RMC Track Protection Services

[2020] FWC 1096

[2020] FWC 1096

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees

RMC Track Protection Services
(AG2019/5098)

COMMISSIONER SPENCER BRISBANE, 28 FEBRUARY 2020

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

[1] An application pursuant to s.318 of the Fair Work Act 2009 (the Act) was made by RMC Track and Civil Pty Ltd (the Applicant) for an order relating to an instrument covering a new employer and transferring employees.

[2] The Applicant sought the following Orders:

A. An Order that the transferable instrument, the Railtrain Pty Ltd SA/VIC/TAS/ACT/NSW/QLD/NT Enterprise Agreement 2013 (the 2013 Agreement) which covers RMC Track and Civil Pty Ltd and the transferring employees because of section 313(1)(a) of the Act does not cover RMC Track and Civil Pty Ltd and the transferring employees;

B. An Order that the transferable instrument, Railtrain Pty Ltd WA Below 26th Parallel (South) EA 2017, which covers RMC Track and Civil Pty Ltd and the transferring employees because of section 313(1)(a) of the Act does not cover RMC Track and Civil Pty Ltd and the transferring employees;

A. An Order that the transferable instrument, Railtrain Pty Ltd Rail/Civil Maintenance & Operations Pilbara EA 2016, which covers RMC Track and Civil Pty Ltd and the transferring employees because of section 313(1)(a) of the Fair Work Act 2009 (Cth) does not cover RMC Track and Civil Pty Ltd and the transferring employees;

B. An Order that the RMC Track and Civil Pty Ltd Enterprise Agreement 2019 that covers RMC Track and Civil Pty Ltd covers the transferring employees in:

a. 2.2 a);

b. 2.2 b); and

c. 2.2 c).

[3] The Applicant provided the following background to the application. RMC Track and Civil Pty Ltd (the Applicant) and New Employer, commenced trading on 2 July 2018. The Applicant is a wholly owned subsidiary of Railtrain Holdings Pty Limited (RHG). RHG has a complex legal structure.

[4] In total RHG is the ultimate holding company of 11 companies in Australia through which it operates its Rail Industry businesses. Those businesses perform services such as specialist construction and maintenance of rail services, track protection, signalling and electrical systems, supply of rail workforces and design and delivery of nationally recognised training to the Australian rail industry. The Applicant is a subsidiary of RHG.

[5] The organisational restructure undertaken by RHG was implemented to better align the business units with the needs of their customers and the nature of the work undertaken by that business unit. Prior to the organisational restructure, all employees who performed track and civil activities were employed by Railtrain Pty Ltd (Old Employer).

[6] Under that structure, the Old Employer employed employees working under the following enterprise agreements (Transferrable Instruments):

•  Railtrain Pty Ltd SA/VIC/TAS/ACT/NSW/QLD/NT EA 2013 (National EA);

•  Railtrain Pty Ltd WA Below 26th Parallel (South) EA 2017 (Below 26th Parallel EA); and

•  Railtrain Pty Ltd Rail/Civil Maintenance & Operations Pilabara EA (Pilbara EA).

[7] At the time the Applicant commenced trading, all employees employed by the Old Employer who performed protection services within RHG, transferred in their employment to the New Employer (Transferring Employees). Pursuant to section 313(a) of the Act the Transferable Instruments transferred with their employment to the Applicant.

[8] On 31 July 2019, the RMC Track and Civil Pty Ltd Enterprse Agreement was approved. The RMC Track and Civil EA was drafted to include classifications to cover all work performed by the Transferring Employees with the New Employer. But for the application of the Transferrable Instruments, the RMC Track and Civil EA would cover the work performed by the Transferring Employees.

[9] The Applicant now seeks for orders to be made so that:

“the Transferrable Instruments no longer apply to the Transferring Employees; and the RMC Track and Civil EA can apply to all employees now employed by the Applicant.”

RELEVANT LEGISLATION

[10] Pursuant to s.313 of the Act:

“313 Transferring employees and new employer covered by transferable instrument

(1) 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…

(3) This section has effect subject to any FWC order under subsection 318(1).”

[11] Further, s.318 of the Act relevantly provides:

“318 Orders relating to instruments covering new employer and transferring employees

(1) 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.

(2) 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).

(3) In deciding whether to make the order, 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.

(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.”

