Viva Energy Australia Pty Ltd
[2019] FWCA 2070
•29 MARCH 2019
| [2019] FWCA 2070 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.320—Application to vary a transferable instrument – enterprise agreement
Viva Energy Australia Pty Ltd
(AG2018/7189, AG2018/7190, AG2018/7191, AG2018/7192)
Airport operations | |
SENIOR DEPUTY PRESIDENT HAMBERGER | SYDNEY, 29 MARCH 2019 |
Applications to vary ZIP Airport Services Pty Ltd enterprise agreements – frequency of pay proposed to be changed from weekly to monthly – applications granted.
[1] On 19 December 2018, Viva Energy Australia Pty Ltd (Viva Energy) filed applications to vary five transferable instruments under s.320 of the Fair Work Act 2009 (Cth) (the FW Act) upon a transfer of business from ZIP Airport Services Pty Ltd (Zip) to Viva Energy.
[2] The five transferable instruments to which these applications relate are:
1. ZIP Airport Services Pty Ltd – Sydney ITP Enterprise Agreement 2018 (the Sydney agreement);
2. ZIP Airport Services Pty Ltd – Perth Airport Enterprise Agreement 2018 (the Perth agreement);
3. ZIP Airport Services Pty Ltd Transport Workers Union – Melbourne Airport Enterprise Agreement 2016 (the Melbourne agreement);
4. ZIP Airport Services Pty Ltd – Darwin Airport Enterprise Agreement 2017 (the Darwin agreement); and
5. ZIP Airport Services Pty Ltd – Brisbane Airport Enterprise Agreement 2016 (the Brisbane agreement).
[3] The crux of the proposed variation is to alter the frequency of payment of employees covered by each relevant agreement from a weekly to a monthly (or, at the employer’s discretion, more frequent) basis. The proposed variation also includes a one-off benefit for transferring employees in the form of a $250 Visa gift card.
[4] On 7 February 2019, the Commission approved the ZIP Airport Services Pty Ltd – Brisbane Airport Enterprise Agreement 2019, which provides for monthly pay. Accordingly, Viva Energy no longer presses its application in relation to the Brisbane agreement.
[5] The Transport Workers’ Union of Australia (TWU) is covered by each of the remaining four agreements. On 8 January 2019, the TWU indicated that it intended to object to the applications.
[6] I held a hearing in Sydney on 7 March 2019 to consider the applications. Viva Energy was represented by Y Shariff of counsel and the TWU by M Gibian SC.
The evidence
[7] Viva Energy tendered three statements by Jodie Haydon (General Manager, Human Resources of the Viva Energy Group of companies). 1
[8] The TWU tendered statements by:
• Noel Dowling (Zip employee); 2
Jason Lang (Zip employee); 3
Robert Hannah (Zip employee); 4 and
Troy Rogers (TWU official with responsibility for members at Sydney Airport). 5
[9] None of the witnesses was required for cross-examination.
[10] I find the following facts based on the evidence.
