Merri Community Health Services Limited T/A Merri Health
[2025] FWC 501
•21 FEBRUARY 2025
| [2025] FWC 501 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Merri Community Health Services Limited T/A Merri Health
(AG2025/260)
| Health and welfare services | |
| COMMISSIONER JOHNS | MELBOURNE, 21 FEBRUARY 2025 |
Application for orders in relation to transfer of business – application granted.
Background
This is an application pursuant to s.318 of the Fair Work Act 2009 (Cth) (FW Act) made by Merri Community Health Services Limited T/A Merri Health (Applicant) seeking orders from the Fair Work Commission (Commission) as follows:
“Pursuant to section 318(1)(a) and (b) of the Fair Work Act 2009 (the FW Act), the Fair Work Commission (Commission) orders that:
1. The BCH Dentists EA and the BCH Specialists MEA, transferable instruments that will likely cover Merri Community Health Services Limited (MH) pursuant to section 313 of the FW Act, will not cover MH or the relevant transferring Banyule Community Health (BCH) employees who perform or are likely to perform the transferring work for MH. Instead, the transferring BCH employees will be covered by the Merri Health – Audiologists Dieticians Pharmacists Psychologists and Dentists Enterprise Agreement 2023 – 2027 (MH 2 Agreement).
2. In accordance with section 318(4) of the FW Act, these orders take effect in respect of each transferring employee on and from the date that the Commission makes its order or from the date on which their employment with MH commences, whichever is later.”
The Applicant and Banyule Community Health (BCH) are both constitutional corporations that have decided to merge effective 1 March 2025. As part of the merger, BCH’s operations will be brought into the Applicant’s corporate structure, and BCH, as separate entity, will be wound up.
BCH employs various health professionals under nine enterprise agreements, but only two of those agreements are relevant to this application:
a)Banyule Community Health (General Dentists’) Enterprise Agreement 2018-2022 (BCH Dentists EA), which covers 5 Dentist employees at BCH, and
b)Psychologists, Dietitians, Audiologists and Pharmacists (Victorian Stand-Alone Community Health Services) Enterprise Agreement 2023-2026 (BCH Specialists MEA), which covers 13 BCH employees working in Dietetics or Psychology.
These 18 employees (collectively referred to as Transferring Employees) will be offered employment by the Applicant as part of the merger.
The Applicant submits that by virtue of s.313 of the FW Act, unless the sought orders are made, the BCH Dentists EA and/or BCH Specialists MEA will apply to any Transferring Employees who accept employment with the Applicant. However, the Applicant seeks an order that those two BCH agreements do not cover the Transferring Employees once they commence with the Applicant. Instead, the Applicant wants to apply its own enterprise agreement – Merri Health – Audiologists Dieticians Pharmacists Psychologists and Dentists Enterprise Agreement 2023 – 2027 (MH 2 Agreement) – to those employees.
The Applicant submits that the MH 2 Agreement already covers employees in equivalent roles at Merri Health. The Applicant submits that the MH Agreement overlaps with the coverage of BCH Dentists EA and BCH Specialists MEA, and that applying a single enterprise agreement will streamline employment terms, reduce administrative complexity, and ensure consistency.
The Applicant is seeking these orders before making offers of employment to the Transferring Employees, so that the Transferring Employees can make an informed decision about whether they wish to accept the offer.
On 10 February 2025, I issued Directions in furtherance of the matter.
On 12 February 2025, the Applicant provided a statutory declaration confirming a copy of my Directions, the Form F40 application and its accompanying documents were served on any affected employees and any relevant employee organisation.
There were no submissions received in opposition to the orders sought. Accordingly, the application was decided on the papers.
Legislative framework
Section 318 of the FW Act sets out 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) 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.”
