VICTORIAN DISABILITY SERVICES (NGO) AGREEMENT 2023
[2023] FWC 2009
•11 AUGUST 2023
| [2023] FWC 2009 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.185 - Application for approval of a multi-enterprise agreement
VICTORIAN DISABILITY SERVICES (NGO) AGREEMENT 2023
(AG2023/2053)
| Social, community, home care and disability services | |
| DEPUTY PRESIDENT SAUNDERS | NEWCASTLE, 11 AUGUST 2023 |
Application for approval of the Victorian Disability Services (NGO) Agreement 2023 – multi-enterprise agreement – preliminary issue concerning coverage of agreement after transfer of business
An application has been made for approval of an enterprise agreement known as the Victorian Disability Services (NGO) Agreement 2023 (Agreement). The application was made pursuant to section 185 of the Fair Work Act 2009 (Act). The Agreement is a multi-enterprise agreement.
The Agreement covers 24 named employers and their employees who are employed in disability support work in Victoria. 23 of those 24 employers have signed the Agreement and provided signed undertakings to address a better off overall concern I identified when considering whether the Agreement should be approved. The 24th employer, Statewide Autistic Services Ltd (SASI), has neither signed the Agreement nor provided signed undertakings.
The Health Services Union (Branch Number 2 Victoria) trading as the Health and Community Services Union (HACSU) and the Australian Education Union (AEU) are employee bargaining representatives for the Agreement.
On about 14 June 2023, SASI entered into a merger deed with Independence Australia Group Limited (IAG) whereby the parties agreed to a merger by way of a transfer of SASI’s business interests and assets to IAG (Merger Deed). As a consequence of this transaction, an issue has arisen as to whether IAG is covered by the Agreement and whether IAG or SASI should sign the Agreement. This decision deals with those discrete issues.
Relevant facts
The relevant facts are not in dispute. They are largely dealt with in a witness statement made by Mr John Anderson, Chief Corporate Officer of IAG, on 17 July 2023 and a Form F17A employer’s declaration made by Ms Kathleen Ferry, Chief Executive Officer of SASI, on 20 June 2023 in support of the application for approval of the Agreement.
On 1 December 2022, SASI issued a notice of employee representational rights to its employees who were engaged in disability support work.
In the period from 1 December 2022 until about 30 June 2023, SASI, represented by its bargaining representative, Mr Nick Church, participated in good faith bargaining in relation to the Agreement. Mr Church was also the bargaining representative of the other 23 employers covered by the Agreement.
On 31 January 2023, IAG and SASI signed a heads of agreement in relation to their potential merger.
On 1 June 2023, SASI put the Agreement to its employees for a vote. So did the other 23 employers covered by the Agreement. The voting process for each employer concluded on 8 June 2023.
On 8 June 2023, there were 158 SASI employees to be covered by the Agreement. 27 of those employees cast a valid vote and 25 of the 27 employees voted to approve the Agreement. Accordingly, the Agreement was made on 8 June 2023.[1]
On 22 June 2023, an application for approval of the Agreement was lodged in the Fair Work Commission (Commission). The application was made by Mr Church in his capacity as a bargaining representative for each of the 24 employers covered by the Agreement.
SASI notified its employees that their employment with SASI would cease on 30 June 2023.
On 1 July 2023, pursuant to the Merger Deed, SASI’s business and assets were transferred to IAG. IAG did not acquire any shares of SASI. SASI continues to exist as a legal entity. Pursuant to clause 6 of the Merger Deed, one director of SASI is entitled to be nominated for appointment as a director of IAG.
142 employees of SASI accepted an offer of employment from IAG to commence on 1 July 2023 (Transferring Employees). The Transferring Employees are performing the same or a similar role with IAG to their role with SASI.
IAG is of the opinion that the Victorian Disability Services (NGO) Agreement 2019 (2019 EA) applies to most of the Transferring Employees; the other Transferring Employees were not covered by the 2019 EA and are covered by the Social, Community Home Care and Disability Services Industry Award 2010.
IAG is not included in the list of employers covered by the Agreement.
On 10 July 2023, Mr Church received an email from Mr Frank Spina, National People Experience Manager at IAG, stating:
“Dear Nick
I would like to advise that from 30 June 2023 Statewide Autistic Services Ltd (SASI) ceased effectively operating and providing services and the legal entity is in the process of being wound up. As a result, I wish to formally notify you that SASI will no longer be a party to the proposed 2023 MEA [Agreement].
SASI has notified all of their employees that their employment with SASI effectively ceased on 30 June 2023. SASI clients have been transferred to Independence Australia Group who will continue to provide support services. As part of this arrangement IAG will continue to use the SASI brand for trading purposes.