[11] The enterprise agreements to which the applications relate have the following nominal expiry dates:
• the Sydney agreement, 30 April 2020;
• the Melbourne agreement, 31 March 2019;
• the Darwin agreement, 28 August 2019; and
• the Perth agreement, 30 April 2020. 6
[12] Each of the enterprise agreements contains a term that employees are to be paid weekly. 7
[13] Prior to August 2014, Viva Energy and Zip were part of the Royal Dutch Shell group of companies and comprised part of Shell’s Australian downstream operations. 8
[14] Zip was established by Shell in about 2000 for the purpose of employing aircraft refuellers in Shell’s aviation business. 9
[15] Zip was a provider of aviation fuel services at Australian airports, and was the employing entity for airport refuelling staff for that business. 10
[16] In August 2014, Shell sold its Australian downstream business, with the exception of its aviation business. Viva Energy ceased to be part of the Shell group. 11
[17] Between 13 August 2014 and 1 June 2017, Shell continued to operate its Australian aviation business as the sole remaining part of its former downstream petroleum business in Australia under the ‘Shell’ brand. Zip continued to be the employing entity for Shell aircraft refuelling staff employed in Australian airports during this period. 12
[18] In 2018, Viva Energy purchased Shell’s Australian aviation business, including Zip. Since 1 June 2017, Zip has formed part of the Viva Energy Group. Zip and Viva Energy are now both wholly owned by Viva Energy Group Limited. 13
[19] There are approximately 1,180 people within the Viva Energy Group:
• 660 staff at head office and at offices and operational sites around Australia;
• 380 staff employed by Viva Energy Refining Pty Ltd; and
• 140 staff employed by Zip. 14
[20] In June 2018, Viva Energy commenced the rebranding of its aviation business from ‘Shell’ to ‘Viva Energy’ in Australian airports. 15
[21] It is Viva Energy’s view that there are benefits to employee engagement and collaboration that can be achieved by having all staff employed under the one company with consistent values, behaviours and culture. It believes that bringing the Zip employees back into Viva Energy will allow for efficiencies and benefits both for the employees and Viva Energy. 16
[22] In order to bring aircraft refuelling employees under the umbrella of the Viva Energy brand, and to create a greater sense that they are part of the Viva Energy Group, Viva Energy has commenced a process for transfer of employment from Zip to Viva Energy. 17
[23] Prior to the purchase of Zip in June 2017, Viva Energy (and Viva Energy Refining Pty Ltd) had one payroll system which administered payment of salary to staff. These staff are paid monthly. When Viva Energy Group Limited purchased the aviation business, it took on Zip’s payroll system, which currently operates as a separate system. 18
[24] Administration of the Zip payroll system and time and attendance records is currently outsourced. The cost of running the weekly payroll and maintenance of these systems is approximately $130,000 per annum. In addition, Viva Energy employs two people whose roles it is to manage and administer the payroll system. Administration assistants employed by Zip in each airport also spend time administering payroll for aircraft refuelling employees. The total cost of administering Zip’s payroll is an additional $280,000 per annum. 19
[25] The transfer of employees from Zip to Viva Energy would eliminate the need for the separate Zip payroll system, reducing costs and administrative complexity. Moving to a single payroll system would provide Viva Energy with an integrated and administratively simpler system to manage. It would enhance the management of time and attendance, overtime and the applicable payroll and employment taxes in a consistent manner across the Viva Energy Group. It would enable tax reporting to be more efficient and accurate. It would also allow Zip employees to utilise self-service options currently available to other Viva employees via their company and personal computer and smartphone. These options are not available on the current Zip payroll system. 20
[26] Zip employees who transfer to Viva Energy would receive a number of benefits currently available to Viva Energy employees, such as salary sacrificing, fuel discounts, enhanced parental leave, enhanced superannuation for part-time employees with young children, and two Volunteer Days per year. 21
[27] During November 2018, Vince Neville, Head of Distribution, wrote to all Zip employees notifying them of the proposed change to bring the aviation business under the Viva Energy brand. It included the following:
‘Viva Energy is establishing a proud reputation for innovative thinking, an outstanding supply chain and customer obsession. Thank you for helping us be who we are today and for providing the best aircraft refuelling service in the country. We are indeed excited to have you as part of the Viva Energy team.
As you know, an exciting part of these changes has been to present to our current – and future – customers a common brand, with a common purpose and driven by great people. These changes have been very well received and we certainly expect a bright future growing the aviation business under the Viva Energy brand.
Performing together under one brand is powerful. However, we also believe that performing, as one team is equally powerful to our business. That is why we are now proposing to bring our Zip employees into Viva Energy and creating one, united aviation business.
The reasons for doing this are very simple. We want to present a uniform ‘face’ to the customer, as a team. This means we are a single organisation, sharing common goals and a common desire for, and pride in, operational and customer excellence. We believe that we have demonstrated this to be true with the Shell Aviation business, and this transition is a very natural extension of bringing this business together. This change represents the first time in a number of years that all aviation employees will be truly part of one team.
