Nindethana Seed Service Pty Ltd
[2023] FWC 637
•28 MARCH 2023
| [2023] FWC 637 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 – Application for an order relating to instruments covering new employer and transferring employees
Nindethana Seed Service Pty Ltd
(AG2023/645)
| Miscellaneous | |
| DEPUTY PRESIDENT BEAUMONT | PERTH, 28 MARCH 2023 |
Application for an order relating to instruments covering new employer and transferring employees
Issue and outcome
Nindethana Seed Service Pty Ltd (the Applicant) has applied under s 318 of the Fair Work Act 2009 (Cth) (the Act) for an order relating to the transfer of seven employees (the Transferring Employees) from Greening Australia Limited (Greening Australia) to its business. The Transferring Employees are currently covered by the Greening Australia LTD Enterprise Agreement 2020-2022 (Greening Agreement).[1]
Greening Australia is the parent company of the Applicant, SeedX Pty Ltd, Canopy Nature Based Solutions Pty Ltd, and various other subsidiaries (collectively, the Greening Group).[2] In 2009, Greening Group acquired the Applicant, but its operations have remained essentially unchanged and are partially administered from Greening Australia’s Western Australian head office in Perth.[3]
Greening Group is said to be Australia’s largest environmental enterprise and has been operating in landscape scale restoration works on a national basis since 1982.[4] Greening Group’s core business is landscape restoration.[5] It operates an integrated supply chain and, via the Applicant, a native seed business comprising of native seedbanks and seed production areas in WA and NSW.[6] It also offers biodiversity offsetting and maintains various landholdings including sandalwood plantations and other carbon aggregations.[7]
Greening Australia is said to operate in the landscape ecology and conversation industry, providing varied landscape scale restoration.[8] It assists clients with native seed services by supplying high quality native seeds which are majority used for environmental restoration projects.[9] Greening Australia’s ‘Western Sydney’ provides for a seed protection area and professional storage facility where it provides a large diversity of native species for its own restoration works and for its clients.[10] Both Greening Australia and the Applicant provide vegetation restoration services to Australian landscapes throughout Australia. The Applicant provides native seed services, as a subset of vegetation restoration services.[11]
The Transferring Employees were contracted to perform scopes of work on restoration programs and native seed service programs in accordance with the Greening Agreement.[12]
In 2022, the Greening Group revised and streamlined its 2030 goals to align with a strategic shift from delivering large-scale restoration programs to delivering market-based products and services that drive impact at scale. One strategy to achieve these goals included the 2025 Strategy Roadmap which includes becoming a market leader in native seed supply with a national network of seed collection partners and seed production infrastructure (Seed Strategy).[13]
On or around late October/early November 2022, Greening Australia decided that to progress the Seed Strategy, a number of its employees would be offered employment with the Applicant.[14] The Transferring Employees, the subject of this application, were offered such employment and accepted the same,[15] in order to continue their employment within the Greening Group.
On 30 January 2023, the Transferring Employees commenced employment with the Applicant and engaged in scopes of work the same, or substantially similar, to that of Greening Australia, including but not limited to specific scopes of work – e.g. restorative landscape scopes of work and native seed services.[16]
Subject to obtaining an order from the Commission, the Applicant and the Transferring Employees will automatically be subject to the Agreement, instead of the Gardening and Landscaping Services Award 2020 (Award).[17]
It is uncontroversial that there is to be a transfer of business as that phrase is understood by reference to s 311(1) of the Act. Briefly stated, the Transferring Employees:
a) ceased employment with Greening Australia on or around 30 January 2023;[18]
b) commenced employment with the Applicant on 30 January 2023, this being within the three months prescribed by s 311(1)(b);
c) perform the same or substantially the same work for the Applicant as they did for Greening Australia;[19] and
d) are employed by the Applicant, the Applicant and Greening Australia being associated entities for the purposes of s 50AAA of the Corporations Act 2001 (Cth) therefore giving rise to the requisite connection between the old employer and new employer referred to in s 311(1)(d) (see also s 311(6) of the Act).
The Applicant now seeks the following order under s 318 of the Act:
a) Pursuant to s 318(1)(a), that the Greening Agreement, as a transferrable instrument, does not cover the Applicant and any employees of the Applicant formerly employed by Greening Australia.
b) In accordance with s 318(4) of the Act, the Order comes into operation as follows:
i.for those Transferring Employees who have commenced employment with the Applicant, the date of this Order; and
ii.for those employees who have not yet commenced employment with the Applicant, on the day on which the Transferring Employees become employed by the Applicant.
