St Kevins College Ltd
[2023] FWC 3049
•29 NOVEMBER 2023
| [2023] FWC 3049 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.319—Enterprise agreement
St Kevins College Ltd
(AG2023/4396)
| Educational services | |
| DEPUTY PRESIDENT CLANCY | MELBOURNE, 29 NOVEMBER 2023 |
Application for an order relating to instruments covering new employer and non-transferring employees.
St Kevins College Ltd (the Applicant) has made an application to the Fair Work Commission (the Commission) pursuant to s.319 of the Fair Work Act 2009 (the Act) for an order in relation to a transfer of business.
The Applicant seeks an Order for the Catholic Education Multi Enterprise Agreement 2022 (CEMEA) to cover non-transferring employees, who perform, or are likely to perform, transferring work as employees for the Applicant and are employed in roles that fall within the classifications under the CEMEA.
If the Order sought is not granted, new non-transferring employees who are subsequently engaged by the Applicant in roles within classifications in the CEMEA will otherwise be covered by the Educational Services (Teachers) Award 2020 or the Educational Services (Schools) General Staff Award 2020.
The relevant legislation
Part 2-8 of Chapter 2 of the Act describes when a transfer of business occurs and s.312(1) of the Act provides for the transfer of enterprise agreements, certain modern awards and certain other instruments if there is a transfer of business from one employer to another employer.
Section 311 of the Act relevantly provides:
“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).
Meaning of transferring employee
(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.
Transfer of assets from old employer to new employer
(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:
(a) the old employer or an associated entity of the old employer; and
(b) the new employer or an associated entity of the new employer;
the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):
(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and
(d) that relate to, or are used in connection with, the transferring work.”
Sections 317 and 319 of the Act relevantly provide:
“317 FWC may make orders in relation to a transfer of business
This Division provides for the FWC to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer.
…
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.”
Transfer of business
St Kevin’s College is an Edmund Rice Education Australia (EREA) member school. EREA commenced the implementation of a new governance structure in 2021. As part of the new structure, it is proposed that the staff who currently work at St Kevin’s College will be transferred to the Applicant, a newly incorporated entity. The staff are currently employed by Trustees of EREA (TEREA), the body corporate which owns and operates EREA.
To facilitate the transfer, all employees of TEREA who work at St Kevin’s College (Transferring Employees) will be made offers of employment with the Applicant. The offers of employment made to Transferring Employees will be on the same terms and conditions of employment and shall recognise all service-based employment entitlements. It is anticipated that the Transferring Employees will commence employment with the Applicant on 1 December 2023 and that their employment with TEREA will terminate effective from this date (Transfer Date).
Of the 612 Transferring Employees who were employed by TEREA and who worked at St Kevin’s College at the time this application was lodged, and to whom it was stated offers of employment would be made:
a)424 are currently covered by the CEMEA, which covers teachers; deputy principal; education support employees; school services officers; catholic education office speech pathologists, psychologists and administration employees; and education officers (together the CEMEA Transferring Employees); and
b)188 are covered by relevant modern awards including the Educational Services (Schools) General Staff Award 2020 and the Children's Services Award 2010 and are employed in roles that fall outside of the classifications in the CEMEA.
From the Transfer Date, the Applicant also intends to commence hiring new non-transferring employees in various roles to perform the same work, or substantially the same work, as that which is currently performed by 612 Transferring Employees for TEREA.
I am satisfied that there there will be a transfer of business from TEREA to the Applicant and that the Applicant is a “new employer” pursuant to s.311(1) of the Act, having regard to the material before me, because:
· The employment of the transferring employees with TEREA is set to terminate on 1 December 2023 (s.311(1)(a));
· The transferring employees will become employed by the Applicant on 1 December 2023 (i.e. within three months after the termination (s.311(1)(b));
· The work the transferring employees are performing for the Applicant will be the same, or substantially the same, as the work they performed for TEREA (s.311(1)(c)); and
· There being a connection between TEREA and the Applicant (s.311(1)(d)), as described in s.311(3), in that the Applicant owns or has the beneficial use of some or all of the assets that TEREA owned or had beneficial use of and that relate to or are used in connection with, the transferring work.
As I am satisfied that the Applicant will be a “new employer”, as defined pursuant to s.311(1) of the Act, it may apply to the Commission under s.319 of the Act for orders relating to a transferable instrument.
Transferable instrument
As it is an enterprise agreement that was approved by the Commission on 31 July 2023, the Agreement is a transferable instrument pursuant to s.312(1)(a) of the Act.
Section 313 of the Act provides that the Agreement covers the Applicant and the transferring employees, subject to any order of the Commission under s.318(1) of the Act.
Section 314 of the Act provides that the Agreement covers the Applicant and any non-transferring employees, subject to any order of the Commission under s.319(1) of the Act. In this matter, the Applicant has advised that it has no current non-transferring employees, but that the Applicant intends to commence hiring new non-transferring employees in various roles who will perform the same work, or substantially the same work, as currently performed by Transferring Employees for TEREA.
Who may apply for an order?
The application has been made by St Kevin’s College Ltd, the new employer. This meets the requirements of s.319(2) of the Act.
The Applicant seeks an Order that the Agreement covers it and any non-transferring employees pursuant to s.319 of the Act.
