Western Health
[2020] FWC 6320
•27 NOVEMBER 2020
| [2020] FWC 6320 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Western Health
(AG2020/3162)
DEPUTY PRESIDENT MASSON | MELBOURNE, 27 NOVEMBER 2020 |
Application for orders relating to instruments covering new employer and transferring employees.
[1] An application has been made pursuant to s. 318 of the Fair Work Act 2009 (the Act) by Western Health seeking orders from the Fair Work Commission (the Commission) that;
(i) The RFK Meal Production Agreement 2018 - 2020 (the RFK Agreement) 1 not cover Western Health and employees of Western Health formerly employed by RFK Pty Ltd T/A Community Chef (RFK) (the Transferring Employees); and
(ii) The Victorian Public Health Sector (Health and Allied Services Managers and Administration Workers) Single Interest Enterprise Agreement 2016 – 2020 (the Western Health Agreement) 2 that covers Western Health covers or will cover the Transferring Employees.
[2] Directions were issued by the Commission on the 2 November 2020 allowing for submissions and materials to be filed in relation to the application by; any Transferring Employees and any Unions that are party to the RFK Agreement. No submissions or materials were received from any of the Transferring Employees, or the Union/s covered by the RFK Agreement.
Background
[3] As part of the broader Victorian public hospital food services strategy, the Department of Health and Human Services on behalf of Western Health, purchased RFK from its shareholders on 7 August 2020. RFK, its employees and the Australian Municipal, Administrative, Clerical and Services Union (the ASU) were covered by the RFK Agreement. The RFK agreement has a nominal expiry date of 30 June 2020.
[4] Western Health is covered by the Western Health Agreement, which has a nominal expiry date of 30 September 2020. Western Health, its employees in relevant classifications and the Health Services Union (the HSU) are covered by the Western Health Agreement.
[5] In the week commencing 7 September 2020 Western Health wrote to RFK’s employees providing an explanation regarding an offer of employment that would be made to them in the following week. Offers of employment were subsequently made that provided for a start date with Western Health of 28 September 2020. 43 employees of RFK transferred to Western Health.
[6] The offer of employment was expressed as having 2 stages those being;
Stage 1: An offer of transfer to Western Health on the same or equivalent pay and position, with recognition of prior service, and all accrued but unused leave entitlements transferred across with them to Western Health.
Stage 2: That upon a decision of the Commission in the form sought by the Applicant in this matter;
(a) The employee would be covered by the Western Heath Agreement;
(b) In almost all cases, their employment benefits would increase; and
(c) For those Transferring Employees whose remuneration does not automatically increase their remuneration would be no less than provided for in the RFK Agreement.
[7] The Applicant identified four different types of circumstances of Transferring Employees. They are;
Group 1: Employees who will be covered by the Western Health Agreement and who will receive an immediate pay increase. There are 32 employees out of the 43 Transferring Employees in this category.
Group 2a: Employees who will be covered by the Western Health Agreement and who will remain on the same pay rate as the relevant pay rate under the Western Health Agreement is lower than the RFK Agreement. These employees will receive annual increases in accordance with increases in the base rates under the Western Health Agreement. There is 1 Transferring Employee in this category.
Group 2b: Employees who will be covered by the Western Health Agreement and who will remain on the same pay rate until such time as increases in pay rates under the Western Health Agreement result in a higher rate of pay. There are 2 Transferring Employees in this category.
Group 3: Employees whose jobs do not fit into a classification in the Western Health Agreement will be assigned to a comparable skill level and job classification, which will result in a pay increase from the point at which they become covered by the Western Health Agreement. There are 7 Transferring Employees in this category.
Group 4: Employees whose jobs do not fit into a classification in the Western Health Agreement and who are assigned to a skill level and job classification that is lower than their current rate, will be maintained at their current rate until such time as wage increases under the Western Health Agreement ensures that they receive a higher rate of pay. There is 1 Transferring Employees in this category.
[8] The Applicant says that as a consequence of the above, 40 out of the 43 Transferring Employees will receive a pay increase backdated to 1 October 2020 as a consequence of wage increases due under the Western Health Agreement, subject to the Commission making the orders sought pursuant to s. 318 regarding the RFK Agreement no longer applying and the Western Health Agreement applying to the Transferring Employees. The remaining 3 Transferring Employees will get a backdated increase only if the backdated increases in the Western Health Agreement take the relevant rates above the rates of pay they are currently on under the RFK Agreement.
[9] The Applicant when consulting with the Transferring Employees set out and provided to them on 21 August 2020 a detailed comparison of the terms and conditions under the Western Health Agreement versus the RFK Agreement. The document was titled ‘Comparison of key terms of your RFK Enterprise Agreement 2018 – 2020 (“RFK EA”) and the Western Health Enterprise Agreement 2016 – 2020 (“WH EA”)’ and was provided to the Commission in support of the application. The comparison document identified the following conditions that were more beneficial in the Western Health Agreement;
• Overtime penalty rates;
• Accrued days off (ADOs);
• Meal breaks when recalled to work;
• Annual leave – the time of taking leave more flexible;
• Long Service Leave – 6 months LSL after 15 years’ service versus 13 weeks after 10 years’ service;
• Personal carers leave – higher accrual rate;
• Public holidays – more beneficial if public holiday falls on an RDO;
• Emergency services leave – provides for release without loss of pay;
• Redundancy payments more generous and redeployment arrangements available;
• Leading hand allowances;
• Higher kilometre vehicle allowance;
• Higher duties;
• Meal allowance; and
• Childcare reimbursement.
