Macmahon Underground Pty Ltd
[2022] FWC 2041
•5 AUGUST 2022
| [2022] FWC 2041 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Macmahon Underground Pty Ltd
(AG2022/3178)
| Mining industry | |
| DEPUTY PRESIDENT BEAUMONT | PERTH, 5 AUGUST 2022 |
Application for an order relating to instruments covering new employer and transferring employees
This matter involves an application by Macmahon Underground Pty Ltd (the Applicant) under s 318 of the Fair Work Act 2009 (Cth) (the Act). The Applicant has applied for orders from the Fair Work Commission (the Commission) relating to employees who were previously working for GBF North Pty Ltd (GBF). These employees are covered by the GBF North Pty Ltd Enterprise Agreement 2018 (GBF Agreement).[1]
GBF is a wholly owned subsidiary of GF Holdings (WA) Pty Ltd (GF Holdings).[2] In June 2018, GF Holdings accepted a takeover bid from Macmahon Holdings Ltd (MHL). MHL’s acquisition of GF Holdings was completed in August 2019, at which point GF Holdings became a wholly owned subsidiary of MHL.[3] At all relevant times, GBF remained a wholly owned subsidiary of GF Holdings, and since August 2019, MHL as the ultimate parent company, has controlled both the Applicant and GBF.[4]
Since August 2019, GBF has operated as a separate entity within the group of companies operated by MHL, with its employees continuing to be covered by the GBF Agreement.[5] That entity has provided services at Mt Belches Mining Centre in Western Australia since 2014. The contract under which those services are provided was completed on 18 July 2022, with the operator of that site electing to place the mine into care and maintenance.[6] In order to retain employees, MHL sought to redeploy affected employees from the Mt Belches site into other projects in suitable equivalent roles.[7]
Consequently, some employees of GBF were transferred to projects serviced by the Applicant (the Transferring Employees), ceasing their employment with GBF on the 27 July 2022, and commencing their employment with the Applicant effective 28 July 2022.[8] However, the Applicant has employees currently performing the same work as the Transferring Employees and those employees are covered by the Macmahon Underground Mining Agreement 2022 (Macmahon Agreement).[9]
It is uncontroversial that there has been a transfer of business as that phrase is understood by reference to s 311(1) of the Act. Briefly stated the Transferring Employees:
a) ceased employment with GBF on or by 27 July 2022;[10]
b) commenced employment with the Applicant on 28 July 2022, this being within the three months prescribed by s 311(1)(b);
c) perform the same or substantially the same work for the Applicant as they did for GBF;[11] and
d) are now employed by the Applicant and as observed, the Applicant and GBF are associated entities for the purposes of s 50AAA of the Corporations Act 2001 (Cth) therefore giving rise to the requisite connection between the old employer and new employer referred to in s 311(1)(d) (see also s 311(6) of the Act).
The Applicant now seeks the following orders under s 318(1) of the Act:
a) pursuant to s 318(1)(a), that the GBF Agreement, as a transferrable instrument, does not cover the Applicant and any employees of the Applicant formerly employed by GBF; and
b) pursuant to s 318(1)(b), the Macmahon Agreement will cover the employees of the Applicant formerly employed by GBF.
The application contained detailed grounds and submissions, and was accompanied by a witness statement of Victoria Bucknell, Principal Industrial Relations and Employee Relations Manager of the Applicant, together with several attachments, which in short contend that which is listed:
a)Prior to the termination of the employment of the employment of the Transferring Employees, GBF provided services under contracts at the Mt Belchers, Daisy Milano and Deflector sites.[12]
b)The contract under which GBF provided services at the Mt Belchers site expired on 18 July 2022 and neither GBF nor Macmahon were required to provide further services at the site.[13]
c)It was identified that the Transferring Employees would need to be offered employment with the Applicant in order to continue their employment at the Boston Shaker project where the Applicant provides similar services.[14]
d)Ms Bucknell gave evidence that her colleague Mr Michael de Bellis, her direct report and Human Resources Advisor with the Applicant, informed her on the morning of the 21 July 2022 that he met with the Transferring Employees on the 15, 19, and 21 July 2022.[15]
e)At the meetings, each Transferring Employee was provided with a hard copy of the following documents:
i.an offer of employment with the Applicant (Letter of Offer);
ii.a summary of the key differences between the Macmahon Agreement and the GBF Agreement (Comparison Document); and
iii.the GBF Agreement.[16]
f)Digital copies of these documents were also emailed to each Transferring Employee.[17]
g)The Letter of Offer expressly advised the Transferring Employees of the Applicant’s intention to make this application and sought the consent of the Transferring Employees.[18]
h)In consideration of the application, Transferring Employees were provided with the Comparison Document, a matrix summarising the key differences between the GBF Agreement and the Macmahon Agreement, including information about where the GBF Agreement was more favourable.[19]
All six Transferring Employees who were offered employment with the Applicant have accepted the offer.[20]
j)It is the Applicant’s view that the orders sought should be made as this will ensure the continued employment of the Transferring Employees, and that the Transferring Employees will have consistent terms and conditions of employment with other employees at their new worksite, preventing administrative and managerial challenges and the negative effectives to morale and productivity likely to follow if employees working side by side are employed under different terms and conditions.[21]
