PRC Hire Pty Ltd
[2023] FWC 2607
•11 OCTOBER 2023
| [2023] FWC 2607 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
PRC Hire Pty Ltd
(AG2023/3598)
| Building and construction industry | |
| DEPUTY PRESIDENT BEAUMONT | PERTH, 11 OCTOBER 2023 |
Application for an order relating to instruments covering a new employer and transferring
employees
PRC Hire Pty Ltd (the Applicant) has applied under s 318 of the Fair Work Act 2009 (Cth) (the Act) for certain orders in respect of a transfer of business. The orders sought relate to employees who were previously employed by Vertigo Group Pty Ltd (Vertigo) and covered by the Vertigo Enterprise Agreement 2020 (Vertigo Agreement)[1] but are now employed by the Applicant. The Applicant and its employees are covered by the PRC Hire Pty Ltd and CFMEU (WA) Enterprise Agreement 2020-2024 (PRC Agreement).[2] The nominal expiry date of the PRC Agreement is 30 December 2024 in contrast to that of the Vertigo Agreement, which is 5 October 2024.
Vertigo and the Applicant are both associated entities within a business group (the Group).[3] The Group provides structural steel and precast concrete erection services throughout Western Australia.[4] The Applicant’s employees perform work in relation to the installation of structural steel and precast panels, in addition to the movement of mechanical items.[5] Scopes of work currently include work on METRONET rail construction sites and the construction of the Kwinana Waste to Energy Facility Project.[6] Employee classifications working on these particular projects include rigger, boilermaker, crane driver, labourer and dogmen.
Whilst the Applicant was established in November 2012, Vertigo was established in November 2019, as an internal labour hire company for the Group providing labour to the Applicant.[7] The Vertigo employees purportedly perform work on the same projects as the Applicant’s employees and are employed in the same classifications.[8]
Whilst most of the ‘blue collar’ employees within the Group are said to have been employed by the Applicant, there nevertheless remains a number who remain employed by Vertigo.[9] In or around November 2022, the Group decided to exclusively engage new employees via the Applicant[10] and recently brought forward the decision to transfer employees of Vertigo across to the Applicant.[11]
According to the Applicant, the reason for bringing forward the decision was threefold:
a) in response to changes proposed by the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (Cth) which seek to restrict the use of labour hire arrangements (including internal labour hire);
b) on review of the decision in Appeal by The Australian Worker’s Union,[12] the Vertigo Agreement may be challenged, and the risk of a dispute mitigated if the terms of the Vertigo Agreement are no longer relevant; and
c) to ensure that employees of the Group can receive the benefits of the PRC Agreement, which has more favourable terms and conditions than the Vertigo Agreement.
All seven Vertigo employees accepted employment with the Applicant (Transferring Employees) on 3 October 2023,[13] having resigned from their employment with Vertigo on 2 and 3 October 2023. As noted, the Transferring Employees are engaged in scopes of work for the Applicant that are the same, or substantially similar, to the work they performed with Vertigo.[14]
The Transferring Employees’ acceptance of employment with the Applicant was only forthcoming after the Applicant had consulted with the Transferring Employees on 26 September 2023 and 28 September 2023.[15] During the consultation process, the Transferring Employees were provided with a high-level summary document comparing the Vertigo Agreement with the PRC Agreement, in addition to copies of the Applicant’s Sickness and Injury Policy and Mutual Benefit Fund Policy.[16]
By signing their employment contracts, the Transferring Employees acknowledged they:
a) wanted to be covered by the PRC Agreement;
b) were satisfied with the terms and conditions of employment offered by the Applicant under the PRC Agreement, because those terms and conditions were no less beneficial than if offered under the Vertigo Agreement;
c) supported the application for orders under s 318 of the Act; and
d) would prefer to be employed under the terms and conditions offered by the PRC Agreement than the Vertigo Agreement.[17]
Turning to whether there has been a transfer of business, it is uncontroversial that the Transferring Employees:
a) ceased employment with Vertigo between 2 and 3 October 2023;[18]
b) commenced employment with the Applicant on 3 October 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 Vertigo;[19] and
d) are now employed by the Applicant, the Applicant and Vertigo 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).
In the circumstances, I am satisfied there has been a transfer of business as that phrase is understood by reference to s 311(1) of the Act.
The Applicant seeks the following orders under s 318(1) of the Act:
a) pursuant to s 318(1)(a), the Vertigo Agreement, as a transferrable instrument, does not, and will not, cover the Applicant and the Transferring Employees; and
b) pursuant to s 318(1)(b), the PRC Agreement does, or will, cover the Transferring Employees.
