Macquarie University

[2018] FWC 3715

[2018] FWC 3715

FAIR WORK COMMISSION

DECISION

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

Macquarie University
(AG2018/2613)

DEPUTY PRESIDENT KOVACIC CANBERRA, 22 JUNE 2018

Application for an order relating to instruments covering new employer and non-transferring employees in agreements – orders made that the Department of Industry, Innovation and Science Enterprise Agreement 2016 – 2019 will not apply to any transferring employees and non-transferring employees who perform or are likely to perform the transferring work of the new employer.

[1] This decision concerns an application made pursuant to s.318 of the Fair Work Act2009 (the Act) by Macquarie University (the University) seeking orders that:

•  the Department of Industry, Innovation and Science Enterprise Agreement 2016 – 2019 1(the DIIS Agreement) does not and will not cover the University or any transferring employees; and

•  the Macquarie University Professional Staff Enterprise Agreement 2015 2 (the Professional Staff Agreement) or the Macquarie University Academic Staff Enterprise Agreement 20143(the Academic Staff Agreement) (together, the University Agreements) will apply to University staff and any of transferring employees in respect of their employment with the University.

[2] By way of background the application arises in circumstances where the University was successful in its bid to acquire the Australian Astronomical Observatory (AAO) from the Commonwealth Department of Industry, Innovation and Science (DIIS). The acquisition will take effect on 30 June 2018 at which time all AAO assets will transfer from DIIS to the University.

[3] As part of the acquisition the University has made offers of employment to 37 employees who are currently employed by DIIS and work for the AAO (the transferring employees). The offers of employment will see the transferring employees perform substantially the same work for the University that they currently perform at the AAO. Thirty six of the transferring employees are currently covered by the DIIS Agreement. As at the date of the application 35 of the transferring employees had accepted the offer of employment with the University. One person is still considering the offer whilst one person has declined the offer. Those transferring employees who have accepted the offer will commence employment with the University on 1 July 2018. Employees of the University who perform similar work to the transferring employees will remain covered by the University Agreements.

[4] Ms Nicole Gower, the University’s Director, Human Resources, provided an affidavit in support of the application. Among other things, Ms Gower deposed that on or around 1 June 2018 the transferring employees were provided with a letter explaining the University’s reasons for its application and an accompanying election form for them to indicate whether they were supportive of the application. That letter included the following:

“RE: Your views on our application to the Fair Work Commission

…

As you might recall, the University intends to make an application to the Fair Work Commission (FWC) for orders that the applicable University enterprise agreement cover your employment with the University rather than the DIIS enterprise agreement. Before doing so, we are keen to understand your views on the proposed application.

…

Overall, we believe that you will not be disadvantaged by being covered by the University Enterprise Agreement. In fact, the University Enterprise Agreement is more favourable than the DIIS Enterprise Agreement in several respects, including in relation to leave entitlements, consultation and redundancy. You have each been provided with a comparison table for a more comprehensive comparison of the University Enterprise Agreement against the DIIS Enterprise Agreement to assist you in making your own assessment.

The University has also agreed that at a minimum, your current remuneration package (inclusive of salary and superannuation) with DIIS will be matched. In these circumstances, we can assure you that you will not be disadvantaged overall with respect to your remuneration. Please refer to your individualised remuneration comparison table for a comparison of your current salary and superannuation against the salary and superannuation offer to you by the University.

Our reasons for making the application

First and foremost, we want you to feel part of our community – and we genuinely believe that having you on the same terms and conditions as other university staff will help achieve this.

There are also practical challenges associated with applying the DIIS Enterprise Agreement to your employment at the University. The DIIS Enterprise Agreement was negotiated in a unique context, where the Australian Astronomical Observatory was a part of DIIS and more broadly, the Commonwealth Government. For this reason, several provisions in the DIIS Enterprise Agreement reflect and incorporate Commonwealth Government legislation and policy, which is contemplated for Australian Public Service and Commonwealth Government employees and which would not have application to the University. It is unlikely that the University would be able to effectively comply with these provisions. There are also specific positions mentioned in various provisions that do not exist at the University (e.g. several provisions refer to the Secretary of DIIS).

Your Opinion

Before making any application, we would like to get a sense from AAO staff of whether the proposed application is supported or not. To assist us in understanding your views, I would appreciate if you could please complete the attached form and return it to … We attach a copy of the University Enterprise Agreement and a comparison table for your reference.” 4

[5] At the time of Ms Gower’s affidavit, of the 34 transferring employees who had accepted employment with the University and would be covered by the DIIS Agreement, 31 had indicated that they would prefer to be covered by the appropriate University Agreement while the remaining three indicated that they did not have any preference.

