Whitehaven Coal Mining Ltd
[2010] FWA 1142
•17 FEBRUARY 2010
[2010] FWA 1142 |
|
DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees in agreements
(AG2010/3356)
Coal industry | |
DEPUTY PRESIDENT SAMS | SYDNEY, 17 FEBRUARY 2010 |
Instruments covering new employer and transferring employees in agreements.
[1] On 28 January 2010, I made orders in this matter in the following terms:
(1) The TESA Group Pty Ltd – CFMEU Mining and Energy Workplace Agreement 2005 [PR964207] will not cover Whitehaven Coal Mining Ltd or any employees who were formerly employed by TESA Group Pty Ltd or any of its wholly owned subsidiaries.
(2) This order will take effect on and from 28 January 2010.
I now publish my reasons for making the order.
[2] On 15 January 2010, Whitehaven Coal Mining Ltd (‘the applicant’) made an application, pursuant to s 318 and s 319 of the Fair Work Australia Act 2009 (‘the Act’), for orders in relation to the transfer of some 22 former casual employees of the TESA Group Pty Ltd to permanent employment at its black coal mining operations at Werris Creek, Rocglen, Tarrawonga and its coal handling and preparation plant. The relevant history and reasons for the application were conveniently set out in the application as follows:
1. TESA Group Pty Ltd (‘TESA’) is a provider of labour hire services.
2. The Applicant and TESA are parties to an agreement pursuant to which TESA provides the Applicant with labour services at its mines and was plant. TESA has provided labour services to the Applicant pursuant to this agreement for approximately six years.
3. As part of its service, TESA provides employees of TESA, or its subsidiaries, to perform work at the Applicant’s mine sites and wash plant, in various types of production and administerial support work, under the Applicant’s direction. These employees are employed by TESA on a casual basis and receive an hourly rate of pay.
4. The TESA Group Pty Ltd – CFMEU Mining and Energy Workplace Agreement 2005 (‘the TESA Agreement’) applies to the employment of the employees of TESA and its subsidiaries who work at the Applicant’s mines and wash plant under the Applicant’s direction.
5. The applicant and its related companies are currently undergoing a phase of expansion of operations. As part of this expansion, the Applicant intends to employ approximately 20 new employees, including approximately 18 employees in a permanent full-time capacity.
6. There are approximately 16 employees of TESA, or its subsidiaries, who are currently working on a casual basis at the Applicant’s sites, and who have been doing so for various periods up to approximately nine months. The Applicant would like to provide these TESA employees with the opportunity to be employed directly by the Applicant.
7. Given that the TESA employees who are currently working on the Applicant’s sites on a casual basis have already been working in the Applicant’s operations for some time, it would be unfair to exclude them from participating in the Applicant’s expansion recruitment.
8. As these TESA employees are currently employed on a casual basis, the opportunity to be employed directly by the Applicant on a permanent basis would give those employees greater security of employment and associated entitlements.
9. Furthermore, as these TESA employees have been working at the Applicant’s sites for some time, they have a particular experience in working on TESA sites which means that directly employing them, instead of other employees, would ensure greater workplace productivity.
10. The Applicant has made offers of employment to several employees of TESA and its subsidiaries. Those offers of employment are conditional on Fair Work Australia either:
(i) granting the orders sought in this application; or
(ii) deciding that it does not have the power to make the order sought in this application.
11. On one possible reading of s 311(5) of the Act, there is a connection between TESA and the Applicant such that, if the former employees of TESA and its subsidiaries commence employment with the Applicant, there will be a ‘transfer of business’ within the meaning of the Act.
12. If there is a transfer of business, the TESA Agreement would cover the former employees of TESA and its subsidiaries who accept employment with the Applicant and would bind the Applicant.
13. Fair Work Australia has the power to make the orders sought in this application, provided that there is or is likely to be a transfer of business from an old employer to a new employer.
