Porters Glass & Aluminium (Qld) Pty Ltd

[2019] FWC 7758

[2019] FWC 7758

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.319 - Application for an order relating to instruments covering new employer and non-transferring employees

Porters Glass & Aluminium (Qld) Pty Ltd
(AG2019/4128)

COMMISSIONER HUNT BRISBANE, 13 NOVEMBER 2019

Application for an order relating to instruments covering new employer and non-transferring employees.

[1] On 12 February 2019 the Fair Work Commission (Commission) approved the Charles Porter & Sons Pty Ltd Enterprise Agreement 2018 (the Agreement). The Agreement has a nominal expiry date of 11 February 2023. It was entered into by Charles Porter & Sons Pty Ltd T/A Porters (Charles Porter).

[2] On 1 August 2019 a new entity, Porters Glass & Aluminium (Qld) Pty Ltd (Porters) commenced trading. Porters is a wholly-owned subsidiary of Charles Porter & Sons Pty Ltd T/A Porters.

[3] The Agreement sets out three different ‘classification streams’ of employees; retail/warehouse, manufacturing and clerical. All employees of Charles Porter covered by the Agreement who performed work in the retail/warehouse and manufacturing classification streams within the Agreement have had their employment transferred from Charles Porter to Porters. No employees within the clerical classification stream have had their employment transferred from Charles Porter to Porters.

[4] Section 311 of the Act sets out the circumstances in which a transfer of business occurs. It states:

“311 When does a transfer of business occur

(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).”

[5] Section 312 of the Act also indicates that a “transferable instrument” includes “an enterprise agreement that has been approved by the FWC”.

[6] Section 313 of the Act provides that “If a transferable instrument covered the old employer and a transferring employee immediately before the termination of the transferring employee’s employment with the old employer”, then:

“(a) the transferable instrument covers the new employer and the transferring employee in relation to the transferring work after the time (the transfer time ) the transferring employee becomes employed by the new employer”.

[7] I am satisfied that there was a transfer of business and that the employees of Charles Porter transferred to Porters under the terms of the Act. I am also satisfied that the Agreement is a transferable instrument and that it now covers Porters and the transferring employees. I shall hereafter refer to the Agreement as the Transferable Instrument.

Section 319 application and section 320 application

[8] Porters has applied for an order under s.319(1)(b) of the Fair Work Act 2009 (the Act) that the Transferable Instrument will cover any non-transferring employees of Porters who perform, or are likely to perform, transferring work in a role within the classifications provided by the Transferable Instrument.

[9] It is noted that while none of Charles Porter’s employees working within the Transferable Instrument’s clerical classification streams had their employment transferred to Porters, Porters has made a separate application under s.320 of the Act, which is also before me, to vary the Transferable Instrument such that all classifications contained in the Transferable Instrument are included within the transferring work and Porters may employ any new non-transferring employees in any of the classifications contained in the Transferable Instrument.

[10] On 12 November 2019 I held a telephone conference with Porters and its representative to discuss the present application and its separate application under s.320 of the Act. During the conference I indicated that my preliminary view was that it may not be necessary to vary the Transferable Instrument, and I might simply confirm in any decision dealing with Porters’ application pursuant to s.319(1)(b) of the Act that the transferring work includes the work performed in respect of the retail/warehouse, manufacturing and clerical classification streams within the Transferable Instrument, despite no clerical employees having transferred employment from Charles Porter to Porters.

[11] I am satisfied that the ‘transferring work’ includes all work performed in respect of the retail/warehouse, manufacturing and clerical classification streams within the Transferable Instrument. It would not make sense, in my view, to vary the Transferable Instrument as it expressly covers clerical work, and I do not believe that because clerical employees did not transfer to Porters that the Transferable Instrument has no work to do with respect to clerical employees. Accordingly, I do not consider it necessary to vary the Transferable Instrument pursuant to the s.320 application.

[12] Section 314 of the Act also provides for a transferable instrument to cover other employees in certain circumstances. It states:

“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).”

[13] I observe that the General Retail Industry Award 2010 and the Manufacturing and Associated Industries and Occupations Award 2010 (jointly; the Awards) are likely to cover Porters’ enterprise. Given the coverage of a modern award, s.314(1) does not operate to have the Transferable Instrument cover the non-transferring employees.

