Marathon Health Ltd T/A Marathon Health

[2016] FWC 6948

[2016] FWC 6948

FAIR WORK COMMISSION

DECISION

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

Marathon Health Ltd T/A Marathon Health
(AG2016/5939)

Health and welfare services
COMMISSIONER JOHNS	SYDNEY, 27 SEPTEMBER 2016

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

[1] This decision is about an application pursuant to s.318 of the Fair Work Act 2009 (Act) by Marathon Health Ltd T/A Marathon Health (Marathon/applicant/new employer) seeking orders from the Fair Work Commission (Commission) that:

a) a transferrable instrument, being the firsthealth Enterprise Agreement 2009 (firsthealth Agreement) not apply to Marathon and former transferring employees who commence employment with Marathon after the date of the transfer of business; and that

b) the Western NSW Medicare Local Enterprise Agreement 2013 (Marathon Agreement) cover the transferring employees, on and from 1 October 2016.

Background

[2] On or around 10 August 2016, the applicant and firsthealth Limited (firsthealth/old employer) entered into two separate agreements for the provision of care coordination and allied health services. The two agreements are set to commence on 1 October 2016 and are listed below:

a) the Integrated Care Coordination Service Agreement; and

b) the Integrated Team Care Service Agreement.

[3] On or around 9 September 2016, the applicant and firsthealth entered into another agreement, known as the Psychological Services for Hard to Reach Groups Service Agreement set to commence on 15 October 2016. The three service agreements mentioned above will collectively be referred to as the “Service Agreements”.

[4] The Service Agreements mentioned in paragraph [2] are due to commence on 1 October 2016. While the Service Agreement in paragraph [3] is due to commence on 15 October 2016.

[5] Under the Service Agreements:

a) firsthealth will be engaging the applicant to provide the scope of the care coordination, community liaison and mental health services that are subject of the Service Agreements;

b) the applicant has agreed to provide the scope of the care coordination, community liaison and mental health services that are subject of the Services Agreements; and;

c) firsthealth has agreed to pay the applicant for the provision of those services consistent with its funding agreement and the terms set out in the Service Agreements.

[6] The applicant submits that firsthealth is engaging the applicant to perform work within the scope of the Service Agreements on the basis of an outsourcing arrangement under s.311(4) of the Act.

Orders Sought

[7] The applicant is seeking orders from the Commission that:

a) the firsthealth Agreement does not cover the applicant or any transferring employees who have commenced, or will commence employment with the applicant within 3 months of the date of the order and;

b) the Marathon Agreement covers, or will cover any or all of the transferring employees who have commenced, or will commence employment with the applicant within 3 months of the date of the order.

[8] The applicant filed detailed submissions in support of the application. Further, the application was supported by two affidavits from Mr Robert Joseph Strickland, the applicant’s Executive Manager of Corporate Services and Finance. The first affidavit was filed in the Commission on 23 September 2016 (first affidavit). The second affidavit was filed on 27 September 2016 (second affidavit).

The Legislation

[9] Section 318 of the Fair Work Act 2009 (Cth) (Act) sets on the circumstances in which an order 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.

[10] The Commission will now consider each of the matters it is required to consider under s.318(3).

s.318(3)(a)(i) - the views of the new employer

[11] The new employer wants to ensure there is a common set of conditions for all employees regardless of whether they are former employees of firsthealth or not. Mr Strickland provided the following reasons as to why the new employer would prefer the Marathon Agreement to apply to the transferring employees:

a) The Marathon Agreement contains terms and conditions of employment that are more favourable overall than those provided under the firsthealth Agreement;

b) The Marathon Agreement contains terms and conditions that were specifically negotiated, taking into account the applicant’s particular operational environment and culture;

c) The new employer wants to increase efficiency and minimise any additional administrative burden, namely:

a. the significant differences between the two agreements, including but not limited to the differences in the span of ordinary hours, casual loading, time in lieu provisions and uniform allowances;

b. the resources that would be required to administer and comprehend the complexity of two concurrent agreements;

c. the relative number of transferring employees (18) to the total number of existing employees of the new employer (161);

d. the concern to expend funds administered by the Commonwealth on administrative tasks to enforce differences in provisions of the two agreements.

d) The new employer submits that if it had to ensure compliance with two agreements it would cause significant disadvantage in the running of their business, negatively impacting its productivity through the misappropriation of human resources and administrative costs.

s.318(3)(a)(ii) - the view of the employees who would be affected by the order
[12] In his first affidavit Mr Strickland provided a breakdown of the number of transferring employees from firsthealth, and under which Agreement their transfer will be effective. They are as follows:

a) Integrated Care Coordination Service Agreement will have around or up to nine transferring employees which the applicant has targeted because they would prefer to recruit candidates who have relevant experience and qualification in the health sector. The transfer of these employees would be effective from 1 October 2016;

b) Integrated Team Care Service Agreement will have around or up to eight transferring employees which the applicant has targeted because they would prefer to recruit staff with Enrolled Nurse, Registered Nurse or similar health sector qualifications. The transfer of these employees would be effective from 1 October 2016; and

c) Psychological Services for Hard to Reach Groups Service Agreement will have four employees providing direct clinical mental health services. The transfer of these employees would be effective from 15 October 2016.

[13] In his second affidavit, Mr Strickland detailed the steps taken by the applicant to consult with the possible transferring employees of firsthealth about the transfer of work and the intention to end the coverage of the firsthealth Agreement and to subsequently implement the Marathon Agreement.

