V/Line Corporation T/A V/Line
[2018] FWC 599
•7 FEBRUARY 2018
| [2018] FWC 599 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.319 - Application for an order relating to instruments covering new employer and non-transferring employees
V/Line Corporation T/A V/Line
(AG2017/6570)
Rail industry | |
COMMISSIONER LEE | MELBOURNE, 7 FEBRUARY 2018 |
Application for an order relating to instruments covering new employer and transferring employees.
[1] An application has been made by V/Line Corporation T/A V/Line (V/Line Corporation) to the Fair Work Commission (the Commission) for an order pursuant to section 319 of the Fair Work Act 2009 (the FW Act).
[2] The application seeks an order that:
1. The V/Line Infrastructure Enterprise Agreement 2015-2019, a transferable instrument that will cover V/Line Corporation pursuant to the Act, will cover non-transferring employees of V/Line Corporation who perform or are likely to perform the transferring work for V/Line Corporation.
2. The V/Line Rail Operations Enterprise Agreement 2015-2019, a transferable instrument that will cover V/Line Corporation pursuant to the Act, will cover non-transferring employees of V/Line Corporation who perform or are likely to perform the transferring work for V/Line Corporation.
[3] On 10 January 2018 my chambers wrote to the parties advising that having considered the application documentation lodged and the Affidavit of Elaine Elizabeth Seckhold, Executive General Manager, People at V/Line Pty Ltd (the Affidavit) I was satisfied that I had sufficient information before me to determine the matter on the papers. The correspondence noted that the application relates to employees who are not yet employed and that the Applicant had taken steps to seek the views of The Association of Professional Engineers, Scientists and Managers, Australia (APESMA), the Australian Rail, Tram and Bus Industry Union (RTBU) and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU). The unions were asked to advise my chambers if they object to the application or of any views they may have in relation to the application by close of business 17 January 2018.
[4] On 10 January 2018 the CEPU advised my chambers that it did not object to the application. On 11 January 2018 APESMA advised my chambers that it has no objections to the application and made a response to V/Line Corporation’s submissions in its application in relation to the criteria under s.319(3) of the Act. No response was received by the RTBU.
Legislation
“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.”
Background
[5] The V/Line passenger and freight business is presently operated by V/Line Pty Ltd.
[6] Pursuant to the Transport Integration Act 2010 (Vic) (TI Act) as recently amended by the Transport Integration Amendment (Head, Transport for Victoria and Other Governance Reforms) Act 2017 (Vic), the V/Line passenger and freight business will be transferred from V/Line Pty Ltd to V/Line Corporation. It is anticipated that this will occur in mid-February. Following the transfer, V/Line Pty Ltd will be wound up.
[7] V/Line Pty Ltd currently has approximately 1857 employees. The majority of V/Line Pty Ltd employees are covered by the V/Line Infrastructure Enterprise Agreement 2015-2019 and the V/Line Rail Operations Enterprise Agreement 2015-2019 (the VPL Agreements).
[8] Under s.289 of the TI Act, the employment of all V/Line Pty Ltd employees will transfer to V/Line Corporation, provided they are listed in the allocation statement provided to the Minister for Public Transport under s.275 of the TI Act (the transferring employees).
[9] It is intended that all V/Line Pty Ltd employees who are employed immediately before the transfer will transfer to employment by V/Line Corporation. Section 289(3)(b) of the TI Act confirms that the transferring employees will be employed by V/Line Corporation on the same terms and conditions as applied to their employment with V/Line Pty Ltd. The Applicant submits that the transfer to take place under the TI Act will also constitute a transfer of business under section 311 of the Act. Therefore, the VPL Agreements will cover and apply to V/Line Corporation and the transferring employees who perform transferring work, as a transferable instrument under section 312 of the FW Act.
[10] The orders sought under section 319(1)(b) of the FW Act are to ensure that non-transferring employees subsequently employed by V/Line Corporation are covered by the VPL Agreements where they are employed to perform work covered by the VPL Agreements.