k)The GBF Agreement will reach its nominal expiry date on 7 March 2023, which will result in uncertainty surrounding the terms and conditions of employment of the Transferring Employees.[22]
l)The Transferring Employees will not be disadvantaged if the orders sought are made, as both the GBF Agreement and MacMahon Agreement are ‘loaded rate’ agreements, and as such neither of them provides for penalty rates, loadings or other allowances. In financial terms, the Transferring Employees will be better off overall under the Macmahon Agreement than under the GBF Agreement as they will be entitled to the following under the Macmahon Agreement:
i.guaranteed rates of pay at least $5.20 above those provided for in the GBF Agreement;
ii.an additional leading hand allowance of $4.00 per hour when acting in that capacity;
iii.an additional 8 hours of annual leave accrued per year for non-continuous shiftworkers and an additional 10 hours of annual leave accrued per year for continuous shiftworkers; and
iv.the benefit of being enrolled in the Applicant’s income protection insurance program. [23]
m)The GBF Agreement also:
i.deems certain circumstances, such as the loss of a contract, to not give rise to a redundancy situation therefore disentitling Transferring Employees to redundancy pay, whilst the Macmahon Agreement contains no such deeming provision;
ii.provides that abandonment of employment occurs after three consecutive absences, rather than seven consecutive absences as provided for in the Macmahon Agreement;
iii.does not include any provision for minimum pay in circumstances of stand down.[24]
n)Ms Bucknell gave evidence that the Applicant would also be subjected to additional administrative and managerial burdens as well as economic disadvantage, if the GBF Agreement operates as a transferable instrument, including:
a.the need to modify its existing payroll systems, or implement new payroll systems to accommodate the lower rates of pay and lesser leave accruals provided for under the GBF Agreement;
b.identifying and appropriately administering circumstances where:
i.employees under the Macmahon Agreement would be entitled to redundancy pay but Transferring Employees would have no such entitlement;
ii.Transferring Employees were considered to have abandoned their employment, but employees under the Macmahon Agreement are not; and
iii.in the case of a stand down, providing minimum pay to employees under the Macmahon Agreement but not to Transferring Employees.[25]
Having received no objection to the application being determined on the papers, I proceeded to determine the matter by reference to and reliance upon the grounds, submissions and other materials provided with the application.
Section 318 of the Act sets out the circumstances in which an order such as that sought by the Applicant may be made by the Commission:
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.
I have reviewed the application documentation and the accompanying material. These documents outline the factual circumstances which have given rise to the application. Further, the submissions contained in the application address the relevant legislative requirements which are asserted to provide a proper basis for the making of the orders sought.
As observed, I am satisfied this circumstance is a transfer of business as understood by reference to s 311 and that the GBF Agreement is a transferable instrument as described in s 312(1)(a). If the order under s 318(1)(a) was not made, then I consider by virtue of s 313(1)(a) the GBF Agreement would cover the Transferring Employees notwithstanding their employment with the Applicant.
It is observed that six Transferring Employees will be affected by the orders sought and after a period of consultation, all have accepted offers of employment with the Applicant. It is evident that none of the Transferring Employees will be disadvantaged by the proposed orders in relation to their terms and conditions of employment. If I were to make the orders sought the Transferring Employees will be covered by the Macmahon Agreement hence establishing terms and conditions of employment until 2026, which have been shown to be advantageous compared to those the Transferring Employees currently enjoy. The Applicant referred to the dissatisfaction and confusion that may arise where its Transferring Employees were performing the same duties working side-by-side with existing employees and yet, would be afforded different minimum entitlements. I consider the submission is not absent merit. As to whether the Applicant would incur significant economic disadvantage, the assertion is unable to be sustained on the evidence, however, I accept that the absence of such orders may result in additional administrative and managerial burden in light of Ms Bucknell’s evidence, therefore impacting upon the Applicant’s productivity.
I have considered all the factors set out in s 318(3) and have concluded that it is appropriate and not contrary to the public interest to make Orders[26] sought under s 318(1)(a) and (b). In accordance with section 318(4), the Orders shall have effect from the date the Order is made.
DEPUTY PRESIDENT
[1] [2019] FWCA 1317; AE502036; PR705392.
[2] Applicant’s Form F40 [2.3(2)].
[3] Ibid [2.3(3)].
[4] Ibid [2.3(3)] – [2.3(4)].
[5] Ibid [2.3(5)].
[6] Ibid [2.3(6)].
[7] Ibid [2.3(7)].
[8] Ibid [2.3(8)].
[9] [2022] FWCA 1300; AE515693; PR740380.
[10] Fair Work Act 2009 (Cth) s 311(1).
[11] Ibid s 311(1)(c).
[12] Witness Statement of Victoria Bucknell [12].
[13] Ibid [13].
[14] Ibid [15].
[15] Ibid [16].
[16] Ibid [17].
[17] Ibid [18].
[18] Ibid [19].
[19] Ibid [20].
[20] Ibid [21].
[21] Ibid [24] – [25].
[22] Ibid [28].
[23] Ibid [29a] – [29d].
[24] Ibid [30a] – [30c].
[25] Ibid [32a] – [32b].
[26] PR744530.
Printed by authority of the Commonwealth Government Printer
<AE515693 PR744422>
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