Shangri-La Hotel (Cairns) Pty Ltd T/A Shangri-La Hotel, The Marina, Cairns

[2016] FWC 8096

[2016] FWC 8096

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.319 - Application for an order relating to instruments covering new employer and non-transferring employees

Shangri-La Hotel (Cairns) Pty Ltd T/A Shangri-La Hotel, The Marina, Cairns
(AG2016/6526)

Hospitality industry
COMMISSIONER SPENCER	BRISBANE, 9 NOVEMBER 2016

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

[1] An application has been filed in relation to The Pier Cairns Management Services Pty Ltd – Enterprise Agreement 2016 [AE419007] 1(the Agreement) by Shangri-La Hotel (Cairns) Pty Ltd T/A Shangri-La Hotel, The Marina, Cairns (the Applicant).

[2] The Agreement covers employees employed by the entity The Pier Cairns Management Services Pty Ltd. However, at the time the application was made, a restructuring of the organisation was occurring, though the employees had not yet been transferred to the new associated entity, Shangri-La Hotel (Cairns) Pty Ltd (the Applicant). The transfer between associated entities was anticipated to take place on or about 1 November 2016.

[3] The Applicant was self-represented and the application was made by Ms Jennifer Smith, Director of Human Resources of the Applicant. A Statutory Declaration was also provided by Ms Smith.

[4] In accordance with s.311(1) of the Act, a transfer of business from The Pier Cairns Management Services Pty Ltd to the Applicant was to occur on or about 1 November 2016. An enterprise agreement is a transferable instrument by operation of the Act s.312(1)(a). Section 313(1) provides that a transferrable instrument that covered the old employer and the transferring employees immediately before the termination of the employment will cover the new employer (being the Applicant). The operation of these sections means that the Applicant (the new employer) would be covered by the Agreement in relation to the transferring employees.

[5] Ms Smith, in the application, stated that the employees who are covered by the Agreement will be transferring to the Applicant (transferring employees). The Applicant also intends to employ new employees (non-transferring employees). The Statutory Declaration provided by Ms Smith, stated that at that time, being 7 November 2016, there were no non-transferring employees employed by the Applicant.

[6] Non-transferring employees are covered by the Hospitality Industry (General) Award 2010 2(the Hospitality Award). The Applicant seeks an Order that the Agreement will cover any non-transferring employees of the Applicant who perform, or are likely to perform, the transferring work, pursuant to s.319(1)(b) of the Act. The Applicant only referred to the Hospitality Award in its application, however, it is noted that the Agreement approved by Deputy President Sams refers to the Hospitality Award and the Manufacturing and Associated Industries and Occupations Award 20103as the applicable reference instruments for the purposes of the better off overall test.

Relevant legislation

[7] Section 313 provides:

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; and
....

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

[8] Section 319 provides:

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.

Summary of the Applicant’s submissions

[9] The Applicant submitted in its application, with respect to the views of the employees who would be affected by the Order, that the Applicant had not yet engaged any non-transferring employees and accordingly, could not provide evidence of their point of view.

[10] The Applicant submitted that the Agreement was approved by Deputy President Sams on 20 May 2016 and the Deputy President was satisfied that the Agreement passed the better off overall test.

[11] It was submitted by the Applicant that the Agreement contains several additional clauses not included within the Hospitality Award. In addition, whilst the Agreement removes penalty rates for work performed on weekends and public holidays, the base rates of pay contained in the Agreement are higher and the penalties have been loaded into the base rates of pay. The base rates of pay contained in the Agreement are between 17% and 30% higher when compared to the minimum rates of pay set out in the Hospitality Award. In addition, the Agreement provides for an annual 3% increase to the base rates of pay contained in the Agreement. The Applicant submits that the Agreement overall provides for terms and conditions of employment that are more favourable to non-transferring employees when compared to the Hospitality Award.

[12] The Agreement has a nominal expiry date of 21 April 2020.

[13] The Applicant contended that it is seeking to avoid a situation where the Applicant has two different instruments and different entitlements for employees performing the same or substantially the same work, including base rates of pay. Having one reference instrument would ensure consistency with the terms and conditions of employment for both transferring and non-transferring employees.

[14] The Applicant submitted in its application that if the Agreement did not cover non-transferring employees, the Applicant would face challenges in regard to the payments of wages and configuring its payroll system to take into consideration two different sets of rules and that it would need to outsource this at a cost to the Applicant.

[15] The Applicant submitted that it was making the application and seeking the Order for reasons of business synergy (as the Applicant intended to operate an identical operation to the old employer), administrative convenience for payroll, to enable the equitable rostering of employees and for industrial harmony.

Consideration

[16] The material provided by the Applicant in support of the application and the matters listed in s.319(3) of the Act have been taken into account. Accordingly, the relevant matters having been satisfied, the Order will be issued.

[17] The Order, PR587402, will issue with this Decision and will take effect in accordance with s.319(4) of the Act, that is, this Order shall take effect in respect of each non-transferring employee on and from 9 November 2016 or the date from which employment with the Applicant commences, whichever is the later.

COMMISSIONER

 1   [2016] FWCA 3175

 2   MA000009.

 3   MA000010.

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<Price code C, AE419007  PR587388 >