Transfer of business and the transfer of the enterprise agreement
Transfer of business
[11] Section 311 of the Act provides as follows in relation to a transfer of business:
“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).
Meaning of transferring employee
(2) An employee in relation to whom the requirements in paragraphs (1) (a),(b) and (c) are satisfied is a transferring employee in relation to the transfer of business.
Transfer of assets from old employer to new employer
(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:
(a) the old employer or an associated entity of the old employer; and
(b) the new employer or an associated entity of the new employer;
the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):
(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and
(d) that relate to, or are used in connection with, the transferring work.
Old employer outsources work to new employer
(4) There is a connection between the old employer and the new employer if the transferring work is performed by one or more transferring employees, as employees of the new employer, because the old employer, or an associated entity of the old employer, has outsourced the transferring work to the new employer or an associated entity of the new employer.
New employer ceases to outsource work to old employer
(5) There is a connection between the old employer and the new employer if:
(a) the transferring work had been performed by one or more transferring employees, as employees of the old employer, because the new employer, or an associated entity of the new employer, had outsourced the transferring work to the old employer or an associated entity of the old employer; and
(b) the transferring work is performed by those transferring employees, as employees of the new employer, because the new employer, or the associated entity of the new employer, has ceased to outsource the work to the old employer or the associated entity of the old employer.
New employer is associated entity of old employer
(6) There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employed by the new employer.”
[12] Accordingly, pursuant to section 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.
Whether the Agreement covers non-transferring employees
[13] Section 314 of the Act sets out when non-transferring employees are automatically covered by the transferring instrument. This only occurs in certain circumstances.
[14] Section 314 of the Act provides as follows:
“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).”
Whether the Agreement should cover non-transferring employees
Section 319 of the Act
[15] Section 319 of the Act provides as follows:
“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.
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.
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;
(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.”
[16] In this matter, V/Line Corporation seeks orders pursuant to s.319(1)(b) of the FW Act. The application has been made by V/Line Corporation, the new employer, pursuant to s.319(2)(a) of the FW Act. I must now consider the requirements in subsection 319(3), and will deal with each requirement now in turn.
Section 319(3)(a)(i) - the views of the new employer
[17] V/Line Corporation is the Applicant and supports the application. V/Line Corporation submits that the VPL Agreements should cover any non-transferring employees who perform the work covered by the VPL Agreements, including any prospective employees who are offered and accept employment with V/Line Corporation to ensure that employees who perform the same work have access to the same terms and conditions of employment, to avoid any possible workplace tension if terms are not consistent.
[18] V/Line Corporation submits that if all employees performing comparable duties, including both the transferring and non-transferring employees, were covered by the VPL Agreements, this would enable a more streamlined integration of the V/Line business following the transfer.
Section 319(3)(a)(ii) - the views of the employees who will be affected by the order
[19] The application relates to employees who are not yet employed and V/Line Corporation has taken steps to seek the views of The Association of Professional Engineers, Scientists and Managers, Australia (APESMA), the Australian Rail, Tram and Bus Industry Union (RTBU) and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU). A letter was sent to the Director or Secretary of each union on 24 November 2017 and further follow up correspondence and telephone calls were made on behalf of V/Line Corporation.
[20] In response to correspondence sent by my chambers the CEPU and APESMA advised that they did not object to the application. The ARTBIU did not provide a response to the correspondence. However, attached to the Affidavit of Elaine Elizabeth Seckold, Executive General Manager, People at V/Line Pty Ltd (the Affidavit) is a copy of an email from the RTBU Locomotive Division advising that it does not oppose the orders sought in the application. Also attached to that Affidavit is correspondence between Ms Seckold and the State Secretary of the RTBU in relation to the application. However, I note that the RTBU did not respond to Ms Seckold’s email of 14 December 2017 asking for confirmation that the RTBU did not oppose the orders sought. APESMA have submitted that, in their view, if no order is made non-transferring employees would be covered by the relevant existing enterprise agreement as a transferable instrument pursuant to s.314(1) of the FW Act. Notwithstanding that submission, APESMA support the making of the orders sought by V/Line Corporation.