On behalf of the SASI management team I would like to thank you for the support you have provided SASI to date and wish you well with finalising the final stage of the MEA. Should you have any questions you can contact me on my mobile …”
Summary of submissions
IAG submits that it is not covered by the Agreement and the Agreement is not a transferring instrument, with the result that it does not, and will not, apply to IAG.
IAG submits that a transfer of business within the meaning of s 311 of the Act took place from SASI to IAG on 1 July 2023. IAG further submits that the 2019 EA is the transferable instrument that applies to the Transferring Employees who were covered by the 2019 EA. It is contended that the Agreement is not a transferable instrument because it has not been approved by the Commission.
IAG submits that it should not be compelled to sign the Agreement because it is not covered by it and the Agreement will not apply to IAG.
SASI has not made any submissions in relation to the contested issues.
HACSU submits that the Agreement is a transferrable instrument within the meaning of s 312 of the Act. HACSU relies on paragraph 312(1)(a) which provides that “an enterprise agreement that has been approved by the FWC” is a transferable instrument. HACSU then turns to the definitions in s 12 of the Act, particularly the definition of “enterprise agreement” to include a multi-enterprise agreement such as the Agreement and the definition of “approved by the FWC” to mean, in the context of an enterprise agreement, “approved by the FWC under section 186 or 189”. HACSU submits that s 186 of the Act is a deeming provision because it does not confer a discretion on the Commission to approve the Agreement but states that the Commission must approve the agreement if the requirements of ss 186 and 187 are satisfied. HACSU further contends that the Agreement either did or did not satisfy the requirements of ss 186 and 187 when the application for approval was lodged on 22 June 2023.
HACSU submits that if the Commission is satisfied that the requirements of s 186 were met at the time the Agreement was lodged on 22 June 2023, then the Agreement is “approved by the FWC” as of 22 June 2023. It follows, so HACSU contends, that the Agreement is the transferable instrument which transferred to IAG on 1 July 2023. HACSU submits that IAG should sign the Agreement.
In support of these submissions, HACSU relies on the requirement under s 578 of the Act for the Commission to take into account the objects of the Act and any objects of relevant parts of the Act, together with “equity, good conscience and the merits of the matter”. HACSU contends that it would be inconsistent with the principles of good faith bargaining, equity and good conscience that employees participate in good faith bargaining which leads to the making of an enterprise agreement to then have that enterprise agreement removed from them through a transmission of business process. Permitting such a situation to exist would, according to HACSU, create perverse incentives for employers to avoid their industrial obligations through transmission of business provisions which go against the objects of the Act and result in unfair outcomes.
The AEU submits that representatives of SASI, not IAG, should sign the Agreement. The AEU relies on the obligation under s 185(2)(a) of the Act and regulation 2.06A of the Fair Work Regulations 2009 (Regulations) for an employer covered by an enterprise agreement that is submitted to the Commission for approval to sign the enterprise agreement. If necessary, the AEU submits that a direction should be made requiring SASI to sign the Agreement.
In reply, IAG submits that s 186 of the Act is not a deeming provision and the Commission has the discretion to accept an undertaking if particular requirements are not satisfied at the time the enterprise agreement is lodged with the Commission for approval. IAG further submits that deeming an enterprise agreement to have been retrospectively approved by the Commission as at the date the application for approval was lodged in the Commission would cause enterprise agreements to commence applying under s 54 of the Act before the Commission had an opportunity to consider whether or not the enterprise agreement should be approved.
IAG also submits that it would not be appropriate for the Commission to find that the Agreement is a transferable instrument simply in light of the matters in s 578 of the Act given this would require the Commission to ignore the express provisions of the Act, including sections 52, 53, 54 and 313.
Consideration
Pursuant to s 185(2)(a) of the Act and regulation 2.06A of the Regulations, an application for approval of an enterprise agreement must be signed by the employer covered by the agreement.
An employer is covered by an enterprise agreement if the agreement is expressed to cover (however described) the employer.[2] It is clear from clause 2 and Schedule A of the Agreement that it is expressed to cover SASI, but not IAG.
The only other relevant way in which the Agreement may cover IAG is pursuant to the transfer of business provisions in part 2-8 of the Act. Those provisions relevantly state:
“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.
312 Instruments that may transfer
Meaning of transferable instrument
(1) Each of the following is a transferable instrument:
(a) an enterprise agreement that has been approved by the FWC;
(b) a workplace determination;
(c) a named employer award.
…
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
(b) while the transferable instrument covers the new employer and the transferring employee in relation to the transferring work, no other enterprise agreement or named employer award that covers the new employer at the transfer time covers the transferring employee in relation to that work.”