14. As the ‘new employer’ if there is a transfer of business, the Applicant has standing to apply for the orders sought.
15. Accordingly, the Applicant seeks the order sought in this application in order to ensure that these employees will not be covered by the Agreement when they commence employment with the Applicant.
16. The following grounds relate to the matters specified in s 318(3) of the Act:
(a)(i) the Applicant is the ‘new employer’ and is in favour of the granting of the order;
(ii) The employees who would be affected by the order are also in favour of the granting of the order. They have each signed an offer of employment which is conditional in the manner specified in ground 10 above.
(b) No employees would be disadvantaged by the order in relation to the terms and conditions of their employment. Upon commencement of their employment with the applicants, each of the employees will enjoy the benefits of the relevant Whitehaven enterprise agreement that has been approved (or is expected to be approved following the conclusion of current negotiations).
(c) The nominal expiry date of the Agreement was 25 October 2008.
(d) If the Agreement applied to former TESA employees employed by the Applicant, it would have a negative effect on the productivity of the Applicant’s workplace.
(e) The Applicant would incur significant economic disadvantage as a result of the Agreement applying to former TESA employees who took up employment with the Applicant.
(f) There is a lack of business synergy between the Agreement and the Whitehaven Open Cut Operations (Production) Employees Collective Agreement 2009.
17. The public interest favours granting the order sought in this application. If the order is not made, the offers of employment already made to TESA and subsidiary employees will not give rise to employment for these individuals. There will be no adverse effects of granting the order.
[3] The Construction, Forestry, Mining and Energy Union (Mining and Energy Division) (‘the Union’) is obviously a party to the relevant Agreement referred to above and made submissions in support of the application as follows:
1. The CFMEU Mining & Energy Division (“the Union”) is a registered industrial organisation of employees with constitutional coverage of persons employed in the coal industry.
2. The Union is a principal union representing coal miners throughout Australia including in the Northern District coalfields of New South Wales.
3. The Union has a large number of members employed by the Applicant. The Union also has members employed by the TESA Group Pty Ltd, including those that have been offered conditional employment with the Applicant.
4. The Union is a party to the TESA Group Pty Ltd – CFMEU Mining and Energy Workplace Agreement 2005.
5. The employees that will be affected by the order sought by the Applicant are members of the Union.
6. The Union supports the Application for Orders in Relation to Transfer of Business made by the Applicant that is the subject of these proceedings and requests Fair Work Australia to make orders in the form sought by the Applicant as documented at point 4 Order(s) Sought of the Applicant.
7. The applicant has set out the grounds of support in the Application. The Union supports those grounds and asks Fair Work Australia to adopt them in making the order in the form sought.
8. Fair Work Australia in deciding whether or not to make the orders is required to take into account those matters set out in section 318(3) of the Fair Work Act 2009, section 318(3) reads as follows:
“In deciding whether to make the order, FWA 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.”
9. It is paragraph 16 of point 5 Grounds of the Application that deals specifically with those issues required to be considered by Fair Work Australia in determining the Application.
10. The Union submits and supports without repeating those grounds other than paragraph 16(e) which says:
“(e) The Applicant would incur significant economic disadvantage as a result of the Agreement applying to former TESA employees who took up employment with the Applicant.”
11. The Union does not challenge the bona fides or the accuracy of this ground as asserted by the Applicant as the Union cannot independently verify any economic disadvantage. We not that the employees would receive on balance superior terms and conditions of employment should the order be made and should they enjoy the benefits of the relevant Whitehaven Enterprise Agreement that has been approved (or is expected to be approved following the conclusion of current negotiations).
12. The Union and the employees support the making of the order.
[4] All of the affected employees have signed conditional offers of permanent employment with the applicant and are awaiting Fair Work Australia’s (FWA’s) decision in the matter.
[5] At a hearing of the application on 28 January 2010, Mr A Longland, Solicitor, appeared for the applicant. The Union was not represented. Mr Longland tendered detailed submissions going to both the meaning of the relevant provisions of the Act and the merits of the application.
