National Australia Bank T/A NAB
[2019] FWC 308
•18 JANUARY 2019
| [2019] FWC 308 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.318—Transfer of instrument
National Australia Bank T/A NAB
(AG2018/7052)
Banking finance and insurance industry | |
DEPUTY PRESIDENT CLANCY | MELBOURNE, 18 JANUARY 2019 |
Application for an order relating to instruments covering new employer and transferring employees.
[1] National Australia Bank Limited T/A NAB (NAB) has made an application to the Fair Work Commission (the Commission) pursuant to s.318 of the Fair Work Act 2009 (the Act) for an order in relation to a transfer of business.
[2] The transferring employees the subject of this application are:
• Mr Craig Mitchell;
• Mr Craig Walker;
• Mr Brian Barnes; and
• Ms Gail Anderson.
[3] The transferring employees were employed by IBM Australia Ltd (IBMA) and IBM Australia Client Services Pty Ltd, a wholly owned subsidiary of IBMA, (together, the IBM Entities), and were deployed to NAB to provide certain IT services that had previously been outsourced to IBMA pursuant to an Infrastructure Transformation Services Agreement. Under this arrangement, the transferring employees are covered by the NAB Enterprise Agreement 2006-2009 (NAB Agreement 2006-2009).
[4] NAB and the IBM Entities are currently in the process of finalising an Employee Transfer Deed, the purpose of which is to effect the transfer of the employment of the transferring employees to NAB.
[5] Each of the transferring employees was made an offer of employment with NAB to commence with effect from 19 December 2018. All four transferring employees accepted the offer, have commenced employment with NAB and have since been integrated into NAB’s existing Infrastructure, Cloud and Workplace team, where they work alongside current NAB Employees who are covered by the NAB Enterprise Agreement 2016 (NAB Agreement 2016).
[6] NAB seeks the following orders:
1) That the NAB Agreement 2006-2009 (or any agreement that may replace it) will not cover the transferring employees, in respect of their employment with NAB; and
2) That the NAB Agreement 2016 (or any agreement that may replace it) will cover the transferring employees during their employment with NAB (together, the Orders).
[7] NAB seeks for the Orders to operate with respect to each of the transferring employees on and from the date of the Orders.
[8] In addition to the Form F40 – Application for orders in relation to a transfer of business, NAB has filed a witness statement from its Senior Consultant – Employee Relations, Ms Fiona Mullins. Further, I conducted a telephone Mention on 16 January 2019. Ms Mullins attended, together with Mr A Cousner and Mr B Karambatsos from the Finance Sector Union (FSU).
The relevant legislation
[9] Part 2-8 of the Act describes when a transfer of business occurs and s.312(1) of the Act 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.
[10] Section 311(1) of the Act contains the definition of transfer of business:
“311 When does a transfer of business occur
Meanings of transfer of business, old employer, new employer and transferring work
(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).”
[11] Sections 317 and 318 of the Act relevantly provide:
“317 FWC may make orders in relation to a transfer of business
This Division provides for the FWC 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 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.”
Transferable Instrument
[12] The NAB Agreement 2006-2009is a transferable instrument pursuant to s.312(1)(a) of the Act. Having regard to the material before me and the advice of Ms Mullins during the telephone Mention, I am satisfied there has been a transfer of business within the meaning of s.311(1) of the Act. Specifically, I am satisfied:
• the employment of the transferring employees with the IBM Entities has terminated (s.311(1)(a));
• within three months after the termination, the transferring employees became employed by NAB (s.311(1)(b));
• the work the transferring employees perform for NAB is the same, or substantially the same, as the work they performed for the IBM Entities (s.311(1)(c)); and
• there is a connection between the IBM Entities and NAB, as described in s.311(5) of the Act, in that NAB has ceased outsourcing the work they perform to the IBM Entities (s.311(1)(d)).
[13] Section 313 of the Act provides that the NAB Agreement 2006-2009 covers the NAB and the transferring employees, subject to any order of the Commission under s.318(1) of the Act.
Who may apply for an order?
[14] The application has been made by NAB, the new employer. This meets the requirements of s.318(2) of the Act.
Matters that the FWC must take into account
Section 318(3)(a) the views of the new employer or a person who is likely to be the new employer and the employees who would be affected by the order
[15] NAB, the new employer, has made the application and supports the making of the Order sought.
[16] Ms Mullins, through her witness statement, said on 6 December 2018, she met with the transferring employees to discuss the terms of NAB’s offer of employment and that during this meeting, each of the transferring employees were provided with a written offer of employment as well as information regarding the various terms and conditions of employment at NAB. Additionally, Ms Mullins said that she discussed the terms of the NAB Agreement 2006-2009 and NAB Agreement 2016, and explained NAB’s intention to make an application to the Commission for orders for the NAB Agreement 2016 to apply to their employment at NAB. Moreover, all four transferring employees have accepted the offer of employment with NAB. These things having occurred, Ms Mullins submitted the transferring employees support the application.
[17] Having regard to these matters, I have formed the view that this factor weighs in favour of granting the Orders.
Section 318(3)(b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
[18] Ms Mullins said she undertook a comparison and analysis of the terms under the NAB Agreement 2006-2009 against the terms of the NAB Agreement 2016. A document containing the comparison was attached to her witness statement. Ms Mullins submitted the analysis demonstrates that the transferring employees will not be disadvantaged in relation to their terms and conditions of employment when employed by NAB under the NAB Agreement 2016.
[19] Under NAB’s offer of employment, Ms Mullins said that the remuneration will be based upon their remuneration as applied by the IBM Entities as a starting position with a 10% increase. As a result of this, Ms Mullins asserted that on commencement with NAB, the transferring employees will receive a higher fixed salary than they were receiving at IBMA Client Services. I have reviewed the remuneration under each offer of employment and am satisfied that the transferring employees will not be disadvantaged by the Order in relation to their remuneration.
