RACV Regional Services Pty Ltd
[2024] FWC 1638
•21 JUNE 2024
| [2024] FWC 1638 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.319 - Application for an order relating to instruments covering new employer and non-transferring employees
RACV Regional Services Pty Ltd
(AG2024/2064)
| COMMISSIONER PERICA | MELBOURNE, 21 JUNE 2024 |
Application for an order relating to instruments covering new employer and non-transferring employees
On 7 June 2024, RACV Regional Services Pty Ltd (RACV Regional) made an application for an order under s 319(1)(b) that the RACV Club and Resorts Collective Agreement 2023 (the Agreement) covers the employment of any non-transferring employee who commences employment with RACV Regional or after 1 July 2024(Commencement Day), if their role falls within a classification in the Agreement.
For the reasons I give below, after considering the matters I must take into account under s 319(3), I exercise my discretion under s 319(1) to make the order sought.
The material filed by RACV Regional includes a detailed application and a witness statement of Ms. Joanne Nyhof who is the Head of Employee Relations for Royal Automobile Club Victoria Limited (RACV Limited) with various attachments (the Nyhof Statement). Ms. Nyhof has responsibility for management, employee and industrial relations across RACV Limited and all its subsidiaries, including the applicant in this proceeding, RACV Regional.
A mention hearing was held on 13 June 2024. Mr. Ashley Sherr of the firm Spark Helmore Lawyers represented RACV Regional. The UWU was represented by Ms. Abbey Sultan, an industrial officer. The UWU represents employees of RACV Limited covered by the Agreement. The UWU supports the application and both parties were content with the matter being dealt with on the papers.
Background
RACV Limited is one of the largest membership organisations in Victoria. It offers a variety of services including hospitality, roadside assistance and insurance. As part of its hospitality services, it operates ten resorts across Victoria, Queensland and Tasmania.
In late 2023, RACV Limited began internal discussions regarding a possible restructure of its corporate structure to align with RACV Limited’s broader strategy of expanding its regional operations.
The restructure being considered was a change in the employing entity for a range of RACV Limited’s employees. In particular, employees currently employed by RACV Limited performing work at its club and resorts would be transferred to RACV Regional. RACV Regional is a wholly owned subsidiary of RACV Holdings Pty Ltd which is in turn a wholly owned subsidiary of RACV Limited.
On or around 3 May 2024, RACV made a definitive decision that it was going to proceed with the restructure, subject to making this application “to ensure consistent terms and conditions of employment applied across the various entities”.
According to the Nyhof Statement, “The restructure does not seek to reduce employee numbers but is simply a change in the corporate structure that RACV uses for its business. This change would have employees working at its club and resorts based in regional locations of Cobram, Inverloch, Torquay cease their employment with RACV Limited, and then immediately commence employment with RACV Regional.”
The restructure will impact approximately 553 employees. This is made up of employees covered by the Agreement, employees covered by the Hospitality Industry (General) Award 2020 and award-free employees. Approximately 503 of these employees are covered by the Agreement. All employees impacted by the restructure will continue to perform the same duties as when they were employed by RACV Limited.
If this application is not successful, the employees of RACV Regional will be covered by a number of different modern awards: the Hospitality Industry (General) Award 2020, the Registered and Licensed Clubs Award 2020, the Fitness Industry Award 2020 and the Hair and Beauty Industry Award 2020 (the “Modern Awards”).
Legislative framework for orders under s 319
The discretion to make the orders sought by the Applicant under s 319(1) will only be exercised after the factors set out in s 319(3) are considered.[1] These factors, which must be read having regard to the objects of Part 2.8, are intended to enable the Commission to balance appropriately the protection of employees’ entitlements under certain instruments with the need for some flexibility to depart from the default rules about coverage of instruments following a transfer of business.[2]
The objects of this Part 2.8 of the Act, are:
309 Object of this Part
The object of this Part is to provide a balance between:
(a) the protection of employees’ terms and conditions of employment under enterprise agreements, certain modern awards, and certain other instruments; and
(b) the interests of employers in running their enterprises efficiently.
if there is a transfer of business from one employer to another employer.