CONSIDERATION

[12] The Applicant provided correspondence demonstrating that it had sought the views of the Australian Rail Tram and Bus Industry Union (the Union) in relation to the application, with the Union confirming its support of the application.

Section 318(1)(a)(i): The views of the new employer

[13] The Applicant submitted that it is a related body corporate of the Old Employer. The granting of the order would enable the employer to be able to implement consistent base employment conditions for all employees within the business, that would significantly reduce the administrative burden of managing rostering and the payroll system for management and

the administrative team.

[14] Currently, the Applicant is required to manage the application of four enterprise agreements to its workforce. Whilst the enterprise agreements are in part largely the same, there are noticeable differences between the instruments in relation to the rostering of work, application of the start and finishing times of penalty rates and other like matters. The Applicant submitted that being able to implement a single enterprise agreement across the business would remove unnecessary complexity in the management of employees across the Applicant’s workplaces.

[15] The Applicant also submitted that having one enterprise agreement would also create greater certainty in relation to future enterprise bargaining processes. Both Transferrable Instruments will have passed their nominal expiry date well before the RMC Track Protection Services EA; the National EA has already done so.

[16] Transitioning all employees across to the RMC Track and Civil EA will mean that the business will have known terms and conditions of employment until 30 July 2023, in turn ensuring that there can be industrial stability amongst the workforce, allowing the Applicant to deliver on its commercial contracts without disruption until that time.

[17] If the order sought was not granted by the Commission, the Applicant submitted it could be required to commence bargaining for new enterprise agreements for sections of its workforce:

•  Next year, for the National Transferable Instrument and Below 26th Parallel Transferable Instrument; and

•  March 2020 for the Pilbara Transferable Instrument.

[18] The transfer of all employees to the RMC Track and Civil EA would significantly save the Applicant from significant costs to the business of having to bargain three new enterprise agreements in the next two years.

Section 318(1)(a)(ii): The views of the employees who would be affected by the order

[19] Mr Brendan Lane, the General Manager of the Applicant, provided a statutory declaration in support of the application. Mr Lane stated that the Applicant entered into extensive consultation with the 40 Transferring Employees about the application to have the Transferable Instruments no longer cover their employment, and instead for their employment to be covered by the RMC Track and Civil EA.

[20] As part of the consultation process, the Applicant provided employees with:

•  The details of the Transferable Instrument that applies to their employment;

•  The details of the RMC Track and Civil EA;

•  A table comparing the terms of the Transferable Instrument to the RMC Track and Civil EA, which set out which terms would and would not result in them being better off under the RMC Track and Civil EA.

[21] The Applicant also held discussions with each of the Transferring Employees about the proposed change.

[22] As part of the consultation process, the Transferring Employees were provided an opportunity express their support or disagreement with the proposed change. Collectively, of the 40 Transferring Employees, 73% actively indicated that they were in support of the Application.

[23] No Transferring Employees indicated their disagreement with the proposed change.

Section 318(1)(b): Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment

National EA Transferable Instrument

[24] Mr Lane stated that for those Transferring Employees currently covered by the National EA Transferable Instrument, they will be better off overall under the RMC Track and Civil EA.

[25] Whilst the Transferable Instruments provide the legal minimum terms of employment, the Applicant has Individual Flexibility Agreements in place which provide all Transferring Employees with significantly more favourable terms and conditions of employment.

Below 26th Parallel Transferable Instrument

[26] Mr Lane stated that for those Transferring Employees currently covered by the Below 26th Parallel EA Transferable Instrument, they will be better off overall under the RMC Track and Civil EA in relation to their minimum terms and conditions of employment.

[27] However, whilst the Transferable Instruments provide the legal minimum terms of employment, the Applicant has Individual Flexibility Agreements in place which provide all Transferring Employees with significantly more favourable terms and conditions of employment.

Pilbara EA Transferable Instrument

[28] For those Transferring Employees currently covered by the Pilbara EA Transferable Instrument, they will be better off overall under the RMC Track and Civil EA in all respects, except that the overtime provisions in the Pilbara EA is paid at double time for all overtime worked.

[29] Whilst the Transferable Instruments provide the legal minimum terms of employment, the Applicant has Individual Flexibility Agreements in place which provide all Transferring Employees with significantly more favourable terms and conditions of employment.

[30] Based on the above, the Applicant submitted that there would not be any disadvantage to Transferring Employees in granting the order.