Consideration
The Commission will now consider each of the matters it is required to consider under s.318(3) of the FW Act.
s.318(3)(a)(i) - the views of the new employer
The Applicant strongly prefers to have the MH 2 Agreement cover the Transferring Employees, instead of the BCH Dentists EA or BCH Specialists MEA. The Applicant submits that this will ensure consistency of terms and conditions for employees performing the same or similar work, thereby avoiding workplace tension and streamlining the integration of the two healthcare providers.
s.318(3)(a)(ii) - the view of the employees who would be affected by the Order
The Applicant submitted that between 10 January 2025 and 15 January 2025, it engaged with the Transferring Employees to explain the application before the Commission and its implications if the proposed orders were granted. This process included providing the Transferring Employees with tailored presentations and comparison documents as well as four informal consultation sessions.
Following the consultations, the Applicant says that it conducted an online ballot asking the Transferring Employees to indicate whether they supported or opposed the application. Of the 18 Transferring Employees, 10 participated in the ballot, with 7 voting in support, 3 opposing, and 3 not responding. The Applicant submits that the views of the three employees that did not respond should be considered by the Commission to be neutral. Additionally, 5 employees were on planned annual leave during this time; since then, 2 of those employees have expressed their support for the application. Based on these figures, the Applicant submits that the majority of Transferring Employees either support or do not oppose the application. Consequently, the Applicant contends that the views of the Transferring Employees weigh in favour of granting the order.
Moreover, the Applicant says that on 24 December 2024, it notified the Health Services Union, Professionals Australia and Medical Scientists Association of Victoria of its intention to make the application, inviting feedback and queries. The Applicant submits that no comments or concerns were received from these organisations.
s.318(3)(b) - whether any employees would be disadvantaged by the Order in relation to their terms and conditions of employment
The Applicant submitted that it conducted a comprehensive comparison of the BCH Dentists EA and BCH Specialists MEA against the MH 2 Agreement.
With regards to the BCH Dentists EA, the Applicant submits that the MH 2 Agreement is considerably more beneficial in comparison. Should the orders sought be made, the Applicant submits that the Transferring Employees covered by the BCH Dentists EA will, under the MH 2 Agreement:
a)receive around an 8.5% salary increase (there are no further salary increases provided for under the BCH Dentists EA),
b)be entitled to be engaged for a minimum of 3 hours if employed as a casual employee,
c)be entitled to 16 weeks of redundancy pay if the transferring employee has completed more than 9 years of service (rather than 12 weeks),
d)be entitled to accrue one day off each month,
e)be entitled to an additional payment if as a result of been recalled on duty the transferring employee would have less than 10 consecutive hours off duty,
f)be entitled to take long service leave (LSL) early on pro-rata basis from 9 years’ service and can take LSL at half pay,
g)be entitled to 182.4 hours of annual leave (as opposed to 4 weeks annual leave),
h)be entitled to between 121 hours and 26 minutes (1st year of service) and 190 hours (5th + years of service) of personal leave (rather than 12 days per year),
be entitled to 14 weeks of paid parental leave for primary and secondary carers (including adoption leave) where the transferring employee has completed at least 12 months service,
j)be entitled to be paid superannuation whilst on paid or unpaid parental leave,
k)have access to 3 days of natural disaster leave (no entitlement currently),
l)be entitled to up to 5 days of paid and up to 10 days unpaid cultural and ceremonial leave,
m)have access to an additional day of paid leave on Melbourne Cup Eve,
n)have access to 4 weeks of paid (48 weeks unpaid) gender transition support leave, and
o)have access to 2 days of paid community or charitable volunteering leave.
With regards to the BCH Specialists MEA, the Applicant submits that the Transferring Employees will, under the MH 2 Agreement:
a)Be entitled to a slightly higher rate of pay as of August 2025 (when the MH 2 Agreement rates next are next increased – their current rate of pay will be maintained until that time),
b)receive slightly more generous allowances,
c)be entitled to 14 weeks of paid parental leave for primary and secondary carers (including adoption leave) where the transferring employee has completed at least 12 months service, and
d)be entitled to up to 5 days of paid and up to 10 days unpaid cultural and ceremonial leave.
