The University of Melbourne

[2019] FWC 4372

[2019] FWC 4372

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees

The University of Melbourne
(AG2019/1645)

Educational services
DEPUTY PRESIDENT MILLHOUSE	MELBOURNE, 25 JUNE 2019

Application for orders relating to instruments covering new employer and transferring employees.

[1] This decision concerns an application by The University of Melbourne (University) for an order under s.318 of the Fair Work Act 2009 (Cth) (Act).

[2] The application is made in respect of the prospective employment of 16 employees (Transferring Employees) who are currently employed by University of Melbourne Commercial (UoMC) under the Melbourne University Private Ltd Enterprise Agreement 2005 (AG845638)(MUP Agreement).

[3] UoMC is a wholly owned subsidiary of the University. UoMC and the University are associated entities as a consequence of their status as related bodies corporate within the meaning of s.50of the Corporations Act 2001 (Cth).

[4] The order sought by the University is that the MUP Agreement, a transferable instrument that would, or would be likely to, cover the University and the Transferring Employees because of s.313(1)(a) of the Act, will not cover the University and the Transferring Employees in their employment with the University.

[5] The application is not opposed by the National Tertiary Education Union (NTEU), being an employee organisation that is covered by the MUP Agreement, or has the right to represent the industrial interests of the Transferring Employees and/or other employees at the workplace.

[6] In the circumstances, I have decided to deal with the application on the papers without conducting a hearing.

Background

[7] UoMC is currently in the process of ceasing operations. The University proposes to seek to transfer the employment of the Transferring Employees to the University prior to 30 June 2019.

[8] If, as is the apparent case, the Transferring Employees cease employment with UoMC and commence employment with the University within three months after the termination of their employment with UoMC, the University submits that there will be a transfer of business within the meaning of s.311(1) the Act, which provides as follows:

“When does a transfer of business occur

(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).”

[9] The Commission has the power to make certain orders if there is, or is likely to be a transfer of business from an old employer to a new employer. 1 Accordingly, the University has applied for an order under s.318(1) of the Act that the MUP Agreement, a transferable instrument that would, or would be likely to, cover the University and the Transferring Employees because of s.313(1)(a) of the Act, will not cover the University and the Transferring Employees in their employment with the University and that the University of Melbourne Enterprise Agreement 2018 (AE502413) (2018 Agreement) will cover the Transferring Employees. The University has standing to make the application because, pursuant to s.318(2)(a) of the Act, it is likely to be the new employer of the Transferring Employees in accordance with the proposed offer of employment to be made.

[10] The application is supported by the affidavit material of Seán Hogan, Director, Workplace Relations for the University. 2  As earlier noted, the application is not opposed by the NTEU. The fact that the application is not opposed is evidenced in correspondence sent to the Commission.

The statutory framework

[11] Section 317 of the Act enables the Commission to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer.

[12] The discretion to make the order sought by the University pursuant to s.318(1) of the Act will only be exercised after taking into account the matters set out in s.318(3) of the Act, which provides as follows:

“Orders relating to instruments covering new employer and transferring employees

(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.”

Consideration

[13] It is not in dispute, and I am satisfied that the Commission has the power to make an order pursuant to s.318(1) of the Act, because in the circumstances set out above, there is, or is likely to be a transfer of business from UoMC to the University. 3

[14] For the purposes of s.318(3)(a)(i) of the Act, the view of the University is that it wishes to offer the Transferring Employees employment pursuant to the 2018 Agreement, with no break in the Transferring Employees’ employment, and supports the making of the order sought.

[15] For the purposes of s.318(3)(a)(ii) of the Act, the views of the Transferring Employees were sought by the Commission, however no views were expressed. Accordingly, I consider this to be a neutral consideration.

[16] For the purposes of s.318(3)(b) of the Act, I have had regard to the fact that all of the Transferring Employees will be transferred to positions at the University which are at the same or a higher classification level under the 2018 Agreement. The salaries in the 2018 Agreement exceed the salaries for the equivalent classifications in the MUP Agreement. While the MUP Agreement makes provision for an extended pay structure through the linking of two classifications, such that an employee may be advanced to a higher pay range in recognition of their performance and skill development, this is offset by the superior salary entitlements in the 2018 Agreement. Further, during the operation of the 2018 Agreement, employees will become entitled to two further pay increases, each of 2.2%.

[17] In respect of paid and unpaid leave entitlements, the 2018 Agreement offers certain more favourable outcomes for Transferring Employees including:

•  the opportunity to purchase annual leave;

•  five days of non-cumulative carer’s leave per annum, in addition to the cumulative entitlement of 15 days per annum;

•  paid maternity leave of up to 24 weeks for employees with at least five years of continuous service;

•  paid partner leave, which extends the paid maternity leave entitlements to a partner of the employee who becomes the primary caregiver of a child;

•  paid and unpaid domestic violence leave accessible “per occasion;”

•  five days paid leave per annum (non-cumulative) to fulfil Indigenous cultural responsibilities for Aboriginal and Torres Strait Islander employees;

•  time release for union representatives;

•  up to five days of paid leave per annum (non-cumulative) for union training; and

•  leave without pay in any other circumstances requested by an employee and approved by the University.

[18] I also note that the University will recognise continuity of service for all Transferring Employees for the purposes of calculating leave entitlements, and all accrued but untaken leave will transfer to the employment with the University.

