Northern Star Mining Services Pty Limited

[2018] FWC 1239

[2018] FWC 1239

FAIR WORK COMMISSION

DECISION

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

Northern Star Mining Services Pty Limited
(AG2017/5881)

Mining industry
DEPUTY PRESIDENT BULL	PERTH, 14 MARCH 2018

Application for an order relating to transferrable instrument covering new employer and transferring employees. Outsourced operations, insourced by applicant.

[1] On 29 November 2017, Northern Star Mining Services Pty Ltd (the applicant) lodged an application in the Fair Work Commission (the Commission) for an order under s.318(1)(a) of the Fair Work Act 2009 (the Act) which relates to an instrument covering a new employer and transferring employees in the context of a transfer of business. The application is for an order that a transferrable instrument no longer covers the applicant and transferring employees.

Background

[2] Prior to 1 July 2017, another employer, Barminco Limited (Barminco) and their employees provided underground mining services to the applicant at operations of the East Kundana Joint Venture (EKJV). A number of Barminco’s employees were covered by the Barminco Enterprise Agreement 2014 (the Barminco Agreement). The EKJV is 51% owned by the applicant, the other joint venture partners are Rand Mining Limited and Tribune Resources Limited. The EKJV operates four underground gold mines; Raleigh, Rubicon, Hornet and Pegasus, 25km’s northwest of Kalgoorlie.

[3] On 30 June 2017, the applicant ceased to outsource the underground mining services to Barminco at the EKJV operations. From 1 July 2017 the applicant insourced the underground mining operations.

[4] From 1 July 2017, the applicant employed approximately 220 employees (the transferring employees) who were previously employed by Barminco Limited, of which 134 employees were covered by the Barminco Agreement.

[5] For the reasons discussed below the Barminco Agreement is a transferable instrument. Section 313 of the Act provides for the transferable instrument (the Barminco Agreement) to, in effect, transfer to the new employer (the applicant) and the employees who are transferred.

[6] Therefore, the applicant and 134 transferring employees are currently covered by the Barminco Agreement.

Transfer of business

[7] Section 311 of the Act provides the definitions of transfer of business, old employer, new employer and transferring work. It also sets out the circumstances in which a transfer of business occurs:

“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).

Meaning of transferring employee

(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.

Transfer of assets from old employer to new employer

(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:

(a) the old employer or an associated entity of the old employer; and

(b) the new employer or an associated entity of the new employer;

the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):

(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and

(d) that relate to, or are used in connection with, the transferring work.

Old employer outsources work to new employer

(4) There is a connection between the old employer and the new employer if the transferring work is performed by one or more transferring employees, as employees of the new employer, because the old employer, or an associated entity of the old employer, has outsourced the transferring work to the new employer or an associated entity of the new employer.

New employer ceases to outsource work to old employer

(5) There is a connection between the old employer and the new employer if:

(a) the transferring work had been performed by one or more transferring employees, as employees of the old employer, because the new employer, or an associated entity of the new employer, had outsourced the transferring work to the old employer or an associated entity of the old employer; and

(b) the transferring work is performed by those transferring employees, as employees of the new employer, because the new employer, or the associated entity of the new employer, has ceased to outsource the work to the old employer or the associated entity of the old employer.

New employer is associated entity of old employer

(6) There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employed by the new employer.”

[8] The applicant submits that there has been a transfer of business as defined at s.311(1) of the Act effective from 1 July 2017, from Barminco, (the old employer), to the applicant as the new employer.

[9] The employment of the transferring employees from the old employer Barminco, terminated and they became employed by the applicant within 3 months of their employment termination. The work of the transferring employees is stated to be the same or substantially the same as the work the transferring employees performed for Barminco at the EKJV operations.

[10] It is submitted that there is a connection between Barminco and the applicant as:

•  the applicant outsourced underground mining services at the EKJV operations to Barminco on 1 July 2016; and

•  the applicant ceased to outsource underground mining services at the EKJV operations to Barminco on 30 June 2017.

