One Qsuper Pty Ltd T/A Qsuper
[2021] FWC 6483
| [2021] FWC 6483 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
One Qsuper Pty Ltd T/A Qsuper
(AG2021/8207)
| Banking finance and insurance industry | |
| COMMISSIONER HUNT | BRISBANE, 1 december 2021 |
Application for an order relating to instruments covering new employer and transferring employees – The Sunsuper Group Enterprise Agreement 2019.
On 4 November 2021, One Qsuper Pty Ltd T/A Qsuper (OneQ, new employer) made an application to the Fair Work Commission (the Commission) for an order pursuant to s.318 of the Fair Work Act 2009 (the Act) that The Sunsuper Group Enterprise Agreement 2019[1] (Sunsuper Agreement) will not cover OneQ and transferring employees from an old employer. OneQ is the employing entity for employees engaged in the administration of the Qsuper Superannuation Fund (Qsuper Fund). OneQ is covered by the One Qsuper Enterprise Agreement 2018 (Qsuper Agreement).[2]
Background
This application is made in the context of a merger of the Qsuper Fund and the Sunsuper Superannuation Fund (Sunsuper Fund) administered by Precision Administration Services Pty Ltd and Sunsuper Pty Ltd (collectively, Sunsuper, the old employer).[3] The two funds are in the process of merging into an “as-yet unnamed fund” (Merged Fund). OneQ will be the employing entity for the Merged Fund.
The application made by OneQ contained a Form F40 – ‘Application for orders in relation to a transfer of business’ (the F40) and enclosed a witness statement of Ms Kellie Douglas, Head of People Performance, Sunsuper.
Ms Douglas explained in her statement that:
“18. The Merger will take effect through the Successor Funds Transfer (SFT) mechanism permitted by the Superannuation Industry (Supervision) Regulations 1994 (Cth), and dealt with in APRA Prudential Practice Guide SPG 226. Essentially, the Merged Fund will replace both Qsuper and Sunsuper, and members’ superannuation accounts will transfer to the Merged Fund.
19. On 26 October 2021, the Queensland Parliament passed legislation to amend the SSPS Act, allowing Qsuper to pursue the merger with Sunsuper while remaining the preferred fund for Queensland Government employees.
20. Completion of the Merger through SFT remains subject to regulatory and final board approvals of both funds. In this respect:
(a) The application for MySuper authorisations for the Merged Fund is currently being considered by APRA; and
(b) The respective Trustees of the Existing Funds are committed to completing the Merger. They have been clear on this publicly on many occasions and have invested a significant amount of work in making this happen.
21. The target date for SFT is 28 February 2022.”
The Australian Municipal, Administrative, Clerical and Services Union (ASU) and the Finance Sector Union of Australia (FSU) have been involved in this matter prior to the involvement of the Commission.
This application is concerned with persons in positions of employment with Sunsuper immediately below executive-level positions, whose role titles begin with the words “Head of…”, and who will be referred to throughout this decision as “Head(s)”. Heads are senior leaders responsible for a particular function, with multiple direct and indirect reports.
A number of Heads from Sunsuper have been offered employment with OneQ. In its F40, OneQ stated that incoming “Chiefs” (executive-level employees) from Sunsuper to the merged fund have been offered employment with OneQ, but that the Sunsuper Agreement does not cover Chiefs. OneQ submitted that the Qsuper Agreement covers neither Chiefs nor Heads. OneQ also stated that most other employees of Sunsuper will remain employed by Sunsuper “for the time being”.
Heads employed by OneQ are not presently covered by either an award or an enterprise agreement. OneQ submits that due to the transfer of business which is likely to occur, existing OneQ Heads who become employed by OneQ in the administration of the Merged Fund may become covered by the Sunsuper Agreement if orders are not made to the contrary under ss.318-319 of the Act. This is due to the effect of s.314 of the Act. I address this later in this decision. OneQ wishes to avoid its existing Heads becoming covered by the Sunsuper Agreement if the Heads take up employment administering the Merged Fund.
On 10 November 2021, I issued correspondence to OneQ which I directed be forwarded to employees who would be affected by the orders sought, namely, the Heads. I indicated that any employee who wished to provide their views as to the application had leave until 22 November 2021 to do so. I also invited the ASU and FSU to provide any views they had by that same date.
On 15 November 2021, I received correspondence from OneQ confirming that the email of 10 November 2021 had been forwarded to the Heads of both OneQ and Sunsuper who had been offered employment with the Merged Fund, being employees who would be affected by the orders sought.