A range of benefits will apply to you as a direct consequence of this change. These benefits are detailed in the attachments. Additionally we will be holding consultation and engagement sessions with all the work groups, to provide the opportunity to raise any concerns and answer any questions you may have about the change.
In order to make this change happen, we will be transferring the employment of all Zip employees to Viva Energy Australia Pty Ltd. via a conditional letter of offer. Viva Energy will apply to the Fair Work Commission for approval to change our enterprise agreements to provide for weekly to monthly pay, which is need to bring Zip employees onto the Viva Energy payroll system.
We are proposing to make this change effective from the 1st April 2019; this provides sufficient notice and consultation time to make this transition effective for everyone.
We very much look forward to welcoming you to the Viva Energy team and look forward to your personal commitment to this change.’ 22
[28] As foreshadowed in this letter, Viva Energy then held a series of consultation sessions with employees at each of the airports covered by the enterprise agreements. 23
[29] On 15 November 2018, Viva Energy sent a letter of offer of employment to all Zip employees. The letter included the following:
‘As you know, ZIP Airport Services Pty Ltd (ZIP) became part of the Viva Energy Group in June 2017. As discussed during recent consultation sessions held by Viva Energy, as part of a broader plan to consolidate operations within the Group, it is now planned that ZIP employees will transfer to employment with Viva Energy Australia Pty Ltd (Viva Energy).
This letter is an offer of employment with Viva Energy to enable your transfer of employment from ZIP to Viva Energy in accordance with this plan.
The terms of Viva Energy’s offer are as follows:
1. Your employment with ZIP will cease, and your employment with Viva Energy will commence, with effect from a date which is intended to be three months after the Fair Work Commission issue orders varying the enterprise agreements currently binding on ZIP in accordance with applications for such variation made by Viva Energy (Transfer Date). This offer is conditional on such orders being made by the Fair Work Commission. We will conform the precise transfer date in due course.
2. Your position, remuneration arrangements and conditions of employment (including in relation to termination of employment) with ZIP will continue unaltered subject to the terms of this letter.
3. We will continue to apply the terms of the enterprise agreement applicable to your employment by ZIP as at the Transfer Date in accordance with the Fair Work Act 2009. However, as part of the application to the Fair Work Commission, Viva Energy will be asking that the enterprise agreement be varied to permit payment of your remuneration and any other applicable payments on a monthly basis.
4. Your service commencement date as recognised by ZIP will be recognised for all purposes by Viva Energy.
5. Your accrued annual leave, long service leave and personal leave balances will transfer to your employment with, and will be recognised by, Viva Energy.
…
As explained in the letter to you from ZIP, this offer of employment will be understood as bringing your employment with ZIP to an end by agreement, subject to the Fair Work Commission supporting the variation of the enterprise agreements. If the Fair Work Commission does not support the variation of the enterprise agreements, as requested by Viva Energy, your employment will continue with ZIP.
We will notify you when the Fair Work Commission has made its decision in relation to Viva Energy’s applications to vary the enterprise agreements. We will at that time confirm whether your employment will transfer to Viva Energy and if so the Transfer Date, ie the date you will commence employment with Viva Energy. You will be required to sign and accept the terms of this offer at that time…’ 24
[30] Consistent with that letter of offer, it is the intention of Viva Energy to implement the change to monthly pay three months after the Commission makes the order it is seeking. 25
[31] Viva Energy has offered employees an interest-free loan of $1,000, repayable over four months, to assist with the transition. 26
[32] Enterprise bargaining negotiations for the Sydney agreement started in June 2018. At the time of commencement of negotiations, neither Viva Energy nor Zip had made a decision to transfer the employment of Zip employees to Viva Energy.