Moreover, the Applicant submits that where a specific term under the MH 2 Agreement is less favourable, it will contractually honour the more beneficial terms under the BCH Dentists EA and BCH Specialists MEA, including:
a)providing Transferring Employees who were covered by the BCH Specialist MEA with an entitlement to 190 hours of annual leave (cf. 182.4 hours under the MH 2 Agreement),
b)providing Transferring Employees who were covered by the BCH Specialist MEA with an entitlement to 5 days of severe weather event leave (cf. 3 days natural disaster leave under the MH 2 Agreement),
c)providing Transferring Employees who were covered by the BCH Specialist MEA with access to LSL on a pro rata basis from 8 years (cf. 9 years under the MH 2 Agreement), and
d)providing Transferring Employees who have completed more than 6 months but less than 12 months service with 12 weeks primary carers leave and 2 weeks secondary carers leave.
Overall, the Applicant contends that there is no net disadvantage to the Transferring Employees if the MH 2 Agreement applied to their employment with the Applicant. For this reason, the Applicant submits that this criteria weighs in favour of granting the proposed orders.
s.318(3)(c) - if the Order relates to an enterprise agreement—the nominal expiry date of the agreement
The BCH Dentists EA passed its nominal expiry date on 1 July 2022. The Applicant submits that while negotiations to replace the BCH Dentists EA are underway, it is unlikely that the replacement will be negotiated and approved before the merger. The Applicant submits that this criterion should be given weight as it will mean that, if the Commission does not make the orders sought, those Transferring Employees covered by the BCH Dentists EA will remain covered by an enterprise agreement that has passed its nominal expiry date.
The nominal expiry date of the BCH Specialists MEA is 31 August 2026. The Applicant submits that this should be given neutral weight in respect of the application.
s.318(3)(d) - whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
The Applicant submits that there will be a negative impact on the productivity of its workplace if the orders sought are not made. This is because:
a)systems will need to be maintained and refined to implement and ensure compliance with 3 different sets of terms and conditions applying to Transferring Employees and non-transferring employees performing the same roles (instead of 1),
b)managers and human resources staff will need to distinguish between arrangements in place for employees who do the same type of work, and
c)there will be associated operational burden, risk of non-compliance, cultural implications, additional administration, disengagement and confusion amongst employees.
The Applicant also relies on past Commission decisions that recognise the negative impact on productivity arising from different agreements for similar workers.[1]
s.318(3)(e) – economic disadvantage
The Applicant is a not-for-profit health service provider. The Applicant submits that it would prefer to direct resources and funds towards community health services as opposed to back office, administrative costs or investment in duplicate systems. However, the Applicant does not contend that any economic disadvantage it would suffer because of these administrative challenges would be significant.
s.318(3)(f) – degree of business synergy
Both the Applicant and BCH are not-for-profit community health care providers. The Applicant acknowledges that the relevant enterprise agreements are therefore applicable in similar operational contexts. The Applicant acknowledges that this factor may not strongly support the application. However, it points to the benefits that will flow to employees under the MH 2 Agreement and the support of the Transferring Employees to argue that this factor alone should not weigh against granting the application.
s.318(3)(g) - the public interest
The Applicant submits that there is strong public interest in granting the orders sought. In this regard, the Applicant points to the Commission’s decision in the matter of Silver Chain Group Limited [2018] FWC 972 where Deputy President Beaumont held that there was public interest in ensuring the not-for-profit organisation in that matter could operate efficiently without unnecessary complications in its employment arrangements.[2]
Conclusion
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 [PR784626].
COMMISSIONER
[1] Silver Chain Group Limited [2018] FWC 972 at [22]; and Calstores Pty Ltd T/A Calstores [2020] FWC 2884 at [18] – [21].
[2] Silver Chain Group Limited [2018] FWC 972 at [65].
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