Section 318(1)(c): The nominal expiry date of the transferable instrument

[31] The Transferable Instruments have the following nominal expiry dates:

•  Railtrain Pty Ltd SA/VIC/TAS/ACT/NSW/QLD/NT Enterprise Agreement 2013 – 2 September 2017;

•  Railtrain Pty Ltd WA Below 26th Parallel (South) Enterprise Agreement 2017 –16 May 2021; and

•  Railtrain Pty Ltd Rail/Civil Maintenance & Operations Pilbara Enterprise Agreement 2017 – 30 March 2020.

[32] The RMC Track and Civil EA has a nominal expiry date of 30 July 2023 being approximately three years and six months from the date of this application.

Section 318(1)(d): Whether the transferable instrument would have a negative impact on the productivity of the Applicant's workplace

[33] The Applicant submitted that there would be a positive impact on its workplace by granting the application as all employees employed by it who would perform the Transferring Work would be entitled to the same terms and conditions of employment and greater security of employment.

[34] Further, the Applicant submitted that when the RMC Track and Civil EA was negotiated with employees its was tailored to meet the specific needs of the business, including provisions to allow longer periods of engagement to casual employees so they can more readily work across Australia under the one instrument and it is better suited to the Applicant’s method of work and needs of its clients.

Section 318(1)(e): Whether the Applicant would incur significant economic disadvantage as a result of the transferable instrument covering the Applicant

[35] The Applicant submitted that whilst the terms of the RMC Track and Civil EA mostly provide greater terms and conditions of employment than the Transferrable Instruments (excepting those matters identified above), there would be no economic disadvantage to the Applicant if the order was granted. This is because the Applicant will continue to pay Transferring Employees at their higher rates of pay already received under the respective IFA’s in place with the Transferring Employees.

[36] The Applicant further submitted that the efficiencies to be achieved for human resources, managers and payroll will result in the Applicant being able to be more economically viable, without impacting the Transferring Employees in any practical way.

Section 318(1)(f): The degree of business synergy between the transferable instrument and any workplace instrument that already covers the Applicant

[37] There are currently four Industrial Instruments in place that cover employees performing the Transferring Work for the Applicant. The Applicant submitted that there is not a degree of business synergy between the Transferring Instruments or the Transferring Instrument and the RMC Track and Civil EA.

[38] Mr Lane stated that the Transferable Instruments do not have the appropriate allowance structure to match that which exists in practice or a set of standard terms and conditions or a consistent mechanism to demonstrate to employees what their entitlements are in any given circumstance. Mr Lane confirmed that the Applicant has, to date, had to implement IFA’s to overcome this so it can create a degree of business synergy. This would be simpler to implement with only one instrument covering the scope of the business.

Section 318(1)(g): The public interest

[39] The Applicant submitted that it is in the public interest for the workplace to provide consistency in relation to the base employment conditions provided to all employees who are employed by the Applicant, either now, or in the future.

CONCLUSION

[40] Taking into account the matters in 318(1) and (2) of the Act, I am satisfied that it is appropriate to make Orders in the following terms that:

C. That the transferable instrument, the Railtrain Pty Ltd SA/VIC/TAS/ACT/NSW/QLD/NT Enterprise Agreement 2013 (the 2013 Agreement) which covers RMC Track and Civil Pty Ltd and the transferring employees because of section 313(1)(a) of the Act does not cover RMC Track and Civil Pty Ltd and the transferring employees;

D. That the transferable instrument, Railtrain Pty Ltd WA Below 26th Parallel (South) EA 2017, which covers RMC Track and Civil Pty Ltd and the transferring employees because of section 313(1)(a) of the Act does not cover RMC Track and Civil Pty Ltd and the transferring employees;

E. That the transferable instrument, Railtrain Pty Ltd Rail/Civil Maintenance & Operations Pilbara EA 2016, which covers RMC Track and Civil Pty Ltd and the transferring employees because of section 313(1)(a) of the Fair Work Act 2009 (Cth) does not cover RMC Track and Civil Pty Ltd and the transferring employees;

F. That the RMC Track and Civil Pty Ltd Enterprise Agreement 2019 that covers RMC Track and Civil Pty Ltd covers the transferring employees in:

a. 2.2 a);

b. 2.2 b); and

c. 2.2 c).

[41] The transferring employees will be covered by the Award from 5 March 2020.

[42] I Order accordingly.

COMMISSIONER

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