Macquarie Bank Limited

[2016] FWC 6230

[2016] FWC 6230

FAIR WORK COMMISSION

DECISION

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

Macquarie Bank Limited
(AG2016/5146)

DEPUTY PRESIDENT BULL SYDNEY, 22 SEPTEMBER 2016

Application for an order relating to instruments covering new employer and transferring employees

[1] On 19 August 2016, Macquarie Bank Limited (the applicant/Macquarie) lodged an application in the Fair Work Commission (the Commission) for an order under s.318 of the Fair Work Act 2009 (the Act) which relates to an instrument covering a new employer and transferring employees in the context of a transfer of business.

[2] The applicant is the likely new employer of the business to which this application relates and therefore has standing to apply for the order under s.318(2)(a) of the Act.

[3] The agreement to which this application relates is the ANZ Enterprise Agreement 2015-2016 (the ANZ Agreement).

Orders sought

[4] The applicant seeks the following orders:

A. Pursuant to s. 318 of the Fair Work Act 2009, the Fair Work Commission (Commission) orders that the ANZ Enterprise Agreement 2015-2016 (Agreement) will not cover:
1. any person who:

a) has at any time been employed by Australia and New Zealand Banking Group Limited (ANZ) in the Esanda business;
b) ceases to be employed by ANZ; and
c) becomes employed Macquarie Bank Limited, or

2. Macquarie Bank Limited in relation to any person described in item A.1.

A. This order shall come into effect immediately and shall continue in force until 31 July 2017 or further order of the Commission.

Background

[5] Macquarie Bank Limited (Macquarie) is an employing entity within the Macquarie Group, which provides investment banking and various other financial products and services within Australia and overseas.

[6] In October 2015, Macquarie purchased the assets of the Esanda business from Australia and New Zealand Banking Group Limited (ANZ). The Esanda business was a finance company which principally provided finance to dealerships to purchase motor vehicles. Employees who performed work in the Esanda business were employed by ANZ.

[7] Since Macquarie acquired Esanda, a number of ANZ employees who performed work in the Esanda business (Seconded Employees) have been seconded to perform work within the Macquarie Leasing business.

[8] Macquarie is entitled to make offers of employment to the Seconded Employees and proposes to do so. Macquarie has sought and received expressions of interest from current Seconded Employees who wish to be offered such employment.

[9] Macquarie intends to make offers to a number of the Seconded Employees who have expressed interest in becoming directly employed by Macquarie. It is in this context that the present application is made.

Transfer of business

[10] The applicant submits that there will be a transfer of business as defined at s.311(1) of the Act on the basis that:

● The employment of any Seconded Employee with ANZ will necessarily end before they can become employed by ANZ (s.311(1)(a) of the Act);

● Any Seconded Employee who becomes employed by Macquarie will likely do so within three months of the employment with ANZ terminating (s.311(1)(b);

● In the majority of cases employees will continue to perform work with Macquarie Lending which is substantially the same as that which they performed for Esanda (s.311(1)(c);

● There is a connection between Macquarie and ANZ, because Macquarie owns and has beneficial use of former ANZ assets associated with the Esanda business that relate to and were used in connection with the transferring work performed by the Seconded Employees for ANZ (s.311(1)(d).

[11] The actual transfer of business has not yet occurred, and it is expected that offers of employment will be made prior to the end of the secondments on 31 January 2017.

[12] Section 317 of the Act provides that the Commission may make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer. The orders sought may be made ahead of the actual transfer of business as envisaged and defined in s.311 as Macquarie is “likely to be the new employer” as per s.318(2)(a) of the Act.

Relevant legislation

[13] Section 312(1) of the Act defines the meaning of a transferable instrument. Pursuant to s.312(1)(a) the ANZ Agreement constitutes a transferable instrument for the purposes of the Act.

[14] Section 313 provides for the transferable instrument to transfer to the new employer along with the employees who are transferred.

[15] Therefore, the applicant and the transferring employees will be covered by the ANZ Agreement.

[16] The applicant seeks that the ANZ Agreement not cover the applicant and the transferring employees.

[17] The relevant sections of the Act which allow for the Commission to provide the orders sought are:

S.319 “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.

[18] Section 318(3) of the Act sets out considerations that the Commission must take into account in deciding whether to make the order:

“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....”

Consideration

[19] In its application, the applicant has addressed each of the matters the Commission is required to consider when issuing an order under s.318. The application was accompanied by a witness statement of Jon Moodie, Managing Director of Macquarie Leasing, dated 18 August 2016, which attached the following documents:

1. Copy of email sent to employees inviting them to a briefing regarding the employment process;

2. Copy of email dated 29 July 2016 sent to employees inviting them to a one-on-one briefing, which attached the following documents:

i. Letter to employees explaining the proposed terms of offer of employment, dated 2 August 2016;

ii. Copy of Macquarie’s pro forma letter of offer;

iii. Copy of Macquarie’s pro forma employment contract;

iv. Sample summaries of the benefits applicable to each employee under the ANZ EA and Macquarie’s proposed arrangements;

v. Frequently Asked Questions document provided to employees, dated 2 August 2016;

3. Email from Allison Scott, ER Lawyer, to each employee regarding profit share guarantees, dated 10 August 2016;

4. Copy of sample revised benefit summary.

Section.318(3)(a)(i)- Views of the new employer or the likely new employer

[13] Mr Moodie’s witness statement, filed in support of the application, stated that if the ANZ Agreement were to apply to the Seconded Employees it would be disadvantageous to Macquarie in a number of respects:

● It would undermine the ‘one team’ culture which is highly valued by Macquarie, by having employees who perform the same work under different arrangements with different entitlements; and

