Nestle Australia Limited T/A Nestle

[2021] FWC 696

[2021] FWC 696

FAIR WORK COMMISSION

DECISION

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

Nestle Australia Limited T/A Nestle
(AG2020/3383)

DEPUTY PRESIDENT MANSINI MELBOURNE, 10 FEBRUARY 2021

Application for orders relating to transferrable instruments.

[1] Nestlé Australia Limited (Nestlé) has made an application seeking orders pursuant to s.318 of the Fair Work Act 2009 (Cth) (Act) in relation to the Programmed Industrial Maintenance Pty Ltd – Metals Labour Hire Agreement 2020-2023 1(Programmed Agreement).

[2] The orders sought would have the effect that the Programmed Agreement would not apply to five named employees of Programmed Industrial Maintenance Pty Ltd (Programmed), each of whom have been offered employment with Nestlé: Daniel Bereza, James McNeil, Jamie Kirkley, Joe Guglielmini and Lindsay Botha (Transferring Employees). The proposed orders would also have the effect that the Nestlé Australia Limited Victorian Confectionery Agreement 2018 - 2021 2 (Nestlé Agreement) will cover the Transferring Employees in their employment with Nestlé.

[3] Nestlé has made the Transferring Employees an offer of employment, conditional upon the Fair Work Commission (Commission) making the order that is sought by this application. The order sought is that the Programmed Agreement does not, or will not, cover Nestlé and the Transferring Employees upon their transfer to Nestlé from Programmed.

[4] For the reasons that follow, I am satisfied that the order should be made.

Context

[5] The maintenance function at Nestlé’s Campbellfield site is presently performed by a majority of Nestlé employees and a small number of labour hire workers including some mechanical fitters and trades assistants who are employed by Programmed. 3 Nestlé has decided to increase the proportion of directly employed maintenance workers, and as part of that insourcing process is looking to directly employ the Transferring Employees (4 mechanical fitters and one trades assistant), all of whom currently work at Nestlé’s Campbellfield site and are employed by Programmed.4

[6] Nestlé submits that if the Transferring Employees cease employment with Programmed and commence employment with Nestlé within three months after the termination of their employment with Programmed, as proposed, there will be a transfer of business within the meaning of s.311(1) of the Act. This is because:

(1) the work that the Transferring Employees will perform with Nestlé will be the same or similar to the work they are currently performing for Programmed; and

(2) there is a connection between Programmed and Nestlé, on account of the insourcing of maintenance work from Programmed to Nestlé.

[7] The Commission has the power to make certain orders if there is or is likely to be a transfer of business. Nestlé seeks an order under s.318(1) that the Programmed Agreement does not, or will not, cover Nestlé and the Transferring Employees in their employment with Nestlé. It seeks that their employment be covered by the Nestlé Agreement.

[8] The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU), being an employee organisation that is covered by the Programmed Agreement, or have the right to represent the industrial interests of the Transferring Employees at the workplace, have not expressed any views to the Commission in respect of the application. However, it is said by Ms Carolyn Gray, Human Resources Business Partner for Nestlé in her statutory declaration that the AMWU supports the application. 5

Statutory Framework

[9] It is not in dispute, and I am satisfied on the basis of the application and accompanying material, that the Commission has the power to make an order under s.318(1) of the Act. In the circumstances described, there is, or is likely to be a transfer of business from Programmed to Nestlé. The Programmed Agreement is a transferable instrument that would or would be likely to cover Nestlé and the Transferring Employees because of s.313(1)(a) of the Act. 6

[10] Nestlé has standing to make the application because, pursuant to s.318(2)(a) of the Act, it is likely to be the new employer of the Transferring Employees.

[11] In deciding whether to make an order, I must take into account the matters set out in s.318(3) of the Act. I consider these matters below.

The views of the new employer and affected employees – s.318(3)(a)

[12] The Commission must take into account the views of the new employer and the employees who would be affected by the order.

[13] As the applicant, Nestlé supports the making of the order. It submits that for its insourcing to be effective, employees must be engaged on equivalent terms and conditions of employment. It wishes to employ the Transferring Employees under the Nestlé Agreement and has consulted with them (and the AMWU) regarding its application to the Commission.

[14] The application is accompanied by a statutory declaration of two of the Transferring Employees, Mr Lindsay Botha and Mr Daniel Bereza. They support the making of the order and declare what they understand to be the implications of the order, including a change to some terms and conditions of their employment. Despite the differences, Mr Botha and Mr Bereza said that they still want to be employed by Nestlé because they respectively consider that the differences are not as important as their job security. 7

[15] The conditional offers of employment made by Nestlé to the Transferring Employees are attached to the application. The offers have been signed by each of the Transferring Employees and each acknowledges that they respectively:

(1) support the making of the order;

(2) understand that the effect of the order will mean that the terms and conditions of employment will be different and that they will no longer be entitled to some of the benefits they currently receive and that their take home pay may be less;

(3) have had an opportunity to obtain advice about what the order would mean for them; and

(4) agree to assist Nestlé with its application for the order.

[16] The views of Nestlé and the Transferring Employees weigh in favour of the making of the order.

Whether any employee will be disadvantaged by the order in relation to their terms and conditions of employment – s.318(3)(b)

[17] The Commission must consider whether any employee would be disadvantaged by the order in relation to their terms and conditions of employment.

[18] The Programmed Agreement contains certain benefits that will not apply to the Transferring Employees if the application is granted. This includes a travel allowance, a tool allowance and income protection insurance, as acknowledged by both Mr Botha and Mr Bereza in their statutory declarations. Furthermore, a comparison table contained in an information sheet provided to the Transferring Employees by Nestlé identifies current leave balances will be managed by Programmed and that sick leave with Nestlé will be prorated for 2020.

