Linfox Australia Pty Ltd
[2013] FWC 3384
•4 JUNE 2013
[2013] FWC 3384 |
FAIR WORK COMMISSION |
REASONS FOR DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees in agreements
| Linfox Australia Pty Ltd (AG2013/6564) WOOLWORTHS TRANSPORT DEPARTMENT (VICTORIA) ENTERPRISE AGREEMENT 2010-2013 Road transport industry | |
COMMISSIONER HAMPTON | ADELAIDE, 4 JUNE 2013 |
s.318 - application for an order relating to instruments covering new employer and transferring employees - transfer of business from Woolworths Limited to Linfox Australia Pty Ltd - whether transferring employees should be covered by transferring instrument or enterprise agreement of new employer - consent arrangements as part of comprehensive agreed position - public interest and statutory requirements met - order made.
1. Background
[1] This matter concerns an application pursuant to s.318 of the Fair Work Act 2009 (the Act) by Linfox Australia Pty Ltd (Linfox) seeking that orders be made in relation to industrial instruments covering it as the new employer and certain transferring employees.
[2] The context for this application is primarily established by the decision of Woolworths Limited (Woolworths) to outsource the transport functions associated with its heavy vehicle fleet operations at Mulgrave, Hue and Laverton distribution centres in Victoria. These functions are in effect to be contracted to Linfox and this has led to the foreshadowed redundancy of up to approximately 189 drivers presently employed by Woolworths.
[3] The relevant heavy vehicle operations of Woolworths are subject to the coverage and application of the Woolworths Transport Department (Victoria) Enterprise Agreement 2010-2013 (the Woolworths Agreement). The Transport Workers’ Union of Australia (TWU) is also covered by this enterprise agreement.
[4] Linfox for its part is relevantly subject to the Linfox Road Transport and Distribution Centres National Enterprise Agreement 2011 (the Linfox Agreement). The TWU is also covered by this instrument.
[5] Following the announcement of the outsourcing decision earlier this year, Woolworths consulted with the TWU and the drivers concerned. In February and April 2013, disputes 1 were notified to the Commission regarding the redundancies and the implementation of the Woolworths Agreement in that context. Conciliation in the matter was undertaken by Drake SDP and in due course the matters were referred to me.
[6] As a result of some preliminary proceedings and further discussions between the parties, a comprehensive agreement was reached concerning the application of the Woolworths Agreement, the process by which the drivers concerned would make an election whether to take up employment opportunities with Linfox, and the redundancy arrangements and benefits that would apply. In addition, the TWU and Linfox also reached a related understanding concerning the industrial instrument that would apply in that context.
[7] The s.318 application sought in effect that the Woolworths Agreement not apply to any transferring employees and that the Linfox Agreement apply instead.
[8] Having heard the application on 23 May 2013, I made an order 2 largely in the terms as sought. In so doing, I indicated that I would subsequently publish reasons.
2. The Statutory requirements
[9] Section 318 of the Act provides as follows:
“318 Orders relating to instruments covering new employer and transferring employees
Orders that the FWC may make
(1) FWA 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) FWA 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, 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.”
[10] I also note that the exercise of the discretion given to the Commission in this regard is also guided by the objects of this Part of the Act, which state 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.”
3. Consideration
[11] Mr Fox, who appeared with permission for Linfox provided comprehensive submissions dealing with each of the statutory considerations. Mr Baarini for the TWU supported the application.
3.1 The basis of the application
[12] Linfox is a relevant employer for the purposes of s.318(2) of the Act and is eligible to make this application.
[13] I am also satisfied that there will be transferring employees and the Woolworths Agreement would become a transferable instrument as a result of the transmission of business provisions of the Act. 3
[14] There is a valid application before the Commission.
3.2 The considerations arising for s.318(3) of the Act
Section 318(3)(a): The views of the new employer and the employees who would be affected
[15] Linfox has brought this application and provided a strong justification for doing so. The TWU, which is covered by both instruments, has consulted with its members and supports the application.
[16] Further, in endorsing the package of arrangements that has resolved the earlier disputes, the drivers concerned have also supported those elements touching upon this application.
[17] This consideration supports the granting of the application.
Section 318(3)(b): Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
[18] There are differences between the Woolworths and Linfox agreements and some of the rates and conditions in the latter are marginally inferior. In some circumstances, this consideration would mitigate against the application.