[19] The Transferring Employees are currently employed on maximum term contracts. The redundancy pay provisions of the 2018 Agreement do not apply to fixed term employees. However, in circumstances where the fixed term employment is terminated prior to the expiry of the term, such employees will be entitled to payment in lieu for the remainder of the term (with exceptions in the case of probationary employees and in cases of unsatisfactory performance and misconduct). Further, where a fixed term employee has been employed for at least five years on successive fixed term contracts, the employee may be entitled to a separation payment of between 10 and 13 weeks’ pay where the University ends the employment at the expiry of the term and where there is no suitable alternative employment available (subject to the satisfaction of other conditions as contained in clause 3.10.7 of the 2018 Agreement). I also note the operation of clause 3.10.9 of the 2018 Agreement, which preserves the severance benefits set out in clause 24 of the University of Melbourne Enterprise Agreement 2013 (of between 4 and 52 weeks’ severance pay) where the fixed term employment commenced prior to the commencement date of the 2018 Agreement, and where the employment of a fixed term employee ends on the expiry date agreed at the commencement of the contract. In this respect, I note that the University will recognise prior service of Transferring Employees’ for the purposes of calculating redundancy benefits.

[20] In comparison, in a redundancy situation the MUP Agreement provides for eight weeks’ notice of termination and a severance payment of four to 16 weeks’ pay. While the requirement for the satisfaction of certain conditions in the 2018 Agreement are not contained in the MUP Agreement, if a Transferring Employee is made redundant by the University pursuant to the 2018 Agreement, the employee will have the potential to receive a greater payment under the 2018 Agreement than under the MUP Agreement. Notwithstanding this, there is some disadvantage associated with the difference between the two instruments, which may have a detrimental impact upon the Transferring Employees in certain cases.

[21] Under the 2018 Agreement, employees can be engaged for up to 36.25 ordinary hours per week, which is fewer than the maximum weekly hours provided in the MUP Agreement, being 36.75 hours per week. Transferring Employees will also receive two paid 10 minute rest breaks not afforded under the MUP Agreement. However, I note that under the 2018 Agreement, the Transferring Employees may be rostered to work during a spread of 06:30am to 10:30pm, which is less beneficial than the ordinary spread of hours of 08:00am to 06:00pm contained in the MUP Agreement.

[22] Many of the clauses in the 2018 Agreement are drafted in similar terms to the MUP Agreement. Having regard to the provisions above that are expressed to be more or less beneficial to the Transferring Employees, I am of the view that when those matters are reviewed in totality, the Transferring Employees would not be disadvantaged by the order sought in relation to their terms and conditions of employment. This conclusion weighs in favour of making the order.

[23] In respect of s.318(3)(c) of the Act, the nominal expiry date of the MUP Agreement is 20 December 2008. Having regard to the fact that the MUP Agreement has been nominally expired for more than a decade, I consider this to be a matter that weighs in favour of making the order.

[24] In respect of s.318(3)(d) of the Act, the University contends that should the MUP Agreement apply to the Transferring Employees:

(a) the University would need to maintain distinct and disparate employment systems, which will give rise to operational inefficiencies; and

(b) Transferring Employees and existing employees of the University that perform similar duties will be treated differently and this could affect the workplace culture.

[25] Further, the University says that where the work to be undertaken by Transferring Employees is covered by the classifications in the 2018 Agreement, the reliance on the MUP Agreement is unnecessary.

[26] I accept the University’s submission that the ongoing application of the MUP Agreement would have a negative impact on the productivity of the University’s workplace for the purposes of s.318(3)(d) of the Act. I have taken into account the evidence of Mr Hogan that the continued operation of the MUP Agreement would require the University to maintain distinct employment systems for 16 Transferring Employees, out of a total workforce of approximately 8,900 and in circumstances where the 2018 Agreement is the primary document governing the terms and conditions of employment for the majority of that workforce. I also accept that the differential treatment raises the potential for employee dissatisfaction and this is a matter that may negatively affect productivity at the workplace. These matters weigh in favour of making the order sought.

[27] While there are said to be costs and administrative difficulties that may arise from the management of disparate terms and conditions of employment for employees who perform the same work, there is insufficient material presently before me that would allow me to conclude that the University would incur significant economic disadvantage for the purposes of s.318(3)(e) of the Act as a result of the MUP Agreement covering it. This is a factor that weighs against the making of the order sought.

[28] In respect of s.318(3)(f) of the Act, the University contends that given the similarity in the operations of UoMC and the University, the degree of business synergy between the 2018 Agreement and the MUP Agreement should be regarded as a neutral factor, and I regard it as so.

[29] In respect of s.318(3)(g) of the Act, the University submits that the public interest lies with ensuring consistency in employment terms and conditions for employees of the University. The notion of public interest refers to matters that might affect the public as a whole. 4 Having regard to these matters, I am of the view that there are no public interest considerations before the Commission that would militate against making the order sought. This weighs in favour of the order being made.

Conclusion

[30] Taking into account all of the above matters, I am satisfied that the order sought by the University, which is not opposed by the NTEU, ought be made.

[31] I will make an order that the MUP Agreement will not cover the University and the Transferring Employees in relation to the Transferring Employees’ employment with the University and that the 2018 Agreement will cover the Transferring Employees. For the purposes of s.318(4) of the Act, the order will come into operation in relation to a particular Transferring Employee on the date that the Transferring Employee becomes employed by the University.

[32] An order giving effect to this decision will be issued separately in PR709649.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<AG845638  PR709648>

 1 Section 317 of the Act.

 2   Witness statement of Seán Hogan dated 17 May 2019 (Hogan statement).

 3   Above n 1.

 4 See Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (2005) 139 IR 34 at [23].