Sydney Trains
[2024] FWC 1144
•6 MAY 2024
| [2024] FWC 1144 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Sydney Trains
(AG2024/233)
| UGL UNIPART JV AUBURN ENTERPRISE AGREEMENT 2022 Rail industry | |
| COMMISSIONER MCKINNON | SYDNEY, 6 MAY 2024 |
Application for orders relating to instruments covering new employer and transferring employees
Sydney Trains is in the process of insourcing the rollingstock maintenance and supply chain services provided by employees of UGL Rail Services Pty Ltd (UGL) at the Sydney Trains maintenance site in Auburn, NSW. The process will conclude on 1 July 2024, one day after its services agreement with UGL expires. Sydney Trains has applied for orders under section 318(1) of the Fair Work Act 2009 (the Act) so that the Sydney Trains and NSW TrainLink Enterprise Agreement 2022 (Sydney Trains Agreement) will cover affected employees who transfer to Sydney Trains on and from 1 July 2024 and who are currently covered by the UGL Unipart JV Auburn Enterprise Agreement 2022 (the UGL Agreement).
Extensive consultation between Sydney Trains, affected employees and the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) has resulted in agreement on the transfer of business and the preservation of certain terms and conditions of employment for UGL employees who transfer from UGL to Sydney Trains. The agreement means that the application now proceeds unopposed.
The question is whether the orders sought by Sydney Trains should be made.
Section 318 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.”
On the material before me, there will be a transfer of business for the purposes of subsection 311(1) of the Act from UGL to Sydney Trains on 1 July 2024, because:
The employment of relevant UGL employees will terminate on 30 June 2024,
The employees will be offered employment with Sydney Trains on and from 1 July 2024, and at least some of these employees will accept the offer of employment and become employed by Sydney Trains from that date,
The work these employees will perform for Sydney Trains will be the same, or substantially the same, as the work they currently perform for UGL, and
There will be a connection of the type described in subsection 311(3) (transfer of assets) when assets used by UGL in the provision of rollingstock maintenance and supply chain services for Sydney Trains become assets used by Sydney Trains in the performance of this same work. Although not necessary to decide, there is also likely to be a connection of the type described in subsection 311(5) (insourcing) on the basis that the work performed by transferring employees will cease to be outsourced by Sydney Trains to UGL and will instead be performed by employees of Sydney Trains.
The UGL Agreement is a transferable instrument. Upon the transfer of business, UGL employees who become employees of Sydney Trains between 1 July 2024 and 30 September 2024 will be transferring employees in relation to the transfer of business.
Factors relevant to the exercise of the discretion in section 318 of the Act are set out in subsection 318(3) and are now considered in turn.
The views of Sydney Trains and employees who would be affected by the order
Naturally, Sydney Trains supports the application. It seeks to ensure that a single enterprise agreement applies to employees at the Auburn site when performing the same or similar work. It submits that on an overall basis, transferring employees will not be disadvantaged and indeed will be better off under the Sydney Trains Agreement. To this end, Sydney Trains has made a series of commitments to the AMWU (discussed further below), which are to be formalised in a Deed or other legally binding instrument in relation to the terms and conditions of employment of transferring employees.
Relying on these commitments, the AMWU does not oppose the application. The same can be said for two of the three individual employees who took the opportunity to express their views about whether the orders sought by Sydney Trains should be made. The only other evidence of employee views is a survey conducted in late January/early February 2024 which indicated that a majority of affected employees who responded to the survey (58/107) were in support of becoming covered by the Sydney Trains Agreement upon the transfer of their employment from UGL to Sydney Trains, while 49/107 were not in support.
Whether any employees would be disadvantaged in relation to their terms and conditions of employment
The UGL Agreement contains some terms and conditions of employment for which there is no equivalent in the Sydney Trains Agreement. Other terms of the UGL Agreement are more beneficial than comparable terms in the Sydney Trains Agreement, including in relation to standing by, higher duties, minimum health standards, salary sacrifice, weekday rosters, transport home after hours, weekend and overtime minimum engagements and breaks between shifts, morning tea breaks, pro rata long service leave on termination, laundry service, post-transfer retrenchment and some penalties, allowances and wage rates.
More beneficial terms and conditions in the Sydney Trains Agreement include provision for free travel on Sydney public transport, additional leave (sick/carer’s leave, compassionate leave, parental leave, picnic day, paid special leave, domestic and family violence leave, public holiday leave, long service leave after 10 years, delegates training leave), breastfeeding entitlements, support in connection with sexual harassment, journey accident insurance, shift worker leave, accrued days off, redundancy pay, some higher overtime, public holiday and shift penalties and additional or higher value allowances.
Unsurprisingly, there are also differences between the two instruments in machinery terms, including in relation to consultation, dispute resolution, disciplinary matters and frequency of pay.
