MMG Dugald River Pty Ltd T/A MMG Dugald River
[2023] FWC 316
•6 FEBRUARY 2023
| [2023] FWC 316 |
| FAIR WORK COMMISSION |
| REASONS FOR DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
MMG Dugald River Pty Ltd T/A MMG Dugald River
(AG2022/4667)
Barminco Enterprise Agreement 2018
| Mining industry | |
| DEPUTY PRESIDENT ASBURY | BRISBANE, 6 FEBRUARY 2023 |
Application for an Order relating to instruments covering new employer and transferring employees.
Background
MMG Dugald River Pty Ltd T/A MMG Dugald River (MMG) applied to the Fair Work Commission (the Commission) pursuant to s. 318 of the Fair Work Act 2009 (the Act) for an Order relating to instruments covering new employer and transferring employees. MMG sought to transfer 11 employees (the transferring employees) from Barminco Limited (Barminco) to direct employment with MMG at the MMG Dugald River Mine from 15 November 2022.
Barminco is a specialist underground hard rock mining contractor engaged by MMG to conduct mine development at MMG sites. Barminco began development at the Dugald River Mine in 2012. MMG entered into a contract with Barminco on 1 July 2016 to commence production operations at the Mine, with the intention that MMG would take over the Run of Mine (ROM) operations from Barminco effective 14 November 2022 and offer direct employment to the 11 Barminco employees within the ROM operations. MMG stated that this business decision meant that the outsourcing of the transferring work, within the meaning of s. 311(5) of the Act, would thereby cease.
Following the transfer of employment, MMG stated that the transferring employees would be employed to perform the same, or substantially the same, work within the ROM operations at the Dugald River Mine. Further, it is noted by MMG that the 11 transferring employees had already accepted the offers of employment with MMG and their employment with Barminco would be terminated effective 14 November 2022.
The effect of the Order sought by MMG is that the Barminco Enterprise Agreement 2018 (Barminco Agreement), which covered the transferring employees, would not cover the transferring employees or MMG, and that the transferring employees would instead be covered by the Dugald River Enterprise Agreement 2022 (Dugald River Agreement). The Dugald River Agreement was approved by the Commission on 28 June 2022 and commenced operation from 5 July 2022.[1]
MMG filed submissions in support of the application. The application was accompanied by the witness statement of Mr Eddie Sarsero, the HR Superintendent – Australian Operations for MMG. Eight of the 11 transferring employees had also provided witness statements indicating their support for the application.
While the Barminco Agreement does not cover any employee organisation, the Dugald River Agreement covers the Australian Workers’ Union (AWU) as the AWU was a bargaining representative for that Agreement. The views of the AWU were sought in respect of the present application. Through correspondence, the AWU confirmed that it did not oppose the Order sought by MMG.
On 11 November 2022, I issued the Order as sought by MMG,[2] and these are my reasons for the decision.
Legislation
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.”
Consideration
Preliminary matters
On the basis of the material provided by MMG, I am satisfied that MMG is the new employer who is entitled to make the present application in accordance with s. 318(2)(a) of the Act, the transferring employees will perform the same, or substantially the same, work within the ROM operations at the Dugald River Mine, and there is a transfer of business from Barminco to MMG within the meaning of s. 311 of the Act.
Section 318(1) provides that the Commission has a discretion as to whether the Order sought by MMG should be made and in determining whether to exercise the discretion, I must consider each of the matters in s. 318(3) of the Act. I will now turn to consider these matters.
The views of the new employer and the employees who would be affected by the order
MMG, being the new employer, supported the application and proposed Order. MMG submitted that if the Order sought was not made, it would have a negative impact on the transferring employees and its business. In this respect, MMG submitted that the transferring employees would be better off under the Dugald River Agreement and having two enterprise agreements applying at the same Mine site for the same or substantially similar work would be administratively and operationally burdensome.
In relation to the views of the transferring employees, MMG stated that it was not aware of any union representative for the 11 transferring employees. However, MMG submitted the transferring employees were supportive of the Order sought, noting that they had already accepted offers of employment with MMG. With respect to some of the transferring employees who had not provided a witness statement, Mr Sarsero stated that due to the urgency of making the present application, those employees could not be contacted in time due to their roster swing.
For those employees who had provided a witness statement, they gave substantially similar evidence that they met with representative of MMG between 24 August 2022 and 27 September 2022 to discuss the offers of direct employment with MMG and were advised that they would continue to perform their duties at the Dugald River Mine as ROM Operators after the transfer. They were also provided with a summary of the terms and conditions contained in the Dugald River Agreement; a document comparing the terms of the Barminco Agreement with those of the Dugald River Agreement; and details of the proposed Order sought in the present application. The employees stated that they understood the effect of the Order on their ongoing employment and were supportive of the proposed Order.
I accept the uncontested evidence of MMG and the transferring employees and find that this factor weighs in favour of making the proposed Order.
