M & D Saunders Holdings Pty Ltd atf the Saunders Family Trust

[2015] FWC 1923

[2015] FWC 1923

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.319 - Application for an order relating to instruments covering new employer and non-transferring employees

M & D Saunders Holdings Pty Ltd atf the Saunders Family Trust
(AG2015/1977)

SV4T INVESTMENTS ENTERPRISE AGREEMENT 2013
(ODN AG2013/12204)  [AE406766]

Fast food industry
COMMISSIONER BULL	SYDNEY, 24 MARCH 2015

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

[1] This decision concerns an application by M&D Saunders Holdings Pty Ltd atf the Saunders Family Trust (the applicant) for an Order under s.319 of the Fair Work Act 2009 (the Act) which relates to instruments covering a new employer and non-transferring employees. In particular, an Order is sought under s.319(1)(b) that the SV4T Investments Enterprise 2013 (the Agreement) will cover non-transferring employees of the applicant.

Background

[2] The applicant submits that on 31 January 2015, there was a transfer of business from the old employer of Subway Burleigh Heads to the applicant as per s.311 of the Act, in particular:

i. within three months of termination, selected employees of the old employer were employed by the applicant;

ii. that the work the transferring employees perform is the same or substantially the same as the work that the transferring employees performed for the old employer; and

iii. Business assets associated with Subway Burleigh Heads owned by the old employer were transferred to the applicant, effective 31 January 2015; and since 31 January 2015, the applicant has carried on the business previously carried on by the old employer.

[3] The transferring employees were covered by the Agreement which was approved by the Fair Work Commission (the Commission) on 6 February 2014. The Agreement has a nominal expiry date of 13 February 2018.

[4] The applicant has employed non-transferring employees since the transfer of business. The non-transferring employees are currently covered by the Fast Food Industry Award 2010 (the Award) which is a modern award within the meaning of s.314(1)(d) of the Act.

[5] The application is brought on the basis that the Agreement covers the applicant on the basis that there has been a transfer of business, and that the Agreement has transmitted along with the transferring employees as a result of the operation of the Act.

Relevant legislation

[6] Pursuant to s.311(1) the Act provides for 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).

[7] In this application, selected transferring employees were re-employed by the new employer (the applicant) within three months after termination. The work that the transferring employees perform for the applicant is the same or substantially the same as the work performed for the old employer. Further, there is a connection between the old employer and the applicant in that the business assets owned by the old employer were transferred to the applicant as of 31 January 2015. Accordingly pursuant to s.311 of the Act, there is a transfer of business and the employees of the old employer are transferring employees within the meaning of the Act.

[8] The Agreement is a transferable instrument by virtue of s.312(1)(a) of the Act. Section 313 provides for the transferable instrument (the Agreement) to, in effect, transfer to the new employer (the applicant) along with the employees who are transferred.

[9] Therefore, the applicant and the transferring employees are already covered by the Agreement.

Non-transferring employees

[10] With respect to whether the Agreement should also cover the non-transferring employees, s.314 of the Act makes provision for a transferable instrument to automatically cover other employees in certain circumstances.

[11] Section 314 of the Act states:

314 New non-transferring employees of new employer may be covered by transferable instrument

(1)  If:

 (a)  a transferable instrument covers the new employer because of paragraph 313(1)(a); and

(b)  after the transferable instrument starts to cover the new employer, the new employer employs a non-transferring employee; and

(c)  the non-transferring employee performs the transferring work; and

(d)  at the time the non-transferring employee is employed, no other enterprise agreement or modern award covers the new employer and the non-transferring employee in relation to that work;

then the transferable instrument covers the new employer and the non-transferring employee in relation to that work.

(2)  A non-transferring employee of a new employer, in relation to a transfer of business, is an employee of the new employer who is not a transferring employee.

(3)  This section has effect subject to any FWC order under subsection 319(1).

[12] The applicant is covered by the Award which is a modern award within the meaning of s.314(1)(d) of the Act. As some or all of the non-transferring employees were engaged subsequent to the Agreement covering the new employer and the employer is covered by a modern award, the broader coverage of the Agreement to the ‘new’ employees, as contemplated by s.314 above does not operate.

