Tiger Airways Australia Pty Ltd

[2014] FWC 1479

[2014] FWC 1479

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.318—Transfer of instrument

Tiger Airways Australia Pty Ltd
(AG2014/3781)

COMMISSIONER CRIBB MELBOURNE, 3 MARCH 2014

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

[1] Tiger Airways Australia Pty Ltd (Tiger Airways, the Applicant, new employer) has lodged an application under section 318(1) of the Fair Work Act 2009 (the Act) for an order that the transferring employee (Mr A Hubbard) be covered by the new employer’s existing industrial instrument - the Tiger Pilots Australia Enterprise Agreement 2011 - 2013 1 (Tiger Agreement). The transferring employee would therefore no longer be covered by the Skywest Airline Pilots Agreement 20102 (Skywest Agreement) which currently applies to him.

[2] In the detailed application, it was stated that it was arguable that the work that the transferring employee will perform for Tiger Airways (the new employer) is the same or substantially the same as the work that they performed for the old employer Skywest Airlines (Australia) Pty Ltd (Skywest). This was on the basis that Tiger Airways operates in the budget domestic flight sector whilst Skywest operates regionally, mainly providing fly in/fly out charter services. The transferring employee will commence employment with the new employer on 4 March 2014. This is within three months of the termination of his employment with Skywest.

[3] The transferring employee is presently covered by the Skywest Agreement, being an enterprise agreement improved by a decision 3 of the Fair Work Commission on 2 December 2010. An enterprise agreement is a transferable instrument by operation of the Act at section 312(1)(a).

[4] Section 313(1) provides that a transferable instrument (the Skywest Agreement) that covered the old employer (Skywest) and the transferring employees, immediately before the termination of employment, will cover the new employer, Tiger Airways. The operation of these sections therefore means that Tiger Australia (the new employer) would be covered by the Skywest Agreement in relation to the transferring employee.

1. Relevant legislation

[5] Section 313 of the Act provides:

“313 Transferring employees and new employer covered by transferable instrument

(1) If a transferable instrument covered the old employer and a transferring employee immediately before the termination of the transferring employee’s employment with the old employer, then:

(a) the transferable instrument covers the new employer and the transferring employee in relation to the transferring work after the time (the transfer time) the transferring employee becomes employed by the new employer; and

b) while the transferable instrument covers the new employer and the transferring employee in relation to the transferring work, no other enterprise agreement or named employer award that covers the new employer at the transfer time covers the transferring employee in relation to that work.

(2) To avoid doubt, a transferable instrument that covers the new employer and a transferring employee under paragraph (1)(a) includes any individual flexibility arrangement that had effect as a term of the transferable instrument immediately before the termination of the transferring employee’s employment with the old employer.

(3) This section has effect subject to any FWC order under subsection 318(1).”

[6] Section 318 of the Act provides:

“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.”

2. Considerations

[7] A very detailed application was filed by Tiger Airways. Accompanying it was an affidavit from Mr Hubbard, dated 25 February 2014, who is the transferring employee.

Section 318(3)(a)(i): the views of the new employer

[8] The applicant, as the new employer, seeks that the transferable instrument (the Skywest Agreement) not cover or apply to it. Several reasons were advanced for this including the lack of synergy between the Skywest Agreement and the employer’s enterprise and the cost of trying to administer two very different enterprise agreements.

Section 318(3)(a)(ii): the views of the employees

[9] As indicated above, Mr Hubbard has provided a statutory declaration to the effect that the offer of employment by Tiger Airways was conditional on the Tiger Agreement covering his terms and conditions of employment. He stated that he had been provided by Tiger with information about the differences between the Skywest Agreement and the Tiger Agreement and that he considers the terms offered by Tiger Airways to be more beneficial to him. Further, he stated that he supports the application by Tiger Airways.

Section 318(3)(b): any disadvantage to the employees

[10] The applicant provided a detailed comparison of the key terms and conditions which the transferring employee currently receives and the terms and conditions which he would receive if covered by the Tiger Agreement. On the basis of the information provided, it would appear that, particularly when the proposed Tiger Agreement is approved and the transferring employee receives a promotion, there is no disadvantage to him, in respect of his salary and benefits, if he is covered by the Tiger Agreement.

Section 318(3)(c): the nominal expiry date of the transferable instrument

[11] The nominal expiry date of the Skywest Agreement is 9 December 2013. The nominal expiry date of the Tiger Agreement is 30 June 2013. It was stated by the applicant that a proposed new agreement has very recently been voted on by employees. It was said that the proposed agreement provided a significant enhancement to employees, including the transferring employee.

Section 318(3)(d): any negative impact on the employer’s workplace

[12] It was submitted by Tiger Airways that the transfer of the Skywest Agreement would have a negative impact on productivity in the workplace. The applicant would be required to administer different terms and conditions of employment for employees who perform the same role. Further, each agreement has different and complex systems in place for the allocation of annual leave.

Section 318(3)(e): any significant economic disadvantage to the employer

[13] It was stated by the applicant that there will be significant economic cost if the Skywest Agreement transfers with the transferring employee. This is due to the administrative difficulties arising from applying an enterprise agreement that lacks business synergy with the applicant’s enterprise. Further, compliance with particular provisions of the Skywest Agreement would impose considerable cost burdens on the new employer.

Section 318(3)(f): business synergy between the transferable instrument and existing agreement

[14] Tiger Airways submitted that there is a lack of business synergy between the transferring Skywest Agreement and the Tiger Agreement. In addition to the annual leave issue outlined above, it was stated that the Skywest Agreement provided for other terms and conditions of employment which could not be reconciled with the applicant's enterprise. These included redundancy, notice of termination and personal leave.

Section 318(3)(g): the public interest

[15] There is no evidence that the public interest is agitated in this matter.

Conclusion

[16] On balance, taking into account each of the matters stipulated in section 318(3) of the Act, I am satisfied that the orders sought should be granted.

[17] A separate order⁴ will issue. The order will come into operation, in accordance with section 318(4) of the Act, namely, the later of :

• the time when the transferring employee becomes employed by the new employer, or



• the day on which the order is made.

 1   AE884830

 2   AE882623

 3   [2010] FWAA 9318

4 PR548278

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