Nestlé Australia Ltd
[2018] FWC 1611
•19 MARCH 2018
| [2018] FWC 1611 |
| FAIR WORK COMMISSION |
| decision |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Nestlé Australia Ltd
(AG2018/583)
SKILLED Group Ltd Labour Hire ETU Collective Agreement 2015-2017
(ODN AG2015/6758) [AE416989]
| Electrical contracting industry | |
| Commissioner McKinnon | MELBOURNE, 19 MARCH 2018 |
Application that transferable instrument not cover transferring employees.
Introduction
Nestlé Australia Ltd (Nestlé) has applied for orders under section 318 of the Fair Work Act 2009 (the Act) dealing with instruments covering a new employer and transferring employees in the context of a transfer of business.
The application concerns electricians performing maintenance work for Programmed Industrial Maintenance Pty Ltd (Programmed) at Nestlé’s Campbellfield site. The electricians are currently covered by the Skilled Group Ltd Labour Hire ETU Collective Agreement 2015-2017[1] (Skilled Agreement), which covers Programmed following a prior transfer of business.
It is proposed that the employees transfer to Nestlé from Programmed but that the Skilled Agreement not cover Nestlé in respect of those current and any future transferring employees in connection with the insourcing of maintenance work from Programmed to Nestlé at Campbellfield.
Background
Nestlé outsources the majority of maintenance work at Campbellfield to Programmed.
Nestlé has decided to cease this outsourcing arrangement and directly employee a group of seven electricians currently performing maintenance work at Campbellfield (the Transferring Employees).[2]
The Transferring Employees have received offers of employment with Nestlé which are conditional on this application being granted. The intention is that on employment with Nestlé, the Transferring Employees will become covered by the Nestlé Australia Limited – (National Framework) Agreement 2015 – 2018[3] (Nestlé Agreement).
The relevant legislation
Part 2-8 of the Act describes when a transfer of business occurs and also provides for the transfer of enterprise agreements from one employer to another in a transfer of business.
Section 311(1) defines “transfer of business” and section 312 defines the types of “transferable instrument” that may transfer from one employer to another. Sections 317 and 318 empower the Commission to make orders in relation to a transfer of business, including orders that a transferable instrument will, or will not, cover the new employer in relation to the transferring employee.
In deciding whether to make orders of this kind, the Commission must take into account a range of factors set out in section 318(3) of the Act.
Consideration
The Skilled Agreement is an enterprise agreement approved by the Commission on 8 December 2015. It is a transferable instrument for the purposes of section 312(1)(a).
I am satisfied that Nestlé, who will be the new employer of the Transferring Employees if the application is granted, will be covered by the Skilled Agreement under section 313 if no contrary order is made.
In relation to the Transferring Employees, I am satisfied that in each case:
(i)their employment with Programmed will terminate upon the acceptance of the offer of employment from Nestlé;
(ii)they will be employed by Nestlé immediately thereafter, and within 3 months of the termination of their employment with Programmed;[4]
(iii)their work for Nestlé will be the same as the work they are currently performing for Programmed (the transferring work); and
(iv)there is a connection between Programmed and Nestlé in that Nestlé will shortly cease outsourcing its maintenance work to Programmed.
Accordingly, the Transferring Employees are each transferring employees in relation to a transfer of business for the purposes of section 311(2).
The views of the new employer and employees affected by the order
As the applicant in this matter, Nestlé is taken to support the application and has filed a statutory declaration in support of the application by Simon May, Human Resources Business Partner at Campbellfield.
According to Mr May, Nestlé has consulted with the Transferring Employees who each support the application[5]. Nestlé filed a statutory declaration from Mr Adam Ceccomancini, one of the Transferring Employees as well as signed extracts from the seven conditional offers of employment relating to the Transferring Employees. I am satisfied that the Transferring Employees support the application.
Nestlé has consulted the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) about the application as an employee organisation covered by the Skilled Agreement. The CEPU has advised the Commission it does not oppose the application.
The general support of each of the employer, employee organisation and Transferring Employees weighs in favour of the application.