● A number of provisions in the ANZ Agreement are inconsistent with Macquarie practice, including but not limited to hours of work arrangements, payroll cycles, job classifications and grades; and

● The Macquarie human resources and payroll system is not configured to administer the terms and conditions provided for in the ANZ Agreement; and

● Macquarie managers would be required to manage entitlements under an agreement which they are not familiar with and which was not tailored to meet the needs of the Macquarie business.

s.318(3)(a)(ii) - Views of the employees who would be affected by the order

[14] The applicant stated that it engaged in an extensive process of briefing and consultation with the 33 Seconded Employees as to the terms on which they may wish to become employed with Macquarie. Beginning in July 2016 the process included:

● Holding a briefing session with the Seconded Employees in which Macquarie outlined the terms on which it proposed to offer employment;

● Providing the Seconded Employees with a letter explaining the terms on which Macquarie proposed to offer employment, a copy of Macquarie’s pro forma letter of offer, a copy of Macquarie’s pro forma employment contract, a frequently asked questions document and summaries of the benefits applicable to each employee under the ANZ Agreement and under Macquarie’s proposed arrangements;

● Holding one-on-one briefings with each of the Seconded Employees (with the exception of one employee who was on annual leave) at which they were able to ask questions;

● Issuing revised versions of the benefit summary after consultation with ANZ regarding incentive payments.

[15] It was stated by Mr Moodie that Macquarie had formulated the basis on which it proposes to offer employment to at least some of the Seconded Employees. The Commission wrote to the applicant seeking to know whether all employees had access to the information necessary to form a view. The applicant confirmed that every Seconded Employee had been provided with information about the terms on which Macquarie proposes to make offers of employment, such that the Commission should be satisfied that each employee who expressed an interest in becoming employed by Macquarie did so with a full appreciation of the proposed terms of employment.

[16] The applicant states that of the 33 Seconded Employees 31 expressed interest in becoming employed by Macquarie on the terms explained to them at the briefings and in the materials provided to them.

[17] The applicant submits that one employee did not respond at the time expressions of interest were sought due to being on annual leave but has since expressed interest in becoming employed by Macquarie on terms discussed during a telephone call.

[18] The applicant submits that only one employee indicated that they were not interested in becoming employed by Macquarie for the reason that they were seeking a career change.

s.318(3)(b) - Whether any employee would be disadvantaged by the order in relation to their terms and conditions of employment

[19] The applicant submits that overall the terms of the contracts and remuneration packages on which it proposes to employee the Seconded Employees meet or exceed the benefits that they would be entitled to under the ANZ Agreement.

[20] In the witness statement of Mr Moodie it is stated that in 11 cases individual Seconded Employees’ base salaries may be lower than their current salary due to there being no position within Macquarie at an equivalent position held by the seconded employee within ANZ. It is stated that these employees are likely to be offered a less senior role which would attract a lower rate of pay than under the ANZ Agreement.

[21] The applicant submits that until at least 31 March 2018 it will guarantee minimum payments under its Discretionary Profit Share policies to ensure that the Seconded Employees will receive overall remuneration in excess with their current salary with ANZ. 1 The Commission wrote to the applicant seeking clarification on whether this guarantee would apply to all Seconded Employees, including those whose base salaries would be lower that their current salary. The applicant responded by way of email that:

“For the avoidance of doubt, until at least 31 March 2016, Macquarie will guarantee minimum payments under its discretionary Profit Share policies to ensure that all Seconded Employees whom it employs receive at least as much remuneration overall as their current salaries with ANZ, even if they do move into more junior roles.”

s.318(3)(c) - the nominal expiry date of the agreement

[22] The ANZ Agreement has a nominal expiry date of 30 September 2017 meaning it remains in term for approximately 12 months.

s.318(3)(d)- Whether the Agreement would have a negative impact on the productivity on the new employer’s (the applicant) workplace

[23] It is submitted by the applicant that if the ANZ Agreement were to apply, it would have a negative impact on the productivity of the applicant’s workplace for the following reasons:

1. Macquarie’s current employees are employed under common law contracts with arrangements which facilitate flexibility in the management of Macquarie’s employment arrangements. The Agreement is said to contain conditions which are inconsistent with Macquarie’s practices.

2. If the Agreement was to cover the applicant, it would be required to maintain two different payroll systems and sets of work rules.

s.318(3)(e)- Whether the applicant would incur significant economic disadvantage as a result of the Agreement covering it

[24] It is submitted by the applicant that in order to administer the ANZ Agreement the applicant would need to make substantial modifications to its existing human resources and payroll systems, which would result in significant costs.

s.318(3)(f) – The degree of business synergy between the Agreement and any workplace instrument that already covers the new employer

[25] The applicant submits that it is only covered by the Banking, Finance and Insurance Award 2010.

s.318(3)(g)- The public interest

[26] The applicant submits that the making of the order sought would not have any implications other than for the small group of transferring employees.

Conclusion

[27] I am satisfied that the ANZ Agreement is a transferable instrument as described in s.312(1)(a) of the Act and that the circumstances described are a transfer of business within the meaning of s.311 of the Act.

[28] The Act requires the Commission to take into account the circumstances of the transmission of business under the various headings listed above and then to balance these considerations in reaching a conclusions.

[29] Having regard to the grounds and reasons stated in support of the application, I am satisfied that the requirements of the Act have been met. With respect to the considerations above I am satisfied that the orders sought should be granted.

[30] For the reasons set out above, an order [PR PR585668] will issue that the ANZ Agreement will cease to cover the applicant or any transferring employees at Macquarie Bank Limited.

DEPUTY PRESIDENT

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