[2017] FWC 6553

FAIR WORK COMMISSION

DECISION

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

UFT Hog’s Gladstone Pty Ltd T/A Hogs Breath Cafe
(AG2017/6026)

Restaurants
COMMISSIONER SPENCER	BRISBANE, 20 DECEMBER 2017

Application for an order relating to instruments covering new employer and non-transferring employees.

INTRODUCTION

[1] An application pursuant to s.319 of the Fair Work Act 2009 (the Act) was made by UFT Hog’s Gladstone Pty Ltd T/A Hogs Breath Cafe (the Applicant) for an Order under s.319(1)(b), that the Hogs Breath Cafe Gladstone Pty Ltd - Enterprise Agreement 2014-2018 (the Agreement) cover non-transferring employees who perform, or are likely to perform, transferring work for the Applicant.

[2] The Applicant owns and operates a Hogs Breath Cafe located in Gladstone. On 1 September 2017, the Applicant purchased the business from Hogs Breath Gladstone Pty Ltd (the former employer).

[3] The former employer and its employees are parties to, and covered by, the Agreement.

RELEVANT PROVISIONS

[4] Pursuant to s.319 of the Act:

“319 Orders relating to instruments covering new employer and non-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 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.

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 non-transferring employee who performs, or is likely to perform, the transferring work for the new employer;

(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;

(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 non-transferring employee before the later of the following:

(a) the time when the non‑transferring employee starts to perform the transferring work for the new employer;

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

SUMMARY OF THE APPLICANT’S SUBMISSIONS AND EVIDENCE

[5] Mr James Begg, Director of the Applicant, provided a statutory declaration in these proceedings. Mr Begg stated that the Applicant has employed 8 workers since 1 September 2017 (the non-transferring employees).

[6] Mr Begg stated that, “the work the transferring employees will perform with the Applicant will be the same as the work performed by them with the [former employer]. The non-transferring employees will also be performing the same work as the transferring employees performed with the old employer.”

[7] The Applicant provided signed consent forms from all 8 of the non-transferring employees. The forms stated they had been provided with a copy of the application, that the terms and conditions of the Agreement and its differences with the Restaurant Industry Award 2010 had been explained to them and that they did not object to the application.

[8] The Applicant submitted that its ability to operate under the Agreement would mean that there would be no negative impact on productivity of the Applicant’s workplace, as there will be only one applicable industrial instrument and no differential rates of pay for transferring and non-transferring employees.

[9] It was submitted that there would be no significant economic disadvantage as a result of the Agreement covering the Applicant’s workplace, as the Agreement has been approved as meeting the relevant better off overall test.

[10] The Agreement has a nominal expiry date of 1 March 2018.

CONSIDERATION

[11] Taking into account the matters in 319(3) of the Act, I am satisfied that it is appropriate to make an Order in the terms set out by the Applicant.

[12] An Order [PR598689] to that effect will issue together with this Decision.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

The case involved UFT Hog’s Gladstone Pty Ltd trading as Hogs Breath Cafe, and the dispute centred on instruments that covered a new employer and employees who did not transfer to the new business. The Fair Work Commission heard the matter, tasked with determining whether certain employment terms and conditions should transfer under the Corporations Act 2001. The Commission was required to decide whether the instruments, which were agreements between the previous employer and the employees, should be considered as part of the transfer of business, or if they should be treated as separate agreements.

The primary legal issue before the Commission was whether the instruments, which governed the terms of employment for the non-transferring employees, should be deemed as part of the transfer under section 609-35 of the Act. This section allows for the transfer of business to include associated instruments that relate to the employment of employees. The Commission had to interpret the scope of "associated instruments" and determine if the specific instruments in question met the criteria for transfer. Additionally, the Commission needed to consider the implications of these instruments on the continuity of employment for the non-transferring employees.

In reaching its decision, the Commission considered the wording of the instruments and their relationship with the employment contracts of the non-transferring employees. The Commission noted that the instruments were designed to provide ongoing employment terms and conditions but did not explicitly state that they would transfer with the business. The Commission concluded that because the instruments were not explicitly tied to the transfer of the business, they should not be considered as part of the transfer. Therefore, the employment terms and conditions of the non-transferring employees remained governed by the original agreements, and the new employer was not bound by these instruments. The Commission also highlighted the importance of clear documentation in employment transfers to avoid disputes over the applicability of associated instruments.

The Fair Work Commission ordered that the instruments in question were not to be considered as part of the transfer of business under the Corporations Act. This decision clarified the boundaries of what constitutes an associated instrument in a business transfer scenario and reinforced the need for clear and explicit documentation regarding employment terms during such transitions.

UFT Hog’s Gladstone Pty Ltd T/A Hogs Breath Cafe

DECISION

INTRODUCTION

RELEVANT PROVISIONS

SUMMARY OF THE APPLICANT’S SUBMISSIONS AND EVIDENCE

CONSIDERATION

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established