Medibank Health Solutions Telehealth Pty Ltd
[2011] FWA 5696
•26 SEPTEMBER 2011
[2011] FWA 5696 |
|
DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees in agreements
Medibank Health Solutions Telehealth Pty Ltd
(AG2011/1730)
VICE PRESIDENT WATSON | SYDNEY, 26 SEPTEMBER 2011 |
Application in relation to a transfer of business - transferrable instrument - application that the transferrable instrument not cover transferring employee - Fair Work Act 2009 - ss 318, 319.
Introduction
[1] This decision concerns an application by Medibank Health Solutions Telehealth Pty Ltd (Medibank) pursuant to s 222 of the Fair Work Act 2009 (the Act) and an alternate application pursuant to ss 318 and 319 of the Act.
[2] An application to terminate an enterprise agreement under s 222 of the Act was filed by Medibank on 16 July 2011. The application referred to the agreement to be terminated as the “transferable instrument that was previously known as the Australian Health Management Group Limited General Manager Collective Agreement August 2006.” The application concerns one employee, Mr Jason Keir.
[3] At the hearing of the matter on 29 July 2011, Ms Kitchener represented Medibank. Medibank submit that Mr Keir supports the application.
Background
[4] On 1 July 2011 a number of employees of Australian Health Management Group Pty Limited (AHM) were transferred together with the work they performed to Medibank. Mr Keir was among the employees transferred. While employed at AHM the AHMG General Managers Agreement 2006 (the AHM GM Agreement) applied to Mr Keir’s employment.
[5] Medibank submits that a transfer of business within the meaning of s 311 of the Act occurred at this time and that a new instrument in the terms of the AHM GM Agreement came into operation by virtue of the variation. The AHM GM Agreement has ongoing application to employees of AHM still employed in AHM’s business.
[6] The application seeks the termination of the alleged separate instrument or alternately a declaration that the AHM GM Agreement not apply to Medibank and Mr Keir or any new employee who would otherwise be covered by the AHM GM Agreement as a result of s 314(1) of the Act.
The relevant legislation
[7] Division 2 of Part 2-8 of the Act provides that rights and obligations under awards and agreements transfer from one employer to another employer in the case of a transfer of business and an employee transfers to the new business to perform work which has transferred to the new employer. Sections 313 and 314 provide:
“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
(b) while the transferable instrument covers the new employer and the transferring employee in relation to the transferring work, no other enterprise agreement or named employer award that covers the new employer at the transfer time covers the transferring employee in relation to that work.
(2) To avoid doubt, a transferable instrument that covers the new employer and a transferring employee under paragraph (1)(a) includes any individual flexibility arrangement that had effect as a term of the transferable instrument immediately before the termination of the transferring employee’s employment with the old employer.
(3) This section has effect subject to any FWA order under subsection 318(1).
314 New non-transferring employees of new employer may be covered by transferable instrument.
(1) If:
(a) a transferable instrument covers the new employer because of paragraph 313(1)(a); and
(b) after the transferable instrument starts to cover the new employer, the new employer employs a non-transferring employee; and
(c) the non-transferring employee performs the transferring work; and
(d) at the time the non-transferring employee is employed, no other enterprise agreement or modern award covers the new employer and the non-transferring employee in relation to that work;
then the transferable instrument covers the new employer and the non-transferring employee in relation to that work.
(2) A non-transferring employee of a new employer, in relation to a transfer of business, is an employee of the new employer who is not a transferring employee.
(3) This section has effect subject to any FWA order under subsection 319(1).”
[8] The application was initially made under s 222 of the Act which provides:
- “222 Application for FWA approval of a termination of an enterprise agreement
Application for approval
(1) If a termination of an enterprise agreement has been agreed to, a person covered by the agreement must apply to FWA for approval of the termination.
Material to accompany the application
(2) The application must be accompanied by any declarations that are required by the procedural rules to accompany the application.
When the application must be made
(3) The application must be made:
(a) within 14 days after the termination is agreed to; or
(b) if in all the circumstances FWA considers it fair to extend that period—within such further period as FWA allows.
[9] Section 223 of the Act provides:
“223 When FWA must approve a termination of an enterprise agreement
If an application for the approval of a termination of an enterprise agreement is made under section 222, FWA must approve the termination if:
(a) FWA is satisfied that each employer covered by the agreement complied with subsection 220(2) (which deals with giving employees a reasonable opportunity to decide etc.) in relation to the agreement; and
(b) FWA is satisfied that the termination was agreed to in accordance with whichever of subsection 221(1) or (2) applies (those subsections deal with agreement to the termination of different kinds of enterprise agreements by employee vote); and
(c) FWA is satisfied that there are no other reasonable grounds for believing that the employees have not agreed to the termination; and
(d) FWA considers that it is appropriate to approve the termination taking into account the views of the employee organisation or employee organisations (if any) covered by the agreement.”
[10] The alternative application was made under ss 318 and 319 of the Act. Part 2-8 of the Act describes when a transfer of business occurs and 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.
