Lutheran Church Of Australia Queensland District (Lutheran Community Care)
[2022] FWC 1367
•1 JUNE 2022
| [2022] FWC 1367 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Lutheran Church Of Australia Queensland District (Lutheran Community Care)
(AG2022/1032)
| Aged care industry | |
| COMMISSIONER HUNT | BRISBANE, 1 JUNE 2022 |
Application for an Order relating to instruments covering new employer and transferring employees
Introduction
On 6 April 2022, the Lutheran Church of Australia Queensland District (Lutheran Community Care or the Applicant) made an application to the Fair Work Commission (the Commission) for an Order pursuant to s.318 of the Fair Work Act 2009 (the Act) that the Cooinda Aged Care Support Staff Enterprise Agreement 2019[1] (Cooinda Support Staff Agreement) will not cover Lutheran Community Care and transferring employees from an old employer.
Lutheran Community Care is a not-for-profit organisation which provides aged care and associated services. Lutheran Community Care is covered by the Lutheran Services (Qld) Enterprise Agreement 2019 (Lutheran Services Agreement).[2]
Lutheran Community Care is the new employer of employees previously employed by Cooinda Aged Care Centre (CACC). Employees who had been employed by CACC have been covered by one of two enterprise agreements, depending on whether the employee is a nurse, or a support staff employee. The two enterprise agreements covering CACC employees are the Cooinda Support Staff Agreement, referred to above, and the Cooinda Aged Care – Nurses Enterprise Agreement 2018 (Cooinda Nurses Agreement).[3]
This application deals with the Cooinda Support Staff Agreement. A separate decision in AG2022/1031 deals with the Cooinda Nurses Agreement for similar Orders.
Orders sought
The Applicant seeks the following Orders:
“1. An order pursuant to section 318(1)(a) of the FW Act that the Cooinda Aged Care Support Staff Enterprise Agreement 2019 (AG2019/1202) (Cooinda EA) will not cover the new employer and any transferring employees on and from 2 May 2022; and
2. An order pursuant to section 318(1)(b) of the FW Act that the Lutheran Services (Qld) Enterprise Agreement 2019 (Lutheran Services EA) will cover any transferring employees on and from 2 May 2022.”
Background
This application was made in a ‘Form F40 – ‘Application for orders in relation to a transfer of business’ (F40), and enclosed a statement of Ms Cara Benoit, General Manager – People, Culture and Development of Lutheran Community Care detailing the following:
“1. On 1 October 2021, Lutheran Services became the new employer of 38 support staff previously employed by Cooinda Aged Care Centre (CACC) in the following circumstances:
a. CACC had been administered by community-minded business people and retired professionals since 1965;
b. In 2021, the board of CACC determined that its operating model was no longer sustainable, and sought expressions of interest from other aged care operators to take over the ownership and management of the facility;
c. Lutheran Services was selected by the board of CACC and it was a term of sale that Lutheran Services offer employment to CACC’s staff;
d. When the transfer of business occurred on 1 October 2021, 38 CACC support staff transitioned to become employees of Lutheran Services;
e. As at the date of this application, 29 transferring support staff remain employed by Lutheran Services.
2. The nominal expiry date of the Cooinda EA is 31 October 2021 and the nominal expiry date of the Lutheran Services EA is 21 March 2023.
3. If the Cooinda EA were to continue to apply to Lutheran Services and the transferring employees, it would have a negative impact on the productivity of Lutheran Services’ workplace for the following reasons:
a. Lutheran Services’ payroll staff will need to be familiar with more than one enterprise agreement. This will significantly increase the workload of payroll staff;
b. Lutheran Services’ management with responsibility for preparing rosters will need to be familiar with more than one enterprise agreement. This will significantly increase the workload of those personnel; and
c. Lutheran Services will be required to expend time and funds to configure the existing payroll system to accommodate conditions within additional enterprise agreements.
4. Lutheran Services would incur economic disadvantage as a result of the Cooinda EA continuing to cover Lutheran Services as it will increase Lutheran Services’ operational costs as set out in paragraph 3 above. As Lutheran Services is a not for profit business, the additional administrative costs will have a direct impact on Lutheran Services’ ability to deliver services to clients and to offer other employment benefits to staff.
5. An affidavit addressing the degree of business synergy between the Cooinda EA and the Lutheran Services EA will be filed prior to the determination of this application.
6. On balance, the transferring employees will be better off in relation to their pay and conditions should the Cooinda EA cease to cover them.