[14] However, as indicated, the provisions contained in s.314 are subject to s.319 of the Act, which allows for the Commission to make an order that a transferring instrument covers non-transferring employees.

[15] Section 319 of the Act states:

“319 Orders relating to instruments covering new employer and non-transferring employees

(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 non-transferring employee because of subsection 314(1) does not, or will not, cover the non-transferring employee;

(b) an order that a transferable instrument that covers, or is likely to cover, the new employer, because of a provision of this Part, covers, or will cover, a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer;

(c) an order that an enterprise agreement or a modern award that covers the new employer does not, or will not, cover a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer.

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 non-transferring employee who performs, or is likely to perform, the transferring work for the new employer;

(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 non-transferring employee before the later of the following:

(a) the time when the non-transferring employee starts to perform the transferring work for the new employer;

(b) the day on which the order is made.”

[16] Porters is entitled to bring the application, which relies upon the terms of s.319(1)(b) of the Act to, in effect, extend the coverage of the Transferable Instrument to future non-transferring employees.

[17] In dealing with the application, the Commission is required to have regard to each of the matters in s.319(3) in determining whether an order should be made. I now turn to deal with each of those considerations.

The views of the new employer – s.319(3)(a)(i)

[18] Porters submitted that it is a subsidiary of Charles Porter and granting the orders sought would provide consistent employment conditions within its enterprise and certainty for Porters in relation to any future enterprise bargaining processes.

The views of the new employees – s.319(3)(a)(ii)

[19] It is not possible to obtain the views of the new employees who will be affected by the Order because there are no non-transferring employees currently employed by Porters.

Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment – s.319(3)(b)

[20] If the order is not made, non-transferring employees would be covered by the Award. At approval time, the Transferable Instrument was compared against the Award and it was determined by the Commission that employees covered by the Transferable Instrument would be better off overall under the Transferable Instrument rather than the Award. 1 I am satisfied that the employees would not be disadvantaged in relation to their terms and conditions of employment by the making of an order.

Expiry date of the agreement – s.319(3)(c)

[21] The nominal expiry date of the Transferable Instrument is 11 February 2023.

Negative impact on Productivity – s.319(3)(d)

[22] Porters submitted that it is still a new business, having commenced trading on 1 August 2019, and that making the orders sought would enable it to employ all of its employees performing the transferring work on the same terms and conditions. Porters submitted that this would create a positive impact on its workforce early into Porters’ operations. Further, Porters submitted that the Transferable Instrument was negotiated with employees specifically to meet circumstances of the employees’ work, making the Transferable Instrument better-suited to the employees’ work than the Awards.

Economic disadvantage – s.319(3)(e)

[23] Porters noted that the terms and conditions set by the Transferable Instrument are greater than the Awards and will impose an economic burden on Porters as a result. However, Porters submitted that making the orders sought will increase the efficiency of its human resources, managerial and payroll departments and staff and will offset any economic disadvantage incurred as a result of meeting the higher labour costs provided by the Transferable Instrument compared against the Awards.

Degree of business synergy – s.319(3)(f)

[24] Porters submitted there are no other workplace instruments that apply to its business or its current employees. If Porters was to employ a non-transferring employee, that employee’s terms and conditions of employment would be governed by one of the Awards depending on the nature of the employee’s work. Porters submitted that there is little business synergy between its business and either of the Awards and, were the orders sought not granted, Porters may experience internal disharmony within its business as a result of applying three different instruments to across its business.

[25] I also note in respect of this criterion Porters’ earlier submissions regarding impact on productivity; that the Transferable Instrument was negotiated with employees in light of the circumstances of their work and the Transferable Instrument is better-suited to the work of the relevant employees than either of the Awards.

Public interest – s.319(3)(g)

[26] Porters submitted that it is within the public interest to provide consistent terms and conditions of employment for its employees and for persons that may become employees of Porters in the future.

Conclusion

[27] Having considered each of the matters in s.319(3) of the Act I am satisfied that it is appropriate for an order to be made. In accordance with s.319(4) of the Act, the order will not come into operation in relation to each non-transferring employee until the later of the following:

•  the time when the non-transferring employee starts to perform the transferring work for the new employer; or

•  the day on which the order is made.

[28] An order [PR714240] will be issued to this effect.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

<PR714241>

 1   [2019] FWCA 860.