Reerac & Lliks Pty Ltd; ALASKA FOODS EMPLOYEE COLLECTIVE AGREEMENT
[2012] FWA 7265
•24 AUGUST 2012
[2012] FWA 7265 |
|
DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees in agreements
Reerac & Lliks Pty Ltd
(AG2012/9945)
ALASKA FOODS EMPLOYEE COLLECTIVE AGREEMENT
[AC322066]
Food, beverages and tobacco manufacturing industry | |
COMMISSIONER HAMPTON | ADELAIDE, 24 AUGUST 2012 |
Transfer of business - application for an order that collective agreement applying to former business not cover the new employer - application made prior to transfer - whether discretion should be exercised to have the modern award apply in lieu of the collective agreement - application granted.
BACKGROUND
[1] This is an application pursuant to s.318 of the Fair Work Act 2009 (the Act) by Reerac & Lliks Pty Ltd (R&L). R&L has recently acquired the shares of Alaska Foods Pty Ltd (Alaska). Both organisations are in the business of food manufacturing.
[2] R&L and its employees are subject to the Food Beverage and Tobacco Manufacturing Award 2012 (the modern Award).
[3] Alaska is a party to the Alaska Foods Production Employee Collective Agreement (the Collective Agreement) which was approved by the Workplace Authority in 2009 pursuant to the Workplace Relations Act 1996.
[4] Alaska has continued to operate under the terms of the Collective Agreement however it is intended that in the near future both operations will be merged into a single site with R&L as the employer.
[5] The Collective Agreement is a transferrable instrument for the purposes of s.312 and s.313 of the Act. That is, by virtue of sub item 2(3), Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the TPCA Act) the Collective Agreement is a transitional instrument for purposes of the Act itself. Pursuant to Item 8, Part 3 of Schedule 11 of the TPCA Act, the Collective Agreement is also a transferable instrument for the purposes of s.312(1) and consequently, s.313 of the Act.
[6] Section 313 of the Act provides for the transferrable instrument (in this case the Collective Agreement) to in effect transfer to the new employer (R&L) along with the employees who are to be “transferred”.
[7] There are some 65 employees who will transfer to R&L.
[8] The application seeks that the Collective Agreement not cover R&L or any of its transferring employees who are currently engaged by Alaska.
[9] In the lead up to the hearing of this matter, directions were issued requiring the fact of the application and the details of the hearing to be communicated to all of the relevant employees. Further, these employees were invited to contact Fair Work Australia in person or in writing should they wish to express any views or concerns about the application. No contact was made with the Tribunal.
[10] This matter was heard on 23 August 2012 and I indicated at that time that an order and accompanying decision would be issued granting the application.
THE IMMEDIATE STATUTORY PROVISIONS
[11] Section 318 of the Act provides as follows:
“318 Orders relating to instruments covering new employer and transferring employees
Orders that FWA may make
(1) FWA 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) FWA 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 FWA must take into account
(3) In deciding whether to make the order, FWA 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.”
[12] I also note that the exercise of the discretion given to Fair Work Australia in this regard is also undertaken within the objects of this Part of the Act, which state as follows:
“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.”
CONSIDERATION
[13] A&L is the likely new employer for the purposes of s.318(2)(a) of the Act and I find that the application is validly before Fair Work Australia.
[14] It is convenient to assess the considerations arising from s.318(3) using the relevant subsections of the Act as applied to the circumstances of this case.
Section 318(3)(a)(i): the views of A&L as the likely new employer
[15] A&L has made this application on a number of grounds as set out in the affidavit of Mr Raymond Khabbaz, Director of R&L and its parent company, and in the submissions of Mr Manos who appeared with permission for the applicant employer.
[16] These grounds relate to the simplicity of having a single industrial instrument applying in the new workplace and issues of equity amongst employees.
Section 318(3)(a)(ii): the views of the employees who would be affected by any order
[17] I have earlier outlined the process adopted by Fair Work Australia to facilitate any concerns amongst the employee group being raised. A&L also provided evidence regarding the consultation process adopted by it in the lead up to this application.