Matters that the FWC must take into account – Section 319
Section 319(3)(a) the views of the new employer or a person who is likely to be the new employer and the employees who would be affected by the order
The Applicant, the new employer, has made the application under s.319 of the Act and supports the making of the Order sought. It also submits that the transferring employees agree to the making of the Order sought.
There are no current non-transferring employees from whom I can receive views in considering the application.
The continuing application of the CEMEA to the Applicant and the Applicant's employees will ensure that operations are standardised and there is minimal interruption following the implementation of the new governance structure. The Applicant further submits that the continuing application of the CEMEA to new non-transferring employees will help promote a single workplace culture as well as the long-term interests of both the CEMEA Transferring Employees and any new non-transferring employees engaged after the transfer of business. The CEMEA Transferring Employees and new non-transferring employees are not a discrete group of employees but will effectively be integrated and work alongside one another performing the same or similar roles. The only practical distinction between the CEMEA Transferring Employees and the new nontransferring employees is that the new non-transferring employees will have been engaged on or after the Transfer Date. The proposed Order will provide the Applicant with certainty and consistency in relation to its workplace arrangements and application of industrial instruments at its workplace post transfer of business and will minimise its exposure to potential disadvantage as a result of the transfer.
Having regard to these matters, I have formed the view that this factor weighs in favour of granting the Order.
Section 319(3)(b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
The Applicant submits that Transferring Employees will not be disadvantaged by the order sought, as their terms and conditions of employment and service-based entitlements will remain unchanged following the transfer, and the CEMEA will cover the CEMEA Transferring Employees irrespective of whether the order is made. The Applicant further submits new non-transferring employees engaged by the Applicant following the transfer who perform the same transferring work as the Transferring Employees will not be disadvantaged by the order in relation to their terms and conditions of employment.
New non-transferring employees engaged by the Applicant in roles that fall within the CEMEA classifications after the Transfer Date, will otherwise be covered by the relevant modern awards despite the fact they will be performing the same work as the CEMEA Transferring Employees under the CEMEA. The Fair Work Commission has already satisfied itself that, in relation to the CEMEA, the requirements of section 186 of the FW Act have been met (which includes the requirement for the FWC to be satisfied that the CEMEA pass the better off overall test). Accordingly, the Applicant submits that the new non-transferring employees engaged after the Transfer Date in roles within the CEMEA classifications will be better off overall and enjoy more favourable terms and conditions under the CEMEA, in comparison to the Modern Awards
Having considered all the material before me, I am satisfied that the non-transferring employees will not be disadvantaged by the Order in relation to their terms and conditions of employment and therefore, this factor weighs in favour of granting the Order sought.
Section 319(3)(c) if the order relates to an enterprise agreement—the nominal expiry date of the agreement
The nominal expiry date of the Agreement is 31 December 2025. This does not weigh against the granting of the Order sought.
Section 319(3)(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace; and Section 319(3)(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer
The Applicant submits that application of the CEMEA will have a positive impact on the productivity of the Applicant's workplace, given that it has been incorporated for the purpose of continuing TEREA/EREA's operations and does not have its own enterprise agreement. The Applicant further submits the application of the respective Modern Awards to the non-transferring employees who perform the same work as the CEMEA Transferring Employees would have a negative impact on productivity and cause economic disadvantage to the Applicant due to the need to administer different terms and conditions of employment and classification systems for employees performing similar roles. Further, the application of different terms and conditions of employment may create division amongst employees and have an adverse impact on employee morale and productivity as a result of employees performing the same work under different classifications and rates of pay and being subject to different employee entitlements. This is particularly so given that the CEMEA Transferring Employees would enjoy more beneficial entitlements under the terms of the CEMEA.
I am persuaded these submissions have merit and have formed the view that these factors weigh in favour of granting the Order.
Section 319(3)(f) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer
The Applicant submits that there is little business synergy between applying the terms of the respective Modern Awards and the terms of the CEMEA for employees that are performing the same work. Given that the majority of the existing TEREA St Kevin's College employees will continue to be covered by the CEMEA, should they choose to accept the offers of employment, applying an entirely different instrument for new non-transferring employees will interfere with the Applicant's business synergies, culture and terms.
I consider this factor weighs in favour of granting the Order sought.
Section 318(3)(g) the public interest
The Applicant submits that granting the order sought would ensure both the protection of employees' terms and conditions of employment by ensuring non-transferring employees are better off and enjoy more favourable terms under the CEMEA and ensure the Applicant's business is able to operate. Accordingly, the Applicant asserts, granting the order would further the object of Part 2-8 of the FW Act, which the Applicant submits is in the public interest.
Given the circumstances and having regard to the material before me, I am not of the view that there are any public interest reasons not to make the Order sought.
IEU Support.
The Applicant submits that the application is supported by the Independent Education Union who is party to the CEMEA.
Conclusion
Having considered each of the matters set out in s.319(3) of the Act, I am satisfied that the following order should be made, with immediate effect (s.319(4)(b)):
· The Catholic Education Multi Enterprise Agreement 2022 will cover non-transferring employees who perform, or are likely to perform, transferring work as employees for St Kevin's College Ltd and are employed in roles that fall within the classifications under the Catholic Education Multi Enterprise Agreement 2022.
An Order[1] to this effect will be issued along with this decision.
DEPUTY PRESIDENT
[1] PR768513.
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<AE520953 PR768475>
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