Multicap Limited
[2023] FWC 299
•6 FEBRUARY 2023
| [2023] FWC 299 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Multicap Limited
(AG2022/5551)
| COMMISSIONER SIMPSON | BRISBANE, 6 FEBRUARY 2023 |
Application for an order relating to instruments covering new employer and transferring employees
An application has been made by Multicap Limited (the Applicant) to the Fair Work Commission (the Commission) for an order pursuant to s.318 of the Fair Work Act 2009 (the FW Act).
The Applicant submitted that there is a transfer of business as defined by s.311(1)(a) of the FW Act, and the Applicant is a new employer as defined by s.311(1)(b) of the FW Act.
Orders Sought
The Applicant is seeking orders that:
(a)the transferable instrument, the Fraser Coast Family Network – Disability Support Workers Agreement 2006 (the FCFN Agreement) which covers Multicap Limited and the transferring employees because of section 313(1)(a) of the FW Act does not cover Multicap Limited and the transferring employees; and
(b)the Social, Community, Home Care and Disability Services Industry Award 2010 (SCHADS) covers Multicap Limited and the transferring employees.
Background
The FCFN Agreement is a zombie agreement. The FCFN Agreement was made under the Workplace Relations Act 1996. As a result of the passing of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022, the FCFN Agreement will naturally cease to exist on 7 December 2023.
The Applicant submitted that this application is made to ensure that employees are treated fairly and to ensure that their terms and conditions of employment, at all times, remain in line with the minimum standards set by the NES and Modern Award system.
The Applicant submits that by seeking to have SCHADS apply to the transferring employees this ensures that the employees are treated fairly and will give them the greatest consistency in their terms and conditions of employment.
Matters that must be taken into account by the Commission in making orders under s.318 of the FW Act are contained within subsection (3).
s318(3)(a)(i) - The views of the new employer or person who is likely to be the new employer
The Applicant submits that the orders should be made as the FCFN Agreement is a zombie agreement and does not contain all terms and conditions consistent with the NES.
The FCFN Agreement was made under legislation preceding the FW Act and the Applicant submits that this leads to potential for employees to be disadvantaged. Should the orders sought not be made it would lead to potential wage compliance issues due to having to apply the FCFN Agreement as well as ensure that the NES provisions are adhered to.
s318(3)(a)(ii) – the views of the employees who would be affected by the order
The Applicant submits that it consulted with the transferring employees commencing on or around 9 January 2023.The consultation occurred by way of face-to-face group meetings, individual meetings and FAQ documents to ensure that all transferring employees received all relevant information and had an opportunity to put forward their concerns or questions specific to their own particular circumstances.
Directions were issued on 9 January 2023 for the Applicant to serve a copy of the Application and any attachments on the transferring employees as well as a copy of the Directions. The Directions also provided that if any transferring employee wished to be heard on the matter, they were to file any submissions and/or evidence in relation to the application by 27 January 2023. The Applicant confirmed, by way of email on 19 January 2023, that it had complied with the Directions. To date, no material has been received from any transferring employees of the Applicant.
s318(3)(b) – whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
The Applicant submits transferring employees will not be disadvantaged by the orders sought.
Currently FCFN seek to incorporate SCHADS into the employment agreements. The Applicant submits there are few, if any, provisions of the FCFN Agreement that are more advantageous to the transferring employees than those contained within SCHADS.
s318(3)(c) – if the order is in relation to an enterprise agreement – the nominal expiry date of the agreement
The FCFN Agreement nominally expired in or around 2008.
s318(3)(d) – whether the transferrable instrument would have a negative impact on the productivity of the new employer’s workplace
The Applicant submits granting the orders sought would have a positive impact on productivity as employees will be overall happier and more productive with the knowledge that they are no longer having to work under a zombie agreement and will be afforded all the benefits and protections that the FW Act and SCHADS provides them.
In the absence of the orders being made, the Applicant submits it would negatively impact the productivity of the Applicant and prevent growth in the area that the transferring employees perform work as the Applicant will be constrained by the patterns of work contemplated over 15 years ago and will not be able to work effectively with the transferring employees covered by a zombie agreement and new employees covered by a different set of terms and conditions with different hours of work.
s318(3)(e) – whether the new employer would incur significant economic disadvantage as a result of the transferrable instrument covering the new employer
The Applicant submits they would incur significant economic disadvantage should the orders sought not be made. There are approximately 40-50 employees that will be transferring employees.
The Applicant submits that to set up the payroll system, including the pay rule interpretations, should the FCFN Agreement continue to apply to the transferring employees would cost the Applicant somewhere in the vicinity of $250,000.
The Applicant is a not for profit and this expense is not insignificant and would divert funds from the objects of the organisation.
The FCFN Agreement is a zombie agreement and, as such, will naturally cease to have effect on 7 December 2023. The Applicant is likely to become the new employer on or around 25 February 2023.
As a result, the Applicant would be facing a significant cost burden to have the FCFN Agreement apply for no more than 9-10 months and for a relatively small number of employees.
SCHADS is already set up in the payroll system. Making the orders sought would provide for efficiencies in human resources and payroll, would reduce the possibility of wage compliance issues that are a risk with zombie agreements and would be more economically viable for the Applicant without impacting the transferring employees in any practical way.
s318(3)(f) – the degree of business synergy between the transferable instrument and any workplace instrument that already covers the Applicant
The Applicant currently employs employees under SCHADS and an enterprise agreement.
The transferrable instrument contains provisions that provide for the regional area that the transferring employees perform work. The Applicant does not believe that it is appropriate to allow the FCFN Agreement to become a transferrable instrument that covers the transferring employees.
The main reason for seeking orders that SCHADS covers the transferring employees and not the Applicant’s current enterprise agreement is that the Applicant would have to use IFA’s for the transferring employees if orders were sought that the Applicant’s enterprise agreement covers the transferring employees.
s318(3)(g) – the public interest
The Applicant submits that it is in the public interest for the transferring employees to be afforded the terms and conditions set by the Modern Award structure and not be subjected to maintaining terms and conditions of a zombie agreement.
Statutory provisions
Section 318 of the Act relates to the application sought by the Applicant. Section 318(3) of the Act sets out those matters the Commission must have regard to in determining if the orders sought should be granted.
Section 318 provides as follows:
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.
I have reviewed the application documentation and the accompanying material. These documents outline the circumstances which have given rise to the application. Further, the submissions contained in the application address the relevant legislative requirements which are asserted to provide for a proper basis for the making of the orders sought.
I am satisfied that the requirements of s.318 of the FW Act have been met. Orders will be issued with this decision.
COMMISSIONER
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