Two Plus Two Enterprises Pty Ltd

[2014] FWC 2596

[2014] FWC 2596

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.319 - Application for an order re instruments covering new employer and non-transferring employees in agreements

Two Plus Two Enterprises Pty Ltd
(AG2014/5378)

COMMISSIONER BULL SYDNEY, 22 APRIL 2014

Application for an order re instruments covering new employer and non-transferring employees in agreements.

[1] This decision concerns an application by Two Plus Two Enterprises Pty Ltd (the Applicant) for an Order under s.319 of the Fair Work Act 2009 (the Act) which relates to instruments covering a new employer and non-transferring employees.

Background

[2] The Applicant submits that on 18 December 2013, it purchased the business assets of the old employer, Jaced123 Pty Ltd. Within three months of their termination, 11 employees of the old employer were employed by the Applicant.

[3] The Applicant submits that the work the transferring employees perform is the same or substantially the same as the work that the transferring employees performed for the old employer.

[4] The transferring employees were covered by the IPCA (NSW) Enterprise Agreement 2011 (the Agreement) which was approved by the Fair Work Commission (the Commission) on 21 July 2011. The Agreement has a nominal expiry date of 21 July 2015.

[5] Since 18 December 2013 the Applicant has employed 5 non-transferring employees. The non-transferring employees are currently covered by the Fast Food Industry Award 2010 which is a modern award within the meaning of section 314(1)(d) of the Act.

[6] The application is brought on the basis that the Applicant is already covered by the Agreement. On the basis that there has been a transfer of business and that the Agreement has transmitted along with the transferring employees as a result of the operation of the Act.

[7] Pursuant to s.311(1) the Act provides for when a transfer of business occurs:

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).

[8] In this application, the selected transferring employees were re-employed by the new employer within three months after termination. The work that the transferring employees perform for the new employer is the same or substantially the same as the work performed for the old employer. Further, there is a connection between the old employer and the Applicant in that all of the business assets owned by the old employer were transferred to an associated entity of the Applicant as of 18 December 2013. Accordingly pursuant to s.311 of the Act, there is a transfer of business and the employees of the old employer are transferring employees within the meaning of the Act.

[9] The Agreement is a transferable instrument by virtue of s.312(1)(a) of the Act. Section 313 provides for the transferable instrument (the Agreement) to, in effect, transfer to the new employer (the Applicant) along with the employees who are transferred.

[10] Therefore, the Applicant and the transferring employees are already covered by the Agreement.

Non-transferring employees

[11] With respect to whether the Agreement should also cover the non-transferring employees, s.314 of the Act makes provision for a transferable instrument to automatically cover other employees in certain circumstances.

[12] Section 314 of the Act states:

314 New non-transferring employees of new employer may be covered by transferable instrument

(1)  If:

 (a)  a transferable instrument covers the new employer because of paragraph 313(1)(a); and

(b)  after the transferable instrument starts to cover the new employer, the new employer employs a non-transferring employee; and

(c)  the non-transferring employee performs the transferring work; and

(d)  at the time the non-transferring employee is employed, no other enterprise agreement or modern award covers the new employer and the non-transferring employee in relation to that work;

then the transferable instrument covers the new employer and the non-transferring employee in relation to that work.

(2)  A non-transferring employee of a new employer, in relation to a transfer of business, is an employee of the new employer who is not a transferring employee.

(3)  This section has effect subject to any FWC order under subsection 319(1).

[13] The Applicant is covered by the Fast Food Industry Award 2010 which is a modern award within the meaning of s.314(1)(d) of the Act. As some or all of the non-transferring employees were engaged subsequent to the Agreement covering the new employer and the employer is covered by a modern award, the broader coverage of the Agreement to the ‘new’ employees, as contemplated by s.314 above does not operate.

[14] However, the operation of s.314 is subject to s.319 of the Act which allows for the Commission to make an order notwithstanding the provisions of s.314, that a transferring instrument cover non-transferring employees.

[15] Section 319(1) provides for Orders that the Commission may make:

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.

[16] Section 319(3) sets out the matters that the Commission must take into account when issuing an order pursuant to s.319.

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.

Applicant’s submissions

[17] In its application the Applicant has addressed each of the matters that I am required to consider when issuing an Order under s.319. The application was accompanied by a witness statement of Mr John Graeme Watchers, a Director of the Applicant and five employee statements outlining their support to be covered by the Agreement.

[18] I will deal with each of the matters under s.319(3) of the Act.

Views of the new employer - s.319(3)(a)(i)

[19] The Applicant wishes the Agreement to apply to its non-transferring employees because it will avoid some employees being covered by one industrial agreement and receiving different entitlements that are more beneficial, whilst other employees in the same workplace are covered by an industrial award with lesser entitlements, all performing similar or the same work.

[20] Secondly, the Applicant stated that it would be an administrative challenge to apply two different industrial instruments to employees in one small workplace.

Views of the employees - s.319(3)(a)(ii)

[21] The Applicant states that all non-transferring employees expressed a wish to be covered by the transferring instrument. The application was accompanied by signed employee acknowledgement forms by five of the non-transferring employees which indicated that they wished to be covered by the Agreement and had been given a copy of the Agreement to consider its terms and that the employer had explained to them how the terms of the Agreement would affect their employment.

Whether any employees would be disadvantaged by the order - s.319(3)(b)

[22] It was submitted by the Applicant that the non-transferring employees will be entitled to better terms and conditions of employment under the Agreement as compared to the Fast Food Industry Award 2010.

Expiry date of the agreement s.319(3)(c)

[23] The nominal expiry date of the Agreement is 21 July 2015.

Productivity s.319(3)(d)

[24] The Applicant submitted that the Agreement would not have a negative impact on the productivity of the workplace. This was because, having employees in a small workplace on two different industrial instruments which provide different entitlements, will lead to dissatisfaction amongst employees, in particular, the non-transferring employees who receive lesser entitlements.

Economic disadvantage s.319(3)(e)

[25] It was stated by the Applicant that there would be operational and administrative inefficiencies arising from having to administer the terms of an additional industrial instrument in a small workplace.

Degree of business synergy s.319(3)(f)

[26] The Applicant argued that there is little business synergy between the Agreement and the Fast Food Industry Award 2010 as they provide for different minimum employment conditions.

Public interest s.319(3)(g)

[27] The Applicant submits that issuing this order will not offend the public interest. There is no evidence that it would be against the public interest to issue this order.

Conclusion

[28] Taking into account each of the matters set out in section 319(3), I am satisfied that the order sought should be granted.

[29] An Order (PR549803) will be issued to provide that that IPCA (NSW) Enterprise Agreement 2011 would also cover the non-transferring employees of Two Plus Two Enterprises Pty Ltd who perform similar or the same work as the transferring employees.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

<Price code C, PR549802>