[6] Also in her affidavit, Ms Gower summarised the main advantages of being covered by the University Agreements rather than the DIIS Agreement and vice versa. More specifically, Ms Gower identified the following as the main advantages of being covered by the University Agreements rather than the DIIS Agreement:

•  up to 26 weeks paid parental leave for primary carers (compared to 14 weeks’ paid maternity leave under the DIIS Agreement);

•  10 weeks of paid personal/carer’s leave on commencement and 3 weeks per year thereafter;

•  a wider range of community service leave types, including Living Organ Donation Leave and payment to attend as a Crown witness on behalf of the University;

•  annual leave loading;

•  more generous redundancy payments;

•  salary increases;

•  17% superannuation for all transferring employees (the DIIS Agreement provides for 15.4%, for those employees not eligible to join the Commonwealth Defined Benefit Scheme); and

•  ordinary hours of 35 hours per week (the DIIS Agreement provides for 37.5 hours per week).

[7] As to the main advantages of being covered by the DIIS Agreement as opposed to the University Agreements, Ms Gower identified the following:

•  a wider range of allowances under the DIIS Agreement, noting that DIIS had advised the University that the only allowance currently received by any of the transferring employees was a combined allowance of $608.26 per annum in relation to fire warden and fire first aid duties which 6 employees currently received. Ms Gower also noted that the University Agreements have more generous first aid allowance rates;

•  minimum salary rates – of the 36 transferring employees offered employment with the University who would be covered by the DIIS Agreement, 22 had been offered employment at a classification level with a base salary rate lower than their current salary under the DIIS Agreement. Ms Gower deposed that where this was the case the University had provided a fixed salary loading to ensure that no transferring employee’s remuneration was less favourable overall;

•  superannuation for defined benefit scheme members – currently 12 out of the 36 transferring employees offered employment with the University and who would be covered by the DIIS Agreement were members of the Commonwealth defined benefit scheme, adding that while the University was not able to make contributions to that scheme it had offered those transferring employees an increase in base salary to compensate for any reduction in employer superannuation contributions;

•  14 weeks’ paid fostering leave (under the University Agreements the entitlement is 6 weeks’ at half pay for staff who become a primary carer as a result of a long-term fostering arrangement);

•  a guarantee of part-time work for employees returning from maternity leave up to the child’s six birthday (there is no equivalent entitlement under the University Agreements);

•  overtime provisions for the 6 transferring employees who would be covered by the Academic Staff Agreement which does not provide for paid overtime, noting that DIIS had advised the University that none of these employees were paid any overtime in the previous 12 months;

•  access to up to 10 weeks’ purchased leave in any period up to a year (under the University Agreements the entitlement to purchased leave is up to 4 weeks in a year for academic staff and up to 10 days in a year for professional staff); and

•  vacation childcare subsidy for accredited providers (there is no equivalent provision under the University Agreements, though DIIS had advised the University that none of the transferring employees currently access this benefit).

[8] Also annexed to Ms Gower’s affidavit was a comparison table identifying the difference in terms and conditions between the University Agreements and the DIIS Agreement.

Relevant legislation

[9] The relevant sections of the Act are ss.313 and 318 which provide as follows:

“313 Transferring employees and new employer covered by transferable instrument

(1) If a transferable instrument covered the old employer and a transferring employee immediately before the termination of the transferring employee’s employment with the old employer, then:

(a) the transferable instrument covers the new employer and the transferring employee in relation to the transferring work after the time (the transfer time) the transferring employee becomes employed by the new employer; and

...

(3) This section has effect subject to any FWC order under subsection 318(1).

318 Orders relating to instruments covering new employer and transferring employees

Orders that FWC may make

(1) 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) 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;

…

Matters that FWC must take into account

(3) In deciding whether to make the order, 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.”

[10] Before turning to consider each of the matters specified in s.318(3) the Act, I note that the University, as the new employer, has standing pursuant to s.318(2)(a) of the Act to make the application for the orders sought.

The views of the new employer [s.318(3)(a)(i)]

[11] The University stated among other things in its application that in the absence of the orders sought being made that employees employed by the University performing the transferring work would be covered by different industrial instruments. The University also stated that it would like to maintain consistent entitlement for employees performing the transferring work.