[19] This consideration was discussed in the Supplementary Memorandum to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009. 4 Applying that approach, it is intended that while the terms and conditions of employment between an employer’s own industrial instrument and the transferable instrument may be different, the Fair Work Commission should satisfy itself whether “overall, the employees would not be disadvantaged”. This of itself may not prevent the granting of the application but in my view would generally represent a significant hurdle as part of the wider considerations which must be taken into account for the purposes of s.318(3) of the Act.
[20] However, in this case, the proposed orders take place in the context of a comprehensive agreement that permits the drivers concerned to access generous redundancy benefits and to make an election to immediately take up the further employment with Linfox.
[21] In these particular and rather unique circumstances, the employees are not disadvantaged by the making of the orders sought.
Section 318(3)(c): The nominal expiry dates
[22] The Woolworths Agreement will nominally expire on 31 May 2013. The Linfox Agreement will nominally expire on 31 December 2013. Accordingly, each of the instruments is largely in the same stage of its life cycle.
[23] In that light, this consideration is neutral.
Section 318(3)(d), (e) and (f): Productivity, economic disadvantage and business synergy
[24] Linfox has confirmed with the Commission that any transferring employees would not be engaged at the Woolworths sites. This is due to the fact that it has had to make employment arrangements in advance of the anticipated transfer of operational responsibilities.
[25] I also understand that the Linfox Agreement is itself an amalgam of some 40 former instruments, which have been combined to form a single instrument for the Victorian operations. This has been undertaken with the support of the TWU to ultimately provide a single set of conditions. In that context, the maintenance of the Woolworths Agreement for the transferring employees would re-establish differences and not be conducive to efficient and consistent employment arrangements for the Linfox employees as a whole.
[26] Importantly, the Linfox Agreement is specifically designed to apply in the transport industry including the particular context in which the transferring drivers will be undertaking their work.
[27] These considerations are strongly supportive of the application.
Section 318(3)(g): the public interest
[28] The public interest in this context is influenced by the objects of this Part of the Act in s.309 and those adopted by the Act more broadly.
[29] There is public interest in ensuring that agreed and statutorily approved arrangements are not put aside lightly and where they would cease to apply, the interests of the employees concerned are safeguarded. The absence of relevant disadvantage, and the evident employee support for the change in this case, are important considerations.
[30] Further, and particularly given the above context, there is also public interest in ensuring that the business of Linfox is able to efficiently operate without unnecessary complications in its employment arrangements.
[31] It is also the case that the public interest in this matter is served by facilitating arrangements that permit and encourage the maintenance of ongoing employment for the drivers within the transport industry.
4. Conclusions
[32] Having considered all of the relevant matters I was satisfied that the public interest, as well as those of the parties, was best met by granting the application and I was satisfied that I should exercise the discretion established by the Act.
[33] The orders made provided:
1. That the Woolworths Agreement will not apply to current or former employees of Woolworths who commence employment with Linfox on or after the date of the transfer of business under the Act between Woolworths and Linfox, provided those employees would have been covered by the Woolworths Agreement if they had been employed by Woolworths prior to the transfer of business.
2. That the Linfox Agreement will apply to current or former employees of Woolworths who commence employment with Linfox on or after the transfer of business under the Act between Woolworths and Linfox, provided those employees would have been covered by the Woolworths Agreement if they had been employed by Woolworths prior to the transfer of business.
[34] In accordance with s.318(4) of the Act the order took effect in respect of each transferring employee on and from 23 May 2013 or the date from which the employment with Linfox commences, whichever is the later.
[35] I repeat here the observations made at the conclusion of proceedings; namely, that the parties, which in this context includes Linfox, the TWU and Woolworths, are to be commended on the constructive manner in which the major issues arising from the outsourcing decision have been handled. In particular, this has included facilitating the mutual benefit of allowing the drivers to remain in the transport industry and be readily available to Linfox, and permitting them to make a genuine choice in that regard.
COMMISSIONER
Appearances:
J Fox of Minter Ellison (with permission), with D Jones, for Linfox Australia Pty Ltd.
B Baarini of the Transport Workers’ Union of Australia.
Hearing details:
2013
Melbourne
23 May
1 C2013/3247 and C2013/3839.
2 PR537176.
3 S.312 and s.313 of the Act.
4 Revised Explanatory Memorandum to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.
Printed by authority of the Commonwealth Government Printer
<Price code C, AE881444 PR537329 >
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