St Kerelos Pty Ltd atf the Ehab Mikhail Family Trust

[2015] FWC 6396

[2015] FWC 6396

FAIR WORK COMMISSION

DECISION

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

St Kerelos Pty Ltd atf the Ehab Mikhail Family Trust
(AG2015/5405)

COMMISSIONER GREGORY MELBOURNE, 17 SEPTEMBER 2015

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

[1] This decision concerns an application by St Kerelos Pty Ltd atf the Ehab Mikhail Family Trust (the Applicant) for an Order under s.319 of the Fair Work Act 2009 (Cth) (the Act) which relates to instruments covering a new employer and non-transferring employees.

Background

[2] The Applicant submits that on 30 June 2015 a transfer of business from the old employer to the Applicant occurred within the meaning of the expression as set out in s.311 of the Act. It submits that business assets associated with 7-Eleven Keilor East owned by the old employer, Sin-Can Pty Ltd, transferred to the Applicant on this date, and from that date onwards the Applicant has carried on the business previously carried out by the old employer.

[3] Pursuant to s.311(1) the Act provides for when a transfer of business occurs:

“311 When does a transfer of business occur

Meanings of transfer of business, old employer, new employer and transferring work

(1) There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:

(a) the employment of an employee of the old employer has terminated;

(b) within 3 months after the termination, the employee becomes employed by the new employer;

(c) the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;

(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).”

[4] The transferring employees were covered by the First Choice Convenience Enterprise Agreement 2014 (the Agreement) which was approved by the Commission on 20 February 2015 and has a nominal expiry date of four years from the date of operation. The Agreement was made between the old employer, Sin-Can Pty Ltd and employees in the following job classifications:

• Console Operators, and



• Retail Assistants.

[5] Since 30 June 2015 the Applicant has employed one non-transferring employee who is currently covered by the Vehicle Manufacturing, Repair, Services and Retail Award 2010.

[6] The Application is brought on the basis that the Applicant has employed nine transferring employees to perform the same work they had performed for the old employer under the terms and conditions of the transferring instrument, and the Applicant now seeks an order that the Agreement covers all employees, including current and future non-transferring employees, who will perform the transferring work.

[7] The work that the transferring employees perform for the new employer is the same or substantially the same as the work performed for the old employer. Further, there is a connection between the old employer and the Applicant in that all of the business assets owned by the old employer were transferred to the Applicant as of 30 June 2015. Accordingly, pursuant to s.311 of the Act, there is a transfer of business and the employees of the old employer are transferring employees within the meaning of the Act.

[8] The Agreement is a transferable instrument by virtue of s.312(1)(a) of the Act. Section 313 provides for the transferable instrument (the Agreement) to, in effect, transfer to the new employer (the Applicant) along with the employees who are transferred.

[9] Therefore, the Applicant and the transferring employees are already covered by the Agreement.

[10] With respect to whether the Agreement should also cover the non-transferring employees, s.314 of the Act makes provision for a transferable instrument to automatically cover other employees in certain circumstances.

[11] Section 314 of the Act states:

“314 New non-transferring employees of new employer may be covered by transferable instrument

(1) If:

(a) a transferable instrument covers the new employer because of paragraph 313(1)(a); and

(b) after the transferable instrument starts to cover the new employer, the new employer employs a non-transferring employee; and

(c) the non-transferring employee performs the transferring work; and

(d) at the time the non-transferring employee is employed, no other enterprise agreement or modern award covers the new employer and the non-transferring employee in relation to that work;

then the transferable instrument covers the new employer and the non-transferring employee in relation to that work.

(2) A non-transferring employee of a new employer, in relation to a transfer of business, is an employee of the new employer who is not a transferring employee.

(3) This section has effect subject to any FWC order under subsection 319(1).”

[12] The Applicant is covered by the Vehicle Manufacturing, Repair, Services and Retail Award 2010 which is a modern award within the meaning of s.314(1)(d) of the Act. As some or all of the non-transferring employees were engaged subsequent to the Agreement covering the new employer and the employer is covered by a modern award, the broader coverage of the Agreement to the ‘new’ employees, as contemplated by s.314 above does not operate.

[13] However, the operation of s.314 is subject to s.319 of the Act which allows for the Commission to make an order notwithstanding the provisions of s.314, that a transferring instrument cover non-transferring employees.

[14] Section 319(3) sets out the matters that the Commission must take into account when issuing an order pursuant to s.319.

“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.”

[15] In its application the Applicant has addressed each of the matters that I am required to consider when issuing an Order under s.319. The application was accompanied by a witness statement of Ehab Mikhail, a Director of the Applicant and one employee statement outlining their support to be covered by the Agreement.

[16] I will deal with each of the matters under s.319(3) of the Act.

Views of the new employer - s.319(3)(a)(i)

[17] The Applicant has made this application on the basis that it will avoid having some employees being covered by one industrial instrument and receiving more beneficial entitlements whilst other employees in the same workplace will be covered by an alternative instrument that contains lesser entitlements.

[18] Secondly, the Applicant submits that by having an order issued it will avoid the administrative challenges of applying two different industrial instruments to employees in a small workplace.

Views of the employees who would be affected by the order - s.319(3)(a)(ii)

[19] The Applicant submits that the employees have been given a copy of the Agreement and the Application was accompanied by one employee statement completed by the non-transferring employee expressing their wish to be covered by the Agreement.

Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment - s.319(3)(b)

[20] The Applicant submits the non transferring employees will be entitled to better terms and conditions of employment under the Agreement than under the Vehicle Manufacturing, Repair, Services and Retail Award 2010.

Expiry date of the agreement s.319(3)(c)

[21] The nominal expiry date of the First Choice Convenience Enterprise Agreement 2014 is four years from the date of operation, and it came in to operation on 27 February 2015.

Productivity s.319(3)(d)

[22] The Applicant has submitted that the Agreement would not have a negative impact on the productivity of their workplace. It submits that having employees in a small workplace on two different industrial instruments which provide for different entitlements will lead to dissatisfaction amongst employees who receive lesser entitlements.

[23] The Applicant further states that if the order were not to be granted there would be operational and administrative inefficiencies arising from having to administer the terms of two industrial instruments within a small workplace.

Economic disadvantage s.319(3)(e)

[24] The Applicant submits it will not incur any significant economic disadvantage if the order is made. The Applicant is prepared to provide its non transferring employees with better conditions of employment under the Agreement than under the Vehicle Manufacturing, Repair, Services and Retail Award 2010.

Degree of business synergy s.319(3)(f)

[25] The Applicant has submitted that there is little business synergy between the Agreement and the Vehicle Manufacturing, Repair, Services and Retail Award 2010 as they provide for different minimum employment conditions.

Public interest s.319(3)(g)

[26] The Applicant submits that issuing this order will not offend the public interest. There is no evidence that it would be against the public interest to issue this order.

Conclusion

[27] Taking into account each of the matters set out in s.319(3) I am satisfied that the order sought should be granted.

COMMISSIONER

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