[21] Further, the Affidavit provides that although transferring employees will not be affected by the order they were advised of the intention to make the application and offered an opportunity to provide any feedback. No feedback was received as at the date of the Affidavit, being 21 December 2017.
Section 319(3)(b) - whether any employees would be disadvantaged
[22] V/Line Corporation submits that if the Commission does not grant the orders sought, and non-transferring employees are not covered by the VPL Agreements, the minimum terms and conditions of employment of non-transferring employees would be as per the Rail Industry Award 2010. It therefore submits that there will be no disadvantage to non-transferring employees in respect of their terms and conditions of employment if the orders sought are made. Rather, non-transferring employees performing work covered by the VPL Agreements will be better off overall if the orders are made.
Section 319(3)(c) - the nominal expiry date of the agreement
[23] The nominal expiry date for both of the VPL Agreements is 30 June 2019.
Section 319(3)(d) - whether negative impact on the productivity of the new employer
[24] V/Line Corporation submits that there will be a negative impact on the productivity of the workplace if the orders sought are not made as systems will need to be established to implement different sets of terms and conditions for employees who do the same type of work, which managers will need to distinguish between. Further, there will be associated operational burden, risk of non-compliance, cultural implications, additional administration, disengagement and confusion amongst employees.
[25] V/Line Corporation is a Victorian public body and is therefore accountable to the Victorian Government with respect to its budget and service standards. V/Line Corporation considers it is preferable for its resources and funds to be directed toward improving the important services it provides, as opposed to back office, administrative costs
Section 319(3)(e) - whether the new employer would incur significant economic disadvantage
[26] V/Line Corporation considers it would not incur a significant economic disadvantage as a result of the application of the VPL Agreements to non-transferring employees, particularly once the productivity gains from achieving a unified, harmonious workforce are considered.
Section 319(3)(f) - the degree of business synergy
[27] This factor concerns the degree of business synergy between the VPL Agreements and any workplace instrument that already covers V/Line Corporation. V/Line Corporation is not covered by an alternative enterprise agreement, and therefore the Rail Industry Award 2010 is the other workplace instrument that will apply to VLC in respect of non-transferring employees in the absence of the orders sought being made.
[28] In light of this, V/Line Corporation submits that it is more advantageous, and significantly more efficient, for the Applicant and all its employees who perform work covered by the VPL Agreements (including non-transferring employees) to be covered by the VPL Agreements. The VPL Agreements were negotiated with specific reference to the V/Line business which is to be transferred, and will therefore provide the V/Line Corporation with the most suitable employment framework to support the running of the V/Line business.
Section 319(3)(g) - the public interest
[29] V/Line Corporation considers that the terms of employment under the VPL Agreements are more beneficial overall than the relevant award, and should the orders sought not be granted, non-transferring employees will not have access to those more beneficial terms and it is in the public interest that they are not disadvantaged.
[30] V/Line Corporation submits there is a public interest in ensuring that its business is able to efficiently operate without unnecessary complications in its employment arrangements. This is particularly relevant given the services offered by it to the Victorian community, and upon which many Victorians rely. The Commission has endorsed the statement that the most fundamental considerations relevant to the public interest must be those which have most substance to what are perceived to be the interests and welfare of the community. 1
Conclusion
[31] Having considered each of the matters set out in s.319(3) of the FW Act, it is apparent that consideration weighs in favour of making the order sought. There are no factors weighing against the making of the order sought. I am satisfied that the order as sought should be granted.
[32] An order PR599918 will be issued concurrently with this decision.
COMMISSIONER
< PR599917 >
1 Sonic HealthPlus Pty Ltd T/A Sonic HealthPlus [2015] FWC 6460, [67] and [108]
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