Section 319 sets out the circumstances in which the order sought that the Agreement will cover all new non-transferring employees who perform the transferring work.
319 Orders relating to instruments covering new employer and non‑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 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.
Note: Orders may be made under paragraphs (1)(b) and (c) in relation to a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer, whether or not the non-transferring employee became employed by the new employer before or after the transferable instrument referred to in paragraph (1)(b) started to cover 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.
Can RACV apply for these orders?
RACV Regional, as the new employer, has standing to bring this application pursuant to s 319(2)(a) of the Act.
Has there been a transfer of business between RACV Limited and RACV Regional?
The restructure is imminent. It will result in some of the current employees of RACV Limited ceasing to be employed by RACV Limited and commencing employment with RACV Regional (the Transferring Employees). The Transferring Employees will perform the same duties for RACV Regional as they currently perform for RACV Limited. RACV Regional argues the restructure constitutes a transfer of business for the following reasons:
· The Transferring Employees will have their employment with RACV Limited terminated. Immediately upon the termination of their employment with RACV Limited, the Transferring Employees will commence employment with RACV Regional.
· The Transferring Employees will be performing an identical role with RACV Regional to the role they have performed for RACV Limited.
· RACV Regional is a subsidiary of RACV Limited, meaning they are associated entities within the meaning of the Corporations Act 2001 (Cth). As a result, the Transferring Employees’ terms and conditions, accrued entitlements, and continuous service will transfer from RACV Limited to RACV Regional.
· The Agreement is a transferrable instrument (within the meaning of the Act) and is therefore capable of being subject to the Application. The Agreement will apply to RACV Regional and the Transferring Employees on and from the transfer of business; and
· The Modern Awards will apply to employees who are not Transferring Employees should an order not be made. This is why the order sought is necessary.
On the material filed, it is clear when the restructure occurs, there will be a ‘transfer of business’ from RACV Limited to RACV Regiona1 within the meaning of s 311(3) of the Act. Further, the Agreement is a transferrable instrument under s 312. It follows that the Agreement covers the Transferring Employees under s 313.
Given RACV Regional can make this application, and the Agreement is a “transferrable instrument” under s 319(1), the next step is to consider each of the matters which I must take into account under s 319(3).
Consideration of the matters that must be taken into account under s 319(3)
View of RACV Regional- s 319(3)(a)(i)
RACV Regional express the view the Agreement should apply to new, non-transferring employees. The Nyhof Statement confirms Ms. Nyhof “has discussed this application with the internal decision makers at RACV Limited (who operate and control RACV Regional) and confirm that both RACV Limited and RACV Regional support the making of this application”.
Views of the employees who would be affected by the order - s 319(3)(a)(ii)
As the non-transferring employees are yet to be recruited, it has not been possible for RACV Regional to seek their views prior to making this application. Ms. Nyhof has consulted with UWU who have stated they support and endorse this application. This was confirmed to me by Ms. Sultan at the mention of this matter on 13 June 2024.
Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment - s 319(3)(b)
RACV Regional argues there is no disadvantage to the employees if the terms and conditions of the Agreement applies to them. The Commission has recently assessed the Agreement as having passed the better off overall test when it was approved.
RACV Regional further argues employees would be disadvantaged if the application is refused because the non-transferring employees would be covered by the Modern Awards rather than the superior Agreement.
RACV Regional make further submissions in relation to this factor:
· The Agreement is a new industrial instrument, having only been approved on 28 June 2023, operating from 5 July 2023 and having a nominal expiry date of 30 June 2026.
· The Agreement also includes further salary increases during its nominal life… the Agreement is not a dated instrument, rather, it has terms that are fit for a modern workplace and are likely to result in better wages for employees.
· The Agreement provides for minimum rates that are, on average, 13% higher than the Modern Awards.
· The Agreement provides for overtime and penalty rates that are in excess of what is provided for in many of the applicable modern awards.