No views were received by my Chambers from either the Heads or the ASU and FSU. Further below in my discussion of s.318(3)(a) of the Act, I have noted that employees have accepted roles with the Merged Fund on the understanding that the Sunsuper Agreement will not cover them, and that the FSU has indicated its support of the order sought.
I am satisfied that a reasonable opportunity has been afforded to affected employees and the unions to provide any further views they wished to provide.
Orders sought
OneQ seeks an order under s.318 of the Act that the Sunsuper Agreement does not, and will not, cover the new employer and transferring employees (Heads) from the old employer to the new employer.
In the alternative, if the Commission were not minded to grant the order sought under s.318, OneQ seeks an order under s.319 of the Act that the Sunsuper Agreement does not and will not cover new, non-transferring employees of the new employer (OneQ).
Transfer of business
Section 311 of the Act sets out when 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.”
OneQ submitted in its F40 that:
“10. There will be ‘transfers of business’ as defined in section 311 of the Fair Work Act 2009 (FWAct) in relation to Sunsuper Heads who become employed by OneQ, in order to carry out the same or substantially the same work for the Merged Fund, as they currently perform for Sunsuper. In relation to each of the elements of a ‘transfer of business’:
(a) on the terms set out in the offer letters, the employment of Sunsuper Heads will end before they become employed by OneQ (section 311(1)(a));
(b) that employment will end concurrently with the employment by OneQ commencing - thus, the two will be within 3 months of one another (section 311(1)(b));
(c) in many cases, current Heads will perform essentially the same work they do now for Sunsuper, but for the Merged Fund. Subject to necessary differences as to context, the work they do for the Merged Fund will be substantially the same as that which they perform now (Transferring Work) (section 311(1)(c)); and
(d) there will be a ‘connection’ between OneQ and the Sunsuper employing entities, because pursuant to the merger arrangements and ultimately an SFT Deed, OneQ will have the beneficial use of Sunsuper assets used in connection with the Transferring Work, and because ultimately OneQ and the existing entities will become related bodies corporate and thus associated entities (section 311(1)(d), (3), (6)).
11. For the above reasons, in the absence of any contrary order of the Commission, section 313 of the FW Act would have the effect that the Sunsuper EA would continue to cover the transferring Heads and begin to cover OneQ in relation to the EA Covered Employees.
12. Further, because some Heads already employed by OneQ in relation to QSuper may perform work that is the same or substantially the same as the Transferring Work, and are award and agreement free, section 314 of the FW Act would have the effect that the Sunsuper EA would begin to cover them.”
On the evidence before me, having regard to the merger of the two funds that is presently taking place, I am satisfied that there is likely to be a transfer of business within the meaning of ss.311(1)(a)-(d) of the Act if a Head from Sunsuper commences employment with OneQ in administering the Merged Fund.
I am satisfied that the work of a Head in the Merged Fund is transferring work within the meaning of s.311(1)(c) in the context of a Head from Sunsuper becoming a Head in the Merged Fund.
Pursuant to s.311(3) of the Act, there will be the requisite connection between two entities because of the merger of the Qsuper Fund and the Sunsuper Fund into the Merged Fund. OneQ, the new employer, will have the beneficial use of some or all of the assets of Sunsuper, the old employer, that relate to the work of any potential transferring employees. Section 311(6) is also met because OneQ and Sunsuper will continue as related entities.
I am satisfied that Sunsuper Heads who take up employment in the same or substantially the same role with OneQ in administering the Merged Fund will be transferring employees for the purpose of s.311(2) of the Act.
Transferable instrument
Section 312 of the Act details instruments that may transfer:
“312 Instruments that may transfer
Meaning of transferable instrument
(1) Each of the following is a transferable instrument:
(a) an enterprise agreement that has been approved by the FWC;
(b) a workplace determination;
(c) a named employer award.
Meaning of named employer award
(2) Each of the following is a named employer award:
(a) a modern award (including a modern enterprise award) that is expressed to cover one or more named employers;
(b) a modern enterprise award that is expressed to cover one or more specified classes of employers (other than a modern enterprise award that is expressed to relate to one or more enterprises as described in paragraph 168A(2)(b)).
Note: Paragraph 168A(2)(b) deals with employers that carry on similar business activities under the same franchise.”
The Sunsuper Agreement is an enterprise agreement. The Sunsuper Agreement is therefore a transferable instrument within the meaning of s.312(1)(a) of the Act.