[20] Ms Mullins said that while employed by the IBM Entities, the transferring employees may have been eligible to participate in a Growth Driven Profit Sharing Plan, whilst when employed by NAB, the transferring employees will be eligible to participate in the NAB Group Short Term Incentive Plan.
[21] Ms Mullins further submitted that the transferring employees will have more favourable overall terms and conditions of employment pursuant to the NAB Agreement 2016, as well as more favourable employment benefits overall under NAB policies and their contract of employment with NAB.
[22] I have noted that the comparison table demonstrates some entitlements are more beneficial under the NAB Agreement 2016 (such as overtime and carer’s leave pay) while many of the entitlements would result in no change or provide conditions of a similar nature.
[23] Based on the various statements of Ms Mullins and having considered all the material before me, I am on balance satisfied that the transferring employees will not be disadvantaged by the Orders in relation to their terms and conditions of employment. This factor weighs in favour of granting the Orders.
Section 318(3)(c) if the order relates to an enterprise agreement—the nominal expiry date of the agreement
[24] The nominal expiry date of the NAB Agreement 2006-2009 was 31 December 2010. This does not weigh against the granting of the Orders.
Section 318(3)(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
[25] Ms Mullins in her witness statement said that the transferring employees will be integrated into the existing NAB Infrastructure, Cloud and Workplace team and will work side by side with existing NAB Employees. She submitted that there are misalignments between the NAB Agreement 2006-2009 and the NAB Agreement 2016 which would undermine efforts by NAB to standardise employment conditions. Therefore, she submitted that the making of the Orders sought would have a positive impact on workplace productivity because existing and new employees performing the same work are on common terms and conditions.
[26] Of administering the provisions of the NAB Agreement 2006-2009 solely for the four transferring employees, Ms Mullins said that this will not be feasible for the following reasons:
• The NAB payroll system is set up to apply the terms and conditions of the NAB Agreement 2016 automatically to all employees and has safeguards in place to ensure compliance. If the NAB Agreement 2006-2009 continued to apply to the transferring employees, NAB would require its payroll team to manually enter this information;
• Management of the misalignment of classifications would require setting up the transferring employees in the payroll system separately, remunerating them in accordance with the old Group structure, and assessing them against the old performance management framework. This would be disproportionately costly in terms of both time and money;
• To establish a separate system for the transferring employees would increase the risk of non-compliance for the payroll team.
[27] I accept the concerns expressed by Ms Mullins have merit and have formed the view that this factor weighs in favour of granting the Orders.
Section 318(3)(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer
[28] Ms Mullins asserted that there would not be any ‘significant economic disadvantage’ as a result of the transferable instrument applying to NAB, but suggests that compliance with the transferable instrument may result in additional and avoidable administrative costs. She further submitted that making the Orders sought would eliminate any economic or administrative burden of managing the NAB Agreement 2006-2009.
[29] I consider this is a neutral factor in the circumstances of this application.
Section 318(3)(f) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer
[30] Ms Mullins submitted through her witness statement that although the two sets of terms and conditions may have some similarities, the terms of the NAB Agreement 2006-2009 are outdated and not in synergy with the current NAB Agreement 2016. She further contended that the group/classification structures, performance management framework and career paths under the two instruments are very different and do not work consistently together.
[31] I am persuaded by these submissions and have formed the view that this factor weighs in favour of granting the Orders.
Section 318(3)(g) the public interest
[32] Ms Mullins submitted that maintaining a cohesive, harmonious and productive workplace is a matter of public interest, particularly for a large financial institution like NAB, which has a large workforce in excess of 30,000 employees.
[33] Further, it is contended that it would be in the public interest for NAB’s business to operate effectively and efficiently, which cannot be achieved if the Orders sought are not made as it would result in NAB having to:
• Manage a small number of people on terms and conditions that differ from similar employees in the same workplace; and
• Incur avoidable costs in time and administration to establish and manage a separate payroll system for the transferring employees.
[34] Moreover, Ms Mullins said that the Orders sought are aligned with the interests of the transferring employees, who have a legitimate interest in protecting their terms and conditions of employment under the NAB Agreement 2006-2009. She submitted that their interest is satisfied by the fact that the NAB Agreement 2016 provides terms and conditions which are no less favourable overall and, in certain instances, more beneficial than those under the NAB Agreement 2006-2009. Furthermore, Ms Mullins contended that the long term interests of the transferring employees would likely be better served by treating them as an integrated agreement-covered cohort together with their NAB colleagues, which is likely to enhance their ability to participate in bargaining for new terms and conditions of employment at the expiration of the NAB Agreement 2016.
[35] Although not specifically required to do so, I sought comment from the FSU regarding the application. At the telephone Mention, the FSU stated that based on the various statements of Ms Mullins, it had no objections to the application.
[36] Having regard to the material before me, I am not of the view there are any public interest reasons not to make the Orders sought.
Conclusion
[37] Having considered each of the matters set out in s.318(3) of the Act, I am satisfied that the following orders should be made, with immediate effect (s.318(4)(b)):
1) The NAB Limited Enterprise Agreement 2006-2009 (or any agreement that may replace it) will not cover Mr Craig Mitchell, Mr Craig Walker, Mr Brian Barnes and Ms Gail Anderson in respect of their employment with National Australia Bank Limited T/A NAB; and
2) The NAB Enterprise Agreement 2016 (or any agreement that may replace it) will cover Mr Craig Mitchell, Mr Craig Walker, Mr Brian Barnes and Ms Gail Anderson during their employment with National Australia Bank Limited T/A NAB.
[38] An Order to this effect will be issued along with this decision.
DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
<PR703964>
0
0
0