SCT Opco Pty Ltd

[2023] FWC 1307

[2023] FWC 1307

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.319 - Application for an order relating to instruments covering new employer and non-transferring employees

SCT Opco Pty Ltd

(AG2023/1513)

Rail industry
DEPUTY PRESIDENT COLMAN	MELBOURNE, 1 JUNE 2023

Application for an order relating to instrument covering non-transferring employees (s 319)

1. SCT Opco Pty Ltd (SCT) has made an application under s 319 of the Fair Work Act 2009 (FW Act) for an order that the RailPro Services Enterprise Agreement 2018 (RailPro Agreement) cover SCT and non-transferring employees of SCT after a transfer of business that will occur from RailPro Services Pty Ltd (RailPro) to SCT on 30 June 2023 (transfer date).

1. The application states that SCT and RailPro are associated entities within the meaning of s 50AAA of the Corporations Act 2001 and are therefore associated entities for the purposes of the FW Act (see s 12). Pursuant to a group restructure, the business activities currently undertaken by RailPro will be taken over by SCT on the transfer date. Employees of RailPro will be offered employment with SCT on the same terms and conditions that apply to their employment with RailPro. There will be no change in the work undertaken by those employees in their employment with SCT.

1. SCT considers that when employees of RailPro accept employment with SCT, there will be a transfer of business from RailPro to SCT, on the basis of the ‘connection’ between the two companies that is identified in s 311(6) of the FW Act (associated entities), and that the RailPro Agreement will therefore cover SCT and transferring employees (see s 313). However, persons employed by SCT after the transfer of business will be non-transferring employees for the purposes of the transfer of business provisions in Part 2-8 of the FW Act and would not be covered by the RailPro Agreement. This is the effect of s 314(1)(d), which provides that non-transferring employees will be covered by a transferable instrument such as the RailPro Agreement only if, at the time they are employed, no other enterprise agreement or modern award covers the new employer. In the present case, the new employer, SCT, will be covered by the Rail Industry Award 2020 (Award) in relation to the relevant work.

1. The purpose of SCT’s application is to ensure that the RailPro Agreement will cover and apply to any non-transferring employees who perform transferring work for SCT. In the absence of an order under s 319, the Award will apply to them. The provisions of the Award are not as generous as those of the RailPro Agreement. SCT contends that it would be unfair for non-transferring employees to receive less generous conditions than transferring employees. It would also be unfair for the company to have to apply and administer different conditions for employees performing the same work.

1. Part 2-8 of the FW Act allows the Commission to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer (s 317). I agree with the applicant that there will be a transfer of business from RailPro to SCT. I am satisfied that transferring employees will cease employment with RailPro and within three months accept employment with SCT – there is likely to be little if any gap in most cases. The transferring employees will continue to perform the same, or substantially the same work for SCT as they performed for RailPro. And there will be a ‘connection’ between SCT and RailPro because SCT will be an associated entity of RailPro at the time when transferring employees become employed by SCT. These circumstances fall within s 311(6) of the FW Act.

1. Section 319(3) provides that, in deciding whether to make an order under s 319, the Commission must take into account certain matters, which I will now consider:

·   The views of the new employer and employees affected by the order (s 319(3)(a)): The new employer’s view is that the application should be granted. There are presently no non-transferring employees who would be affected by the order.

·   Whether any employees would be disadvantaged (s 319(3)(b)): As the RailPro Agreement provides for more generous conditions than the Award that would otherwise apply to non-transferring employees, employees would not be disadvantaged by the proposed order. This weighs in favour of granting the order.

·   The nominal expiry date of an enterprise agreement (s 319(3)(c)): The nominal expiry date of the RailPro Agreement is 3 September 2023. This is a neutral consideration.

·   Whether the transferable instrument would have a negative impact on the productivity of the new employer’s worksite (s 319(3)(d)): I accept SCT’s submission that the transferrable instrument will not negatively impact on its workplace productivity. This supports the application.

·   Whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer (s 319(3)(e)): I agree with SCT that this will not be the case. This weighs in favour of the application.

·   The degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer (s 319(3)(f)): I consider that there is no relevant synergy in this case. This is a neutral consideration.

·   The public interest (s 319(3)(g)): In my view there are no public interest considerations in this matter.

1. The mandatory considerations that apply to the exercise of the Commission’s discretion under s 319 are either neutral or weigh in favour of making the order sought. Taking into account these matters, and all the circumstances, including the fact that the union that is covered by the RailPro Agreement, the Australian Rail, Tram, and Bus Industry Union, supports the application, I consider that it is appropriate to grant the application. The order will come into operation in relation to non-transferring employees from 30 June 2023, or if a non-transferring employee is employed by SCT after that day, from the date of the commencement of the employee’s employment with SCT.

1. SCT’s application sought an order under s 319 that, in the event that RailPro makes an enterprise agreement that replaces the RailPro Agreement prior to the transfer of business, that agreement would cover and apply to non-transferring employees. As I explained at the hearing however, I do not consider that it is possible for the Commission to make an order under s 319 in respect of an instrument that is not yet in existence. If RailPro makes a new enterprise agreement prior to the transfer of business, a fresh application can be made under s 319.

1. An order giving effect to this decision is issued separately in PR762749.

DEPUTY PRESIDENT

Appearances:

C. Broadbent for the applicant
M. Davis for the RTBU

Hearing details:

2023
Melbourne
1 June

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<AE505138  PR762748>