Mind Australia

[2013] FWC 9832

[2013] FWC 9832

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.318—Transfer of instrument

Mind Australia
(AG2013/11886)

Health and welfare services
COMMISSIONER CRIBB	MELBOURNE, 13 DECEMBER 2013

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

[1] Mind Australia (the Applicant, new employer) has lodged an application under section 318(1) of the Fair Work Act 2009 (the Act) for an order that the transferring employees to the new employer are covered by the new employer’s existing industrial instrument - the Richmond Fellowship of Victoria Incorporated Union Collective Agreement 2006 1 (Mind Agreement). The transferring employees would therefore no longer be covered by the ARAFEMI Enterprise Agreement 2006 - 20092 (ARAFEMI Agreement) which currently applies. The Australian Services Union (ASU), which represents the transferring employees, is not opposed to the application.

[2] In the affidavit of Ms H Cobham, Manager Human Resources, Mind Australia, dated 10 December 2013, it was explained that a merger deed was executed between Mind Australia and ARAFEMI Victoria Inc (ARAFEMI) on 23 September 2013. Under the terms of the Merger Deed, amongst other things, Mind Australia agreed to assume ARAFEMI’s liabilities and assets. All of ARAFEMI’s employees were offered, and accepted, employment with Mind Australia and the transferring employees commenced employment with Mind Australia on 2 December 2013. It was stated that the work that the transferring employees will perform for Mind Australia (the new employer) is the same or substantially the same as the work that they performed for the old employer (ARAFEMI). In accordance with section 311(1) of the Act, a transfer of business has occurred.

[3] The transferring employees are covered by the ARAFEMI Agreement, being an enterprise agreement approved by a decision 3 of the Australian Industrial Relations Commission on 28 April 2006. An enterprise agreement is a transferable instrument by operation of the Act at section 312(1)(a).

[4] Section 313(1) provides that a transferable instrument (the ARAFEMI Agreement) that covered the old employer (ARAFEMI) and the transferring employees, immediately before the termination of the employment, will cover the new employer, Mind Australia. The operation of these sections therefore means that Mind Australia (the new employer) would be covered by the ARAFEMI Agreement in relation to the transferring employees.

1. Relevant legislation

[5] Section 313 of the Act provides:

“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 FWC order under subsection 318(1).”

[6] Section 318 of the Act provides:

“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) 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.”

2. Considerations

[7] Extensive documentation accompanied the application. It included a comprehensive affidavit from Ms Cobham together with the signed voting forms from the transferring employees where all but one employee agreed to the termination of the ARAFEMI Agreement and to being covered by the Mind Agreement. In addition, there was advice from the ASU that their members had agreed to be moved onto the Mind Agreement.

Section 318 (3)(a)(i): the views of the new employer

[8] The applicant, as the new employer, seeks that the transferable instrument (the ARAFEMI Agreement) not cover or apply to it. Several reasons were advanced including that all employees who perform the same work should be covered by the one agreement, the ARAFEMI Agreement provides for some classifications to be paid less than the equivalent classification under the Mind Agreement and that an additional payroll system would need to be set up for the transferring employees.

Section 318 (3)(a)(ii): the views of the employees

[9] As indicated above, the voting forms of the transferring employees indicate that all but one of the transferring employees agree to being covered by the Mind Agreement rather than the ARAFEMI Agreement. This is confirmed in writing by the ASU who represents the transferring employees.

Section 318(3)(b): any disadvantage to the employees

[10] The applicant provided a detailed comparison of the wages and entitlements under the two Agreements. The Mind Agreement is more beneficial than the ARAFEMI Agreement in respect of Rostered Days Off, parental leave, compassionate leave and other forms of leave. In terms of wages, the Mind Agreement provides the same or a higher salary for 32 transferring employees. The remaining 20 employees would receive a lower salary under the Mind Agreement. To this end, Mind Australia has agreed to maintain the existing salary of these employees. Mind Australia has also agreed to maintain other existing entitlements which are greater than the Mind Agreement provides.

Section 318(3)(c): the nominal expiry date of the transferable instrument

[11] The nominal expiry date of the ARAFEMI Agreement is 1 March 2009. The nominal expiry date of the Mind Agreement is 30 June 2009.

Section 318(3)(d): any negative impact on the employer's workplace

[12] It was submitted by Mind Australia that the transfer of the ARAFEMI Agreement would have a negative impact on productivity. It was stated that, if employees in the one workplace are on different terms and conditions, this will create tension and conflict. This diverts attention from the work that needs to be undertaken, thereby decreasing productivity.

Further, it was explained that the different entitlement to accrued days off (ADOs) between the two agreements would cause rostering problems. This is because different rosters are worked eg. 8 hour shifts versus 7.6 hour shifts resulting in different finishing times/handover issues etc.

Section 318(3)(e): any significant economic disadvantage to the employer

[13] It was stated by the applicant that there will be an economic cost if Mind Australia has to implement a different payroll system for the transferring employees. As Mind Australia is a not-for-profit organisation, additional administrative fees would result in less funds available for services to clients.

Section 318(3)(f): business synergy between the transferable instrument and existing agreement

[14] Mind Australia submitted that there is limited business synergy between the transferring ARAFEMI Agreement and the Mind Agreement. In addition to the ADO issue outlined above, it was stated that the Mind Agreement was specifically tailored to the needs of the organisation. However, the ARAFEMI Agreement was said to have a limited number of organisation specific clauses and that it relies on the pre-reform awards for the majority of the entitlements. This has resulted in the ARAFEMI Agreement containing different classification structures and different leave entitlements than the Mind Agreement.

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

[15] There is no evidence that the public interest is agitated in this matter.

Conclusion

[16] On balance, taking into account each of the matters stipulated in section 318(3) of the Act, I am satisfied that the order sought should be granted.

[17] A separate order 4 will issue. The order will come into operation, in accordance with section 318(4), namely, the later of :

• the time when the transferring employee becomes employed by the new employer, or



• the day on which the order is made.

 1 AC309187

 2   AG848940

 3   PR972086

 4   PR545719

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<Price code C, AG848940  PR545717 >