Supplementing the terms and conditions of employment contained in the Sydney Trains Agreement, Sydney Trains has committed to preserve or provide additional benefits for transferring employees as outlined in correspondence to the AMWU on 6, 7, 12 and 27 March 2024 and 23 April 2024 (also recorded in AMWU notes of a meeting between the parties on 17 April 2024). There will be a joint communication process between the parties about the transfer process and this application; a collaborative approach to the making of offers of employment to transferring employees; an agreed timeframe for the making of offers of employment and for employees to respond; further discussion with UGL about post-transfer retrenchment entitlements; additional uniforms (10 workable sets); offsetting the loss of a $14/week income protection allowance for affected employees; no charge for salary packaging‑related payroll deductions other than a $55 administration fee for employees who move to a “Maxxia” salary package; and a process for reclassification and pay “gold-circling” of non-“RC” transferring employees (other than apprentices) below the C8 classification to be completed by 30 September 2024.
Having compared the terms of the UGL Agreement and the Sydney Trains Agreement and having regard to the additional commitments made by Sydney Trains for the benefit of transferring employees, I am satisfied that transferring employees will not be disadvantaged overall in relation to their terms and conditions of employment if the orders are made.
The nominal expiry date of the Agreement
The UGL Agreement nominally expires on 30 June 2024, while the Sydney Trains Agreement nominally expired on 1 May 2024. As the Sydney Trains Agreement has now expired, transferring employees will have the opportunity to participate in bargaining for a replacement enterprise agreement for Sydney Trains, which is likely to commence in the not-too-distant future.
Whether the UGL Agreement would have a negative impact on productivity at Sydney Trains
The continuing operation of the UGL 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. It would mean two separate roster patterns at a single site with the associated additional administrative and managerial resources this would require. Sydney Trains has provided estimates as to the time and cost of this endeavour, assuming a not-insignificant lead time to develop and implement new payroll rules and systems, overtime for existing staff to implement the new rules and systems and engagement of 4 new employees to manage the employment of transferring employees as a separate group. If the orders are made, these resources can be redirected to more productive endeavours. There is also the prospect that differing terms and conditions for employees working side by side in the same or similar functions will negatively affect productivity if concerns about job security arise, or employees feel they are missing out or undervalued.
Whether Sydney Trains would incur significant economic disadvantage as a result of coverage by the UGL 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. Sydney Trains estimates this cost to be in the order of $1.5 million for the development and implementation of separate systems alone. The cost estimate does not factor for differentials in terms and conditions of employment as between the two enterprise agreements. Based on these estimates, there is a reasonable hypothesis that continuing coverage of the UGL Agreement at the Auburn site will cause Sydney Trains to incur significant economic disadvantage although the state of the evidence does not permit findings of fact in this regard.
Degree of business synergy between the UGL Agreement and other workplace instruments covering Sydney Trains
The UGL Agreement is underpinned by, and incorporates, the Manufacturing and Associated Industries and Occupations Award 2020 (the Manufacturing Award). By contrast, the Sydney Trains Agreement is a stand‑alone enterprise agreement underpinned by, but replacing, the Rail Industry Award 2020 (the Rail Award) and predecessor enterprise agreements. Because of its relationship with the Manufacturing Award, and because it is narrowly focused on manufacturing and associated industry functions, the UGL Agreement is not easily aligned to the terms and conditions of employment that have long been established at Sydney Trains. Although there are many similar terms and conditions of employment in the UGL Agreement and the Sydney Trains Agreement, there are also important practical operational differences including in relation to patterns of work, classifications and allowances. Rather than promoting business synergy, continuing coverage of transferring employees under the UGL Agreement would require the creation of separate rules and systems to manage a small cohort of Sydney Trains’ approximately 11,000 employees.
The public interest
There is nothing to indicate that granting the orders would be contrary to the public interest. Although the application deals primarily with the private interests of the parties, it intersects with the public interest more broadly in the sense that Sydney Trains is a state government agency tasked with the essential function of delivering public transport services to the community. Efficient administration and operation of these services is generally in the public interest.
Conclusion
On balance, the considerations above weigh in favour of granting the application. There is no opposition to the application by the AMWU or others who have taken the opportunity to express their views. Employees will not be disadvantaged overall in relation to their terms and conditions of employment if the orders are made. As the Sydney Trains Agreement has now expired, it is likely that there will soon be an opportunity for transferring employees to participate in bargaining for a replacement enterprise agreement. The potential for negative productivity effects is reduced by providing for a single enterprise agreement to cover all affected employees of Sydney Trains. There is not a great degree of business synergy between the UGL Agreement and the other workplace instruments that apply at Sydney Trains because its relationship to the Manufacturing Award rather than the Rail Award. Promoting greater efficiency in the administration and operations of Sydney Trains is a matter that is generally in the public interest.
For the reasons above, I am satisfied that the conditions for the making of an order have been met and that it is appropriate to grant the application under section 318 of the Act.
Order PR774444 will issue separately to this decision.
COMMISSIONER
Appearances:
M Seck of Counsel for the Applicant.
J Gordon for the AMWU.
Hearing details:
2024.
Sydney:
April 30.
Printed by authority of the Commonwealth Government Printer
<AE519964 PR774438>
0
0
0