[10] The Applicant also identified the following conditions in the Western Health Agreement that were less beneficial then the RFK Agreement;
• Minimum engagement for casual employees of 2 hours vs 3 hours;
• Overtime rate for casual employees;
• Rest break after 5 hours of work of 10 minutes vs 15 minutes;
• Daylight saving – paid for hours worked rather than by the clock when clock wound forward;
• Paid parental and adoption leave periods less;
• Uniform allowance;
• First aid allowance not payable to food services and administrative staff;
• Cold places allowance not payable;
[11] The Applicant states that it has engaged in extensive consultation with Transferring Employees and that at the time of the application there had been no opposition raised to the making of the orders sought. The consultation included the following;
• Staff memorandums sent out by RFK management to its employees on 17 & 22 June 2020 in relation to the transfer of business;
• On 21 July 2020 RFK in conjunction with Western Health commenced joint consultation;
• On 21 July 2020 a copy of the Change Impact Statement (Attachment 3 to the application) was provided to RFK’s employees;
• Several consultation meetings in the period 28-31 July 2020;
• One on one meetings with Transferring Employees between 4 – 14 August 2020 involving either Western Health’s CEO, Operations Director or Area Managers;
• On 21 August 2020 the comparison document referred to above at [9] was provided to Transferring Employees; and
• On 11 September 2020 Western Health provided Transferring Employees with offers of employment and each of the 43 employees accepted those offers.
Statutory Provisions
[12] Section 318 of the Act sets out the circumstances in which an order may be made by the Commission in respect of a new employer and transferring employees:
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.”
Consideration
[13] Before turning to consider the orders sought by the Applicant it is necessary to establish that the RFK Agreement is a transferrable instrument that covers or would cover the Applicant and the Transferring Employees, subject to any order of the Commission.
Transferable Instrument
[14] I am satisfied that the RFK Agreement is a transferrable instrument pursuant to s 312(1)(a) of the Act. I am further satisfied that;
(i) The employment of the Transferring Employees with RFK has terminated (s. 311(1)(a));
(ii) The Transferring Employees were employed by the Applicant within 3 months of their termination of employment by RFK(s. 311(1)(b));
(iii) The work of the Transferring Employees being performed for the Applicant is substantially the same or similar to the work performed by the Transferring Employees for RFK (s. 311(1)(c)); and
(iv) There is a connection between RFK and the Applicant as described in s 311(3), in that the Applicant assumed the beneficial use of some or all of the assets formerly held by RFK and which relates to or are used in connection with the transferring work (s. 311(1)(d)).
[15] As a consequence of the above I am satisfied that the RFK Agreement covers or will cover the Applicant and the Transferring Employees, subject to any order the Commission may make. It is also the case that the Applicant, the new employer, has made the application, thus satisfying the requirements of s. 318(2) of the Act.
[16] Having been satisfied as to the necessary jurisdictional requirements of ss. 311 and 312 being present, I will now turn to each of the matters that I am required to consider under ss. 318(3).
The views of the new employer and transferring employees
[17] The Applicant seeks that the RFK Agreement does not operate in its business in respect of Transferring Employees and that the Western Health Agreement covers all of its employees. No Transferring Employees provided their views in relation to the application. These factors weigh in favour of the granting of the orders sought by the Applicant.
Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
[18] While there are a small number of conditions under the Western Health Agreement that are less beneficial than the RFK Agreement, any detriment is more than offset in my view by the more beneficial provisions under the Western Health Agreement and the higher rates of pay that will apply immediately in respect of 40 of the 43 Transferring Employees. The remaining 3 Transferring Employees will not suffer a reduction in their pay rates.
[19] I am satisfied that on balance, Transferring Employees’ terms and conditions will be enhanced should the orders sought be made. This weighs in favour of granting the orders sought.
If the order relates to an enterprise agreement—the nominal expiry date of the agreement
[20] The nominal expiry date of the RFK Agreement is 30 June 2020. The Western Health Agreement reached its nominal expiry date on 30 September 2020. The fact that both agreements have recently reached their nominal expiry dates means that the Transferring employee are not disadvantaged. This criterion is therefore a neutral consideration.
Whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
[21] The transferable instrument requires the Applicant to maintain terms and conditions of employment in respect of Transferring Employees performing similar duties and functions to the balance of the Applicant’s workforce who are employed under the terms of the Western Health Agreement. I am satisfied that it creates operational inefficiencies arising from the requirement to administer the terms of the RFK Agreement covering the Transferring Employees. This weighs in favour of granting the orders sought.
The degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer
[22] The Western Health Agreement already covers the applicant and its existing employees within the scope of that agreement. The terms of the Western Health Agreement are on balance more beneficial than the RFK Agreement. The differences between the agreements should the RFK Agreement continue to apply would result in different terms and conditions for the same class of employees. To that extent there is a lack of synergy between the transferable instrument and the Western Health Agreement which covers the Applicant and its employees. This weighs in favour of the orders sought by the Applicant.
The public interest
[23] I am satisfied that it is not contrary to the public interest to grant the orders sought by the Applicant. This weighs in favour of granting the orders sought.
Conclusion
[24] Having considered the application and supporting material and taking into account and weighing each of the requirements in s. 318(3) of the Act, I am satisfied that the orders sought should be granted.
[25] An Order PR724851 will be separately issued with this Decision and will take effect on 27 November 2020.
DEPUTY PRESIDENT
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