There was a transfer of business within the meaning of s 311 of the Act from SASI to IAG on 1 July 2023. That is so because the employment of the Transferring Employees ceased with SASI on 30 June 2023 and commenced with IAG on 1 July 2023 (s 311(1)(a) and (b)), the work being performed by the Transferring Employees is the same, or substantially the same, as the work they performed for SASI (s 311(1)(c)), and there is a connection between SASI and IAG because, pursuant to the Merger Deed, IAG owns and has the beneficial use of some of the assets that SASI owned and had the beneficial use of that relate to, or are used in connection with, the transferring work (s 311(1)(d)).
The 2019 EA is a transferable instrument within the meaning of s 312(1)(a) of the Act because it is “an enterprise agreement that has been approved by the FWC”. Conversely, the Agreement is not a transferable instrument within the meaning of s 312(1)(a) of the Act because it has not been approved by the Commission. The fact that the Agreement may in the future be approved, or may have been in an approvable state at the date it was lodged in the Commission for approval, does not mean that it “has been approved by the FWC”. The expression “has been” is clearly directed to a past state of affairs.
The definitions relied on by HACSU in s 12 of the Act do not assist. It is apparent from the definitions of “enterprise agreement” and “approved by the FWC” that a multi-enterprise agreement such as the Agreement is approved by the Commission when it is approved under s 186 or s 189. Pursuant to s 186 of the Act, the Commission is obliged to approve an enterprise agreement if the requirements set out in ss 186 and 187 are met. This is not a deeming provision. It does not deem an enterprise agreement to have been approved at the date the agreement is lodged with the Commission for approval. Instead, s 186 directs attention to the requirements in ss 186 and 187 and mandates approval if those requirements are met. Such requirements may not be met in particular cases unless an undertaking is given to satisfy the Commission about concerns it has that the agreement does not meet the requirements set out in ss 186 and 187. Those matters cannot be determined at the date an application is lodged for approval of an enterprise agreement, before the Commission has considered whether the requirements set out in ss 186 and 187 have been satisfied. Further, an enterprise agreement does not apply to an employer until it is in operation and the operation of the enterprise agreement does not commence until it is approved by the Commission and either 7 days have passed since approval or, if a later date for commencement is specified in the enterprise agreement, that later date is reached.[3]
Pursuant to s 313(1) of the Act, a transferable instrument that covered the old employer and a transferring employee immediately before the termination of the transferring employee’s employment with the old employer covers the new employer and the transferring employee after the time the transferring employee becomes employed by the new employer. In this case, the 2019 EA covered SASI and some of the Transferring Employees on 30 June 2023. The effect of s 313(1) of the Act is that the 2019 EA covers IAG and the Transferring Employees who fall within the coverage of the 2019 EA from 1 July 2023.
Because the Agreement has not been approved by the Commission, it is not a transferable instrument. Section 313(1) of the Act only applies to transferable instruments. Accordingly, s 313(1) of the Act has not resulted in the transfer of coverage of the Agreement from SASI to IAG.
The requirement under s 578 of the Act to take into account the objects of the Act and any relevant part of the Act, together with “equity, good conscience and the merits of the matter”, does not alter my analysis of the relevant provisions of the Act, or the application of those provisions to the facts of this case. Taking the approach contended for by HACSU would effectively result in the relevant provisions of the Act being rewritten. It would be erroneous to adopt such an approach.
In answer to the submission made by the AEU, I do not consider that I have the power to direct SASI to sign the Agreement.
Conclusion
IAG is not covered by the Agreement.
SASI is covered by the Agreement. SASI has not signed the Agreement.
Unless the Agreement is signed by SASI, my preliminary view is that the Agreement cannot be approved insofar as it relates to SASI on the basis that the requirements of s 185(2)(a) of the Act and Regulation 2.06A have not been met.[4] I am also of the preliminary view that this issue does not have any impact on the application to approve the Agreement insofar as it relates to the other 23 employers.
I make the following directions:
(a)If SASI wishes to sign the Agreement, it must do so and provide a copy of the signed Agreement to [email protected] and all bargaining representatives for the Agreement by 4pm on 14 August 2023; and
(b)If any party or bargaining representative wishes to be heard in relation to the preliminary views expressed in paragraph [40] above, they must file and serve submissions on such matters by 4pm on 17 August 2023.
DEPUTY PRESIDENT
[1] Section 182(2) of the Act
[2] Section 53(1) of the Act
[3] Sections 52 and 54 of the Act
[4] Malteurop Australia Pty Ltd [2014] FWC 2476
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