MBS Insurance Co Pty Ltd T/A MBS Insurance

[2020] FWC 579

[2020] FWC 579

FAIR WORK COMMISSION

DECISION

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

MBS Insurance Co Pty Ltd T/A MBS Insurance
(AG2020/109)

COMMISSIONER RIORDAN SYDNEY, 25 FEBRUARY 2020

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

[1] MBS Insurance Co Pty LTD (the Applicant) have made an application to the Fair Work Commission (the Commission) in accordance with section 318 of the Fair Work Act 2009, (the Act), seeking and Order that the NAB Enterprise Agreement 2016 (the Agreement) does not cover Mr Damien Diggle and Mr Doug Firth (the two employees).

[2] In accordance with section 596(2)(a) of the Act, leave was granted for the Applicant to be represented by Mr Luis Izzo form Australian Business Lawyers and Advisors due to the complexity of the matter.

Background

[3] In late 2019, the Applicant purchased a number of life insurance contracts from JB WERE Limited. This transaction resulted in the two employees being made redundant from JB WERE Limited. The two employees had previously been employed by JB WERE Limited’s parent company, the National Australia Bank (NAB).

[4] In late December 2019, the two employees accept employment with the Applicant within three months of being made redundant. Basically, the two employees are performing the same work, with the same clients, as they performed in their former role with JB WERE.

[5] It is not in dispute that an unintended transfer of business has occurred and that the Agreement will continue to apply to the two employees in their new employment with the Applicant.

[6] The Applicant has sought an order from the Commission that the Agreement does not cover/and will not cover the two employees.

Relevant Legislation

[7] Pursuant to s.313 of the Act:

“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…

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

[8] Further, s.318 of the Act relevantly provides:

“318 Orders relating to instruments covering new employer and transferring employees

(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.

(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;

(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).

(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.

(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.”

[9] I will now turn to consider each of the subsections of section 318(3).

Consideration

Section 318(3)(a)(i) the views of the new employer or a person who is likely to be the new employer

[10] The Applicant has submitted that it was unaware of the possible transfer of the Agreement. The Applicant has indicated that it would be extremely impractical, if not impossible, for it to comply with the Agreement. Further, the Applicant claims that the two employees will not be adversely affected by not being covered by the Agreement as their remuneration exceeds the Agreement rates of pay. I have taken these issues into account.

Section 318(3)(a)(ii) the views of the employees who would be affected by the order

[11] The two employees have both provided signed statements to the Commission, indicating that they support the application by the Applicant. Both statements contained the following provision:

“I am aware that the effect of the application by MBS is that the NAB EA will not apply to my employment at MBS and thus my employment will be governed by my contract of employment dated 16 January 2020 as well as the Banking, Finance and Insurance Industry Award 2010.”

[12] I have taken these statements into account.

[13] In order to ensure the identity of the two employees, I invited Mr Izzo to provide confirmatory documentation of the employee’s identity. Signed and witnessed affidavits, executed by the two employees were provided, which included copies of accredited photo identification.

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

[14] I have taken into account that no employees of the Applicant will be disadvantaged as a result of any order from the Commission.

Section 318(3)(c) if the order relates to an enterprise agreement—the nominal expiry date of the agreement;

[15] The Agreement has a nominal expiry date of 2 October 2019. I have taken this into account.

Section 318(3)(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace;

[16] The Applicant is a medium sized business. NAB has over 35,000 employees. Whilst issues in relation to consultation and procedural fairness are relevant and appropriate in every organisation, the consultation provisions of the Agreement are focused on a detailed process, utilising a third party, which are far too restrictive and time-consuming for a business of this size. I am satisfied that the Applicant can conduct the necessary consultation in a more direct and timely manner. I’ve taken this into account.

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

[17] The Agreement would impose significant additional costs on the Applicant if it was required to follow the inflexible requirements of the Agreement in relation to staffing, workload consultation and redundancy. Further, the Applicant would be left with the complex scenario where two employees would be covered by the expired Agreement whilst the rest of the workforce is covered by their employment contracts and the Banking, Finance and Insurance Award 2020.

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

[18] An analysis of the business synergy between the Applicant and the NAB and their workplace instruments is quite stark. The Applicant has 35 employees. The NAB has in excess of 35,000 employees. The only synergies which exist are that both businesses function within the finance sector and that the applicable Morden Award is the Banking, Finance and Insurance Award 2020. I have taken this into account.

Section 318(3)(g) the public interest.

[19] The objects of the Act are identified in section 3

“3  Object of this Act

The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:

(a)  providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations; and

(b)  ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and

(c)  ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and

(d)  assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and

(e)  enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and

(f)  achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and

(g)  acknowledging the special circumstances of small and medium-sized businesses”

(My emphasis)

[20] It is difficult to sustain an argument that an enterprise agreement for an organisation the size of the NAB, satisfies the stated objectives of the Act when the Applicant only has 35 employees. It has established a renumeration system and provides conditions of employment to its employees which are balanced, fair and focused on the ethical and productive goals of the business. It would be unfair and unreasonable to impose upon the Applicant the Agreement for just two of its employees. I have taken this into account.

Conclusion

[21] I have taken into account all of the submissions and witness statements that have been provided in this matter. I have taken particular note of the evidence from the employees that they support the application.

[22] I am satisfied that the Agreement has little or no relevance to the two employees. I am satisfied that the Agreement would be unworkable, unproductive and unsustainable for the Applicant.

[23] For the reasons identified above, I find that the Agreement does not and will not cover the Applicant and the two employees.

[24] I so Order.

COMMISSIONER

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