The application contained detailed grounds and submissions and was accompanied by a witness statement of Hamish David Clark, sole director and company secretary of the Applicant. Mr Clark said he was responsible for the establishment and oversight of policies and procedures, he supervised projects and managed client relationships, he managed industrial relations and workplace health and safety, and also managed the financial aspects of the business.[20]
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.
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.
I have reviewed the application documentation and the accompanying material including the witness statement of Mr Clark and its attachments. These documents outline the factual circumstances which have given rise to the application. Further, the submissions contained in the application address the relevant legislative requirements which are asserted to provide a proper basis for the making of the orders sought.
I am satisfied this circumstance is a transfer of business as understood by reference to s 311 and that the Vertigo 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 Vertigo Agreement would cover the Transferring Employees notwithstanding their employment with the Applicant.
It is evident that none of the Transferring Employees will be disadvantaged by the proposed orders in relation to their terms and conditions of employment. If I were to make the orders sought, the Transferring Employees will be covered by the PRC Agreement, hence establishing terms and conditions of employment until 30 December 2024, which have been shown to be advantageous compared to those the Transferring Employees currently enjoy.[21]
The Applicant referred to the negative impact on the productivity of its workplace, if the orders sought were not granted – noting that there was an administrative burden of having to apply one or more workplace instruments to a limited number of employees. The reason is far from compelling. It is open to surmise that the Group, of which the Applicant forms part of as does Vertigo, has administered different payroll systems for the two entities since October 2020 (the month in which I approved the Vertigo Agreement). Mr Clark is the sole director and company secretary of both the Applicant and Vertigo.[22]
The Applicant further submitted that having employees engaged to perform the same duties, while governed by two different workplace instruments, was likely to cause significant dissatisfaction and tension amongst employees, given employees under the PRC Agreement were entitled to advantageous terms and conditions of employment. In his evidence, Mr Clark referred to the Transferring Employee expressing dissatisfaction that the Applicant’s employees received better terms and conditions of employment, particularly regarding the Mutual Benefit Fund (see clause 19.4 of the PRC Agreement) and the Sickness and Injury Policy (see clause 31 of the PRC Agreement). Therefore, it appears that there is some substance to the submission made.
One of the reasons provided for the Applicant bringing forward its decision to transfer the Transferring Employees from Vertigo to the Applicant, was a potential challenge to the Vertigo Agreement. It is observed that in Appeal by The Australian Worker’s Union,[23] the Full Bench identified that the circumstances in which the Workforce Logistics Pty Ltd Enterprise Agreement 2022 was made, essentially involved a sham exercise and that persons involved in that exercise had been involved in the making of a number of other enterprise agreements in Western Australia, which had been approved by the Commission in recent years.[24] The Vertigo Agreement, which I approved in 2020, with Mr Mark Hudston as the ‘Employer’s Representative’ and Mr Stephen Biddle as an Employee Bargaining Representative, was one such named agreement – see Schedule 1 of Appeal by The Australian Worker’s Union. It is observed that Mr Clark was not named in Appeal by The Australian Worker’s Union, as having had involvement, or purportedly having had involvement, in any sham agreement making exercise.
Having considered all the circumstance and having had regard to the factors set out in s 318(3), I have concluded that it is appropriate and not contrary to the public interest to make Orders[25] sought under s 318(1)(a) and (b). In accordance with s 318(4), the Orders shall have effect from the date the Orders are made.
DEPUTY PRESIDENT
Matter determined on the papers.
[1] AE509175 (Vertigo Agreement).
[2] AE514678 (PRC Agreement).
[3] Witness Statement of Hamish David Clark, [5], annexure HC-1 (Clark Statement).
[4] Form F40 – Application for orders in relation to a transfer of business, [2.3(1)] (Application).
[5] Clark Statement (n 3) [15].
[6] Ibid [16].
[7] Ibid [9].
[8] Ibid [20].
[9] Application (n 4) [2.3(2)-(3)].
[10] Ibid [2.3(4)].
[11] Ibid [2.3(5)].
[12] [2023] FWCFB 157 (Appeal by AWU).
[13] Clark Statement (n 3) [27].
[14] Ibid [28].
[15] Ibid [33], [40].
[16] Ibid [34].
[17] Ibid [46].
[18] Ibid [43]; Fair Work Act 2009 (Cth) s 311(1).
[19] Clark Statement (n 3) [28]; Fair Work Act 2009 (Cth) s 311(1)(c).
[20] Clark Statement (n 3) [3].
[21] Ibid annexure HC-6. See also PRC Agreement (n 2) particularly Appendix A; Vertigo Agreement (n 1) particularly cl 6.1.
[22] Clark Statement (n 3) annexure HC-1.
[23] Appeal by AWU (n 12).
[24] Ibid [90].
[25] PR767014.
Printed by authority of the Commonwealth Government Printer
<AE509175 PR767013>
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