Lunar Investments Pty Limited

[2016] FWC 5641

[2016] FWC 5641

FAIR WORK COMMISSION

DECISION

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

Lunar Investments Pty Limited
(AG2016/3482)

HRO INITIATIVES PTY LTD EMPLOYEE COLLECTIVE AGREEMENT 2007

Retail industry
DEPUTY PRESIDENT ASBURY	BRISBANE, 14 SEPTEMBER 2016

Application for orders in relation to transfer of business.

1. Introduction

[1] Lunar Investments Pty Limited (Lunar) applies to the Fair Work Commission (the Commission) pursuant to s.318 of the Fair Work Act 2009 (the Act) for an order in relation to transfer of business.

[2] Lunar operates a supermarket business, and is involved with various labour functions to do with the running of IGA Supermarkets and other associated businesses. Prior to 22 May 2016, Lunar engaged trade qualified butchers (the transferring employees) through a labour hire entity, HRO Initiatives Pty Ltd (HRO). HRO and its employees, including the transferring employees, are covered by an enterprise agreement being the HRO Initiatives Pty Limited Collective Agreement 2007 (the Agreement).

[3] From 23 May 2016 the outsourcing arrangement between Lunar and HRO terminated. From this date, Lunar commenced to employ some or all of the transferring employees that were previously employees of HRO. Lunar submits that a transfer of business has occurred for the purposes of s.311 of the Act in that:

● The employment of the transferring employees with HRO terminated on 22 May 2016;

● The transferring employees commenced employment with Lunar on 23 May 2016;

● The work performed by the transferring employees for Lunar is the same or substantially the same as the work performed by the transferring employees for HRO; and

● There is a relevant connection between HRO and Lunar as a result of the cessation of the outsourcing arrangement between HRO and Lunar.

[4] As a result, Lunar submits that the Agreement is a transferrable instrument and by reason of s.313(1) of the Act, the Agreement continues to cover the transferring employees and Lunar in respect of the transferring work. But for the operation of the transfer of business provisions of the Act the General Retail Industry Modern Award 2010 (the Award) would cover and apply to the transferring employees and Lunar.

[5] Lunar applies for the following order:

“Pursuant to s.318(1)(a) of the Fair Work Act 2009, and from the date of this Order, the HRO Agreement shall not cover:

a. [Lunar]; or
b. Any employee of [Lunar] who:

i. Has formerly been employed by HRO Initiatives Pty Ltd;
ii. Is a transferring employee by reason of section 311 of the Fair Work Act as a consequence of a transfer of business from HRO Initiatives Pty Ltd to the Applicant; and
iii. Would otherwise be covered by the HRO Agreement by reason of section 313 of the Fair Work Act.”

[6] Initially, Mr Shane Simmons, a trade qualified butcher that was an employee employed by HRO and placed at Lunar, objected to Lunar’s application for orders in respect of transferring instruments. Mr Simmons was not offered continuing employment with Lunar. Mr Simmons was represented by the Australasian Meat Industry Employees Union (the AMIEU). After a number of Mentions in this matter, Directions were issued and the application was listed for Hearing.

[7] Following receipt of Lunar’s submissions and evidence in support of the application for orders in relation to transfer of business, Mr Simmons (and the AMIEU), withdrew their opposition to the application.

[8] Given the change in position of Mr Simmons and the AMIEU, I proposed to the parties that I would vacate the Hearing and the Directions in this matter and consider the application for orders on the basis of the material presently before the Commission. The AMIEU did not object to this course. I further directed that Lunar serve its material and application on the affected employees.

[9] Lunar has filed submissions in support of its application for orders relating to transfer of business and relies upon a witness statement of Mr Michael Beer, CEO of HG Retail, which is a food based retailing business owned by Lunar.

2. Legislation

[10] Section 318 of the Act provides:

“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.”

3. Consideration

[11] The effect of the order sought by Lunar would be that the Agreement would not cover Lunar as the new employer or the transferring employees. Lunar and transferring employees would be covered by the Award in the absence of the transferring instrument.

[12] I will consider each of those matters in s.318(3) of the Act in turn.

The views of the new employer or a person who is likely to be the new employer

[13] Lunar is the new employer. Mr Beer states that Lunar does not wish to be covered by the Agreement and is of the opinion that the Award is more beneficial to employees and would not result in a reduction in employment conditions and standards or pay for the transferring employees.

[14] Mr Beer states that the Award is better suited to the overall employee relations strategy of the business and provides appropriate coverage for a more competitive and specialised employer in the meat processing industry. The Agreement is an agreement that applies to a labour hire employer and covers a wide range of industries and callings.

The views of the employees who would be affected by the order

[15] On 9 June 2016 an email was sent to employees advising them that an application had been made to the Commission under s.318 of the Act, and providing employees with a copy of that application. Lunar submits that it has not received a response from any employees.

[16] On 17 June 2016, at IGA Wises Road, and on 21 June at IGA Cleveland and IGA Greenslopes, Lunar called a meeting with the transferring employees to discuss the transfer of business. On these dates a secret ballot was conducted. As a result of that ballot, Mr Beer states that 10 employees voted; 7 in favour of the application and 3 against. Four employees did not vote.

[17] On 26 July 2016, Lunar served its submissions, and Mr Beer’s witness statement, on employees pursuant to my Direction.

Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment

[18] Lunar submits that the terms and conditions of the transferring employees will be more beneficial under the Award than under the Agreement.

If the order relates to an enterprise agreement—the nominal expiry date of the agreement

[19] The nominal expiry date of the Agreement was 4 May 2012.

Whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace

[20] In this respect I note that the Agreement was made in 2007 under previous arrangements. It is a minimal document and does not provide the comprehensive raft of terms and conditions of employment that would be applicable under the Award.

[21] Lunar submits that the order will ensure that employees employed by Lunar, performing the same work, will be entitled to the same conditions of employment. This consistency will maintain the culture and morale of the workplace linking Lunar’s movement to a unified workforce.

Whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer

[22] There is no material before me as to any economic disadvantage to Lunar as a result of the Agreement, although I accept that it is more efficient for Lunar if the Award covers all of its employees.

The degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer

[23] Lunar submits that it has commenced employing butchers since the cessation of the outsourcing arrangement. The Award applies to those employees.

The public interest

[24] There is no material before me relating to the public interest or that would indicated that this is a relevant consideration.

4. Conclusion

[25] Having considered the matters required by the Act, I am satisfied that the Order sought should be made.

[26] The Order will issue concurrently with this Decision.

DEPUTY PRESIDENT

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<Price code A, AC306776  PR584122>