7. It is in the public interest to grant the orders sought for the following reasons:
a. The transferring employees will be better off overall under the Lutheran Services EA;
b. Any non-transferring employees who commence work at CACC in future will be covered by the Lutheran Services EA and will be on a higher rate of pay, leading to potential disharmony within the workforce; and
c. The ongoing imposition on Lutheran Services of transferring instruments, such as the Cooinda EA, will have a direct impact on Lutheran Services’ ability to deliver services to clients and to offer other employment benefits to staff.”
In her statement, Ms Benoit stated that since 2013, the Applicant has had no more than one enterprise agreement in place covering all of its aged care workers throughout Queensland, including nursing and support workers. Ms Benoit stated that having a single enterprise agreement has enabled streamlined bargaining, rostering, and payroll administration.
Ms Benoit advised that:
“The Applicant considers that it would not be harmonious and would be divisive to its teamwork to have employees performing the same work but receiving different pay and conditions; and
Having more than one agreement in operation will make it difficult for the Applicant’s payroll and management teams to ensure compliance due to the need to maintain knowledge and familiarity with more than one agreement.”
Ms Benoit submitted that employees transferring from the Cooinda Support Staff Agreement to the Lutheran Services Agreement will not be disadvantaged because:
“(i) The vast majority of pay and conditions provided by the two EAs are equivalent to one another;
(ii) The support staff will be better off under the Lutheran Services EA than under the Cooinda EA in the following respects:
A.Base hourly rate – all support staff currently covered by the Cooinda EA will be paid between $0.78 and $5.05 gross per hour more under the Lutheran Services EA than what they currently receive under the Cooinda EA. The majority of the transferring support staff will be paid $4.04 gross per hour more under the Lutheran Services EA as compared with their current rate of pay;
B.Casual employment – under the Cooinda EA, casual support staff are entitled to a minimum 2 hour engagement, whereas under the Lutheran Services EA, they would be entitled to a minimum 3 hour engagement;
C.Part-time employees – under the Cooinda EA, part-time employees are entitled to a minimum 3 hour shift, whereas under the Lutheran Services EA, they would be entitled to a minimum 4 hour shift;
D.Annual leave – under the Cooinda EA, support staff are entitled to annual leave in accordance with the NES, whereas under the Lutheran Services EA, they would be entitled to 5 weeks’ annual leave per annum irrespective of whether they meet the definition of a shift worker;
E.Domestic violence leave – under the Cooinda EA, support staff are entitled to up to 5 days of unpaid family and domestic violence leave per annum, whereas under the Lutheran Services EA, they would be entitled to up to 5 days of paid family and domestic violence leave per annum;
F.Blood donor leave – under the Lutheran Services EA, support staff are in limited circumstances entitled to time off with no loss of pay to give blood. No such entitlement exists under the Cooinda EA.”
Ms Benoit drew the Commission to the following aspects in which it appears employees who transfer to the Lutheran Services Agreement will be worse off:
A.Higher duties – under the Cooinda EA, support staff are entitled to a higher wage when they have performed higher duties for at least 2 hours, whereas under the Lutheran Services EA, they would be entitled to a higher wage after they have performed at least 4 hours’ higher duties;
B.Travel allowance – under the Cooinda EA, support staff are entitled to a mileage allowance of $0.87 per kilometre, whereas under the Lutheran Services EA, they would be entitled to a mileage allowance of $0.78 per kilometre;
C.Redundancy – under the Cooinda EA, support staff who have completed at least 9 years’ continuous service are entitled to 16 weeks’ redundancy pay, whereas under the Lutheran Services EA:
I.Support staff who have completed more than 10 but less than 11 years’ continuous service are entitled to 14 weeks’ redundancy pay; and
II.Support staff who have completed more than 11 but less than 12 years’ continuous service are entitled to 15 weeks’ redundancy pay.”
Ms Benoit made the following further remarks in her statement at [7]:
“(c) I do not believe that any individual transferring nursing staff member would be disadvantaged by an order being made that the Cooinda EA not be a transferring instrument and therefore not apply to the Applicant. In any event, pursuant to the terms of the Lutheran Services EA, the Applicant may agree with individual transferring employees to vary the terms of the Lutheran Services EA regarding:
(i)Arrangements for when work is performed;
(ii)Overtime rates;
(iii)Penalty rates; and
(iv)Allowances.
If an individual nursing staff member were to experience a reduction in takehome pay as a result of the Cooinda EA ceasing to apply, the Applicant would give consideration to an individual flexibility arrangement with a view to ensuring the employee is not worse off.