Whether any employees would be disadvantaged by the order
MMG submitted that, with some limited instances such as long service leave entitlements, the transferring employees would not be disadvantaged if the order was made. MMG said that the transferring employees would be better off overall under the more beneficial terms of the Dugald River Agreement than they were under the terms of the Barminco Agreement. In particular, Mr Sarsero stated that the annualised salaries offered to the transferring employees under the Dugald River Agreement are higher than the salaries provided in the Barminco Agreement. The transferring employees similarly stated that their annualised average earnings at Barminco were less than the salary offered to them under the Dugald River Agreement.
I am satisfied that the transferring employees would not be disadvantaged if the proposed Order is made. This factor weighs in favour of making the Order.
The nominal expiry date of the agreement
The nominal expiry dates for the Barminco Agreement and Dugald River Agreement are 15 March 2023 and 28 June 2026 respectively. While the Barminco Agreement is yet to reach its nominal expiry date, MMG submitted that the Dugald River Agreement will provide greater certainty as to the terms and conditions of employment for the transferring employees for a longer period of time. This weighs in favour of making the order.
Whether the transferable instrument would have a negative impact on the productivity of the
new employer’s workplace
MMG submitted that there would be an administrative burden associated with applying two different industrial instruments. MMG stated that if the orders sought were not made, then this would create two sets of employment terms and conditions notwithstanding the fact that the transferring employees and any current or non-transferring employees would be performing the same, or substantially similar, work. MMG further stated that it is inefficient and unproductive for MMG to process different payroll interpretation and rostering rules, noting that MMG did not bargain for the Barminco Agreement.
In addition, the evidence of Mr Sarsero is that if the orders were not made, significant administrative and operations issues would arise because:
· The rostering arrangements in the Barminco Agreement are very different from the Dugald River Agreement. It is said that significant operational difficulty would arise in relation to the current fly-in-fly-out and on-site accommodation arrangements. These arrangements have been designed based on all employees working a similar roster, taking into account the fact that Cloncurry Airport can only hold a limited number of flights at any one time. Dugald River rosters have been designed around flight availability and issues with flight availability would arise if another roster pattern were required to be maintained; and
· The transferring employees are being integrated into the processing department which currently works on the Dugald River roster pattern. If the orders were not made, the integration of the transferring employees into the crew could not happen as MMG would be required to maintain a Barminco roster pattern.
I accept these submissions and that these matters weigh in favour of making the proposed Order.
Whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer
MMG submitted that an administrative burden would result if it were required to administer two different industrial instruments and two sets of employment conditions for employees performing the same work.
I accept that if the proposed order was not made, there was potential for MMG to suffer economic disadvantage as a result of administrative burden associated with the interpretation and application of two different enterprise agreements. Given the submissions of MMG on this issue are uncontested, I accept that this factor weighs in favour of the making the proposed Order.
The degree of business synergy between the transferable instrument and any workplace instrument that covers the new employer
MMG submitted that there are substantial operational differences, particularly with respect to roster cycles, between the Barminco Agreement and the Dugald River EA Agreement, which would create administrative burden if MMG were required to apply both industrial instruments. It is asserted by MMG that there is limited business synergy between the two Agreements.
Having regard to the operational differences between the Barminco Agreement and Dugald River Agreement and the potential for administrative burden if MMG were required to apply both instruments, I accept that there is limited synergy between the two Agreements and this factor weighs in favour of making the proposed order.
The public interest
MMG submitted that it was in the public interest for the proposed Order to be made. In this respect, MMG stated that the Dugald River Agreement contains terms and conditions that, on an overall basis, are more beneficial than the Barminco Agreement. To the extent that there is any disadvantage in relation to a specific term or condition of employment, MMG said that the terms of the Dugald River Agreement are not significantly less advantageous. Further, the Order sought by MMG is said to be consistent with the object in s. 309 of the Act as the interests of the transferring employees would be safeguarded and there was no overall disadvantage in the employment conditions for the transferring employees.
I accept these submissions and these matters weigh in favour of making the proposed Order.
Conclusion
Having considered the matters required by s. 318(3) of the FW Act, I am satisfied that the Order sought should be made and an Order was issued on 11 November 2022 as follows:
“A. Pursuant to s. 318(1) of the FW Act, the Fair Work Commission orders that:
(1) The Barminco Enterprise Agreement 2018 will not cover the Applicant and any of the employees (Transferring Employees) who:
(i) until 14 November 2022 are employed by Barminco Limited;
(ii) on 15 November 2022 will commence employment with the Applicant; and (iii) will perform the same, or substantially the same, work for the Applicant as they perform for Barminco Limited.
(2) The Dugald River Enterprise Agreement 2022 will cover the Transferring Employees.
B. In accordance with s. 318(4) of the FW Act, this Order shall come into operation on 15 November 2022, being the date on which the Transferring Employees become employed by the Applicant.”
DEPUTY PRESIDENT
[1] Application by MMG Dugald River Pty Ltd T/A MMG Dugald River [2022] FWCA 2126.
[2] PR747875.
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