[33] On 26 July 2018, Mr Hannah, who was a member of the bargaining committee for the Sydney agreement asked the employer’s representatives whether there had been talks to integrate the Zip employees into Viva. According to Mr Hannah, Simon Slattery, the Aviation Operations Manager said he would find out if something was being considered. 27
[34] A further meeting took place on 7 August 2018. There is an inconsistency between the evidence of Ms Haydon and that of Mr Hannah about what was said at this meeting. According to Mr Hannah, Mr Slattery said there had been no discussion regarding a transition to Viva. 28 According to Ms Haydon, the employees were told that the company was looking at this possibility and its impacts including to the payroll system, reporting structures and other matters. Ms Haydon added:
‘It was made clear at this time that this was a matter that sat outside the enterprise agreement discussion. At this stage, neither Viva Energy nor Zip had made any decision about the Zip to Viva Energy transfer.’ 29
[35] Ms Haydon’s second statement attached an email dated 7 August 2018 from Ievers Gunesekere (one of the management representatives present at the meeting) headed ‘My Notes EBA meeting’. The email included the following:
‘ – The committee wanted to know if ZIP staff would be changing over to Viva – Company is looking at the probability of this with impacts such as Payroll system, reporting structures etc. however this is not an EBA discussion and sits out the discussion.’ 30
[36] Neither witness was cross-examined. However, to the extent of any inconsistency, I prefer the evidence of Ms Haydon, as it is consistent with the contemporary written notes made by Mr Gunesekere. I am satisfied that when the issue of a transfer of employment came up during the enterprise bargaining negotiations for the Sydney agreement, the management representatives told the employee representatives that this was something that was being looked at, but should be dealt with separately – not as part of the enterprise agreement negotiations.
[37] On 23 August 2018, immediately after bargaining for the Sydney agreement had been successfully concluded), Mr Hannah was advised by management that they wished to commence discussions with employees about a transition to Viva Energy. 31
[38] Following a meeting on 4 September 2018, an employee bulletin was sent out by Mr Slattery and Alissa McNeilly (the HR Business Partner) to Zip employees in Sydney, which referred to ‘the option of transitioning from ZIP to Viva’. It said:
‘This bulletin summarises the transition offer to help the Employee group make a decision.’
[39] It described the ‘Next Steps’ as:
• Employee group to review and discuss
• Meeting on site 18th September attended by Alissa McNeilly with a view to discuss and make decision
• Meetings will be at 11:00 for committee followed by a comm’s meeting at 12:00 for all staff
• EBA draft to be finalised based on above decision and voting to be arranged. 32
[40] On 17 September 2018, Ms McNeilly sent an email to the Bargaining Committee in response to a query whether the transition would be dealt with independently from the enterprise agreement. It included the following:
‘If the employees agree to transition to Viva, we would seek to amend (with your support) payment of wages (this could be done a couple of ways). I’m hoping we can talk about this tomorrow. I do believe the best way forward would be for both items to be voted on independently.’ 33
[41] On 21 September 2018, Mr Gunesekere sent an email to TWU official Mr Rogers, which indicated that the voting for the enterprise agreement would begin as soon as practicable and the Zip to Viva transition would be voted on separately once the enterprise agreement vote had taken place and completed. 34
[42] Mr Hannah said that:
‘After being provided with these assurances, the bargaining committee was satisfied that the issue of the transition from ZIP to Viva (and including the shift from weekly to monthly pay cycles) would be dealt with by way of agreement between the company and employees and would include some kind of vote on the matter.
On that basis, the bargaining committee determined to continue its endorsement of the Enterprise Agreement.
The Enterprise Agreement went to a vote on 27 and 28 September and was successful.’ 35
[43] I am satisfied that the Zip employees in Sydney were led to believe that they would have a vote on whether to transfer to Viva Energy. I do not consider, however, that there is sufficient evidence to conclude that they were deliberately misled.
[44] Viva Energy currently pays employees on the 20th of the month. This means that employees are paid 20 days in arrears and 10 or 11 days in advance (compared to a maximum of seven days in arrears under weekly pay). Overtime is paid for the 10th of the current month to the 9th day of the following month of each pay cycle. This means that some employees may wait up to 41 days for overtime payments depending on when the overtime was worked. 36 Employees currently can expect to wait a maximum of 13 days for the payment of overtime.37
[45] Currently, at least some employees organise their financial affairs around weekly payment. Budgeting for their home loans and other expenses are structured according to the receipt of weekly pay. At least some employees pay their mortgage on a weekly basis. 38
[46] A petition of employees was circulated to Zip employees at Melbourne airport in February 2019. 41 employees signed the petition. The petition stated:
‘1. We, the undersigned employees of Zip Airport Services Pty Ltd employed at Melbourne Airport oppose the Application by Viva Energy Australia Pty Ltd to vary our enterprise agreement, resulting in a change from a weekly to a monthly pay cycle.