(d) The Cooinda EA would have a negative impact on the Applicant’s productivity due to the additional time involved in payroll and management staff having to accommodate and operate under more than one industrial instrument, especially given that the Cooinda EA is operating beyond its nominal expiry date;
(e) The Applicant would incur economic disadvantage as a result of the Cooinda EA applying to the Applicant’s workplace, as it would be forced to continue incurring the expense associated with additional administrative time to ensure payroll and rostering compliance with more than one industrial instrument;
(f) I have reviewed the Cooinda EA against the Lutheran Services EA, and whilst both agreements have been assessed by the Fair Work Commission as being better off overall in comparison to the otherwise applicable Awards, there is not a high degree of business synergy between the agreements due to different pay rates, allowances and minimum shift durations. The lack of business synergy is highlighted by the need for the Applicant to configure its payroll system to pay multiple different conditions under the different agreements; and
(g) I believe it is in the public interest that an order be made that all nursing staff of the Applicant performing work within the classifications provided in the Lutheran Services EA should be covered by the Lutheran Services EA rather than any transferring instrument such as the Cooinda EA because the transferring employees will be better off, and the additional expense saved by the Applicant can be better directed towards providing additional services to clients or additional benefits to staff.
As to the effective date of any Order, Ms Benoit stated:
“The Applicant’s payroll software is programmed such that it is not possible to alter employees’ pay and entitlements during a pay cycle. Any alterations to pay and entitlements must be applied across an entire pay cycle. The Applicant therefore respectfully seeks an order that the Cooinda Services EA not be a transferring instrument on and from 2 May 2022, being the first day of the Applicant’s pay cycle.”
Employee and union views
On 12 April 2022, I issued correspondence to the Applicant which I directed be forwarded to employees who would be affected by the Orders sought. The correspondence outlined s.318 of the Act. I indicated that any employee who wished to provide their views as to the application, and the likely effect of the Orders being made, had leave until 27 April 2022 to do so. I requested that any employee providing views indicate by which enterprise agreement they were currently covered, given there were two similar applications on foot, one involving nurses, and one involving support staff.
Between 14 April 2022 and 27 April 2022, I received four emails from employees employed by the Applicant. Three of the four emails were either neutral or supported the application. One employee raised some concerns about changes to their roster, however, it is unclear by which enterprise agreement the employee is currently covered. In any event, I note paragraph [7](c) of the statement of Ms Benoit, referred to at [11] above, which would appear to address any concern raised about a reduction in take home pay or lost flexibility.
On 5 May 2022, I provide a de-identified copy of the employee views to the Applicant and the ANMF, inviting them to provide any views. I sought confirmation from the ANMF as to whether it had any further submission to provide. The ANMF confirmed it did not wish to provide any further submissions.
Noting that The Australian Workers’ Union (AWU) is covered by the Lutheran Services Agreement, I also invited the AWU to provide any views it wished to provide. No views were received from the AWU.
I am satisfied that a reasonable opportunity has been afforded to affected employees, the ANMF and the AWU to provide any views they wished to provide.
Transfer of business
Section 311 of the Act sets out when a transfer of business occurs:
“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.”
On the evidence before me, I am satisfied that there has been a transfer of business within the meaning of ss.311(1)(a)-(d) of the Act when employees of CACC commenced employment with Lutheran Community Care.
I am satisfied that the work of the support staff is transferring work within the meaning of s.311(1)(c) in that employees of CACC have been offered employment “on the same terms and conditions”, as stated by Ms Benoit.
Pursuant to s.311(3) of the Act, and for the purposes of s.311(1)(d) of the Act, there is a connection between CACC and Lutheran Community Care because Lutheran Community Care has taken over operational control of CACC, as stated by Ms Benoit. I am satisfied this meets the requirements of s.311(3) of the Act.
I am satisfied that support staff from CACC who take up employment in the same or substantially the same role with Lutheran Community Care will be transferring employees for the purpose of s.311(2) of the Act.
Transferable instrument
Section 312 of the Act details instruments that may transfer:
“312 Instruments that may transfer
Meaning of transferable instrument
(1) Each of the following is a transferable instrument:
(a) an enterprise agreement that has been approved by the FWC;
(b) a workplace determination;
(c) a named employer award.
Meaning of named employer award
(2) Each of the following is a named employer award:
(a) a modern award (including a modern enterprise award) that is expressed to cover one or more named employers;
(b) a modern enterprise award that is expressed to cover one or more specified classes of employers (other than a modern enterprise award that is expressed to relate to one or more enterprises as described in paragraph 168A(2)(b)).
Note: Paragraph 168A(2)(b) deals with employers that carry on similar business activities under the same franchise.”
The Cooinda Support Staff Agreement is an enterprise agreement. The Cooinda Support Staff Agreement is therefore a transferable instrument within the meaning of s.312(1)(a) of the Act.
Relevant legislation
The application seeks for the Commission to make an Order under s.318 of the Act, which is set out below:
“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.”
Who may apply for an Order?
