UGL Engineering Pty Ltd
[2023] FWC 1866
•28 JULY 2023
| [2023] FWC 1866 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
UGL Engineering Pty Ltd
(AG2023/2020)
| Mining industry | |
| COMMISSIONER SCHNEIDER | PERTH, 28 JULY 2023 |
S.318 - Application for an order relating to instruments covering new employer and transferring employees
UGL Engineering Pty Ltd (UGL or the Applicant) has applied to the Fair Work Commission (the Commission) under section 318 of the Fair Work Act 2009 (Cth) (the Act) for an Order in relation to a transfer of business.
The transferrable instrument in this matter is the IAS Group Enterprise Agreement 2019-2023 (the IAS Agreement or the Transferrable Instrument).[1] The application also concerns the UGL Western Region Enterprise Agreement 2022 (the UGL Agreement).[2]
Background
The Applicant has entered revised contract arrangements with Chevron for the maintenance work for Chevron at its operations in Western Australia (Chevron Sites) which involves UGL performing the services previously performed by Innovative Asset Solutions Pty Ltd (IAS).
IAS employed several casual employees to provide maintenance services in respect to engineering, installation, and maintenance services work at Chevron sites.
IAS provided these services from around November 2021 and does not, and will not, continue to provide those services.
Accordingly, IAS is transferring work at Chevron Sites to UGL Engineering.
33 casual employees (the Transferring Employees), who were engaged by IAS at Chevron’s Gorgon facility at Barrow Island and Wheatstone facility in Onslow Western Australia, have been offered, and have accepted, casual employment with UGL to perform that work.
The Transferring Employees completed their last casual engagement as employees of IAS, between 31 March 2023 and 26 May 2023, in line with rostering arrangements.
The Transferring Employees were then offered employment by UGL, between 3 April 2023 and 27 May 2023.
Each Transferring Employee accepted the terms of the offer made by UGL and progressively commenced work with UGL, from 19 April 2023 until 2 June 2023, in accordance with rosters.
The Transferring Employees’ employment with UGL is covered by the IAS Agreement.
The IAS Agreement covered the Transferring Employees immediately prior to the termination of their employment by IAS.
By operation of section 312 of the Act, the IAS Agreement is a transferable instrument.
The default position, under section 313 of the Act, is that, after the transfer time, the IAS Agreement will cover the Applicant and the Transferring Employees to the exclusion of any other instrument.
However, the Applicant is already covered by an enterprise agreement, being the UGL Agreement.
The UGL Agreement covers the Applicant and its employees in respect of the scope of work to be done by the Transferring Employees and other non-transferring employees currently engaged to perform similar work to that of the Transferring Employees at Chevron Sites.
At the time of application there are 19 employees at Chevron sites employed by UGL, covered by the UGL Agreement.
The UGL Agreement will also cover any new non-transferring employees at Chevron sites.
To ensure industrial harmony, and to minimize any economic disadvantage due to additional administrative and payroll costs, UGL seeks to standardise conditions so that all of the Applicant’s employees who are performing the same work, at the same sites, under the same supervision, are covered by the same industrial instrument.
The Applicant seeks the following orders:
(a) Pursuant to section 318(1)(a) of the Fair Work Act 2009 (Cth), the IAS Group Enterprise Agreement 2019-2023 (IAS Agreement), being a transferable instrument that would, or would be likely to cover the Applicant and its employees previously employed by Innovative Asset Solutions Pty Ltd (Transferring Employees) because of paragraph 313(1)(a) does not, and will not, cover the Applicant and the Transferring Employees;
and
(b) Pursuant to section 318(1)(b) of the Fair Work Act 2009 (Cth), an enterprise agreement, being the UGL Western Region Enterprise Agreement 2022, AE515701 PR740391 (Western Region Agreement) that covers the Applicant, does, or will, cover the Transferring Employees.
Legislation
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.”
Consideration
Preliminary matters
The Applicant submits that, by virtue of section 311(1) of the Act, a transfer of business has occurred and that the former employees of IAS who have accepted employment offers with UGL to perform work on Chevron Sites at the time of this application are transferring employees within the meaning of the Act because:
· The employment of an employee of the old employer, IAS, has terminated;
· Within three months after the termination, the employee has been employed by the new employer, being the Applicant;
· The work the employee performs for UGL is substantially the same as the work the employee performed for IAS; and
· There is a connection between IAS and UGL Engineering as they are associated entities by virtue of section 311(3) of the Act.
I find this satisfies the requisite connection between the old employer and the new employer under the Act, pursuant to section 311(3).
I am satisfied that the Applicant is entitled to make this application as the new employer; the Transferring Employees will perform the same or substantially the same work for the Applicant; and there is a transfer of business within the meaning of section 311 of the Act.
The effect of the order sought by the Applicant would be that the Transferring Instrument would not cover the Applicant or any of the Transferring Employees.