· the Agreement provides for other non-monetary benefits that are in excess of what is
available in the relevant modern wards.
The nominal expiry date of the transferable instruments - s 319(3)(c)
The nominal expiry date of the Agreement is 30 June 2026.
The Agreement is relatively new having been approved on 28 June 2023. RACV Regional argues the Agreement is “current, has approximately two years before the nominal expiry date and contains terms and conditions of employment relevant to the modern workplace”.
Whether the enterprise agreements would have a negative impact on the productivity of the RACV Regional’s workplace - s 319(3)(d)
RACV Regional argues there would be no negative impact on the productivity of its workplace should the order be made.
It argues, to the contrary, granting the Application would enhance its productivity. Uniformity with respect to the Agreement aids the operations of RACV Regional and lowers the administrative burden on it, thereby improving its overall productivity.
Should I not grant the application, RACV Regional argues it will have multiple employees performing the same role in the same part of its business with vastly different entitlements. The order sought would reduce the potential for dissatisfaction, industrial unrest and confusion amongst employees due to the application of different industrial instruments to the same (or substantially the same) roles.
Whether RACV would incur significant economic disadvantage as a result of transferable instruments covering it – s 319(3)(e)
RACV Regional accepts the Agreement provides for rates of pay in excess of those provided for in the Modern Awards. It points out this may be argued to be an economic disadvantage to RACV Regional, but this should be regarded as neutral factor.
RACV Regional argues it would face significant economic disadvantage if the order sought is not made. This is because RACV Regional would be required to invest in developing, configuring and implementing new, parallel payroll systems to enable non – transferring employees are correctly paid under the Modern Awards and transferring employees are paid in accordance with the Agreement.
The degree of business synergy between the transferrable instruments and any workplace instrument already covering RACV Regional - s 319(3)(f)
Ms. Nyhof makes the following statement in relation to the lack of business synergy should the Modern Awards apply to non-transferring employees and the Agreement apply to transferring employees:
“RACV Regional would be forced to manage the additional administration of having a workforce covered by the Agreement as well as multiple modern awards governing other employees... This burden would be significant for its business. While there is some economic impact regarding additional costs associated with paying the terms and conditions in the Agreement, RACV Regional considers the administrative benefits outweigh this impact.”
I take this statement as an argument that there is more business synergy in the Agreement applying to both transferring and non-transferring employees of RACV Regional.
The public interest - s 319(3)(g)
The public interest argument made by RACV Regional is essentially the public interest would be served because of the following:
· By facilitating uniformity in employment conditions through extending the recently approved Agreement’s conditions, that currently apply to the Transferring Employees, to non-transferring employees.
· All RACV Regional will be operating in an identical manner to RACV Limited.
· If I make the order, it would be consistent with the recent ‘Same Job, Same Pay’ provisions passed by Parliament in 2022 that the Agreement apply to employees of RACV Regional who perform the same work as those who previously worked for RACV Limited.
Consideration
The arguments made by RACV Regional are compelling.
Should I not make the order, the terms and conditions of non-transferring employees would be determined by the Modern Awards rather the Agreement. The Agreement was made relatively recently and was negotiated by the UWU and the RACV Limited. The terms and conditions of the Agreement are superior to those which would apply to non-transferring employees who would otherwise be covered by one of the Modern Awards.
The proposed order provides protection of employees’ terms of employment and assists RACV Regional in running their business efficiently as it relieves it of the administrative burden of operating under multiple industrial instruments.
Conclusion
After consideration of all the material filed and taking into account each of the matters in s 319(3), I am satisfied I should exercise my powers under s 319.
By s 319(1)(b), the Agreement covers the employment of any non-transferring employee who commences employment with RACV Regional on or after 1 July 2024, the date requested by RACV Regional, who performs or is likely to perform transferring work in a classification contained in the Agreement.
An order to this effect under s 319(4)(b) will be published together with this decision and come into operation on and from 1 July 2024.
COMMISSIONER
[1] Explanatory Memorandum of the Fair Work Bill 2008 (Cth) [1259].
[2] Ibid.
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