QS Cladding Pty Ltd T/A QS Cladding
[2024] FWC 686
•22 MARCH 2024
| [2024] FWC 686 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
QS Cladding Pty Ltd T/A QS Cladding
(AG2024/367)
| COMMISSIONER LEE | MELBOURNE, 22 MARCH 2024 |
Application for an order relating to instruments covering new employer and transferring employees.
An application has been made by QS Cladding Pty Ltd T/A QS Cladding (Applicant or QS Cladding) to the Fair Work Commission (Commission) for an order pursuant to s.318 of the Fair Work Act 2009 (the Act). The Applicant seeks an order in the following terms:
“1. Pursuant to section 318(1)(b) of the Fair Work Act 2009 (Cth) (Fair Work Act), the Quinton Soper Pty Ltd as Trustee for Quinton Soper Family Trust and the CFMEU (Victorian Construction and General Division) Subcontractors Cladding Installation Enterprise Agreement 2020 – 2023 (Enterprise Agreement) covers QS Cladding Pty Ltd (ABN 93 648 013 138) (QS Cladding Pty Ltd) and all transferring employees (as defined under section 311(2) of the Fair Work Act) from Quinton Soper Pty Ltd (ACN 155 319 798) as Trustee of the Quinton Soper Family Trust (ABN 62 126 848 954) who perform work under the Enterprise Agreement.
2. In accordance with section 318(4) of the Fair Work Act, this Order shall take effect in respect of each transferring employee from [21 November 2023], being the date of this Order, or the date on which the transferring employees became employed by QS Cladding Pty Ltd, whichever is the later date.
3. Any other orders the Fair Work Commission deems appropriate.”
The application consists of a Form F40 - Application for orders in relation to transfer of business.
On 7 March 2024, my Chambers wrote to the Applicant and their legal representative as follows:
“In deciding whether to make the order, the Commissioner must take into account the views of the employees who would be affected by the order. In order for the Commissioner to take into account the views of employees, the employer is directed to forward this correspondence to employees as soon as possible but by no later than 12pm tomorrow, Friday, 8 March 2024.
Commissioner Lee seeks conformation that the employer has complied with the steps outlined in this email. As such, the Commissioner seeks a statutory declaration indicating that this correspondence was forwarded to employees. Please provide the statutory declaration as soon as possible but by no later than close of business Tuesday, 12 March 2024.
To employees:
The employer has made an application for an order relating to instruments covering the new employer and transferring employees. The order sought would have the effect that the Quinton Soper Pty Ltd as Trustee for Quinton Soper Family Trust and the CFMEU (Victorian Construction and General Division) Subcontractors Cladding Installation Enterprise Agreement 2020 – 2023 (Enterprise Agreement) would cover QS Cladding Pty Ltd and all transferring employees who perform work under the Enterprise Agreement.
In deciding whether to make the order the Commissioner is required to take into account the views of employees who would be affected by the order pursuant to s.318 (3)(a)(ii) of the Act. If you have any views, please forward them to [email protected] as soon as possible but by no later than close of business Wednesday 13 March 2024.”
On 12 March 2024, the Director of the Applicant lodged a statutory declaration confirming that on 7 March 2024, he arranged for the email from the Fair Work Commission to be sent to all employees affected by the application.
No objections or views were received pursuant to the above email sent to the Applicant, which was forwarded to all affected employees. In the circumstances I have determined the matter on the papers without the need for a hearing.
Legislation
FAIR WORK ACT 2009 - SECT 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.
Background
The background of this matter as set out in the application is as follows:
“The Enterprise Agreement covers employees of Quinton Soper Pty Ltd (ACN 155 319 798) as the Trustee for the Quinton Soper Family Trust (ABN 62 126 848 954) (QSPL as the Trustee for the QSFT). QSPL as the Trustee for the QSFT was the old employing entity (Old Employer).
The Old Employer employed approximately 20 employees.
The majority of the Old Employer’s employees are covered by the Enterprise Agreement (Transferring Employees).
The Old Employer went into liquidation (and remains in liquidation). The reason why the Applicant undertook a corporate reorganisation was to balance its rate of growth with its working capital. The restructure was conducted with specialist financial advice. The acquiring entity was an existing entity that agreed to take over certain liabilities after negotiating with the liquidator, such as employee entitlements and assets under finance which were essential to running the business. The Applicant’s financial advisers continue to have a role in its day-to-day business, and report to the Directors on a month-by-month basis. The Applicant’s corporate group as a whole remains viable and continues to operate without restriction.”
The Enterprise Agreement has a nominal expiry date of 30 June 2023, the Agreement continues to operate until replaced or terminated.
Transferrable instrument
Section 311 of the Act sets out when a transfer of business occurs. On the evidence before me, as set out in the Form F40 and attachments, all of the elements of s.311(1) of the Act have been met and therefore, a transfer of business has occurred within the meaning of the Act.