[19] However, a review of the Programmed Agreement reveals that where Programmed cannot provide work, employees may be required to remain at home while they await an allocation of duties. In these circumstances, any accrued rostered days off must be used and then, by agreement, accrued annual leave. Employees that remain on standby will be paid their weekly base wage, less $10.00 per day. 8

[20] The Programmed Agreement provides for relativity of terms and conditions at client sites. 9 The effect of this provision is that the Transferring Employees are currently in receipt of the wage rates under the Nestlé Agreement. Accordingly, their rate of pay will remain unchanged following the transfer.

[21] The information sheet provided also contains a comparison between other entitlements in the respective instruments. It specifies that the afternoon shift loading, the night shift loading and the overtime penalties are calculated at the same percentage rates in both instruments.

[22] Accordingly, on balance, if the order is made, it may result in a marginal reduction to the Transferring Employees’ take home pay.

[23] To be weighed against the potential reduction in take home pay is the value of permanent, secure employment with Nestlé. The Transferring Employees have expressed a preference for direct employment with Nestlé rather than continuing as contractors with Programmed. They do not appear to consider that they would be disadvantaged by the order sought in relation to their terms and conditions of employment. They wish to accept employment with Nestlé on the understanding that the Nestlé Agreement would apply to their employment and they would obtain job security. In any case, I note that the rate of pay and conditions under the Nestlé Agreement are well in excess of the legislative safety net.

[24] Having regard to the above matters, I am of the view that the Transferring Employees will not be disadvantaged if the order is made. This factor weighs in favour of the application being granted.

The nominal expiry date of the agreement – s.318(3)(c)

[25] The nominal expiry date of the Programmed Agreement is 30 June 2023, whereas the Nestlé Agreement nominally expires on 24 November 2021.

[26] The Nestlé Agreement remains in operation for at least nine months prior to its nominal expiry, albeit for a shorter duration than the Programmed Agreement. I consider this to be a neutral consideration.

Negative impact on productivity – s.318(3)(d)

[27] The Act requires the Commission to consider whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace.

[28] Nestlé contends that should the Programmed Agreement apply to the Transferring Employees in their employment with Nestlé, it would require Nestlé to maintain two distinct employment systems, which will give rise to operational inefficiencies. There are also administrative issues that would arise as a consequence of compliance with the Programmed Agreement for the Transferring Employees. The instruments differ in relation to hours of work and the entitlements detailed at paragraphs 15 to 17 of this decision. I therefore accept that the potential for differential treatment arises in such circumstances and this may negatively affect employee productivity.

[29] However, given Nestlé’s submission that the conditional employment will not proceed in the absence of the order sought, I cannot be satisfied that the Programmed Agreement would have any relevant negative impact upon productivity. Accordingly, this factor is neutral in my consideration.

Whether the new employer will incur significant economic disadvantage – s.318(3)(e)

[30] Nestlé submits this is a neutral consideration, and in absence of any contrary submissions, I consider it to be so.

The degree of business synergy – s.318(3)(f)

[31] The Commission is required to consider the degree of business synergy between the transferrable instrument and any workplace instrument that already covers the new employer.

[32] There is little business synergy between the Programmed Agreement and the Nestlé Agreement. The Programmed Agreement is an industry agreement specific to labour hire staff, and the Nestlé Agreement contains terms and conditions specific to its Victorian (Broadford and Campbellfield) sites. 10 This factor weighs in favour of making the order.

Public interest – s.318 (3)(g)

[33] Section 318(3)(g) requires the Commission to consider “the public interest”. It does not specify whether this consideration is concerned with the question of whether the application is in the public interest, or instead not contrary to the public interest.

[34] Nestlé submits that it would not be contrary to the public interest to make the order sought. It says that the direct employment of the Transferring Employees is consistent with the public interest. Further, that facilitating the insourcing of the Transferring Employees will benefit its business and therefore contribute to the economy. There were no other submissions concerning the public interest before me.

[35] The notion of public interest refers to matters that might affect the public as a whole. 11 Having regard to those matters, there are no public interest considerations that would militate against making the order sought. This weighs in favour of the order being made.

Conclusion

[36] Taking into account all of the above matters, I am satisfied that the order sought by Nestlé ought to be made.

[37] I will make an order that the Programmed Agreement will not cover Nestlé and the Transferring Employees in relation to their employment with Nestlé, and that the Nestlé Agreement will cover the Transferring Employees.

[38] For the purposes of s.318(4) of the Act, the order will come into operation in relation to each Transferring Employee on the date that the Transferring Employee becomes employed by Nestlé.

[39] An order giving effect to this decision will be issued separately in PR726852.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<PR726851>

 1   AE507274.

 2   AE504063.

 3 Statutory declaration of Carolyn Gray dated 9 November 2020 at [2].

 4 Statutory declaration of Carolyn Gray dated 9 November 2020 at [4].

 5 Statutory declaration of Carolyn Gray dated 9 November 2020 at [11].

 6   The Programmed Agreement is an enterprise agreement approved by the Commission on 28 February 2020.

 7   Statutory Declaration of Mr Lindsay Both dated 9 November 2020 and Statutory Declaration of Mr Bereza dated 9 November 2020.

 8   Clause 17 of the Programmed Agreement.

 9   Clause 34 of the Programmed Agreement.

 10   Clause 3.1 of the Programmed Agreement; Clause 3.2 of the Nestle Agreement.

 11   See Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (2005) 139 IR 34 at [23].