[11] Subsection 311(5) of the Act, (extracted above), in dealing with the meaning of a connection between the old employer and the new employer, in effect states that such a connection exists where the transferring work had been performed by one or more transferring employees, as employees of the old employer, (Barminco) because the new employer, (the applicant) had outsourced the transferring work to the old employer and the transferring work is now performed by the transferring employees, as employees of the applicant, because the applicant, has ceased to outsource the work.

[12] I accept that based on the circumstances as outlined by the applicant there has been a transfer of business in accordance with s.311 of the Act.

Transferrable instrument

[13] Subsection 312(1) of the Act defines the meaning of a transferable instrument to include an enterprise agreement that has been approved by the Commission. The Barminco Agreement was approved by the Commission on 19 November 2014, 1 as such, constitutes a transferable instrument for the purposes of the Act.

Orders sought

[14] Part 2-8 Transfer of Business of the Act, s.317 provides that the Commission may make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer. Subsection 318(2) provides that the Commission may make an order on application by the new employer.

[15] It is submitted by the applicant that they are a new employer and have standing to make the application.

[16] The application seeks an order that the Barminco Agreement no longer cover the applicant and the transferring employees.

[17] The applicant seeks the following orders:

“The Barminco Enterprise Agreement 2014 does not cover:

(i) the Applicant; and

(ii) the employees who transferred employment from Barminco Limited to the Applicant on or about 1 July 2017.”

[18] Subsection 318(1) of the Act sets out the orders the Commission may make:

“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.”

[19] Subsection 318(3) of the Act sets out the considerations that the Commission must take into account in deciding whether to make the order:

“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.”

[20] In its application, the applicant has addressed each of the matters the Commission is required to consider when issuing an order under s.318. Subsequent to the filing of the application two witness statements were provided by the applicant from:

•  Robert Parsons General Manager of the applicant dated 9 February 2018; and

•  Katheryn King Human Resource Advisor of the applicant, dated 12 February 2018.

[21] Both witness statements attached various documents in support of their respective statements.

Consideration

S.318(3)(a)(i) - Views of the new employer or the likely new employer

[22] The applicant, being the new employer, wishes to have all its employees performing underground mining services at the EKJV operations employed under the applicant’s contract of employment and piecework system rather than the Barminco Agreement.

[23] It is the applicant’s view that the transferring employees would be better off overall under the applicant’s contract of employment and piecework system. This statement is supported by documentation comparing the Barminco Agreement with the Piecework Manual of the applicant.

[24] It is put by the applicant that having the transferring employees covered by the Barminco Agreement would have a negative impact on productivity of the EKJV operations.

S.318(3)(a)(ii) - Views of the employees who would be affected by the order

[25] On 4 December 2017, the Barminco Agreement covered employees were provided with a letter outlining that an application to remove them from coverage of the Barminco Agreement had been made to the Commission and employees were provided with a copy of the application. The letter also invited employees to attend one of four consultation meetings to discuss the application.

[26] The letter advised employees that a vote would be held after the consultation meetings to allow employees to express their view on the Barminco Agreement no longer covering the affected employees.

[27] The applicant has advised that following consultation meetings where the consequences of the Barminco Agreement no longer applying to the transferring employees were explained, employees were advised of the voting process.

[28] A declaration from the host of the voting process declaring the result was attached to Mr Parsons’ witness statement.

[29] Of the 134 employees eligible to vote, 86 (64%) of employees actually voted. Of these 65% (56) voted to support the application and 35% (30) voted not to support the application.

[30] On the applicant’s figures, 48 employees or 36% of those eligible to vote, did not vote.

S.318(3)(b) - Whether any employee would be disadvantaged by the order in relation to their terms and conditions of employment

[31] The applicant does not have its own enterprise agreement and employees are covered by the Mining Industry Award 2010. Despite not having its own enterprise agreement the applicant submitted that employees would be better off financially under the applicant’s Piecework Manual and employment contract compared to the Barminco Agreement.