2. We the undersigned acknowledge that the proposed change from weekly to a monthly pay cycle would disadvantage us financially if implemented.’ 39
[47] There are 55 employees at Melbourne Airport. 40
[48] A similar petition was circulated at Sydney airport and was signed by 44 employees. 41
[49] There are 64 employees at Sydney Airport. 42
[50] The total workforce covered by the agreements (not including Brisbane) is 157. 43
The legislation
[51] Part 2-8 of the FW Act contains a scheme of provisions concerning transfers of business. The object of the Part is described in s.309 as follows:
‘309 Object of this Part
The object of this Part is to provide a balance between:
(a) the protection of employees’ terms and conditions of employment under enterprise agreements, certain modern awards and certain other instruments; and
(b) the interests of employers in running their enterprises efficiently;
if there is a transfer of business from one employer to another employer.’
[52] What constitutes a ‘transfer of business’ for the purpose of Part 2-8 is defined in s.311:
‘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.’
[53] Section 312(1) defines the expression ‘transferable instrument’ as used in Part 2-8. Relevantly, it includes an enterprise agreement that has been approved by the Commission. Section 313(1) prescribes the circumstances in which a transferring employee and the employee’s new employer will be covered by a transferable instrument:
‘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.’
[54] Division 3 empowers the Commission to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer. In particular, s.320 provides:
‘320 Variation of transferable instruments
Application of this section
(1) This section applies in relation to a transferable instrument that covers, or is likely to cover, the new employer because of a provision of this Part.
Power to vary transferable instrument
(2) The FWC may vary the transferable instrument:
(a) to remove terms that the FWC is satisfied are not, or will not be, capable of meaningful operation because of the transfer of business to the new employer; or
(b) to remove an ambiguity or uncertainty about how a term of the instrument operates if:
(i) the ambiguity or uncertainty has arisen, or will arise, because of the transfer of business to the new employer; and
(ii) FWA is satisfied that the variation will remove the ambiguity or uncertainty; or
(c) to enable the transferable instrument to operate in a way that is better aligned to the working arrangements of the new employer’s enterprise.
Who may apply for a variation
(3) The FWC may make the variation only on application by:
(a) a person who is, or is likely to be, covered by the transferable instrument; or
(b) if the application is to vary a named employer award—an employee organisation that is entitled to represent the industrial interests of an employee who is, or is likely to be, covered by the named employer award.
Matters that the FWC must take into account
(4) In deciding whether to make the variation, 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 transferable instrument as varied;
(b) whether any employees would be disadvantaged by the transferable instrument as varied in relation to their terms and conditions of employment;
(c) if the transferable instrument is an enterprise agreement—the nominal expiry date of the agreement;
(d) whether the transferable instrument, without the variation, 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, without the variation;
(f) the degree of business synergy between the transferable instrument, without the variation, and any workplace instrument that already covers the new employer;
(g) the public interest.
Restriction on when variation may come into operation
(5) A variation of a transferable instrument under subsection (2) must not come into operation before the later of the following:
(a) the time when the transferable instrument starts to cover the new employer;
(b) the day on which the variation is made.’
[55] The applications in this case concern proposed orders under s.320(2)(c) of the FW Act.
Consideration
Whether the applicant has standing to make the application
[56] The applicant has made the applications on the basis that it is a person who is, or is likely to be, covered by the transferable instruments.
[57] Whether the applicant is, or is likely to be, covered by the transferable instruments is a jurisdictional fact. In the circumstances of this case, the issue can be seen as whether it is likely that there will, in fact, be a transfer of business (for without such a transfer there will be no transferable instruments).