[6] In oral submissions, Mr Longland put that the Tribunal is not required to make a finding of fact before Fair Work Australia’s jurisdiction is enlivened. This is because of the use of the words “likely transfer” in the section. He added that the position of each employee needed to be looked at individually. Mr Longland said the Company’s contractual relationship with TESA would continue and that the agreement to engage the employees might not constitute a transfer. In this case, the Commission would have no jurisdiction and obviously could make no orders. However, for abundant caution and to ensure certainty, the orders sought would put the position beyond doubt.
[7] Mr Longland submitted that one of the matters going to the Tribunal’s exercise of discretion was to examine the terms and conditions of the earlier agreement compared to what was in the new Company’s agreement. He identified the terms of the TESA agreement as to wages, allowances and overtime and noted that these terms were the same as those applying to the Company’s other employees at the mines. The new employees would therefore suffer no disadvantage.
[8] Secondly, Mr Longland said that the consent of the Union was carefully given and was a significant discretionary consideration. Thirdly, the consent of the employees was a relevant factor as were the benefits flowing from permanent employment compared to their former engagements as casuals.
[9] Mr Longland said that subject to Fair Work Australia making the orders, and the new employees receiving a medical clearance, it was likely they would be engaged shortly thereafter.
CONSIDERATION
[10] This is an application for an order under s 318 of the Act. That section empowers Fair Work Australia to make orders of the kind referred to in s 318(1), which is expressed as follows:
FWA 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.
[11] The first question for Fair Work Australia to determine is whether a ‘transfer of business’ as defined, occurs in the circumstances of this particular case. Under s 311 of the Act, a transfer of business is said to occur when 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).
[12] I have no doubt that the specific requirements referred to above have been satisfied. In particular, there can be no doubt that the employees’ employment will be terminated by TESA; they will commence employment with the new employer, Whitehaven, within three months of their terminations; the employees will be performing the same work at the mine they have been working at as they were performing before termination; and, there remains a connection between the old and new employer by virtue of their outsourcing arrangements, which are to continue: see s 311(2) to (6).
[13] Having established the jurisdiction of Fair Work Australia to make the orders the parties seek, the Tribunal is mandated by s 318(3) to take into account all of the following matters:
(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.
In this respect I note and adopt, with respect, the comments of Richards SDP in Queensland Nickel Pty Ltd [2009] FWA 335, where his Honour said at par [36] and [37]:
[36] I note that the exercise of the FWA’s conditioned discretion is also framed within the objects of the Part, which state 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.”
[37] The objects of the Part seek to provide outcomes that balance employer and employee interests. It is perhaps best to construe this as meaning that the objects of the Part anticipate outcomes that are the result of giving proper account to the interest of both employees and employers. In the current case, this will be achieved by way of giving proper account to the matters stipulated at s.318(3) of the Act.
[14] In my opinion, significant weight should be given to the views of all the parties, being, the new employer, the affected employees and their Union, who all have given their agreement to the orders being made. I also consider it is apposite that the employees will suffer no disadvantage in the transfer of business and, indeed, are likely to positively benefit by the obvious advantages of permanent employment. I also accept that there would be negative impacts on the TESA Agreement transferring to the mines, including having separate industrial instruments applying and uncertainty for the new employer. These are matters which, in my view, demonstrate that there are significant public interest considerations which weigh heavily in favour of the order being granted.
[15] It follows that I have no hesitation in granting the order sought, as amended by Mr Longland during the proceedings. It would seem entirely appropriate to make the order effective from the date of hearing, given that prospective employees will shortly be taking up their new employment with the applicant. I confirm the orders I made on 28 January 2010.
DEPUTY PRESIDENT
Appearances:
Mr A Longland: Freehills Lawyers
Hearing details:
2010
SYDNEY
28 January
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