Warrigal Care
[2023] FWC 528
•16 MARCH 2023
| [2023] FWC 528 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
s.319 – Application for orders relating to instruments covering new employer and non-transferring employees
Warrigal Care
(AG2023/332)
The MACI, NSWNMA and HSU NSW Enterprise Agreement 2017-2020
| Aged care industry | |
| COMMISSIONER MCKINNON | SYDNEY, 16 MARCH 2023 |
Application for orders relating to instruments covering new employer and transferring and non-transferring employees
Background
Warrigal Care trading as “Warrigal”, provides aged care residential living and home care services to senior citizens. Warrigal is covered by the Warrigal and NSW Nurses and Midwives’ Association, Australian Nursing and Midwifery Federation NSW Branch, Health Services Union NSW/ACT/QLD Branch and the Australian Nursing and Midwifery Federation – Australian Capital Territory Branch Enterprise Agreement 2022 (the Warrigal Agreement), which was approved by the Commission on 1 December 2022.
On 11 October 2022, Warrigal became the sole member of Multicultural Aged Care Illawarra Limited (MACI), another aged care residential living and home care service provider. The directors of MACI resigned and were replaced by Warrigal’s Board of Directors. MACI became a subsidiary of Warrigal, which assumed operational responsibility for MACI.
The intention is that on 1 April 2023, MACI’s assets and affected employees will transfer to Warrigal; that MACI will be deregistered shortly thereafter; and that the transfer process will be completed by June 2023. Transferring employees are covered by the MACI, NSWNMA and HSU NSW Enterprise Agreement 2017 - 2020 (the MACI Agreement) which nominally expired on 30 June 2020.
Warrigal is entitled to apply, and has applied, for orders:
under section 318(1)(a) and section 318(2)(c) of the Act, to the effect that the MACI Agreement will not cover Warrigal or the transferring employees who perform, or are likely to perform, the transferring work for Warrigal,
under section 318(1)(b), to the effect that the Warrigal Agreement will cover the transferring employees, and
under section 319(1)(a), to the effect that the MACI Agreement will not cover any new non-transferring employees who perform, or are likely to perform, the transferring work for Warrigal (Multicultural Village).
On 24 February 2023, the New South Wales Nurses and Midwives’ Association (NSWNMA) advised that it had no objection to the application. The Health Services Union (HSU) did not formally object to the application, but expressed concern that some employees would be “significantly disadvantaged” by the application as they may be left worse off than if the MACI Agreement continued to apply.
I have decided to grant the application. These are my reasons.
Sections 318 and 319 of the Fair Work Act 2009
Part 2-8 of the Act describes when a transfer of business occurs and provides for the transfer of enterprise agreements from one employer to another in a transfer of business.
Section 311(1) defines “transfer of business”, and section 312 defines the types of “transferable instrument” that may transfer from one employer to another. Sections 317, 318 and 319 empower the Commission to make orders in relation to a transfer of business, including orders that a transferable instrument will, or will not, cover the new employer in relation to the transferring employees and new (non-transferring) employees.
Section 318(a) provides:
(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.
Section 319(1) provides:
(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.
In deciding whether to make orders under sections 318 and 319, the Commission must take into account the factors set out in sections 318(3) and 319(3) of the Act.
Consideration
The MACI Agreement was approved by the Commission on 22 March 2018 and commenced operation on 29 March 2018. It is a transferable instrument for the purposes of section 312(1)(a) of the Act.
I am satisfied that on and from 1 April 2023, there will be a transfer of business from MACI to Warrigal for the purposes of section 311(1). This is because:
- the employment of employees covered by the MACI Agreement will cease with MACI;
- the employees will become employed by Warrigal immediately thereafter;
- their work for Warrigal will be the same as the work they currently perform for MACI (the transferring work); and
- MACI and Warrigal are related entities (because MACI is now a subsidiary of Warrigal).
The views of those affected by the proposed orders
Warrigal is the applicant in the matter. Plainly, it supports the application. It does so on the basis that transferring employees will not be disadvantaged overall and are likely to be better off under the Warrigal Agreement, and also because consistency of industrial terms across its workforce will reduce administrative complexity and promote workplace harmony.
