MDC Foundation Limited for the Mother’s Day Classic Foundation

[2017] FWC 2998

[2017] FWC 2998

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.318—Transfer of instrument

MDC Foundation Limited for the Mother’s Day Classic Foundation
(AG2017/1202)

DEPUTY PRESIDENT CLANCY MELBOURNE, 5 JUNE 2017

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

[1] MDC Foundation Limited as trustee for the Mother’s Day Classic Foundation T/A Mother’s Day Classic Foundation (MDCF) has applied for an order under s.318 of the Fair Work Act 2009 (Cth) (the Act).

[2] In its Form F40 – Application for orders in relation to transfer of business (the Application), MDCF has applied for an order that the Australian Institute of Superannuation Trustees Certified Agreement 2014 (AIST Agreement) no longer cover MDCF or its employees whose employment transferred to it from the Australian Institute of Superannuation Trustees (AIST).

Background

[3] MDCF was established on 19 February 2015 as a company limited by guarantee with the object of pursuing charitable purposes. One of the main objectives for which MDCF was established is to run and facilitate the Mother’s Day Classic fun run and walk event. This event has been held annually since 1998 for the purposes of raising money for the National Breast Cancer Foundation, raising community awareness and supporting and remembering those affected by breast cancer.

[4] The Mother’s Day Classic event was previously initiated and undertaken by Women in Super (WIS), an entity that also operates under the business name “Mother’s Day Classic” and which, despite having its own ABN, was initially established in collaboration with AIST. In order to provide assistance with its administrative processes, AIST employed those staff members of WIS who performed work related to the Mother’s Day Classic event. As such, the employment of these individuals was governed by the AIST Agreement.

[5] In its Application, MDCF stated that one of the key outcomes of its establishment in 2015 was to allow these individuals to be employed directly, rather than continuing to rely on AIST. While, upon its establishment, the employment of those AIST employees performing the work for WIS transferred to MDCF, due to the transfer of business provisions under s.313 of the Act, they remained covered by the AIST Agreement.
[6] MDCF submitted that the AIST Agreement is referable to the Banking, Finance and Insurance Award 2010 (BFI Award) including the classifications under that award, and was originally made between AIST, its employees and the Financial Services Union (FSU). In relation to AIST itself, MDCF stated that it operates as a not-for-profit organisation providing professional training and support for trustees and fund staff, in order to assist them in meeting challenges related to the management of superannuation funds and advancing the interests of fund members.

[7] MDCF further stated that AIST is the principal advocate and peak representative body for the profit-to-member superannuation sector, with a membership consisting of trustee directors and staff as well as corporate and public sector superannuation funds. MDCF submitted that AIST plays a key role in policy development and research, along with hosting the Conference of Major Superannuation Funds (CMSF) in addition to numerous other industry conferences and events.

[8] In relation to itself, MDCF stated that it is a not-for-profit organisation that operates within the social and community services sector and, notwithstanding its role in promoting equal participation of women within the superannuation and financial services industry, does not operate within the banking, finance or insurance sector. MDCF also stated that in addition to running and facilitating the Mother’s Day Classic fun run and walk event, it has a number of other objectives, including:

● providing professional development opportunities for WIS members and Mother’s Day Classic committee volunteers through voluntary committee and event work, as well as opportunities to develop personal and professional networks;

● fostering access to professional development for WIS members, including education and training;

● improving retirement outcomes for women through education and advocating policy change; and

● strengthening the WIS network through promotion of the Mother’s Day Classic.

The Application

[9] Following the Application being lodged on 7 April 2017, my chambers sent an email to Ms Alison Baker of Hall and Wilcox on 21 April 2017 enquiring as to the number of transferring employees and whether they were aware of the Application having been made. In a reply to this correspondence dated 24 April 2017, Ms Baker confirmed that there were eight transferring employees and they were notified verbally of the Application having been made by the Chief Executive Officer (CEO) of MDCF and WIS, Ms Sharon Morris. Further, on 24 April 2017, they were sent an email confirming the Application had been lodged with the Commission.