[13] However, the operation of s.314 is subject to s.319 of the Act which allows for the Commission to make an order notwithstanding the provisions of s.314, that a transferring instrument cover non-transferring employees.

[14] Section 319(1) provides for Orders that the Commission may make in relation to instruments covering new employer and non transferring employees:

Orders that the FWC may make

(1)  The FWC may make the following orders:

(a)  an order that a transferable instrument that would, or would be likely to, cover the new employer and a non-transferring employee because of subsection 314(1) does not, or will not, cover the non-transferring employee;

(b)  an order that a transferable instrument that covers, or is likely to cover, the new employer, because of a provision of this Part, covers, or will cover, a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer;

(c)  an order that an enterprise agreement or a modern award that covers the new employer does not, or will not, cover a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer.

Note: Orders may be made under paragraphs (1)(b) and (c) in relation to a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer, whether or not the non-transferring employee became employed by the new employer before or after the transferable instrument referred to in paragraph (1)(b) started to cover the new employer.

[15] Section 319(3) sets out the matters that the Commission must take into account when issuing an Order pursuant to s.319.

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.

Applicant’s submissions

[16] In its application, the applicant has addressed each of the matters that I am required to consider when issuing an Order under s.319. The application was accompanied by:

i. a witness statement of Mr Mark Saunders, a Director of the applicant;

ii. six employee statements outlining their support to be covered by the Agreement; and

iii. A copy of the Agreement.

[17] I now deal with each of the matters under s.319(3) of the Act.

Views of the new employer - s.319(3)(a)(i)

[18] The applicant wishes the Agreement to apply to its non-transferring employees because it will avoid some employees being covered by one industrial agreement and receiving different entitlements that are more beneficial, whilst other employees in the same workplace are covered by an industrial award with lesser entitlements, all performing similar or the same work.

[19] Secondly, the applicant stated that it would be an administrative challenge to apply two different industrial instruments to employees in one small workplace.

Views of the employees who would be affected by the Order - s.319(3)(a)(ii)

[20] The applicant states that non-transferring employees expressed a wish to be covered by the Agreement. The application was accompanied by six signed employee statements of the non-transferring employees which indicated that they wished to be covered by the Agreement. The statements also indicate that they had been given a copy of the Agreement to consider its terms and that the employer had explained to them how the terms of the Agreement would affect their employment.

[21] It was submitted by the applicant that non-transferring employees will be entitled to better terms and conditions of employment under the Agreement when compared to the Award.

Expiry date of the agreement s.319(3)(c)

[22] The nominal expiry date of the Agreement is 13 February 2018.

Productivity s.319(3)(d)

[23] The applicant submitted that the Agreement would not have a negative impact on the productivity of the workplace. This was because, having employees in a small workplace on two different industrial instruments which provide different entitlements, will lead to dissatisfaction amongst employees, in particular, the non-transferring employees who receive lesser entitlements.

Economic disadvantage s.319(3)(e)

[24] The applicant submitted that it would not incur any significant economic disadvantage if the Order were made, and that it is prepared to provide its non-transferring employees with better conditions of employment under the Agreement than the Award under which they are currently covered.

Degree of business synergy s.319(3)(f)

[25] The applicant submits that there is little business synergy between the Agreement and theAwardas they provide for different minimum employment conditions.

Public interest s.319(3)(g)

[26] The applicant submits that issuing this order will not offend the public interest. There is no evidence that it would be against the public interest to issue this order.

Conclusion

[27] Taking into account each of the matters set out in section 319(3), I am satisfied that the Order sought should be granted.

[28] An Order (PR562228) will be issued to provide that the SV4T Investments Enterprise

Agreement 2013 will also cover the non-transferring employees of M&D Saunders Holdings Pty Ltd atf the Saunders family Trust who perform similar or the same work as the transferring employees.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

<Price code C, AE406766  PR562227 >