s Hospital project. By letter dated 18 June 2014, he was offered employment with LLBC conditional upon LLBC obtaining orders that the Baulderstone Building Victoria Agreement would cover his employment and the Joint Development Agreement would not. He signed to accept the offer on 19 June 2014. On 23 June 2014 his employment with LLB terminated, and on 24 June 2014 he commenced employment with LLBC as a construction worker on its T2 Melbourne Airport project. As with Mr Hackett, the fact that his employment with LLB commenced despite the condition attached to the offer of employment not having been satisfied indicates that the condition was waived.

[34] I am satisfied that the circumstances of Mr Hatton’s termination of employment by LLB and his employment by LLBC constitute a transfer of business as defined in s.311(1), and that Mr Hatton is a transferring employee under s.311(2), in that:

(a) Mr Hatton’s employment with LLB has terminated;

(b) within three months of that termination Mr Hatton has become employed by LLBC;

(c) the work Mr Hatton performs for LLBC, namely that of a construction worker, is substantially the same as the work he performed for LLB; and

(d) there is a connection between LLB and LLBC as described in s.311(6), in that they are “associated entities” (being related bodies corporate).

[35] The effect of s.313(1)(a) is therefore that the Joint Development Agreement would cover Mr Hatton’s employment with LLBC. Accordingly there is power to make orders under s.318(1) with respect to Mr Hatton as a transferring employee.

[36] Beyond this, for the same reasons as set out in relation to the first and second applications, I do not consider there is power to make orders with respect to any future possible transferring employees. Any future offers of employment made by LLBC to existing LLB employees will be subject to the same condition; no such offers have yet been made; nobody (apart from Mr Hatton) has yet been terminated by LLB; and nobody (apart from Mr Hatton) has yet been employed by LLBC.

[37] The third application will therefore be considered with respect to Mr Hatton only. I make the following findings concerning the matters required to be taken into account under s.318(3):

(a) The new employer, LLBC, wants the Baulderstone Building Victoria Agreement to apply to Mr Hatton’s employment, and does not want the Joint Development Agreement to apply. Mr Hatton’s direct view is not known, but his acceptance of the conditional offer of employment from LLBC indicates that he was not opposed to being employed under the Baulderstone Building Victoria Agreement.

(b) Mr Hanrahan’s evidence demonstrates that Mr Hatton would not be disadvantaged by the making of the s.318(1) orders sought in relation to his terms and conditions of employment, and would in fact be better off. The CFMEU agrees that there will be no disadvantage.

(c) The Joint Development Agreement will expire on 31 March 2016, and the Baulderstone Building Victoria Agreement will nominally expire on 31 March 2015. The application of the Baulderstone Building Victoria Agreement will therefore mean a shorter period of certainty for Mr Hatton’s terms and conditions of employment.

(d) There will be small negative impacts on productivity if LLBC is required to administer and apply two agreements at the T2 Melbourne Airport project instead of just one.

(e) LLBC would not incur significant economic disadvantage as a result of the Joint Development Agreement covering it in respect of Mr Hatton’s employment.

(f) There are substantial similarities between the Baulderstone Building Victoria Agreement and the Joint Development Agreement and some differences, which means there is a large degree of business synergy but not complete synergy between the two agreements.

(g) It would not be contrary to the public interest to make the order sought by LLBC.

[38] Taking into account the above matters and the CFMEU’s consent, I consider that, on balance, the orders sought by LLBC should be made with respect to the employment of Mr Hatton.

Fourth Application - AG2014/6397

[39] The fourth application, made by LLE, again involves both a particular individual, Mr Darren Lancaster, and possible future transferring employees. The circumstances applying to Mr Lancaster are as follows. He is currently employed by LLBC as a construction worker on its Water Resources Alliance project in Victoria. Mr Hanrahan’s evidence was that LLE intends to make an offer of employment to Mr Lancaster conditional upon LLE obtaining the orders sought in the fourth application. However, additional evidence concerning Mr Lancaster was given in the witness statement of Mr Salvatore Valvo. Mr Valvo is the Project Manager for LLE’s Alphington Sewer project in Victoria, and as such has the responsibility of the management of personnel on the project to ensure that LLE meets all the project’s requirements. Mr Valvo gave evidence that it was expected that Mr Lancaster would be employed on the Alphington Sewer Project as a construction worker in mid-August 2014, on the basis that that such employment would commence the business day after Mr Lancaster finished working for LLBC on the Water Resources Alliance Project. Mr Valvo’s evidence did not suggest that there was any condition attached to the expected employment of Mr Lancaster.

[40] On the basis of Mr Valvo’s evidence, I am satisfied that the circumstances of Mr Lancaster’s expected termination of employment by LLBC and his expected employment by LLE constitute a likely transfer of business as defined in s.311(1), and that Mr Lancaster is likely to be a transferring employee under s.311(2), in that:

(a) Mr Lancaster’s employment with LLBC is expected to terminate;

(b) within three months of that termination Mr Lancaster is expected to be employed by LLE;

(c) the work Mr Lancaster is expected to perform for LLE, namely that of a construction worker, will be substantially the same as the work he currently performs for LLBC; and

(d) there is a connection between LLBC and LLE as described in s.311(6), in that they are “associated entities” (being related bodies corporate).

[41] The effect of s.313(1)(a) is that the Baulderstone Engineering Victoria Agreement would cover Mr Lancaster’s likely future employment with LLE. Accordingly there is power to make orders under s.318(1) with respect to Mr Lancaster as a likely transferring employee.