[58] The TWU submitted that the evidence discloses that if the orders to vary the enterprise agreements are not made, then the applicant will not proceed with the transfer of business. It referred in particular to the letters of offer to the transferring employees which provided that the employment with Viva Energy would only commence three months after any orders are made by the Commission under s.320 of the FW Act and was conditional upon such orders being made.
[59] On this basis, the TWU submitted, the transferable instruments were not likely to cover the applicant based on the terms of those instruments as they currently stand. The transferable instruments would only be likely to cover the applicant if the relevant orders were made and the transferable instruments varied.
‘If the transfer of business is dependent upon the applications being successful, the applications must fail, as the transferable instruments are not likely to cover the Applicant as at the date of the application, as the transfer of business will not take place without the orders being made. Put simply, the transferable instruments cannot be likely to cover the Applicant in circumstances where, in the absence of the variations being sought, the transfer will not occur.’ 44
[60] In determining whether the transferable instruments are likely to cover the applicant, one must have regard to the totality of the evidence. Clearly the applicant would prefer that the variations it is seeking occur prior to any transfer of employment taking place. There is an obvious business rationale for having all the applicant’s employees on one payroll system. That is, I infer, the reason why it made the letters of offer conditional on the orders being made. However, it is equally clear that the applicant’s motivation for the transfer of employment from Zip to Viva Energy is not solely or even primarily to establish a single payroll system. I see no reason to believe that Mr Neville was being disingenuous when he wrote to the Zip employees about the benefits in creating ‘one, united aviation business’. These included presenting a uniform ‘face’ to the customer, and operating as a single organisation sharing common goals and values. Transferring Zip employees into the Viva Energy organisation also makes sense when one considers the history of the Zip business, its separation as a part of the Shell organisation and then its subsequent purchase by the Viva Energy group.
[61] Based on all the evidence, I find that the proposed transfer of employment is likely to take place and that as a consequence, the applicant is likely to be covered by the transferable instruments.
Whether the proposed variations relate to the ‘working arrangements’ of the new employer’s enterprise
[62] The applications are made in accordance with s.320(2)(c) of the FW Act, which provides that the Commission may vary a transferable instrument:
‘…to enable the transferable instrument to operate in a way that is better aligned to the working arrangements of the new employer’s enterprise.’ [my emphasis]
[63] The TWU submitted that:
‘…the reference to the “working arrangements of the new employer’s enterprise” must be understood to be a reference to the arrangements in place at the new employer’s enterprise for the actual performance of work by employees.’
[64] The TWU submitted that the variations proposed by the applicant were, on the other hand, designed ‘merely to suit the administrative convenience of the new employer’. 45
[65] This submission takes too narrow a view of the provision. The object of the statutory provisions concerning transfer of business is to provide a balance between the protection of employees’ terms and conditions of employment and the interests of employers in running their enterprises efficiently.
[66] I agree with the applicant that the term ‘arrangements’ is a word of the widest import and the addition of the word ‘working’ requires only that they be connected with work or working.
[67] How employees are paid for their work is in my opinion easily captured by the expression ‘working arrangements’, at least in the context of transfers of business. Indeed, dealing with incompatible payroll systems as a result of a transfer of business seems to me to be precisely the kind of problem the provisions are designed to deal with.
The views of the new employer and the affected employees: s.320(4)(a)
[68] The proposed new employer supports the applications.
[69] I am satisfied, based on the signed petitions, that a majority of employees who would be affected by the orders are opposed to them. This is primarily because they believe that the change to monthly pay would disadvantage them financially.
Whether employees would be disadvantaged: s.320(4)(b)
[70] The proposed orders would not reduce the amount of money that the affected employees would receive. However, I accept that money today is (generally) worth (slightly) more than the same amount of money tomorrow. Currently, employees are paid up to seven days in arrears (and up to 13 days in arrears for overtime). Changing the method of payment from weekly to monthly in the manner proposed by Viva Energy would in practice mean that employees would be paid up to 20 days in arrears (and 10 or 11 days in advance) and up to 41 days in arrears for overtime. This would constitute a relatively minor, but not insignificant disadvantage to the affected employees. Moving to monthly from weekly pay would also mean that at least some employees would have to change their budgeting arrangements – though I note that Viva Energy has proposed a number of initiatives to help employees with any transitional difficulties (including three months’ notice and interest free loans). Any disadvantage would also be ameliorated in part by the provision of the $250 Visa card.
