Valmar Support Services Ltd

[2019] FWC 3431

[2019] FWC 3431

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees

Valmar Support Services Ltd
(AG2019/966)

Aged care industry
DEPUTY PRESIDENT KOVACIC	CANBERRA, 17 MAY 2019

Application for an order relating to instruments covering new employer and transferring employees – orders made that the BaptistCare NSW & ACT Aged Care Enterprise Agreement 2017 will not apply to any transferring employees who perform work of the new employer.

[1] This decision concerns an application made on 1 April 2019 pursuant to s.318 of the Fair Work Act2009 (the Act) by Valmar Support Services Ltd (the Applicant) seeking orders that:

•  the BaptistCare NSW & ACT Aged Care Enterprise Agreement 2017 (the BaptistCare Agreement) 1 does not and will not cover the Applicant nor any of the four transferring employees; and

•  the Valmar Support Services Ltd Enterprise Agreement 2015 (the Valmar Agreement) 2 will apply to the four transferring employees in respect of their employment with the Applicant.

[2] By way of background, the application arises in circumstances where a Deed of Novation was executed between BaptistCare NSW & ACT (for Wagga Wagga Community Transport Service), Transport NSW and the Applicant under which BaptistCare NSW & ACT novated its contract with Transport NSW in respect of the Wagga Wagga Community Transport Service to the Applicant. The novation took effect on 1 October 2018 at which time the employment of four drivers employed by Wagga Wagga Community Transport Service under the BaptistCare Agreement transferred to the Applicant.

[3] Attached to the application were copies of both the BaptistCare and Valmar Agreement, a table comparing the terms and conditions of those Agreements, the abovementioned Deed of Novation and copies of Letters of Comfort which were sent by the Applicant to the four transferring employees on 8 January 2019.

Relevant legislation

[4] The relevant sections of the Act are ss.313 and 318 which provide as follows:

“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

...

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

318 Orders relating to instruments covering new employer and transferring employees

Orders that FWC may make

(1) 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) 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;

…

Matters that FWC must take into account

(3) In deciding whether to make the order, 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.”

[5] Before turning to consider each of the matters specified in s.318(3) the Act, I note that the Applicant, as the new employer, has standing pursuant to s.318(2)(a) of the Act to make the application for the orders sought.

The views of the new employer [s.318(3)(a)(i)]

[6] The Applicant stated among other things in its application that in the absence of the orders sought being made the four transferring employees would be disadvantaged by continuing to be covered by the BaptistCare Agreement creating a consequential negative impact on productivity.

The views of the employees who would be affected by the order [s.318(3)(a)(ii)]

[7] As previously mentioned, the Applicant sent a Letter of Comfort to each of the four transferring employees on 8 January 2019. The letter included the following:

“Valmar is 100% committed to pay rate parity across the organisation and we will have three (3) Enterprise Agreements (EA’S) that cover different parts of the organisation, but contain different pay rates. We are writing to all employees of Valmar covered by the BaptistCare NSW & ACT Aged Care Enterprise Agreement 2017 as it includes historically lower pay rates, to give you a guarantee that the above agreement pay rates you currently enjoy will continue to be paid on parity with the equivalent pay rate or position level contained within the VSSEA [the Valmar Agreement]. Furthermore, as pay rates in the VSSEA have pre-agreed increases in line with the Equal Remuneration Order applying to the underpinning SCHADSI Award (Social, Community, Home Care and Disability Services Industry), we are also guaranteeing that these pay rate increases will be passed on to you when they occur.

…

To accept the transfer from BaptistCare NSW & ACT Aged Care Enterprise Agreement 2017 to a single enterprise agreement of Valmar Support Services Ltd Enterprise Agreement 2016 (the Agreement) it is requested that you sign the acknowledgement on page 2 (two) and return the signed letter to the CEO Valmar Support Services …” (Emphasis as per original)

[8] Each of the four transferring employees signed and returned the acknowledgement referred to in the Letter of Comfort. The acknowledgement read as follows:

“I … acknowledge the receipt of this Letter of Comfort and undertake to work within the guidelines of theValmar Support Services Ltd Enterprise Agreement 2016 (VSSEA) (the Agreement). The Agreement applies to all Valmar employees whose work is covered by the classifications in the attached Agreement.” (Emphasis as per original)

[9] The fact that all four transferring employees signed and returned the acknowledgement points to them supporting being covered by the Valmar Agreement. This weighs in favour of making the orders sought.

Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment [s.318(3)(b)]

[10] The table comparing of the BaptistCare and Valmar Agreements indicates that the each agreement is more beneficial than the other in a number of respects. Among other things, the table highlighted that the current rates of pay for drivers under the Valmar Agreement ($26.53/hour to $29.18/hour) were a minimum of 9.76% higher than current rates of pay in BaptistCare Agreement ($24.17/hour). On the other hand, the table also showed that the BaptistCare Agreement provided higher severance pay benefits than the Valmar Agreement which provides redundancy benefits in accordance with the National Employment Standards. While there is an element of swings and roundabouts involved in the comparison, overall the table does not indicate that the transferring employees would be disadvantaged by the orders sought in relation to their terms and conditions of employment, particularly having regard to the higher rates of pay for drivers under the Valmar Agreement. This favours the making of the orders sought.

The nominal expiry date of the agreement [s.318(3)(c)]

[11] The BaptistCare Agreement has a nominal expiry of 30 November 2020 while the Valmar Agreement passed its nominal expiry date on 31 July 2018.

Whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace [s.318(3)(d) and s.319(3)(d)]

[12] The Applicant submitted that the transferable instrument would have a negative impact on the productivity of its workplace as the four transferring employees would be subject to a lower rate of pay when compared to its other community support drivers.

Any significant economic disadvantage to the new employer [s.318(3)(e)]

[13] The Applicant submitted that it would incur significant economic disadvantage as it would have to comply with the BaptistCare Agreement in respect of the four transferring employees whilst also having to comply with the Valmar Agreement. In short, the Applicant argues that significant economic disadvantage would arise from it having to administer a different set of terms and conditions and bear the associated costs of having to do so. I accept that in the absence of the orders sought this would be the case.

The degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer [s.318(3)(f)]

[14] The Applicant submitted that the BaptistCare Agreement did not have a sufficiently significant degree of business synergy with the Valmar Agreement nor was there any potential for any business synergy to be realised. The Applicant also emphasised the disadvantage attached to having to administer two differing sets of terms and conditions. An examination of the two agreements reinforces the differences highlighted in the previously mentioned comparison table. Those differences in my view negatively impact on the degree of business synergy between the two agreements. This favours the making of the orders sought.

The public interest [s.318(3)(g)]

[15] I do not consider that the public interest is enlivened in this case.

Conclusion

[16] Taking into account each of the matters set out in s.318(3), I am satisfied that the orders sought should be made.

[17] The orders (PR708433) will be issued to provide that the BaptistCare Agreement does not and will not cover the Applicant or any transferring employees. The orders will operate from the date they are made.

<AE429101  PR708428 >

 1  AE429101

 2  AE420238

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