Whether any employees would be disadvantaged by the order
The Skilled Agreement is over 130 pages and contains a number of benefits that will not apply if the application is granted, including travel allowance, tool allowance and income protection insurance, different classification structures and a lower wage rate for the relevant classification. If granted, the application is likely to reduce the take home pay of the Transferring Employees.
That must be weighed against the benefit for the Transferring Employees of converting to permanent employment with Nestlé, as well as an undertaking given by Nestlé to pay the Transferring Employees a weekly all-purpose Electrical A Grade Allowance for the life of the Nestlé Agreement.[6]
The Transferring Employees appear to place significant value in becoming permanent employees of Nestlé and have expressed a preference for this outcome over continuing as contractors with Programmed, despite the effect on their take home pay. The wages and conditions contained in the Nestle Agreement are well in excess of the legislative safety net.
While the Transferring Employees may be financially disadvantaged in relation to their terms and conditions of employment if the application is granted, it is tempered somewhat by the value to the Transferring Employees of permanent employment at the site. On balance, this factor does not weigh heavily against the application being granted.
The nominal expiry date of the agreement
The nominal expiry date of the Skilled Agreement is 1 July 2017. The nominal expiry date of the Nestlé Agreement is 24 November 2018. In other words, the Nestlé Agreement is currently in operation while the Skilled Agreement is not. This factor weighs marginally in favour of the application.
Whether the transferable instrument would have a negative impact on productivity at Nestlé
Nestlé submits that continuing to apply the Skilled Agreement is likely to have a negative impact on productivity at the workplace, because there will be two sets of different terms and conditions applying to employees working side by side. It says this will increase the regulatory and administrative burden on Nestlé, and may lead to disharmony in the workplace, including where annual wage increases are not applied in the same way to employees. In this respect, the Skilled Agreement and the Nestlé Agreement differ in a number of ways, including weekly hours; rest breaks and leave accruals, which could create an administrative burden on Nestlé, and lead to disenchantment in the work place.
While these arguments have merit, Nestlé also submits that it will not employ the Transferring Employees if it would result in two different sets of terms and conditions applying to its employees.
In light of that submission, I am not satisfied that the Skilled Agreement would have any relevant negative impact on productivity. If the application is not granted, the proposed transfer of business will not proceed. This factor is neutral in my consideration.
Whether Nestlé would incur significant economic disadvantage by coverage of the Skilled Agreement
Nestlé submits that this factor is a neutral consideration.
In the absence of any evidence to the contrary, I am not satisfied that Nestlé would incur significant economic disadvantage if the Skilled Agreement were to cover the Transferring Employees although there would undoubtedly be an additional cost to it by the application of the terms and conditions contained in the Skilled Agreement. As noted above, however, this is an unlikely outcome as there will be no transfer of business if the application is not granted. This factor is accordingly neutral in my consideration.
Degree of business synergy between the Skilled Agreement and other workplace instruments
There is limited business synergy between the Skilled Agreement, which is a largely generic industry agreement and the Nestlé Agreement which is tailored to three of Nestlé’s sites. This factor weighs in favour of the application.
The public interest
Nestlé submits that it would not be contrary to the public interest to make the order sought. It says that facilitating the insourcing arrangement will benefit its business, contribute to the economy and allow the Transferring Employees to be employed directly.
No other party made submissions on the public interest.
I am satisfied that it is not contrary to the public interest to make the order sought.
Conclusion
Having regard to each of the factors set out above, I am satisfied that an order should be made to the effect that the Skilled Agreement does not, and will not, cover Nestlé or the Transferring Employees in relation to the transferring work.
The order [PR601283] will be issued separately to this decision.
COMMISSIONER
[1] AE416989
[2] Adam Ceccomancini, Dusan Rebershak, Greg McHenry, John Cameron, Joseph Ellul, Stephen Tickle and Trent Cannon.
[3] AE419595
[4] Signed Employment Contracts attached to Form F40
[5] Statutory Deceleration of Simon May signed 5 December 2017; Signed Employment Contracts attached to Form F40
[6] See Nestlé Agreement, Clause 15.5 of Appendix 3
Printed by authority of the Commonwealth Government Printer
<AE416989 PR601282>
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