The agreements’ nominal expiry dates: s.320(4)(c)
[71] The agreements all have different nominal expiry dates. The Melbourne agreement is about to pass its nominal expiry date and negotiations for a new agreement are, I understand, currently taking place. The Darwin agreement reaches its nominal expiry date later this year. The Sydney agreement has just been renegotiated and has a nominal expiry date of 30 April next year. Likewise, the Perth agreement will not nominally expire until April 2020.
[72] The TWU submitted in relation to the Melbourne and Darwin agreements that in circumstances in which the nominal expiry date is in such close proximity (and that bargaining has already commenced) making the variations would undermine the bargaining process.
‘If the applicant, through its subsidiary or following a transfer, wishes to change the existing provision with respect to pay frequency, this is an issue which should be dealt with in bargaining.’ 46
[73] In relation to the Sydney agreement, the TWU submitted:
‘The Commission would not make the variations sought in circumstances in which the Applicant’s subsidiary recently made an enterprise agreement without seeking to change the provision with respect to pay frequency and made apparently misleading statements to employees about the effect of the transfer. It would undermine collective bargaining to permit the Applicant to depart from the terms its subsidiary recently agreed to as a result of a bargaining process with employees at Sydney.’ 47
[74] I do not consider that the applicant deliberately set out to mislead employees while it was negotiating the Sydney agreement. It appears from the evidence that the applicant was turning its mind to integrating the Zip employees with Viva Energy around the time the negotiations for the Sydney agreement were being finalised. It had not at that stage decided how it would go about integrating the two organisations or all the implications of doing so. However, it clearly decided to leave the issue of transferring the employees until after the negotiations for the Sydney agreement were concluded, so as, presumably, not to jeopardise the agreement. I do not find that unreasonable.
[75] The nominal expiry dates of the various agreements are scattered across three different dates, from 31 March 2019 (Melbourne) to 30 April 2020 (Sydney and Perth). The point of the variations being sought is to establish a single payroll system for all Viva Energy employees. The different nominal expiry dates of the different agreements would greatly complicate accomplishing this goal by enterprise bargaining.
Whether the transferable instruments (if not varied) would have a negative impact on the productivity of the new employer’s workplace: s.320(4)(d)
[76] I am satisfied that without the variations the applicant proposes, the transferable instruments would have a negative impact on the productivity of the new employer’s workplace. This is because it would require Viva Energy to incur the additional costs (currently borne by Zip) of operating a separate payroll system for the transferring employees. Based on Ms Haydon’s evidence, I am satisfied these costs would be in the order of $280,000 per annum, with no offsetting benefit in output. Being able to use the same system for the transferring employees as for all its other employees would also allow Viva Energy to avoid other more intangible productivity detriments by removing a potential source of administrative complexity and inefficiency.
Whether the new employer would incur significant economic disadvantage as a result of the transferable instruments, without the variation: s.320(4)(e)
[77] Ms Haydon expressed her opinion that failing to make the variation ‘…would not be considered a “significant economic disadvantage” to Viva Energy in the context of its total operations.’ However, she noted the constant pressure for sustainable efficiencies and cost containment in the aviation industry. Despite Ms Haydon’s opinion, I consider a cost impost of $280,000, together with increased administrative complexity and inefficiency, with no offsetting business benefit, would amount to a significant economic disadvantage.
The degree of business synergy between the transferable instruments, without the variation, and any workplace instrument that already covers the new employer: s.320(4)(f)
[78] There is a clear lack of ‘business synergy’ between the transferable instruments – at least in so far as they provide for weekly pay – and those instruments that currently apply to Viva Energy, providing as they do for monthly pay. As noted, this lack of synergy would lead to additional costs and administrative inefficiencies.