[11] Sections 317, 318 and 319 of the Act relevantly provide:
“317 FWA may make orders in relation to a transfer of business
This Division provides for FWA 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
Orders that FWA may make
(1) FWA 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) FWA 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 FWA must take into account
(3) In deciding whether to make the order, FWA 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.
319 Orders relating to instruments covering new employer and non-transferring employees
Orders that FWA may make
(1) FWA 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 non-transferring employee because of subsection 314(1) does not, or will not, cover the non-transferring employee;
(b) an order that a transferable instrument that covers, or is likely to cover, the new employer, because of a provision of this Part, covers, or will cover, a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer;
(c) an order that an enterprise agreement or a modern award that covers the new employer does not, or will not, cover a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer.
Note: Orders may be made under paragraphs (1)(b) and (c) in relation to a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer, whether or not the non-transferring employee became employed by the new employer before or after the transferable instrument referred to in paragraph (1)(b) started to cover the new employer.”
[12] The matters that the tribunal must take into account when making orders under s 319 of the Act are in the same terms as those matters to be taken into account in the making of an order under s 318 of the Act.
Submissions of the applicant
[13] Medibank submits that at the time Mr Keir transferred to Medibank the AHM GM Agreement became a separate and distinct instrument that only applies to Medibank and Mr Keir. It submits that in the circumstances the AHM GM Agreement is able to be terminated under s 222 of the Act while leaving the original instrument, applying to AHM and its ongoing employees.
[14] Medibank submits that a separate and distinct instrument is created by virtue of the transfer because it covers a separate employer and employee, subsequent variations by AHM should not affect Medibank, and variations made by Medibank should not affect AHM, it would have effectively been converted into a multi-employer agreement, and transferable instruments under the Workplace Relations Act1996 terminated after 12 months. No terms of the legislation or any authority was relied on for the proposition that a separate instrument is created as distinct from an expansion in the scope of the existing instrument.
[15] As noted above, in the alternative Medibank sought leave to amend its application to seek orders pursuant to s s318(1)(a) and s 319(1)(a) of the Act.
[16] In relation to the factors set out in ss 318(3) and 319(3) of the Act, Medibank submits that while the majority of terms in the transferable instrument reflect statutory entitlements, the notice period is in excess of that provided to other senior managers at Medibank and lengthy compared with standard notice periods for senior personnel generally. It submits that as Medibank begins to incorporate the transferred business into its own business it will become increasingly difficult to identify whether new non-transferring employees are engaged in transferring work related to AHM business. It submits the potential uncertainty which may arise in such circumstances may impact on the efficiency of Medibank’s operations.
[17] Medibank submits that it consulted with Mr Keir and obtained his consent to the proposed termination of the transferable instrument. It further submits that Mr Keir was informed that Medibank intended to seek alternative orders under ss 318 and 319 and Mr Keir confirmed he consented to the orders. It submits that Mr Keir and any non-transferring employee who would otherwise have been covered by the transferable instrument will be disadvantaged only in respect of the reduced notice period.
[18] Medibank further submits that the granting of the orders is not against the public interest and is consistent with the objects outlined in s 309 of the Act of providing a balance between the protection of an employee’s terms and conditions and the interest of running an effective operation.
Application under s222
[19] Medibank has not established that s 313 of the Act has the effect of creating a separate and distinct instrument to the AHM GM Agreement. Such a proposition does not in my view flow from the effect of the legislation or the terms of s 313. The arguments advanced in support for the contention are unconvincing. In my view the effect of s 313 is that the AHM GM Agreement has additional application following the transfer of business. It is inappropriate to terminate it when it has ongoing application to AHM’s business. Given its expanded application Medibank has not complied with the requirements for termination in any event.
Application under ss 318 and 319
[20] The alternative application, on the other hand, is clearly available to Medibank as ss 318 and 319 expressly provide that an order that an agreement not apply on transfer can be made in appropriate circumstances. There is no disadvantage to Mr Kier and he consents to the application. I consider that Medibank has established that it is desirable that Mr Kier be covered by Medibank’s terms and conditions, and not continue to be covered by AHM terms and conditions. I consider it desirable that any non-transferring employee who might otherwise be covered by the AHM GM Agreement as a result of s 314 also be covered by Medibanks’ terms and conditions. In this respect I have had regard to the factors in ss 318(3) and 319(3).
Conclusion
[21] For the reasons above I will make an order under ss 318 and 319 of the Act that the AHM GM Agreement not cover Medibank and Mr Kier or any non-transferring employee engaged by Medibank who would otherwise be covered by the AHM GM Agreement as a result of s 314(1). An order to that effect is issued with this decision.
VICE PRESIDENT WATSON
Appearances:
B Kitchener for Medibank Health Solutions Telehealth Pty Ltd
Hearing details:
2011.
Sydney
July, 29
Final written submissions:
Submissions on behalf of Medibank Health Solutions Telehealth Pty Ltd, 12 August 2011
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