In short, I have reviewed the application documentation and the accompanying material. The documents filed outline the factual circumstances which have given rise to the application. Further, the submissions contained in the application and the evidence provided by Mr Martin Elliott, Head of People and Strategy, address the relevant legislative requirements which are asserted to provide a proper basis for the making of the order sought.
I am satisfied this circumstance is a transfer of business and that the Greening Agreement is a transferable instrument. If the order under s 318(1)(a) was not made, then by virtue of s 313(1)(a), the Greening Agreement would cover the Transferring Employees notwithstanding their employment with the Applicant. I have considered all the factors set out in s 318(3) and have concluded that it is appropriate to make the Order[20] sought, and there are no public interest considerations that militate against doing so.
My detailed reasons for granting the Order follows.
Background
The application contained detailed grounds and submissions and, as noted, was accompanied by the witness statement of Mr Elliott,[21] together with several attachments. Mr Elliott acknowledged that his understanding of the consultation process with the Transferring Employees was aided by discussions he had held with Ms Lianne Elliffe, Chief People and Capability Officer, and Mr Peter Young, Executive Director Seed.[22] Shortly stated, the evidence filed contend that which is listed:
a) on 1 December 2022, Mr Young spoke with a number of the Transferring Employees as part of an initial discussion on the integration and proposed change to the Applicant including the Greening Agreement’s future operation. This discussion was general in nature regarding change of operations and staff movement and did speak to the Greening Agreement. During this discussion, no questions were asked by any of the Transferring Employees;
b) meetings were held with the Transferring Employees on 24 January and 3 February 2023, in which Ms Elliffe discussed the transition from Greening Agreement coverage to being placed on individual contracts, in addition to how performance-based pay would work;[23]
c) on 24 January 2023, the Applicant emailed the Transferring Employees and issued them with an offer of employment and an employment agreement (see Annexure ME-2 to the witness statement of Mr Elliott). The letter of offer invited the Transferring Employees to raise any questions via email or personally by requesting a meeting with [email protected]. In addition, it provided:
Section 318 Application
By accepting the attached offer of employment, you acknowledge and understand that:
·Nindethana is proposing to make a section 318 application to the Fair Work Commission (FWC) for orders that the Greening Australia Ltd Enterprise Agreement 2020-2022 [2020 FWCA 2276 (Agreement) do not cover and apply to Nindethana and you, in relation to your employment with Nindethana;
·Based on Nindethana’s analysis, your terms and conditions under the attached employment agreement are the same as that under the Agreement, or otherwise clauses have been grandfathered so that you are not worse off;
·By accepting this offer of employment with Nindethana, you agree with and undertake to support the Nindethana’s section 318 application to the FWC for the Agreement to not cover Nindethana and any employees formerly employed by Greening Australia; and
·If the section 318 order is granted, you will be underpinned by the Gardening and Landscaping Services Award 2020; and
d) on 6 February 2023, Ms Elliffe held a second MS Teams meeting with a Transferring Employee who raised questions on consultation requirements for change of work location and/or duties and also on pay rates due to subsequent promotion. These questions were answered at the time and resulted in certain amendments to that Transferring Employee’s contract of employment.[24]
Mr Elliott expressed that it was clear that the Transferring Employees who would be affected by the order, having had explained to them the effect of the order, are in support of the order being made, and want their employment to be covered by the terms and conditions contained in the Award and the grandfathered clauses.[25]
Mr Elliott observed that the Greening Agreement nominally expired on 29 May 2022.[26] He continued that the administrative burden of having to apply one or more workplace instruments to a limited number of employees, in perpetuity, is significant.[27]
Mr Elliott noted that if the Applicant decides to negotiate an enterprise agreement and the order has been granted then it will allow the Transferring Employees to engage in an equal
bargaining position with other employees of the Applicant.[28] Mr Elliott added that as the Agreement had already reached its nominal expiry date, there is uncertainty surrounding the terms and conditions of employment of the Transferring Employees.[29] Mr Elliott stated that if the order is granted, the Transferring Employees will have the benefit of established terms and conditions of employment.
Having received no objection to the application being determined on the papers, I proceeded to determine the matter by reference to, and with reliance upon, the grounds, submissions and other materials provided with the application.
Legislative framework
Section 317 of the Act enables the Commission to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer.
The discretion to make the order sought by the Applicant under s 318(1) of the Act will only be exercised after the factors set out in s 318(3) of the Act are considered.[30] These factors, which must be read having regard to the objects of the Part, are intended to enable the Commission to balance appropriately the protection of employees’ entitlements under certain instruments with the need for some flexibility to depart from the default rules about coverage of instruments following a transfer of business.[31]
Section 318 of the Act sets out the circumstances in which an order such as that sought by the Applicant may be made by the Commission:
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.
