Streeflands Transport

[2013] FWC 8112

[2013] FWC 8112

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.318—Transfer of instrument

Streeflands Transport
(AG2013/10713)

Food, beverages and tobacco manufacturing industry
DEPUTY PRESIDENT KOVACIC	MELBOURNE, 16 OCTOBER 2013

Application for an order relating to instruments covering new employer and transferring employees in agreements.

[1] Streeflands Transport (the Applicant) made an application for an order under s.318 of the Fair Work Act 2009 (the Act) that the Western Milling (Vic) Enterprise Agreement 2012 (the Agreement) not cover drivers who obtain employment with Streeflands Logistics Solutions and work from its North Melbourne depot in the delivery of George Weston’s product.

Background

[2] George Weston Foods Pty Ltd (GWF) trading as Weston Milling has decided to contract out its Echuca based transport operations/deliveries and close its Echuca Distribution Centre. The Applicant, a transport and logistics company, will from 21 October 2013 perform that work for GWF. The Applicant will not be taking over any plant or equipment from GWF but is willing to employ two drivers currently employed by GWF (the transferring employees) should the order sought be made. The Applicant has advised that the two transferring employees contacted it seeking employment shortly after being informed by GWF that they would be made redundant.

[3] The transferring employees are currently employed by GWF under the Agreement as Flour Milling Level 4 employees. Their current wage rate is $26.0493 per hour or around $990 per week for a 38 hour week. Should the transferring employees be engaged by the Applicant, they would be employed under the Road Transport and Distribution Award 2010 (the Award) as Transport Worker Grade 4 employees. They would be paid $22.50 per hour which is above the relevant Award rate of pay (currently $18.33 per hour).

[4] The Applicant has advised that the work to be performed for GWF will be restructured so that the transferring employees can expect to work around 8 to 10 hours overtime each week. Working 4 hours overtime each week would see the transferring employees earn $990 per week, based on the additional hours being paid at time and a half. In other words, the transferring employees if employed by Streeflands and working the envisaged level of overtime are likely to be earning more than they currently earn, albeit they will be working longer hours.

[5] Both the Applicant and the National Union of Workers (NUW) agreed to the Commission dealing with application on the papers.

The Relevant Legislation

[6] Sections 317 and 318 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.

318 Orders relating to instruments covering new employer and 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 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.

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 transferring employee, or an employee who is likely to be a transferring employee;

(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 transferring employee before the later of the following:

(a) the time when the transferring employee becomes employed by the new employer;

(b) the day on which the order is made.”

Why the s.318 Order should be made

[7] In deciding whether to make the order pursuant to s.318 the Commission must take into account the matters set out in ss.318(3) above. I will deal with each of those matters separately.

(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

[8] The Applicant advised that it is keen to employ the transferring employees as they know the work and the customers. However, the Applicant also advised that it would not be able to offer employment to the two transferring employees were the Agreement to transfer given the higher costs it would entail. The Applicant further advised that the two transferring employees wish to continue working and are happy to work for the Applicant at a lower base rate of pay but with the payment of overtime when appropriate.

[9] Mr Duncan Pegg of the NUW advised that the NUW does not object to the application and that a representative of the NUW had spoken to the employees affected by the application and they did not wish for the NUW to object to the application.

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

[10] Paragraphs [3] and [4] above set out the impact on the earnings of transferring employees. In short, while their hourly rate of pay will be $3.55 per hour lower, once overtime is taken into account their overall remuneration is likely to be higher than they are currently earning with GWF. As acknowledged at paragraph [4] above, the transferring employees will however be working longer hours.

(c) If the order relates to an enterprise agreement—the nominal expiry date of the agreement

[11] The Agreement has a nominal expiry date of 31 May 2015.

(d) Whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace

[12] No evidence was provided on this matter.

(e) Whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer

[13] The Applicant advised that it would be significantly disadvantaged if the Agreement was to transfer and would therefore not be able to offer employment to the two transferring employees. Based on the difference in the hourly rate of pay for drivers under the Agreement and what the Applicant would pay the transferring employees, the Commission calculates that employing both transferring employees for a 38 hour week under the wage rates provided for in the Agreement would entail an additional cost to the Applicant of around $270 per week or $14,000 per annum. The cost impact would increase in circumstances where the transferring drivers worked overtime as is contemplated by the Applicant.

(f) The degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer

[14] The Applicant advised that GWF is a manufacturer of bakery products and that the Echuca Distribution Centre was ancillary to their core operations. On the other hand, the Award, subject to some exclusions, covers employees throughout Australia in the road transport and distribution industry and their employees in the classifications listed in the Award. 1 There does not appear to be any great synergy between the Agreement and the Award.

(g) The public interest

[15] The Applicant submitted that it was in the public interest to make the order sought, while the NUW did not explicitly address this matter. No adverse public interest considerations were brought to the Commission’s attention.

Conclusion

[16] I am satisfied that this application relates to a transfer of business within s.311 of the Act and which is a result of GWF’s decision to close its Echuca Distribution Centre and contract with the Applicant to provide distribution services. Further, I am satisfied that the Agreement is a transferrable instrument for the purposes of s.312 of the Act.

[17] With regard to the application, in view of the material provided by the Applicant and the NUW, and having taken into account all of the matters set out in ss.318(3) of the Act, I am satisfied that an Order pursuant to s.318 sought should be made. The Order (PR543335) will operate from 18 October 2013.

DEPUTY PRESIDENT

 1   PR986380 at Clause 4

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<Price code C, AE896664  PR543334 >