[10] The reasons for making the Application were set out by MDCF in its Form F40 and included was material addressing each of the criteria under s.318(3) of the Act. In particular, MDCF submitted that the AIST agreement should no longer cover it or the transferring employees on the following bases:

● none of the its employees, including the transferring employees, are members of the FSU;

● none of the roles performed by MDCF’s employees are appropriately classified under the BFI Award; and

● the provision of bonuses under the AIST Agreement is:

• reflective of payment models commonly used in professional and financial services industries; and



• is not aligned with the values and objectives of MDCF.

The relevant legislation

[11] Part 2-8 of the Act describes when a transfer of business occurs and s.312(1) of the Act provides for the transfer of enterprise agreements, certain modern awards and certain other instruments if there is a transfer of business from one employer to another employer.

[12] Section 311(1) contains the definition of transfer of business:

“(1) There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:

(a) the employment of an employee of the old employer has terminated;

(b) within 3 months after the termination, the employee becomes employed by the new employer;

(c) the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;

(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).”

[13] Sections 317 and 318 of the Act relevantly provide:

“317 FWC may make orders in relation to a transfer of business:

This Division provides for the FWC to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer.

318 Orders relating to instruments covering new employer and transferring employees

(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.”

Transferable Instrument

[14] The AIST Agreement was approved by the Commission on 23 January 2014 and is a transferable instrument pursuant to s.312(1) of the Act.

[15] Following the establishment of MDCF in 2015, the employment of those employees undertaking work for WIS related to the Mother’s Day Classic event transferred from AIST to MCDF, as did the AIST Agreement. On the material before me, I am satisfied there has been a transfer of business within the meaning of s.311(1) of the Act.

Who may apply for an order

[16] The Application has been made by MDCF, the new employer of the transferring employees. This meets the requirements of s.318(2) of the Act.

Matters that FWC must take into account

Section 318(3)(a): the views of the new employer or a person who is likely to be the new employer and the employees who would be affected by the order

[17] MDCF is the new employer of the transferring employees and supports the making of the orders sought. MDCF submitted that its work as a not-for-profit charitable organisation is not appropriately reflected by the AIST Agreement and as such, it is inappropriate that the transferring employee’s terms and conditions of employment continue to be governed by it. In this regard, Ms Sharon Morris, CEO of MDCF and WIS, provided a statutory declaration in support of the Application and asserted that in MDCF’s view the AIST Agreement is not particularly relevant or suited to it or its employees.

[18] Further, all of the transferring employees who would be affected by the order were briefed in relation to MDCF’s reasons for making the Application, the process involved and what it would mean for them. They were provided with information and given the opportunity to ask questions. The information included a template of the proposed contract of employment to be used and a personalised comparison table comparing current and proposed arrangements. In a subsequent secret ballot, all employees voted in favour of the Application.

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

[19] MDCF submitted that the transferring employees will not, on the whole, be disadvantaged by the order sought in the Application in relation to their terms and conditions of employment.

[20] In particular, MDCF submitted the transferring employees will be employed pursuant to individual contracts of employment and their employment will be governed by the Social, Community, Home Care and Disability Services Industry Award 2010 (SCHDI Award). MDCF operates in the social and community services sector.

[21] MDCF further submitted that as part of the consultation process with the transferring employees, it provided each person with a copy of the proposed template contract of employment. It was submitted that this proposed template contract set out the proposed terms and conditions which would apply to the employee’s employment, if they voted in favour of the Application being made, and included a personalised table which compared their individual entitlements under the current arrangements with their entitlements under the proposed arrangements.

[22] In preparing the proposed employment contracts, MDCF stated it reviewed all entitlements provided for under the transferring employees' current contracts and under the AIST Agreement. MDCF submitted the more beneficial terms and conditions provided to the transferring employees under the AIST Agreement and their existing contract of employment have either been:

● retained in the proposed contracts of employment for each employee; or

● offset with an alternative entitlement.