[12] Ms Gower in her affidavit deposed that the University would be unable to effectively comply with and administer the DIIS Agreement in its current form as it refers to and incorporates Commonwealth legislation and policies which would not apply to the transferring employees once they ceased to be employees of DIIS, citing in particular references in the Agreement to the Maternity Leave (Commonwealth Employees) Act 1973 and the Long Service Leave (Commonwealth Employees) Act 1976. Ms Gower further deposed that:

•  having a different set of terms and conditions would not facilitate a smooth transition;

•  making the orders sought would ensure that transferring employees are effectively integrated into and genuinely feel a part of the University community; and

•  having the DIIS Agreement cover the transferring employees would create significant administrative difficulties and be costly for the University as it would require it to administer another set of terms and conditions.

The views of the employees who would be affected by the order [s.318(3)(a)(ii)]

[13] As outlined above, transferring employees were invited by the University to indicate whether they supported, opposed or had no preference regarding the University’s application, with 31 of the 34 transferring employees who responded expressing support for the application and the remaining 3 employees indicating that they did not have a preference. In in other words, none of the transferring employees who responded indicated that they opposed the University’s application.

[14] The University in its application also stated that the Community and Public Sector Union, which has coverage of the transferring employees, is aware of and had not objected to the proposed application.

[15] Beyond that, I note the various other steps outlined in Ms Gower’s affidavit which the University took to explain to transferring the differences between the DIIS Agreement and the University Agreements employees.

[16] The above analysis points to the transferring employees being aware of the application and the orders sought and being overwhelmingly supportive of the application. This weighs in favour of making the orders sought.

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

[17] The University submitted that no employees would be disadvantaged by the orders but noted that a number of entitlements contained in the DIIS Agreement would no longer apply to the transferring employees. As outlined above, Ms Gower in her affidavit set out the main advantages of being covered by the University Agreements rather than the DIIS Agreement and vice versa. Having done so, Ms Gower deposed that she was satisfied employees would be no worse off overall under the University Agreements and that the majority would be better off overall.

[18] What is also clear from Ms Gower’s affidavit is that wherever possible the University has sought to mitigate or minimise any disadvantage which might be associated with the transferring employees being covered by the University Agreements. For instance, Ms Gower deposed that where a transferring employee had been offered employment at a classification level with a base salary rate lower than their current salary under the DIIS Agreement the University had provided a fixed salary loading to ensure that no employee’s remuneration was less favourable overall. Similarly, Ms Gower deposed that in respect of superannuation for those transferring employees who were members of the Commonwealth defined benefit scheme the University had offered those employees an increase in base salary to compensate for any reduction in employer superannuation contributions stemming from the fact that it could not make contributions to that scheme.

[19] Whilst there are undoubtedly some “swings and roundabouts” associated with the transferring employees being covered by the University Agreements, the material before the Commission suggests that the University has taken, where it can, steps to mitigate or minimise any disadvantage and that there are several important advantages for transferring employees. Having regard to that material, on balance, I do not consider that employees would be disadvantaged by the orders sought. This favours the making of the orders sought.

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

[20] The DIIS Agreement has a nominal expiry of 29 March 2019. I note also that the University Agreements have both passed their nominal expiry date with replacement agreements yet to be finalised. This provides some scope for the transferring employees to have input into their future terms and conditions of employment.

Whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace [s.318(3)(d) and s.319(3)(d)]

[21] The University submitted that maintaining a number of employees on the DIIS Agreement would have a negative impact on productivity in circumstances where the University was unable to effectively comply with and implement a number of provisions in the DIIS Agreement, e.g. those provisions which referred to Commonwealth Government legislation. I consider any such negative impact on productivity as likely to be negligible.

Any significant economic disadvantage to the new employer [s.318(3)(e)]

[22] The University submitted that it would incur significant economic disadvantage if the DIIS Agreement applied to transferring Employees as it would be required to administer a different set of terms and conditions and bear the associated costs of having to do so. I accept that in the absence of the orders sought the university would incur additional costs in administering another disparate set of terms and conditions.

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

[23] As previously mentioned, the University contended that it is unable to effectively comply with and administer a number of the provisions in the DIIS Agreement, e.g. in respect of superannuation the University submitted that it is unable to make contributions to the Commonwealth Defined Benefit Scheme. This suggests that there is little, if any, business synergy between the DIIS Agreement and the University Agreements.

The public interest [s.318(3)(g)]

[24] I do not consider that the public interest is enlivened in this case.

Conclusion

[25] Taking into account each of the matters set out in s.318(3), I am satisfied that the orders sought should be made.

[26] The orders (PR608389) will be issued to provide that the DIIS Agreement does not and will not cover Macquarie University or any transferring employees. The orders will operate from the date the transferring employees commence employment with Macquarie University.

Printed by authority of the Commonwealth Government Printer

<PR608388>

 1  AE418374

 2  AE414138

 3  AE409766

 4   Affidavit of Nicole Gower at Annexure G