Effect of transfer of business if orders not made
OneQ has referred to s.314 of the Act in its application. Section 314 of the Act provides as follows:
“314 New non‑transferring employees of new employer may be covered by transferable instrument
(1) If:
(a) a transferable instrument covers the new employer because of paragraph 313(1)(a); and
(b) after the transferable instrument starts to cover the new employer, the new employer employs a non‑transferring employee; and
(c) the non‑transferring employee performs the transferring work; and
(d) at the time the non‑transferring employee is employed, no other enterprise agreement or modern award covers the new employer and the non‑transferring employee in relation to that work;
then the transferable instrument covers the new employer and the non‑transferring employee in relation to that work.
(2) A non‑transferring employee of a new employer, in relation to a transfer of business, is an employee of the new employer who is not a transferring employee.
(3) This section has effect subject to any FWC order under subsection 319(1).”
OneQ has quite rightly contended that, if no order is made under s.318, when a non-transferring employee is employed to perform transferring work, that non-transferring employee would be covered by the Sunsuper Agreement. This is the reason why OneQ has sought an order under s.319 in the alternative, should an order under s.318 not be granted.
If I determine, which I have, to make an order that the Sunsuper Agreement does not cover the new employer, no non-transferring employee performing the transferring work will be covered by the Sunsuper Agreement because s.314(1) will not be met.
Relevant legislation
The application seeks for the Commission to make an order under s.318 of the Act, which is set out below:
“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.”
Who may apply for an order?
The application has been made by OneQ. I have earlier accepted that OneQ is likely to be the new employer of Sunsuper Heads who are transferring employees. The requirements of s.318(2) have therefore been met. The matters considered below are contained within the submissions provided by the employer in its F40 and in the statement of Ms Douglas.
Matters the Fair Work Commission must take into account (s.318(3))
Section 318(3)(a) - the views of the new employer and the employees who would be affected by the order
The new employer is OneQ, the applicant seeking an order under s.318 that the Sunsuper Agreement not cover the new employer and transferring employees. Naturally, it supports making the order sought.
As I earlier noted, I directed OneQ to forward correspondence to affected employees (Heads), inviting them to provide any views they had to my Chambers, if they wished to do so. I also invited any further views held by the ASU and FSU relevant to this application. No further views were received.
Annexed to the Statement of Ms Douglas, and marked KD-8, is an email from a representative of the FSU dated 1 November 2021, confirming that it supports the application for an order under s.318 of the Act. Ms Douglas states at paragraph 50 of her statement that on 1 November 2021, the ASU confirmed it had received OneQ’s advice that it intended to make this application, and that the relevant internal persons at the ASU had been notified.
Ms Douglas outlined her statement the consultation process that had been undertaken with transferring Heads prior to the making of this application. Ms Douglas also provided outlines of the questions asked by transferring Heads and the answered provided to them in respect of the arrangements for the transfer of employees. I am satisfied that the proposal not to apply the Sunsuper Agreement was quite unambiguously conveyed to the Heads.
In respect of this factor, OneQ made the following submissions:
“15. OneQ’s view is that the order sought should be made. The reasons below support this; it would further ensure that OneQ is not required to apply, and make administrative provision, an additional enterprise agreement that applies only to senior leaders.
16. QSuper and Sunsuper have consulted with Heads as to the terms on which they would be offered employment by OneQ to work as a Head in the Merged Fund. Heads have expressed interest in roles, and offers have been made and accepted, on this basis.
17. Throughout this process, the funds have been clear that they wish to employ all Heads under common law contracts not underpinned by the Sunsuper EA, and that they intend to make this application. Sunsuper has sought the views of the Heads who would be affected by the order and this group has had the opportunity to raise questions about the approach and subsequently they have all accepted employment contracts acknowledging that an application under s 318 would be made.
18. The Finance Sector Union of Australia, being the union with coverage of Sunsuper employees, has indicated that it supports the application.”
Having regard to the submissions provided above by OneQ, this consideration weighs in favour of making the orders sought. Transferring employees have accepted employment contracts on the understanding that they will not be covered by the Sunsuper Agreement, subject to the Commission’s determination of this application. I further note that the FSU has indicated support of the order sought.
Section 318(3)(b) - whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
OneQ submits that the transferring Heads, if not covered by the Sunsuper Agreement, are to be agreement and award-free. OneQ provided the following submissions in its F40:
“19. OneQ has offered employment to Heads under a standard template contract and letter which has been supplied to and entered into by employees of both OneQ and Sunsuper.