[14] Mr Strickland explained that on 23 September 2016 Marathon commenced verbal communications with the transferring employees and aimed to conclude these discussions by 27 September 2016.

[15] Further, on 26 September Marathon sent a copy of the Application and Mr Strickland’s first affidavit to the transferring employees set to commence on 1 October 2016. On this same day, Marathon asked firsthealth to forward a copy of the application and Mr Strickland’s first affidavit to the transferring employees relating to the Psychological Services for Hard to Reach Groups Service Agreement.

[16] Importantly the application sent to potential transferring employees also contained a copy of a table which compared the firsthealth Agreement to the Marathon Agreement.

[17] Mr Strickland explained in his second affidavit that following the above mentioned emails being sent to all transferring employees:

a) a delivery receipt has been received for all emails;

b) two of the transferring employees have acknowledged receipt in a “thank you” response email; and

c) no other transferring employees have responded.

[18] The Commission has also not received any correspondence from any potential transferring employee. Accordingly, although I am required to consider the views of employees, there is no evidence before me about the same. However, I am satisfied that the application and the existence of these proceedings have been brought to the attention of the potential transferring employees and that, therefore, they have had an opportunity to object to the Orders sort. No one has done so. I also note that the New South Wales Nurses and Midwives’ Association has advised the Commission that it does “not oppose or object to the proposed application for an order in relation to a transfer of business by Marathon Health Limited”.

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

[19] Marathon submits that should the transferring employees be covered under the Marathon Agreement, their employment would be for the same role, or substantially the same as it was under the old employer. It submits that the provisions of the Marathon Agreement are, on balance, more favourable in comparison to those of the firsthealth Agreement. Marathon provided a table comparing the provisions of the Marathon Agreement and the firsthealth Agreement, where most but not all provisions are more favourable to employees.

[20] Examples of lesser conditions include:

a) Time in lieu: The Marathon Agreement allows full time employees to accrue up to 20 hours whilst the firsthealth Agreement allows full time employees to accrue up to 37.5 hours;

b) Meal Breaks: The Marathon Agreement does not include a provision on meal breaks, while the firsthealth Agreement provides for a paid minimum 20 minute meal break for employees working 2 hours over ordinary hours; and

c) Leave Loading: The Marathon Agreement provides no leave loading while the firsthealth Agreement provides a 17.5% leave loading.

[21] Examples of more beneficial conditions include:

a) Casual loading: The Marathon Agreement provides a 25% casual loading while the firsthealth Agreement only provides 20%;

b) Working Hours: The Marathon Agreement’s working hours are limited between 7:30am – 6:00pm Monday to Friday, while the working hours under the firsthealth Agreement are broader, specifically, 8:00am – 8:00pm;

c) Annual Leave: The Marathon Agreement provides 5 weeks annual leave, compared to 4 weeks annual leave provided in the firsthealth Agreement;

d) Performance Review: The Marathon Agreement includes provisions surrounding annual performance reviews while the firsthealth Agreement is silent on this condition.

e) Uniforms: The Marathon Agreement provides a $180 credit to employees every second year, while the firsthealth Agreement is silent on this condition.

[22] In his first affidavit Mr Strickland explains that some offers of employment to transferring employees may be for part-time maximum employment or casual employment.

[23] The Commission, as presently constituted, is satisfied that, on balance, the Marathon Agreement is more favourable to transferring employees.

s.318(3)(c) - if the order relates to an enterprise agreement—the nominal expiry date of the agreement

[24] The nominal expiry date of thefirsthealth Agreement is19 February 2014.
s.318(3)(d) - whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace

[25] Marathon submitted that the transferable instrument would have a negative impact upon productivity. Mr Strickland’s evidence was that:

“…based on my management experience I have no doubt it would impose extra time and cost and impact our productivity and divert our focus away from ways and means of developing and designing innovative community care programs and delivering the services to vulnerable members of the community, as well as building staff engagement in order to improve the quality of the services.

Based on my experience with Marathon, I consider that the processes required to ensure compliance with two separate industrial instruments would cause significant disadvantage for marathon and would have a negative impact on its productivity, including by increasing the human resources and administration costs associated with complying and conducting business consistently with the requirements of two industrial instruments”

s.318(3)(e) - whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer

[26] No submissions were made by the applicant about economic disadvantage because it explained that, if the orders sought were not made, the offers of employment to the potential transferring employees would be withdrawn

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

[27] The Commission, as presently constituted, is not satisfied that there is a degree of synergy between the transferable instrument and the existing Agreement.

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

[28] Mr Gee submitted that it was not against the public interest in granting the orders sought.
[29] Further, he referred me to the decisions in:

a) [2010] FWA 1142; 1 and

b) [2015] FWC 7916. 2

[30] I note and adopt the principles enunciated in these decisions and the decisions referred to within those decisions.
[31] The Commission, as presently constituted, is satisfied that it is not against the public interest to grant the Orders sought by the applicant.
[32] Having considered the application and the materials filed in support of the application, the Commission is satisfied that all the requirements of s.318 of the FW Act have been met. An order will be issued with this decision

COMMISSIONER

Appearances:

B, Gee solicitor for the applicant

Hearing details:

Sydney,

27 September

2016

 1   Whitehaven Coal Mining Ltd

 2   Australian Laboratory Services Pty Ltd

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