[32] The witness statement of Ms King stated that on her calculations all Barminco agreement employees receive a higher rate of pay under the Piecework Manual than they would be entitled to under the Barminco Agreement.

[33] Ms King concluded in her witness statement that she was of the belief that when considering all employee entitlements, no employee covered by the Barminco Agreement would be disadvantaged by the agreement no longer covering them.

S.318(3)(c) - The nominal expiry date of the agreement

[34] The Barminco Agreement was approved to operate for a period of 4 years and is still in term having a nominal expiry date of 25 November 2018. 2

S.318(3)(d)- Whether the Agreement would have a negative impact on the productivity on the new employer’s (the applicant) workplace

[35] The applicant is of the view that the combination of its contract of employment and piecework system is the most beneficial method of enhancing productivity at its Kalgoorlie operations rather than the Barminco Agreement. Mr Parsons’s states that the applicant’s profitability has improved significantly since it introduced the piecework system of remuneration to the Barminco Agreement employees at the EKJV operations on 1 July 2017.

[36] The Barminco Agreement is said by the applicant to be burdensome to administer; in particular in respect to the calculation of annual leave.

S.318(3)(e)- Whether the applicant would incur significant economic disadvantage as a result of the Agreement covering it

[37] Mr Parsons states that applying the Barminco Agreement to the transferring employees could have a significant effect on productivity and profitability of the EKJV as the system of piece rates under the Piecework Manual incentivises employees to be more productive whereas the Barminco Agreement simply pays a set wage. In the applicant’s view this is demonstrated by the production figures.

S.318(3)(f) – The degree of business synergy between the Agreement and any workplace instrument that already covers the new employer

[38] It is stated that the requirement to apply the Barminco Agreement would put the EKJV operations out of step with the rest of the applicant’s mining operations. As stated above, there is no enterprise agreement applying to the applicant; the Mining Industry Award 2010 has application.

[39] There is limited synergy between the Barminco Agreement and the Award.

S.318(3)(g)- The public interest

[40] The Full Bench decision in Kellogg Brown & Root Pty Ltd and others v Esso Australia Pty Ltd³ explained the public interest test in a matter dealing with the termination of a certified agreement:

“[23] The notion of public interest refers to matters that might affect the public as a whole such as the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards. An example of something in the last category may be a case in which there was no applicable award and the termination of the agreement would lead to an absence of award coverage for the employees. While the content of the notion of public interest cannot be precisely defined, it is distinct in nature from the interests of the parties. And although the public interest and the interests of the parties may be simultaneously affected, that fact does not lessen the distinction between them.”

[41] Applying the above test, it is not readily apparent that there are any public interest considerations in this application.

Conclusion

[42] I am satisfied that the Barminco Agreement is a transferable instrument as defined at s.312(1)(a) of the Act and that the circumstances described by the applicant are a transfer of business within the meaning of s.311 of the Act.

[43] I note that the transfer of business occurred 1 July 2017, resulting in the transferring employees continuing to be covered by the Barminco Agreement while employed by the applicant since this period. The submissions and evidence produced by the applicant in its application indicate that it is currently applying its Piecework Manual system of remuneration to the transferring employees. 4

[44] The Act requires the Commission to take into account the circumstances of the transmission of business under the various headings listed above and then to balance these considerations in reaching a conclusion.

[45] Having regard to the grounds and reasons stated in support of the application, including the vote of the employees concerned, I am satisfied that the requirements of the Act have been met and that the orders sought should be granted.

[46] For the reasons set out above, an order [PR600757] will issue that the Barminco Agreementwill cease to cover the applicant or any transferring employees now employed by Northern Star Mining Services Pty Ltd.

DEPUTY PRESIDENT

<AE411152  PR600756>

 1   AG2014/9532 [2014] FWCA 8117

 2   The approval decision states a nominal expiry date of 19 November 2018, however the Agreement is to operate for 4 years from the date of operation being 26 November 2014.

3 PR 955357

 4   Witness statement of Mr Parsons at 58(f) and 58(j)

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