20. Overall, the terms of the contracts and the remuneration packages proposed by OneQ - all in excess of $200,000 (inc. superannuation) per annum – would not disadvantage Heads compared to the far lesser benefits to which they are entitled under the Sunsuper EA.
21. In relation to redundancy specifically, OneQ has grandfathered the Sunsuper EA entitlement in employees’ contracts.
22. As set out above, Sunsuper Heads who were offered employment with OneQ accepted the offer on this basis.
23. As such, the orders sought would not disadvantage any employee.”
Having regard to the above, I am satisfied that transferring employees would not be disadvantaged by the order sought. This consideration weighs in favour of making the order sought.
Section 318(3)(c) - if the order relates to an enterprise agreement—the nominal expiry date of the agreement
The Agreement was approved on 14 February 2020. The nominal expiry date of the Agreement is 30 June 2022. OneQ has provided the following submission in respect of this consideration:
“25. After [30 June 2022], QSuper and Sunsuper intend to make a new agreement to replace both the Sunsuper EA and the QSuper EA (which has the same nominal expiry date), and harmonise the terms and conditions of the two current workforces who will work together in the Merged Fund. It is not intended that this agreement will cover Heads. If the Sunsuper EA transfers, however, it will have continued life as a “zombie agreement” for Heads even after it is comprehensively replaced for all other employees.
This consideration weighs in favour of making the order sought.
Section 318(3)(d) - whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
OneQ made the following submission as to this factor:
“26. OneQ does not contend that the Sunsuper EA would have direct negative impacts on productivity. Its indirect importance in this respect is that it undermines the desire of the funds to create a unified Merged Fund, rather than one divided into “ex-QSuper” and “ex-Sunsuper”.”
While OneQ in its F40 did not make any strong contention as to this factor, Ms Douglas at paragraph 24(c) of her statement explained that having parallel arrangements for the Qsuper Agreement, the Sunsuper Agreement, and other common-law employment contracts:
“… will require significant effort to configure the relevant payroll systems and payroll rules… The Payroll team has advised that it is possible to move the smaller group of Heads once they transfer from [Sunsuper] to [OneQ] on the OneQ payroll from the SFT date. The OneQ payroll is already configured to apply Total Salary Package conditions similar to those offered to the Heads transferring from [Sunsuper]. The OneQ payroll system is not, however, configured to apply the terms of the Sunsuper EA. There are broader reasons why we are starting with transferring the smaller group of Heads from the SFT date to the OneQ payroll. This relates to dual system access limitations, until we are ready to bring our technology systems environments together following the merger.”
I consider this additional effort described above by Ms Douglas to be an avoidable and unnecessary burden on OneQ, particularly when a new enterprise agreement for the Merged Fund is already being discussed. This consideration weighs in favour of making the order sought.
Section 318(3)(e) - whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer
OneQ has advised that it does not rely on this factor. This consideration is neutral.
Section 318(3)(f) - the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer
OneQ has submitted that:
“28. OneQ is currently covered by the One QSuper Enterprise Agreement 2018 and the Banking, Finance and Industry Award 2020. The three instruments are in some respects different, but this factor is of limited relevance given that the instruments covering QSuper do not do so with respect to Heads.”
This consideration is neutral.
Section 318(3)(g) - the public interest
OneQ has submitted that:
“29. The making of the order sought would not have any implications other than those for OneQ and the small group of former Sunsuper Heads. There is no public interest in ensuring appropriate industrial coverage for such senior employees.”
I am satisfied that making the order would not be contrary to the public interest.
This consideration weighs in favour of making the order sought.
Conclusion
Having considered OneQ’s application and having taken into account each of the matters set out in s.318(3) of the Act, I am satisfied that it is appropriate to grant the orders sought by OneQ under s.318.
It is therefore not necessary to consider OneQ’s application in the alternative for an order under s.319.
In making the order sought under s.318, OneQ will not become covered by the Sunsuper Agreement by virtue of employing Heads from Sunsuper as transferring employees.
Having regard to s.318(4) of the Act, the order must not come into operation before the later of the time when the transferring employee becomes employed by the new employer or the date on which the order is made. This is reflected in the order.
COMMISSIONER
[1] [2020] FWCA 3917.
[2] [2018] FWCA 7668.
[3] [2020] FWCA 3917.
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