[42] Mr Valvo’s evidence was concerned only with Mr Lancaster’s expected employment, and did not extend to any other future possible transferring employees. Therefore, for the same reasons as set out in relation to the first, second and third applications, I do not consider there is power to make orders with respect to any future possible transferring employees. Any future offers of employment made by LLE to existing LLBC employees will be subject to the condition identified in Mr Hanrahan’s evidence; no such offers have yet been made; nobody has yet been terminated by LLBC; and nobody has yet been employed by LLE.

[43] I will therefore consider the fourth application in relation to Mr Lancaster only. I make the following findings concerning the matters required to be taken into account under s.318(3):

(a) The new employer, LLE, wants the Abigroup Southern Engineering Agreement to apply to Mr Lancaster’s employment, and does not want the Baulderstone Engineering Victoria Agreement to apply. Mr Lancaster’s view is not known.

(b) Mr Hanrahan’s evidence demonstrates that Mr Lancaster would not be disadvantaged by the making of the s.318(1) orders sought in relation to his terms and conditions of employment, and would in fact be better off.

(c) The Baulderstone Victoria Engineering Agreement nominally expired on 31 March 2013. The Abigroup Southern Engineering Agreement will nominally expire on 6 January 2017. The application of the latter agreement as sought by LLE will therefore result in Mr Lancaster having certainty as to his terms and conditions of employment for an extended period.

(d) There will be small negative impacts on productivity if LLE is required to administer and apply two agreements at the Alphington Sewer project instead of just one.

(e) LLE would not incur significant economic disadvantage as a result of the Baulderstone Victoria Engineering Agreement covering it in respect of Mr Lancaster’s employment.

(f) There are substantial similarities between the Abigroup Southern Engineering Agreement and the Baulderstone Victoria Engineering Agreement and some differences, which means there is a large degree of business synergy but not complete synergy between the two agreements.

(g) It would not be contrary to the public interest to make the order sought by LLE.

[44] Taking into account the above matters, and the fact that no party appeared in the matter to oppose the making of the orders sought, I consider that the orders sought by LLE should be made with respect to the employment of Mr Lancaster.

Fifth Application - AG2014/6399

[45] The fifth application, made by LLBC, concerns only one transferring employee, Mr Paul Round. Mr Round was formerly employed by LLE as a construction worker at the Docklands Library project. That employment terminated on 25 April 2014. On 28 April 2014 Mr Round commenced employment as a construction worker with LLBC on its City West Police project. That employment had been offered and accepted on the condition that the orders sought in the fifth application were made, but Mr Round’s employment without that condition having been satisfied indicates that the condition was waived.

[46] I am satisfied that Mr Round was a transferring employee in relation to a transfer of business in that:

(a) Mr Round’s employment with LLE has terminated;

(b) within three months of that termination Mr Round has become employed by LLBC;

(c) the work Mr Round performs for LLBC, namely that of a construction worker, is substantially the same as the work he performed for LLE; and

(d) there is a connection between LLBC and LLE as described in s.311(6), in that they are “associated entities” (being related bodies corporate).

[47] The effect of s.313(1)(a) is that the Abigroup Southern Building Agreement would cover Mr Round’s employment with LLBC. Accordingly there is power to make orders under s.318(1) with respect to Mr Round as a transferring employee. In respect of the fifth application, I make the following findings concerning the matters required to be taken into account under s.318(3):

(a) LLBC as the new employer wants the Baulderstone Building Victoria Agreement to cover Mr Round’s employment, and does not want the Abigroup Southern Building Agreement to apply. Mr Hatton’s direct view is not known, but his acceptance of the conditional offer of employment from LLBC indicates that he was not opposed to being employed under the Baulderstone Building Victoria Agreement.

(b) Mr Hanrahan’s evidence demonstrates that Mr Round would not be disadvantaged by the making of the s.318(1) orders sought in relation to his terms and conditions of employment, and would in fact be better off. The CFMEU agrees that there will be no disadvantage.

(c) The Baulderstone Building Victoria Agreement will nominally expire on 31 March 2015, as will the Abigroup Southern Building Agreement.

(d) There will be small negative impacts on productivity if LLBC is required to administer and apply two agreements at the City West Police project instead of just one.

(e) LLBC would not incur significant economic disadvantage as a result of the Abigroup Southern Building Agreement covering it in respect of Mr Round’s employment.

(f) There are substantial similarities between the Baulderstone Building Victoria Agreement and the Abigroup Southern Building Agreement and some differences, which means there is a large degree of business synergy but not complete synergy between the two agreements.

(g) It would not be contrary to the public interest to make the order sought by LLBC.

[48] Taking into account the above matters and the CFMEU’s consent, I consider that the orders sought by LLBC should be made with respect to the employment of Mr Round.

Conclusion

[49] Orders will be made in relation to the second, third, fourth and fifth applications consistent with the above reasons for decision. The orders will come into operation on the day upon which they are made in accordance with s.318(4). The applicant in each of those matters is directed to file and serve draft orders within seven days of the date of this decision. The first application is dismissed.

VICE PRESIDENT

Appearances:

A. Gotting of counsel with C. Ford solicitor for the applicants

S. Crawford for the Australian Workers’ Union

S. Maxwell for the Construction, Forestry, Mining and Energy Union

Hearing details:

2014.

Sydney:

22, 23 July.

 1   See Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at [130] per Gummow J; Secretary, Department of Education, Employment & Workplace Relations v Holmes [2008] FCA 105 at [16]; Maritime Union of Australia v Patrick Stevedores Holdings Pty Limited [2013] FWCFB 7736 at [6].

 2   Section 12 of the Act gives the expression “associated entity” the meaning given by s.50AAA of the Corporations Act 2001. Section 50AAA(2) of the Corporations Act provides that an entity is an associated entity of another if they are, inter alia, related bodies corporate. Section 50 of the Corporations Act defines “related bodies corporate” to include a body corporate which is a subsidiary of a holding company of another body corporate.

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