The public interest: s.320(4)(g)
[79] The TWU submitted that the Road Transport and Distribution Award 2010 currently provides for a weekly pay cycle as a minimum requirement.
‘This has been the case historically in the transport industry due to the particularly high levels of overtime (which can be inconsistent and ad-hoc) worked by employees in the industry. As a result, there has been recognition that it is prudent and proper to ensure such employees receive their pay (including overtime) on a weekly basis.
A monthly pay cycle may be appropriate for employees that receive a salary which does not alter significantly week to week, but that is not the case in the present matter. Given that weekly pay is the industry minimum standard set by the relevant modern award, the TWU submits it would be against the public interest if the Commission made the variations sought by the Applicant.’ 48
[80] The TWU also submitted the applications, by seeking to avoid the process of enterprise bargaining, were inconsistent with the object of the FW Act.
[81] Of course it is generally preferable, and consistent with the object of the FW Act, to vary the provisions of enterprise agreements through a process of enterprise bargaining. However, s.320 of the FW Act provides for an exception to this general rule in circumstances of transfers of business. There is nothing in the proposed variations that is inconsistent with the scheme of the FW Act. Indeed, as I have noted previously, it is to deal with this type of situation that that the provision exists.
[82] There was relatively little evidence about how much the employees are paid or how much overtime they do. However, it is clear that they are not low-paid employees. Monthly pay is something that is provided for in the FW Act, and in many awards of the Commission, and I do not consider that it would be contrary to the public interest in the circumstances of this case to vary the transferable instruments to move from weekly to monthly pay.
Conclusion
[83] The Commission is clearly enjoined by the requirements of s.320 of the FW Act to undertake a balancing exercise. While I accept that the proposed variations involve some minor disadvantage to the employees concerned, I am also satisfied that they will assist the applicant in running its enterprise efficiently.
[84] Having regard to all the factors set out in s.320(4), I consider that it would be appropriate to exercise my discretion to make the variations to the transferable instruments sought by the applicant. Orders to this effect will issue shortly after this decision.
SENIOR DEPUTY PRESIDENT
Appearances:
Y Shariff, counsel, with J Harvey, solicitor, for Viva Energy Australia Pty Ltd.
M Gibian, counsel, with G Webb for the Transport Workers’ Union of Australia.
Hearing details:
Sydney.
2019.
March 7.
<AE501024 PR706328>
1 Exhibits 1-3.
2 Exhibit 4.
3 Exhibit 5.
4 Exhibit 6.
5 Exhibit 7.
6 Exhibit 1 [9].
7 Ibid [11].
8 Ibid [4].
9 Ibid [13].
10 Ibid [5].
11 Ibid [6].
12 Ibid [7].
13 Ibid [8].
14 Ibid [20].
15 Ibid [15].
16 Ibid [16]-[17].
17 Ibid [18].
18 Ibid [21]-[22].
19 Ibid [23].
20 Ibid [26]-[27].
21 Ibid [32].
22 Ibid attachment JH-2.
23 Ibid [36].
24 Ibid attachment JH -3.
25 Exhibit 2 [4].
26 Ibid [5].
27 Exhibit 6 [14]-[15].
28 Ibid [16].
29 Exhibit 2 [29].
30 Ibid attachment JH-5.
31 Exhibit 6 [24].
32 Exhibit 2 attachment JH-7.
33 Exhibit 6 attachment RH-01.
34 Ibid attachment RH-02.
35 Ibid [28]-[30].
36 Exhibit 2 [19], [21].
37 Exhibit 5 [9].
38 Ibid [8].
39 Ibid [14], attachment JL-2.
40 Exhibit 2 [7].
41 Exhibit 7 [14], attachment TR-02.
42 Exhibit 2 [7].
43 Derived from exhibit 2 [7].
44 TWU’s outline of submissions (4 March 2019) [12].
45 Ibid [7]-[8].
46 Ibid [25].
47 Ibid [27].
48 Ibid [35]-[36].
Printed by authority of the Commonwealth Government Printer
1
0
0