[18] This included the provision of comprehensive advice to all employees as to the differences between the Collective Agreement and the modern award and a subsequent ballot of employees.
[19] All but two of the employees voted and each supported the application of the modern award to the new workplace.
[20] Given the evidence of the process leading to that point, including advice to the employees that an application would subsequently be made to Fair Work Australia to seek that outcome, I am satisfied that the ballot result represents the genuine views of the relevant employees in this matter.
Section 318(3)(b): any disadvantage to the employees in relation of their terms and conditions of employment
[21] Considerable material has been provided both to the employees and to Fair Work Australia analysing the differences between the Collective Agreement and the modern award.
[22] This consideration was discussed in the Supplementary Memorandum to the TPCA Act 1 Applying that approach, it is intended that while the terms and conditions of employment between an employer’s own industrial instrument and the transferable instrument may be different, Fair Work Australia should satisfy itself whether “overall, the employees would not be disadvantaged”. This of itself may not prevent the granting of the application but in my view would represent a significant hurdle as part of the wider considerations which must be taken into account for the purposes of s.318(3) of the Act.
[23] Without discussing each of the differences between the two instruments, on all but one provision of the Agreement, the modern award provides wages, allowance and conditions that are at least as beneficial as the modern award. Indeed, in terms of wages, hours of work arrangements and allowances, the modern award is superior in each case.
[24] Having regard to the operation of the two instruments I am satisfied that the employees will not be disadvantaged.
Section 318(3)(c): the nominal expiry date of the Collective Agreement
[25] The Collective Agreement is part way through its nominal life.
[26] The fact that the Collective Agreement has some time to run is in my view a relevant consideration in two respects. It is an instrument that is not at the time when the parties who made it considered that it should be revisited.
[27] On the other hand, in terms of the impact of the Collective Agreement within the new environment, subject to this application, it will operate for some time before it would reach the point where it would otherwise be renegotiated and common conditions could be established.
Section 318(3)(d): any negative impact on productivity in the workplace
[28] These considerations have been broadly outlined in discussing the employer’s position under s.318(3)(a)(i) above. The adoption of common working conditions across the workforce is more likely to aid productivity rather than inhibit it.
Section 318(3)(e): any significant economic disadvantage to A&L as a result of the Collective Agreement
[29] This is not a significant consideration given the nature of the instruments. Indeed, there are lower employment costs associated with the Collective Agreement.
Section 318(3)(f): business synergy between the Collective Agreement and the modern award
[30] “Business synergy” may have wide connotations however for present purposes the business is capable of operating under either instrument.
Section 318(3)(g): the public interest
[31] The public interest in this context is influenced by the objects of this Part of the Act in s.309 and those adopted by the Act more broadly.
[32] There is public interest in ensuring that agreed and statutorily approved arrangements are not put aside lightly and where they are to no longer apply, the interests of the employees concerned are safeguarded. The absence of disadvantage, and the evident employee support for the change in this case, are important considerations.
[33] Further, and particularly given the above context, there is also public interest in ensuring that the business of A&L is able to efficiently operate without unnecessary complications in its employment arrangements.
[34] It is also the case that the public interest in this matter is served by facilitating arrangements that permit and encourage the maintenance of employment for the employees through the transfer of business process.
CONCLUSIONS AND ORDERS
[35] Having regard to all of the considerations raised by s.318 of the Act, I am satisfied that I should exercise my discretion to grant the application and to make an order. 2
[36] An order will be issued in conjunction with the decision and operate in accordance with s.318(4) of the Act.
COMMISSIONER
Appearances:
A Manos of counsel with permission for Reerac & Lliks Pty Ltd.
Hearing details:
2012
Adelaide
23 August
1 Revised Explanatory Memorandum to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.
2 PR528355.
Printed by authority of the Commonwealth Government Printer
<Price code C, AC322066 PR528294>
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