Marinus Link Pty Ltd
[2022] FWC 1658
•28 JUNE 2022
| [2022] FWC 1658 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.320 - Application to vary a transferable instrument
Marinus Link Pty Ltd
(C2022/3368)
TasNetworks Enterprise Agreement 2020 - 2024
(ODN AG2020/1318) [AE508264]
| Electrical power industry | |
| COMMISSIONER CIRKOVIC | MELBOURNE, 28 JUNE 2022 |
Applications to vary a transferable instrument
On 7 June 2022, Marinus Link Pty Ltd (the Applicant) applied to the Commission under section 320 of the Fair Work Act 2009 (the FW Act) to vary a transferable instrument (the Agreement).
The instrument subject to this application is the:
TasNetworks Enterprise Agreement 2020-2024
The variation seeks to vary the following:
a) remove the reference to ‘TasNetworks’ in clause 13.4;
b) insert, in its place, ‘MLPL’ (the shortened corporate reference to Marinus Link Pty Ltd);
c) remove the reference to the 2019/2020, 2020/2021 financial years; and
d) adjust the required standard for entitlement to the performance based salary increase (bonus) to increase the number of eligible employees.
3. The variation sought to Clause 13.4 of the Instrument reads in full as follows:
“Performance-based salary increases
a) In each of financial years 2021/2022 and 2022/2023 MLPL commits to funding a performance-based salary increase budget (Yearly Performance Budget) of a half of one percent (0.5%) of the annual total of the base salaries of all MLPL Employees covered by this Agreement.
b) The entire Yearly Performance Budget will be used by MLPL to fund a performance based salary increase in each of financial years as stated above, applied by MLPL to an Employee's base salary.
c) The increases under this clause 13.4 will apply for an Employee where MLPL determines, acting reasonably, that the Employee is ‘On Target and Skilled’ and above in the financial year.”
The Agreement names the Australian Municipal, Administrative, Clerical and Services Union (ASU), Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australian (CEPU) and the Association of Professional Engineers, Scientists and Managers Australia (APESMA), as being covered by the agreement.
The background to this application warrants a brief summary.
The section 320 application was lodged on 7 June 2022. The section 320 application sought to vary the TasNetworks Enterprise Agreement 2020-2024 (TasNetworks Agreement).
On 8 June 2022 I issued directions concerning the section 320 application. The directions required the ASU, CEPU, APESMA and employee bargaining representatives to advise their position(s) in relation to the applications in which they have standing by Thursday 16 June 2022. The directions provided further for any person to advise an objection or intent to be heard on the application. None of the unions objected to the section 320 application.
On 21 June 2022, Employee Bargaining Representative, Mr Christ Latimer wrote to my Chambers asking whether the variation would proceed prior to him liaising further with the Applicant regarding the proposed amendments. On 22 June 2022, Mr Latimer wrote to my Chambers advising that his concerns had been addressed and he had no objection to the application.
As no objection or other updated position have been received, it is appropriate to determine the application on the papers.
The materials before me are the application and the agreement, as lodged by the Applicant on 7 June 2022.
Statutory provisions
Section 320 of the FW Act provides:
“320 Variation of transferable instruments
Application of this section
(1) This section applies in relation to a transferable instrument that covers, or is likely to cover, the new employer because of a provision of this Part.
(a) Power to vary transferable instrument
(2) The FWC may vary the transferable instrument:
(a) to remove terms that the FWC is satisfied are not, or will not be, capable of meaningful operation because of the transfer of business to the new employer; or
(b) to remove an ambiguity or uncertainty about how a term of the instrument operates if:
(i) the ambiguity or uncertainty has arisen, or will arise, because of the transfer of business to the new employer; and
(ii) the FWC is satisfied that the variation will remove the
ambiguity or uncertainty; or
(c) to enable the transferable instrument to operate in a way that is better aligned to the working arrangements of the new employer’s enterprise.
Who may apply for a variation
(3) The FWC may make the variation only on application by:
(a) a person who is, or is likely to be, covered by the transferable instrument; or
(b) if the application is to vary a named employer award—an employee organisation that is entitled to represent the industrial interests of an employee who is, or is likely to be, covered by the named employer award.
Matters that the FWC must take into account
(4) In deciding whether to make the variation, 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 transferable
instrument as varied;
(b) whether any employees would be disadvantaged by the transferable instrument as varied in relation to their terms and conditions of employment;
(c)if the transferable instrument is an enterprise agreement—the nominal expiry date of the agreement;
(d) whether the transferable instrument, without the variation, 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, without the variation;
(f) the degree of business synergy between the transferable instrument, without the variation, and any workplace instrument that already covers the new employer; (g) the public interest.
Restriction on when variation may come into operation
(5) A variation of a transferable instrument under subsection (2) must not come into operation before the later of the following:
(a) the time when the transferable instrument starts to cover the new employer;
(b) the day on which the variation is made.”