Section 312 of the Act details instruments that may transfer:
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)).
The Enterprise Agreement was approved by the Commission on 22 July 2022 and pursuant to s.312(1) of the Act is a transferrable instrument
Who may apply for an order?
The application has been made by QS Cladding Pty Ltd T/A QS Cladding, the new employer. The requirement under s.318(2) has therefore been met.
Section 318(3) – Matters that the FWC must take into account
The grounds relied on by the Applicant which are set out in the application are outlined below.
Section 318(3)(a) – the views of the new employer and the employees who would be affected by the order.
Section 318(3)(a)(i) – the views of the new employer
In the application the Applicant submits that:
“As the Applicant, and for the reasons outlined below, the New Employer is supportive of the Enterprise Agreement covering the Transferring Employees. In fact, there is a significant advantage in having the Enterprise Agreement cover the Transferring Employees and the New Employer insofar as it will assist in the commercial operations of the Applicant in being able to enter into, and perform work at, certain construction sites as it is scheduled to do so in the near future.”
I have taken into account the views of the employer who would be affected by the order, including the effect of not granting the application. In the circumstances, this matter weighs in favour of making the order sought
Section 318(3)(a)(ii) – the views of the employees
In the application the Applicant submits that:
“Despite significant consultation and questioning, there has been little to no negative feedback received from Transferring Employees in relation to the transfer of business.”
My Chambers sent an email to the Applicant which was forwarded to employees on 7 March 2023. This email outlined that in deciding whether to make an order, I am required to take into account the views of employees who would be affected by the order pursuant to s.318 (3)(a)(ii) of the Act. I invited employees to provide any views by no later than 13 March 2024. To date, I have received no correspondence from any employees.
I have taken into account the views of the employees who would be affected by the order. The submissions made by the Applicant, alongside the fact that employees were invited to provide their views, and no views were provided to my Chambers by close of business 13 March 2024 weighs in favour of making 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
In the application the Applicant submits that:
“No. The Transferring Employees are employed under the same terms and conditions as pursuant to their employment with the Old Employer. Making the Orders sought would, in fact, be advantageous to Transferring Employees as it would ensure continuity of employment under these same terms and conditions under the Enterprise Agreement.”
I have taken into account whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment. I am satisfied that there will be no disadvantage to employees. In the circumstances, this matter 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 Enterprise Agreement has a nominal expiry date of 30 June 2023. While the agreement has passed its nominal expiry date this occurred relatively recently. This is a neutral consideration.
Section 318(3)(d) – whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
In the application the Applicant submits that:
“No. The New Employer is a part of the same corporate group as the Old Employer, and accordingly, there would be no adverse impact on the productivity of the New Employer’s workplace.”
I have taken into account whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace. I am satisfied that there would be no negative impact on the productivity of the new employer’s workplace. In the circumstances, this matter 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
In the application the Applicant submits that:
“No. The New Employer is a part of the same corporate group as the Old Employer, and accordingly, the New Employer would not incur significant economic disadvantage as a result of the Enterprise Agreement covering it and the Transferring Employees.”
I have taken into account whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer. I am satisfied that the employer would not incur significant economic disadvantage. In the circumstances, this matter weighs in favour of making the order sought.
Section 318(3)(f) – the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer
In the application the Applicant submits that:
“Given the New Employer is a new entity with no other enterprise agreement covering it, the Applicant submits that the prospective applicability of the Enterprise Agreement to the Transferring Employees will ensure a high degree of business synergy, as the employees can continue to be engaged in accordance with their usual terms and conditions and dispensing with the costly and labour intensive requirement for the Applicant to implement new terms and conditions under a modern award.”
I have taken into account the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer. I am satisfied that there is a degree of business synergy between the transferable instrument and any workplace instrument, likely a Modern Award or Awards that already covers the new employer. In the circumstances, this matter slightly in favour of making the order sought.
Section 318(3)(g) – the public interest
In the application the Applicant submits that:
“Having regard to the above, the Applicant submits that it would be in the public interest for the Fair Work Commission to grant the Orders sought.”
I have taken into account whether it is in the public interest to grant the order sought, including the opportunity afforded for the employees to transfer employment. I am satisfied it is in the public interest to make the order sought. In the circumstances, this matter weighs in favour of making the order sought.
Conclusion
Having considered the matters above, it is apparent that all matters either weigh towards the granting of the application sought or are neutral. Taking into account each of the matters set out in s.318(3) of the Act, I am satisfied that the order as sought should be granted. The order will be issued concurrently with this decision.
The order will come into operation in relation to each transferring employee upon the commencement of their employment with QS Cladding Pty Ltd T/A QS Cladding.
COMMISSIONER
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