[23] MDCF advised that in cases where entitlements available under the AIST Agreement were not previously provided to the MDCF employees in practice, they have been removed from the proposed contracts on the basis that they are not relevant to the MDCF organisation and their exclusion will cause no disadvantage to the MDCF employees in practice.

[24] A detailed comparison of the differences between each transferring employee's current entitlements under the AIST Agreement, their existing contract of employment and each transferring employee's proposed entitlements as set out in their proposed employment contract, was set out in the respective contracts of employment and comparison tables provided by MDCF.

[25] MDCF noted the following key differences between the current entitlements of each transferring employee and their entitlements under the proposed arrangements:

● the superannuation contribution for each transferring employee will increase from 10.5% under the current arrangements to 11.5% under the proposed arrangements (and will remain at 2% above the minimum superannuation contribution rate until the minimum superannuation contribution rate reaches 12% in 2025);

● to compensate for the removal of an annual discretionary bonus (provided under the current arrangements), each transferring employee will receive under the proposed arrangements a guaranteed 4% increase to their base salary, back dated to 1 January 2017;

● allowances which are available under the AIST Agreement but were not relevant to the MDCF organisation and which have not been paid in practice will be removed under the proposed arrangements. MDCF submitted it will continue to provide its employees with a surface pro tablet to assist them in the flexible performance of their work; and

● under the proposed arrangements, the transferring employees may access up to 10 days' domestic violence leave per annum, which is not provided for under the AIST Agreement.

Consideration – Section 318(3)(b)

[26] Having considered all the material before me, I am satisfied that the transferring employees will not be disadvantaged by an order in relation to their terms and conditions of employment.

[27] Section 318(3)(c): if the order relates to an enterprise agreement—the nominal expiry date of the agreement

[28] The nominal expiry date for the AIST Agreement was 31 December 2016. Should an order be made, the transferring employees would be covered by the SCHDI Award.

[29] This is a neutral factor.

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

[30] MDCF submitted it is not the case that the AIST Agreement has had a negative impact on the productivity of its workplace; rather, it asserts there are aspects of the AIST Agreement that are not relevant to MDCF’s workplace or organisation and which do not align with its culture, including the classification of employees against the classifications under the BFI Award and the payment of discretionary bonuses.

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

[31] MDCF submitted it has not incurred significant economic disadvantage as a result of the AIST Agreement covering it and the transferring employees and nor is it anticipating or intending to make economic savings by the granting of the order. MDCF stated that this is due to most of the benefits provided under the AIST Agreement being carried over under the proposed new contracts of employment.

[32] It was therefore submitted by MDCF that section 318(3)(e) is not a relevant consideration for the Application I am required to determine.

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

[33] MDCF submitted that while it and AIST and are not-for-profit organisations and there are synergies in their work, primarily as a result of their respective involvement in the superannuation sector, the objectives and purposes of the organisations are not aligned.

[34] Instead, MDCF submitted that the SCHDI Award, being the industrial award covering the industry in which it operates and which covers all new employees of MDCF, is aligned with its organisation and provides for minimum terms and conditions of employment consistent with the organisation's objectives.

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

[35] MDCF submitted there is nothing to suggest the public interest is an issue to be considered in this matter.

Conclusion

[36] MDCF submitted it was evident from its supporting material that it has taken steps to ensure that the transferring employees currently employed by MDCF would not be disadvantaged if the order was granted and they became covered by the SCHDI Award together with common law contracts of employment.

[37] In further support of this, MDCF submitted that taking into account the factors outlined in section 318(3) of the Act, it is appropriate for the Commission to make the order sought in the Application, because:

● the nominal expiry date has passed;

● the transferring employees support the Application;

● the SCHDI Award provides employees with safety net entitlements; and

● the more favourable terms and conditions contained in the AIST Agreement are preserved in the proposed common law contracts for the transferring employees.

[38] Having considered each of the matters set out in s.318(3) of the Act, I am satisfied that most matters weigh towards the granting of the Application, with the balance being neutral considerations. I am therefore persuaded the order sought should be granted.

[39] An Order [PR593388] will be issued to this effect.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<Price code C, PR593387>