Consideration
I turn to the factors required to be taken into account by section 320(4) of the FW Act.
The Views of the Applicant and Relevant Employees (s320 (4)(a))
In lodging the application, the Applicant is seeking that the Commission exercise its power to vary the Agreement. Self-evidently, the Applicant’s view is that the application should be granted. I am further satisfied that employees who would be affected by the varied instrument do not oppose the Variation Application. I am satisfied that the reasons for and the effect of the variation was explained to affected employees who were provided an opportunity to clarify and question or express concerns with the proposed variation. Following the consultation process both the Applicant and the affected employees were in favour of the application to vary the instrument so that it may align with the Applicant’s work practices. This factor weighs in favour of the variation sought.
Disadvantage to employees (s320(4)(b))
For ease of reference, the submissions of the Applicant are set out below:
“Following the 2020/2021 Financial Year, the Applicant amended the basis for measuring employee performance. Following the amendment, performance has been measured against overall project performance and the Applicant’s business plan. The change has resulted in only two employees being ‘on track’ to be eligible for the merit bonus. In the previous year, nine employees were eligible for the merit bonus at the end of financial year.
Consequently, the Applicant seeks to reduce the requisite performance standard to increase the number of employees who will be eligible for the merit bonus. To increase the pool of eligible employees, those who meet the ‘On Target and Skilled’ rating will be eligible. Employees who are below ‘On Target and Skilled’ will not be eligible for a merit increase but will receive a CPI increase.
On current indications, this will increase the number of eligible employees to 25.
Based on current projections, the increased number of eligible employees will reduce the value of merit bonus for those employees who would have received the bonus under Tas Networks’ Enterprise Agreement.
On Tas Networks’ projections, there would be 318 eligible employees drawing from a merit pool of $418,252. The eligible employees represent 32% of Tas Networks’ workforce. On these estimates, each employee would receive a merit bonus of $1,510.
On MLPL’s proposed variation, there would be 25 employees drawing from a merit pool of $15,043. The eligible employees represent 100% of affected MLPL employees. On this proposal, each employee would receive a merit bonus of $601.72.
Lowering the required performance standard does result in a reduction to the value of the merit bonus (of $908.28). However, it is preferable to provide a financial bonus to more employees (i.e 23) than to provide a disproportionately greater bonus to fewer. In practice, the alternative would mean providing a merit bonus to two employees of $7,000 each. Whereas, under the proposed variation, 25 employees are projected to earn $601.72 each.
On balance, the proposed variations pose no disadvantage to affected MLPL employees. The reduction in the performance standard required for merit bonus eligibility substantially increases the number of eligible employees. In this sense, the proposed variation is collectively beneficial to affected MLPL employees.”
This factor weighs in favour of the variation sought.
Nominal expiry date s320(4)(c)
The Applicant submits that the Transferrable Instrument has a nominal expiry date of 10 June 2024. Consequently, should the variation not be made, the bonuses would be improperly calculated on the basis of the salaries of the Applicant’s employees for the next two rounds of performance reviews. This factor weighs in favour of the variation sought.
If not varied, any negative impact on productivity of the new employer’s workplace s.320(4)(d)
The Applicant submits that the absence of a variation of the Instrument may adversely affect the productivity of the Applicant’s workplace in so far as it would remove a performance-based incentive. Consequently, productivity within the workforce may decline if the variation, giving effect to the bonus, is not made. This factor weighs in favour of the variation sought.
Significant Economic Disadvantage s.320(4)(e)
The Applicant submits that the absence of the variation of the Transferrable Instrument will not cause an overt economic disadvantage because the Applicant will avoid paying a direct performance bonus. However, the Applicant could theoretically miss out on a corresponding performance improvement without the incentive for employees to achieve a performance-based bonus. This factor weighs in favour of the variation sought.
Synergy between the non-varied Transferrable Instrument and other Industrial Instruments s.320(4)(f)
The Applicant submits that the Electrical Power Industry Award 2020 (MA000088), which would otherwise cover the affected employees should no Enterprise Agreement apply, contains no equivalent bonus clause. Consequently, there is no business synergy between the two industrial instruments. The Transferrable Instrument provides for the entitlement, which is not present in the Modern Award. This factor weighs in favour of the variation sought.
Public interest s.320(4)(g)
The Applicant submits that there is public interest in ensuring that parties bound by the terms of an industrial instrument have certainty regarding the operation of those terms. This factor weighs in favour of the variation sought.
The unions named in the Agreement do not oppose the variation sought.
In this matter factors weigh in favour of the application. No evidence has been put before me of opposition to the application.
I am satisfied that it is appropriate to vary the Agreement as sought. The application by Marinus Link is granted.
The variations will operate from 11:59pm on 28 June 2021. An Order will be
issued to this effect.[1]
COMMISSIONER
[1]PR743059
Printed by authority of the Commonwealth Government Printer
<AE508264 PR743127>
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