The exercise of the discretion given to the Commission in this regard is undertaken within the objects of this Part of the Act, which state as follows:
309 Object of this Part
The object of this Part is to provide a balance between:
(a) the protection of employees’ terms and conditions of employment under enterprise agreements, certain modern awards and certain other instruments; and
(b) the interests of employers in running their enterprises efficiently;
if there is a transfer of business from one employer to another employer.
Consideration
The Applicant is the new employer of the Transferring Employees for the purpose of s 318(2)(a) of the Act, and it therefore follows that the application is validly before the Commission.
As observed, I am satisfied this circumstance is a transfer of business as understood by reference to s 311 and that the Greening Agreement is a transferable instrument as described in s 312(1)(a). If the order under s 318(1)(a) was not made, then I consider by virtue of s 313(1)(a) the Greening Agreement would cover the Transferring Employees notwithstanding their employment with the Applicant.
Without recounting all the particulars set out in the application or in the material accompanying the application, I have had regard to the material filed and considering the matters in s 318(3) of the Act, I am satisfied that the Transferring Employees have been notified of the Applicant’s intention to make the application and have indicated their consent by verbal communication or otherwise by signing their employment contracts.[32]
In the witness statement of Mr Elliott, he states the following:
[43] If the Applicant decides to negotiate an enterprise agreement and the order has been granted then it will allow the Transferring Employees to engage in an equal bargaining position with other employees of the Applicant.
It is observed that with respect to the explanation provided to employees regarding the Applicant’s intention to apply for the order under s 318, the Transferring Employees were informed of the ‘Current EA Conditions’, ‘Current Common Law Conditions’ and ‘Proposed’, in addition to the matters referred to at paragraphs [31] to [38] of Mr Elliott’s witness statement.
However, it is unclear whether the Applicant informed the Transferring Employees that the move from the Greening Agreement to the Award may impact their bargaining position, as referred to by Mr Elliott. If the proposed order were granted, the Transferring Employees would no longer be able to avail themselves of ss 173(2)(aa) and 173(2A) of the Act – meaning, should the Transferring Employees wish to initiate bargaining (and the order sought is granted), they would be compelled to rely upon s 236 of the Act.
Having considered the matter a relevant consideration under ss 318(3)(a)(ii) and 318(3)(g), the Applicant proffered an undertaking, which is attached to this decision and marked Annexure A. I am satisfied that the undertaking addresses the issue raised.
I have concluded that it is appropriate to grant the order sought and that there are no public interest considerations that would militate against doing so. Consideration has extended to the Applicant’s views, the negative impact on productivity, the nominal expiry date of the Greening Agreement, and business synergy. I note that the Applicant concedes, appropriately in my view, that there will not be any significant economic or productivity disadvantage as a result of the transferring instrument. Nevertheless, the grant of the order would enable the Applicant’s organisation to operate with consistency of employment conditions for all employees.
It is further observed that each Transferring Employee will be entitled to the same terms and conditions under the Award (and grandfathered clauses in their contracts) as under the Agreement but noting that the Greening Agreement’s ATO Tax Offset Additional Leave provision will no longer apply. However, based on the evidence of Mr Elliott, the current Transferring Employees are ineligible for the benefit in any event.[33]
Conclusion
In accordance with section 318(4), the Order will come into effect as follows:
a) for those Transferring Employees who have commenced employment with the Applicant, the date of this Order; and
b) for those employees who have not yet commenced employment with the Applicant, on the day on which the Transferring Employees become employed by the Applicant.
DEPUTY PRESIDENT
Matter determined on the papers.
Annexure A
[1] [2020] FWCA 2276; AE507941.
[2] Witness Statement of Martin Elliott, [6] (Elliott Statement).
[3] Ibid [7].
[4] Ibid [8].
[5] Ibid.
[6] Ibid [9].
[7] Ibid.
[8] Ibid [10].
[9] Ibid [13].
[10] Ibid.
[11] Ibid [16].
[12] Ibid [14].
[13] Ibid [17].
[14] Ibid [20].
[15] Ibid [21].
[16] Ibid [24].
[17] MA000101.
[18] Fair Work Act 2009 (Cth) s 311(1); Elliott Statement (n 2) [24].
[19] Fair Work Act 2009 (Cth) s 311(1)(c).
[20] PR760351.
[21] Elliott Statement (n 2).
[22] Ibid [5].
[23] Ibid [32], [34].
[24] Ibid [35].
[25] Ibid [40].
[26] Ibid [41].
[27] Ibid [42].
[28] Ibid [43].
[29] Ibid [44].
[30] Explanatory Memorandum, Fair Work Bill 2008 (Cth) [1259].
[31] Ibid.
[32] Elliott Statement (n 2) [39], annexure ME-2.
[33] Ibid [50].
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