The application has been made by Lutheran Community Care. I have earlier accepted that Lutheran Community Care is the new employer of support staff previously employed by CACC who are transferring employees. The requirements of s.318(2) have therefore been met. The matters considered below are contained within the submissions provided by the employer in its F40 and in the statement of Ms Benoit.
Matters the Fair Work Commission must take into account (s.318(3))
Section 318(3)(a) - the views of the new employer and the employees who would be affected by the Order
The new employer is Lutheran Community Care, the applicant seeking an Order under s.318 that the Cooinda Support Staff Agreement not cover the new employer and transferring employees. Naturally, it supports making the Order sought.
As I earlier noted, I directed Lutheran Community Care to forward correspondence to affected employees, inviting them to provide any views they had to my Chambers, if they wished to do so. I also invited any further views held by the ANMF and AWU relevant to this application.
Having regard to the submissions and evidence provided above by Lutheran Community Care outlined in the F40 and the statement of Ms Benoit above, the views of the employees affected, and the ANMF, this consideration weighs in favour of making the Orders sought.
Section 318(3)(b) - whether any employees would be disadvantaged by the Order in relation to their terms and conditions of employment
Having regard to the above, I am satisfied that, overall, transferring employees would not be disadvantaged by the Order sought. This consideration weighs in favour of making the Order sought. I note the matters raised by Ms Benoit outlined at paragraph [11] above, and that Lutheran Community Care has expressed a willingness to enter into discussions with individual employees with respect to, arrangements for when work is performed, overtime rates, penalty rates, and allowances with a view to ensuring that employees are not worse off.
Section 318(3)(c) - if the Order relates to an enterprise agreement—the nominal expiry date of the agreement
The Cooinda Support Staff Agreement was approved on 13 June 2019. The nominal expiry date of that agreement is 31 October 2021.
The Lutheran Services Agreement was approved on 19 November 2019. The nominal expiry date of that agreement is 31 March 2023.
The Lutheran Services Agreement has not yet passed its nominal expiry date. This will provide some certainty as to the rights and entitlements of Lutheran Community Services and transferring employees.
This consideration weighs somewhat in favour of making the Order sought.
Section 318(3)(d) - whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
The Applicant has made submissions regarding this matter, which are outlined above. I consider the matters raised by Ms Benoit regarding the burden of applying multiple industrial instruments to be an avoidable and unnecessary burden on Lutheran Community Care, particularly having regard to the efficiencies identified by Ms Benoit in payroll and rostering being streamlined. If the Order sought is made, payroll staff will need only be familiar with a single enterprise agreement. This consideration weighs in favour of making the Order sought.
Section 318(3)(e) - whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer
The Applicant has referred to the economic impact of increased operational costs if required to continue to apply the Cooinda Support Staff Agreement. The Applicant is a not-for-profit business. As noted above in the F40, the Applicant contends that “the additional administrative costs will have a direct impact on Lutheran Services’ ability to deliver services to clients and to offer other employment benefits to staff.” This consideration weighs in favour of making the Order sought.
Section 318(3)(f) - the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer
As to this factor, the Applicant has referred to the matters raised in the statement of Ms Benoit. Ms Benoit has stated that “it would not be harmonious and would be divisive to its teamwork to have employees performing the same work but receiving different pay and conditions”. I consider it important in promoting a harmonious and cordial workplace that persons performing the same work at the same level be entitled to the same pay and conditions. This factor weighs in favour of making the Order sought.
Section 318(3)(g) - the public interest
As to this factor, the Applicant has referred to employees being better off overall under the Lutheran Services Agreement, potential disharmony if there is different pay for the same work (if the Order is not made), and the impact on the delivery of services to clients and benefits to staff.
I am satisfied that making the Order would not be contrary to the public interest. This consideration weighs in favour of making the Order sought.
Conclusion
Having considered the application, and having taken into account each of the matters set out in s.318(3) of the Act, I am satisfied that it is appropriate to grant the Orders sought.
In making the Order sought under s.318, Lutheran Community Services will not become covered by the Cooinda Support Staff Agreement by virtue of employing support staff from CACC as transferring employees.
Having regard to s.318(4) of the Act, the Order must not come into operation before the later of the time when the transferring employee becomes employed by the new employer or the date on which the Order is made.
The Applicant has requested that the Order take effect from the first date of the payroll cycle. The date first put forward in the application was 2 May 2022. Noting that this application could not be determined by that date, a further date was sought from the Applicant; 13 June 2022 was nominated. I consider that to be an appropriate date for the Order to take effect. This is reflected in the Order.
COMMISSIONER
[1] [2019] FWCA 4080.
[2] [2019] FWCA 7901.
[3] [2019] FWCA 4080.
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