Mr Michael Frazer & Eastern Australia Airlines Pty Limited

[2012] FWA 7228

[2012] FWA 7228

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees in agreements

Mr Michael Frazer & Eastern Australia Airlines Pty Limited
(AG2012/9973)

Airline operations
COMMISSIONER BULL	SYDNEY, 24 AUGUST 2012

Application in relation to a transfer of business - transferrable instrument - application that the transferrable instrument not cover transferring employee - Eastern Australia Pty Limited- transferring employee Mr Michael Frazer - Fair Work Act 2009 ss. 311, 317 and 318.

Introduction

[1] This decision concerns an application by Eastern Australia Airlines Pty Limited (Eastern) and Mr Michael Frazer (the Applicants) for an Order under s.318 of the Fair Work Act 2009 (the Act) which relates to instruments covering a new employer and transferring employees in the context of a transfer of business.

[2] The application relates to Mr Michael Frazer who is employed by Qantas Defence Services Pty Limited (‘QDS’) under the QDS Pty Limited (Aircraft Maintenance and Refurbishment) Agreement 2009 (QDS Agreement).

[3] For the purpose of s.311(6) of the Act, Eastern and QDS are associated entities or have a connection by virtue of their status as related bodies corporate, as that term is defined by s.50 of the Corporations Act 2001. Both QDS and Eastern are subsidiaries of Qantas Airways Limited.

Background

[4] QDS performs maintenance work on Australian Air Force aircraft in Richmond, New South Wales.

[5] In 2010, Mr Frazer voluntarily applied for, and was successful in obtaining a two year secondment position with Eastern in Tamworth. Mr Frazer commenced this secondment on 5 July 2010. While on secondment Mr Frazer worked under the terms and conditions of the Eastern Australia Airlines Pty Ltd Aircraft Maintenance Engineers & Trades Assistants Enterprise Agreement VII 2010-2013 (the Eastern Agreement).

[6] Mr Frazer’s secondment was due to expire on 4 July 2012, but has been extended for a short period whilst this application is resolved.

[7] For a variety of personal and lifestyle reasons, Mr Frazer now wishes to remain in Tamworth and work at Eastern on a permanent basis.

[8] To accommodate this, on 28 June 2012, Eastern made a conditional written offer of employment to Mr Frazer for the position of Aircraft Maintenance Engineer at the Eastern Tamworth heavy maintenance base. The condition precedent was that this application was approved by Fair Work Australia. The terms and conditions in the Eastern Agreement are generally less favourable to those contained in the QDS Agreement.

[9] Mr Frazer accepted the conditional offer of employment on 3 July 2012 and has submitted a witness statement in support of the joint application.

[10] The terms of the Order sought provide that in relation to Mr Frazer, where there is a transfer of business from QDS to Eastern within the meaning of s.311 of the Act the Eastern Agreement will cover his employment as opposed to the otherwise transferring QDS Agreement.

[11] Without the order as sought being granted, Mr Frazer would be covered by the QDS Agreement, should he be employed by Eastern.

The relevant legislation

[12] 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.

[13] 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).”

[14] Sections 317 and 318 of the Act 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) …;

(d) ….

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.

Applicants’ submissions

[15] The Applicants submit that the proposed orders should be made in order to facilitate the transfer of Mr Frazer and ensure the interest of all the Applicants are realised. The Applicants submit that despite the provisions of Part 2-8 of the Act, what is actually taking place is a voluntary transfer of employment as distinct from a transfer of business.

[16] Mr Frazer supports and consents to the orders being made and states that the transfer is in his interests. The decision to transfer between QDS and Eastern is a decision Mr Frazer has made voluntarily. It is submitted, on balance, that Mr Frazer will not be disadvantaged if the orders are made.

[17] It is further submitted that Eastern has an industrial agreement, the Eastern Agreement, in place that regulates the pay and conditions of Eastern employees, including Aircraft Maintenance Engineers, who perform a range of maintenance duties on QantasLink branded aircraft in Tamworth.

[18] The Applicants submit that the application of the QDS Agreement to the Eastern Agreement has the potential to cause significant economic disadvantage. In addition to the increase in wage levels that would result, it would also create additional administrative and financial complexity by requiring the application of different industrial instruments and work rules to employees doing the same or substantially similar work. The Applicants therefore submit that due to the difficulties and restrictions that the transfer instrument would create, the transfer would not be permitted to take place.

[19] The Applicants submit that there is very little business synergy between the QDS Agreement and the Eastern Agreement. It is submitted that as a regional airline, Eastern’s business (QantasLink) is substantially different to that of QDS which provides maintenance services to the Australian Air Force.

Conclusion

[20] I am satisfied that the QDS Agreement is a transferable instrument as described in s.312(1)(d) of the Act and this circumstance is a transfer of business within s.311 of the Act as commencing employment with Eastern may be regarded as the termination of employment with QDS.

[21] I have considered the all the factors set out in s 318(3). I am of the view that it is appropriate and not contrary to the public interest to make orders in relation to the transfer of Mr Frazers’ employment. I have given significant weight to the fact that Mr Frazer will undertake the new employment voluntarily at his request, and is aware of the terms and conditions of the Eastern Agreement and is himself an Applicant in this matter.

[22] I accept also that as QDS and Eastern operate in distinct sectors of the aviation industry, inefficiencies would be created if the QDS Agreement was to apply to Mr Frazer when employed by Eastern. The circumstances of the proposed transfer, as set out above, appear to constitute a transfer of business as defined by s.311 of the Act.

[23] For the reasons set out above an Order [PR528249] will issue that the QDS Agreement will not cover Mr Frazer during any period of his employment with Eastern.

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