Snack Foods Pty Ltd T/A Snack Foods
[2024] FWC 555
•8 MARCH 2024
| [2024] FWC 555 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
s.319 – Application for orders relating to instruments covering new employer and non-transferring employees
Snack Foods Pty Ltd T/A Snack Foods
(AG2024/222)
THE REAL MCCOY SNACKFOOD COMPANY ENTERPRISE AGREEMENT 2023
| Food, beverages and tobacco manufacturing industry | |
| COMMISSIONER MCKINNON | SYDNEY, 8 MARCH 2024 |
Application for orders relating to instruments covering new employer and transferring and non-transferring employees
Snack Foods Pty Ltd (Snack Foods) is undergoing a restructure of its operations, including by consolidating three manufacturing operations into a single modern site in Orchard Hills, New South Wales. It has applied for orders under s.318(1) and s.319(1) of the Fair Work Act 2009 (the Act) so that the Snack Brands Australia Operations Agreement 2022 (Snack Brands Agreement) covers employees at the Orchard Hills site who are, or would be, covered by an enterprise agreement made by related entity The Real McCoy Snackfood Company Pty Ltd (The Real McCoy) – namely, The Real McCoy Snackfood Company Enterprise Agreement 2023 (The Real McCoy Agreement).
An earlier, related application led to the making of similar orders by Deputy President Boyce in 2022.[1] The orders never took effect. A restructuring of the corporate group, approved by a Scheme of Arrangement under the Corporations Act 2001[2], resulted in a transfer of business from The Real McCoy to Snack Foods and a related transfer of employment of employees covered by The Real McCoy Agreement to Snack Foods. In the intervening period, The Real McCoy Agreement replaced an earlier enterprise agreement to which the orders of Boyce DP applied.[3] By this application, Snack Foods seeks to achieve the purpose to which the earlier orders were directed, but by reference to the change in circumstances.
The question is whether the orders should be made.
Sections 318 and 319 of the Fair Work Act 2009
Part 2-8 of the Act describes when a transfer of business occurs and provides for the transfer of enterprise agreements from one employer to another in connection with a transfer of business.
Section 311(1) defines “transfer of business”, and section 312 defines the types of “transferable instrument” that may transfer from one employer to another. Sections 317, 318 and 319 empower the Commission to make orders in relation to a transfer of business, including orders that a transferable instrument covers, or does not cover, the new employer in relation to the transferring employees and non-transferring employees.
Section 318(1) provides:
(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 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.
Section 319(1) provides:
(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.
In deciding whether to make orders under sections 318 and 319, the Commission must take into account the factors set out in sections 318(3) and 319(3) of the Act.
The views of those affected by the proposed orders
Snack Foods of course supports the application. It seeks to harmonise the terms and conditions of employment applying to employees performing the same or similar work at the Orchard Hills site, in a way that it submits will likely leave employees better off overall. It carried out a consultation process with employees and the Australian Worker’s Union (the Union) in 2022. The majority of affected employees at the time were in support of the change and those that were not in favour expressed concerns in particular about changes to ordinary hours of work, level classifications and Saturday work. These concerns largely arose from the proposed transition away from a 12 hour shift roster. The Union, which is party to The Real McCoy Agreement, has advised the Commission that it is “happy for [the] application to proceed”.
Whether any employees would be disadvantaged by the order
Some of the terms and conditions in the Snack Brands Agreement are less beneficial than equivalent terms in The Real McCoy Agreement, including in relation to base rates of pay for the lower classifications, public holidays, breaks and ordinary hours. More beneficial terms and conditions in the Snack Brands Agreement include provision for birthday leave and higher loadings, allowances and overtime rates. Although weekly ordinary hours are 1.5 hours more under the Snack Brands Agreement, daily working hours will reduce from 12 to 7.5 per day. Snack Foods has undertaken to maintain existing base hourly rates of pay and loadings for transferring employees directly affected. The effect of the undertakings is that employees who might otherwise be disadvantaged are unlikely to be disadvantaged if the orders are made.
The nominal expiry date of the Agreement
The Real McCoy Agreement nominally expires on 24 January 2026, while the Snack Brands Agreement nominally expires on 9 February 2026. Granting the application will bring forward the transition from The Real McCoy Agreement to the Snack Brands Agreement by approximately two years.
Whether The Real McCoy Agreement would have a negative impact on productivity at Snack Foods
The continuing operation of The Real McCoy Agreement will require allocation of additional resources to undertake payroll and compliance functions for two different enterprise agreements covering employees performing the same or similar work and would also mean two separate shift patterns and overtime arrangements at a single site, with the associated additional administrative and managerial resources. Under a single enterprise agreement, these resources could be redirected to more productive endeavours. Differing terms and conditions for employees working side by side in the same or similar functions may also have a negative effect on productivity if employees feel they are missing out or undervalued. In my view, continuing coverage of The Real McCoy Agreement at the Orchard Hills site would have a negative impact on overall productivity at Snack Foods.
Whether Snack Foods will incur significant economic disadvantage by coverage of the Snack Brands Agreement
There is a real cost involved in having two separate enterprise agreements covering the same or similar work at a single site with different terms and conditions of employment. The evidence is not such as to permit any reliable quantification of this cost as a proportion of Snack Foods’ overall economic activities. For this reason, I am not satisfied that continuing coverage of The Real McCoy Agreement at the Orchard Hills site will cause Snack Foods to incur significant economic disadvantage.
Degree of business synergy between the Agreement and other workplace instruments
The Food, Beverage, and Tobacco Manufacturing Award 2020 (the Award) is excluded by each of the enterprise agreements that cover work at the Orchard Hills site. There is greater synergy between the Snack Brands Agreement and the Award, particularly in relation to shift patterns, hours of work, penalties and loadings, than there is between The Real McCoy Agreement and the Award. In particular, The Real McCoy Agreement provides for the working of 12‑hour shifts and 36 ordinary hours of work per week, compared to 7.5 hour shifts and up to 37.5 ordinary hours per week under the Snack Brands Agreement. The latter aligns more closely with the Award provision for 8 hour shifts and up to 38 ordinary hours per week.
The public interest
The matter does not appear to attract the public interest. It deals instead with the private interests of the parties in a way that does not undermine the established legislative safety net of minimum terms and conditions of employment.
Conclusion
On balance, I am satisfied that the conditions for the making of orders have been met and that it is appropriate to make orders under sections 318 and 319 of the Act. The application is supported by a majority of those affected. Granting the application will reduce Snack Food’s managerial, administration and compliance burden, promote workplace harmony and greater alignment with the Award, and on an overall basis, operate in a way that does not disadvantage employees.
Order PR772058 will issue separately to this decision.
COMMISSIONER
[1] Snack Brands Australia PR746225, 27 September 2022.
[2] Intersnack Mid Co Pty Ltd & Ors, Case No. 2023/00430092 NSWSC per Black J, 9 January 2024.
[3] The Real McCoy Snackfood Company (Factory & Warehouse Staff) Enterprise Agreement 2019.
Printed by authority of the Commonwealth Government Printer
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