Employees affected by the application were informed about the proposed transfer, including through a presentation summarising the differences between the two enterprise agreements, and which terms and conditions were more and less beneficial under the Warrigal Agreement. There is no evidence of employee opposition to the application, other than potentially in relation to the treatment of the uniform and laundry allowances, considered below.
The NSWNMA was significantly involved in negotiation of the Warrigal Agreement on behalf of its members employed by Warrigal. As noted above, it does not object to the application.
The HSU does not formally object to the application on behalf of its members, but it does hold concerns about the treatment of the uniform and laundry allowances and a proposal to ‘red circle’ the rate of pay for two classifications found in the MACI Agreement, but not in the Warrigal Agreement. In each case, the HSU’s concern is that employees may be disadvantaged if they become covered by the Warrigal Agreement instead of the MACI Agreement.
Whether any employees would be disadvantaged by the order
I am not satisfied that any employees will be disadvantaged on an overall basis if the application is granted. While some terms and conditions in the Warrigal Agreement are less beneficial than equivalent terms in the MACI Agreement, those are more than outweighed by terms and conditions in the Warrigal Agreement that are more beneficial for employees.
Dealing specifically with the treatment of uniform and laundry allowance, I do not find any relevant disadvantage to employees. Clause 20.3 of the MACI Agreement provides for an allowance of up to $22.27 per week (pro rata, for a 38 hour week) where a uniform is required to be worn but is not supplied and laundered by the employer. The equivalent allowance in the Warrigal Agreement is currently $23.56 ($0.62/hour x 38 hours). The Warrigal Agreement is, in other words, more beneficial to employees in this respect than the MACI Agreement.
In this regard, the issue raised by HSU is not about which enterprise agreement will be more beneficial for employees. It is instead a practical issue about how the entitlement is applied in practice. Warrigal does not require employees to wear a uniform. This is part of its ‘philosophy’ of ensuring residents feel they are in their home, rather than an institution. One consequence is that employees are not entitled to the uniform or laundry allowances. Warrigal could adopt this same philosophy under the MACI Agreement, with the same result - because whether employees are required to wear a uniform is a matter within its discretion.
The ‘red circling’ of rates of pay will also not result in disadvantage to employees. By definition, it will maintain existing rates of pay and not reduce them.
The nominal expiry date of the Agreement
As noted above, the MACI Agreement nominally expired on 30 June 2020. The Warrigal Agreement has a nominal expiry date of 30 June 2025.
Whether the MACI Agreement would have a negative impact on productivity at Warrigal
I accept that administering two different Agreements with different conditions and rates of pay will increase the administrative compliance burden on Warrigal. It may also cause friction between employees who, working side by side, have different terms and conditions of employment. This in turn may have an adverse effect on productivity within the workplace.
Whether Warrigal will incur significant economic disadvantage by coverage of the MACI Agreement
Application of the MACI Agreement to some, but not all employees of Warrigal, has the potential to increase costs and dampen productivity. I am not satisfied on the materials that this would result in “significant” economic disadvantage to Warrigal.
Degree of business synergy between the Agreement and other workplace instruments
Warrigal and MACI are both aged care and home care service providers. The MACI Agreement and the Warrigal Agreement are both comprehensive in nature and exclude the operation of modern awards. Even so, they were made having regard to relevant provisions of the Aged Care Award 2010 and the Nurses Award 2020 and the need to meet the better off overall test in each case. I find a degree of business synergy between the two instruments, related to the similar work performed under each.
The public interest
The matters that are the subject of this application are largely matters of private interest as between the persons covered by the two enterprise agreements. The public interest is not a relevant consideration in this case.
Conclusion
On balance, I am satisfied that the conditions for the making of an order in the terms sought have been met and that it is appropriate to make orders under sections 318 and 319 in relation to the coverage of the MACI Agreement and the Warrigal Agreement. Granting the application will reduce Warrigal’s administration and compliance burden, promote workplace harmony and on an overall basis, operate in a way that is beneficial for employees.
Order [PR751376] will issue separately to this decision.
COMMISSIONER
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