Section 318 of the Act provides that the Commission has discretion to make the Order and in determining whether to make the order, I must consider each of the matters in section 318(3) of the Act. I will now turn to consider these matters.
The views of the new employer
The Applicant, being the new employer, is clearly supportive of the application.
The Applicant relies on the following reasons to support granting the order:
· it will provide for Transferring Employees to be employed under the business entity which is contracted to Chevron for the performance of the relevant work, under which the ongoing transferring work will be performed;
· to avoid the need for the complexities and costs of running payroll and administration processes for two groups of employees performing the same transferring work; and
· to ensure business synergy and mitigate the negative impact on productivity and work relationships of having to manage and administer multiple employment arrangements within the same entity for the same work.
The Applicant has provided a statement of evidence from Mr Scott Ellevson (Mr Ellevson), Projects and Maintenance Manager for the Applicant.
Mr Ellevson echoes the above reasons and provides further background on the transfer and discussion with employees.
The views the employees who would be affected by the order and whether they would be disadvantaged by the order
The Applicant submitted the following in relation to this criterion:
· Discussions have been held with each of the Transferring Employees, who have subsequently been offered employment by the Applicant.
· Each of the Transferring Employees have accepted the offer of employment with the Applicant on the express basis that the employee proactively supports this Application.
· The Transferring Employees will not be disadvantaged because the rates of pay offered and accepted by the Transferring Employees under the Contracts are significantly higher than the rates of pay they received while employed by IAS in relation to the transferring work.
· The rates of pay in the UGL Agreement are significantly higher than in the IAS Agreement.
· Therefore, if the orders sought are made, the Transferring Employees will be in an advantageous position compared to the position they currently enjoy, as the more beneficial terms of the UGL Agreement.
· The UGL Agreement also includes annual pay rate increases no less than the National Consumer Price Index for the term of the agreement, will apply to their employment.
The Applicant also filed an example of the contract provided to and signed by a Transferring Employee.
The statement of Mr Ellevson details the discussions he held with the Transferring Employees. Mr Ellevson held discussions in groups and individually with the Transferring Employees.
Mr Ellevson states that, during this consultation process, some employees sought clarification or asked questions, but no concerns were raised, with each employee returning their contracts without raising any issues.
The nominal expiry date of the agreement
The Commission notes that neither Agreement has passed its nominal expiry date:
· The IAS Agreement has a nominal expiry date of 2 July 2023.
· The UGL Agreement has a nominal expiry date of 13 April 2026.
Whether the transferable instrument would have a negative impact on the productivity of the
new employer’s workplace
The Applicant submits that the order will have a positive impact on its productivity and that the continuation of the current arrangement will have a negative impact on its productivity for the following reasons:
· It would cause a negative impact to productivity of the Applicant’s workplace if the orders sought are not made, as it is likely to create significant industrial disharmony if employees covered by different sets of terms and conditions of employment are required to perform the same work for the same employer side by side;
· If the order was to be granted it could only have a positive impact on productivity as the UGL Agreement covers the work to be undertaken by both Transferring Employees and non-transferring employees, and therefore better suited to the Applicant’s operations; and
· Productivity issues may arise if a number of different employment arrangements were to cover a single group of employees performing the same work.
I accept these submissions and that these matters weigh in favour of making the proposed order.
Whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer
The Applicant submits that it would incur significant economic disadvantage as a result of the IAS Agreement covering it and the Transferring Employees, as the Applicant would be required to incur greater administrative and human resources costs.
The Applicant also submits it could suffer loss, if the orders are not granted, in the form of productivity impact due to workplace disharmony.
The degree of business synergy between the transferable instrument and any workplace instrument that covers the new employer
The Applicant submits there is no business synergy between having both the IAS Agreement and the UGL Agreement covering the Applicant in relation to the same work, as the instruments provide for different employment conditions. The Applicant is of the position that a greater degree of synergy for the Transferring Employees and non-transferring employees would occur should the order be granted.
The public interest
The Applicant submits that it is in the public interest to grant the order for the following reasons:
· Granting the Order would provide a high degree of consistency in relation to employment conditions, avoid confusion among employees around their terms and conditions of employment, encourage industrial harmony across the Applicant’s workforce and simplify the Applicant’s administrative and payroll processes (thereby reducing administrative costs).
· It is the intention of UGL to have all of its employees covered by the UGL Agreement. This would be in the public interest to the extent that a large group of employees who would otherwise be under various employment arrangements would be able to participate in future enterprise bargaining as a single group. This is supportive of the Objects of the Act to the extent that the desired arrangements facilitate enterprise bargaining.
I am satisfied that granting the order would not be contrary to the public interest.
Conclusion
In consideration of all the circumstances, and importantly noting the contracts accepted by the Transferring Employees, I am satisfied that the order sought should be made. The Order has been issued concurrently.[3]
COMMISSIONER
[1] [AE503897].
[2] [AE515701].
[3] [PR764674].
Printed by authority of the Commonwealth Government Printer
<AE503897 PR764673>
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