Winyama Contracting Group Pty Ltd
[2024] FWC 1531
•13 JUNE 2024
| [2024] FWC 1531 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.319 - Application for an order relating to instruments covering new employer and non-transferring employees
Winyama Contracting Group Pty Ltd
(AG2024/1526)
| Building, metal and civil construction industries | |
| DEPUTY PRESIDENT BEAUMONT | PERTH, 13 JUNE 2024 |
Application for an order relating to instruments covering a new employer and transferring employees
This decision concerns an application by Winyama Contracting Group Pty Ltd (the Applicant) for orders under s 319(1)(b) of the Fair Work Act 2009 (Cth) (the Act) that the IMS (Infrastructure) Agreement 2022[1] (IMS Infrastructure EA) and the IMS Agreement 2022[2] (IMS EA) (collectively the IMS Agreements) will cover the Applicant and non-transferring employees of the Applicant.
The Applicant is an Aboriginal-owned (Ngarluma) contracting company that specialises in a wide range of services including mine services, bulk material handling, civil works, and major and minor construction.[3]
The Applicant’s ‘blue collar’ employees are engaged on two projects. Employees under the IMS Infrastructure EA are engaged on a civil construction project, with employees in classifications such as mobile plant operator, concreter, concrete finisher, and carpenter. Employees under the IMS EA are engaged on a mining service / bulk earth moving contract, with employees consisting of mobile plant operators and heavy diesel fitters.
The Applicant was previously named IMC Alliance Pty Ltd ACN 163 216 288 (IMCA) but was renamed ‘Winyama Contracting Group Pty Ltd’ ACN 163 216 288 on or around 15 May 2023.[4]
IMCA had been purchased by several buyers pursuant to a Share Sale Agreement signed 19 April 2023.[5] The buyers, that is, Justin J Angove and Anouska T Angove as trustee for the Evogna Family Trust (ABN 44 936 501 023), Raymond Kaestner and Yvonne Kaestner as trustee for The Ray and Bonnie Kaestner Family Trust (ABN 41 126 339 046), SDI Enterprises Pty Ltd (ACN 122 440 966) as trustee for The Gore Trust (ABN 91 535 838 470), and Arthur Ross Ramirez and Tania Maree Ramirez as trustee for the Ramirez Family Trust, purchased 100% of the shares in IMCA, a wholly owned subsidiary of Iron Mine Services Pty Ltd (ACN 608 402 446) (IMS) (altogether, the Transaction).[6]
At Annexure C of the Share Sale Agreement, was an Employee Transfer Agreement. That Employee Transfer Agreement was said to be interdependent with the Share Sale Agreement and provided for a transfer of employees from IMS to IMCA. Those same employees were undertaking work for IMCA at the time.[7] To that end, Schedule 2 of the Employee Transfer Agreement listed approximately 48 key employees all of whom were covered by either the IMS Infrastructure EA or the IMS EA.[8]
The transfer of employees was undertaken by IMS and IMCA in accordance with the Employee Transfer Agreement, with the Transaction completed on 1 May 2023.[9] The Applicant understood that as a result of the Transaction, the IMS Agreements transferred to IMCA, in accordance with the Act.[10] Further, as part of the Transaction there was a transfer of assets comprising of various tools and equipment from IMS to IMCA pursuant to an Asset Sale Agreement signed 19 April 2023.[11]
From the 48 employees initially transferred, 16 transferred employees remained with the Applicant as of 23 April 2024, with 10 under the IMS EA and six under the IMS Infrastructure EA.[12] In addition, the Applicant has, it says, recruited 12 new hire employees engaged under the IMS EA and two under the IMS Infrastructure EA.[13]
The Applicant holds the view that if the IMS Agreements did not apply to its non-transferring employees, then they would be covered by the Building and Construction General On-site Award 2020 (the Award) or alternatively the Mining Industry Award 2020 (the MIA).[14] Whilst it was the Applicant’s initial understanding that the IMS Agreements would cover non-transferring employees due to the operation of s 314 of the Act, whilst tendering for work with prospective clients, the Applicant was informed that this may not be the case and that the Award may cover the transferring employees. As a consequence, it brings this application to establish industrial certainty in respect of the terms and conditions of its employees – whether transferring or non-transferring.
The Applicant has articulated the orders sought in the application, in the following terms:
a) Pursuant to s 319(1)(b) of the Act, that the IMS (Infrastructure) Agreement 2022 cover the non-transferring employees of the Applicant who perform, or who are likely to perform, the similar or same work (transferring work) as the transferring employees engaged under the IMS (Infrastructure) Agreement 2022, and who are employed in roles that fall within the classifications set out in the Agreements.
b) Pursuant to s 319(1)(b) of the Act, that the IMS Agreement 2022 cover the non-transferring employees of the Applicant who perform, or who are likely to perform, the similar or same work as the transferring employees engaged under the IMS Agreement 2022, and who are employed in roles that fall within the classifications set out in the Agreements.
c) The Orders will come into effect in respect of each non-transferring employee from the date from which they commence performing the transferring work as employees of the Applicant.
It is accepted that s 317 empowers the Commission to make certain orders, including orders under s 319 of the Act, if there is, or is likely to be, a transfer of business from an old employer to a new employer.
In deciding whether to make the order, I am obliged to consider whether the Applicant has standing under s 319(2)(a) of the Act to apply for the order sought and to take into account various factors. Briefly stated, I am satisfied that there has been a transfer of business and that the Applicant has standing to make the application under s 319(2)(a).
The factors relevant to the application are set out in s 319(3) of the Act, and include:
a) the views of the Applicant and the employees affected by the order;
b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment;
c) the nominal expiry of the IMS Agreements;
d) whether the IMS Agreements would have a negative impact on productivity of the Applicant’s workplace;
e) whether the Applicant would incur significant economic disadvantage as a result of the IMS Agreements covering it;
f) the degree of business synergy between the IMS Agreements and any workplace instrument that already covers the Applicant; and
g) the public interest.
Having taken into account each of the above factors, I am satisfied that they weigh in favour of granting the order sought and as such Orders,[15] that provide that the IMS Infrastructure EA[16] and the IMS EA[17] will cover the non-transferring employees of the Applicant who perform the same or similar work as the transferring employees, are issued concurrently with this decision.
My detailed reasons follow.
Background
I am assisted in this matter by the detailed application filed by the Applicant,[18] and the witness statement of Mr Kaestner, the Chief Executive Officer of the Applicant.
The Applicant confirms that pursuant to the terms and conditions contained in the Employee Transfer Agreement, the transferred employee’s employment with IMS was terminated and they were re-engaged by IMCA within three months to perform the same, or substantially the same work as they had previously performed, and there was a connection between IMS and IMCA in that they were associated entities.[19]
Clause 2(b) of the Employee Transfer Agreement states:
2(b). IMS acknowledges and warrants that:
(i) prior to the Completion Date that IMS and IMCA are “Associated Entities” as contemplated by section 50AAA of the Corporations Act; and
(ii) there will be a "connection" between IMS and IMCA in accordance with section 311 of the Fair Work Act if Employees transfer employment from IMS to IMCA as contemplated by this agreement.[20]
Accordingly, said the Applicant, the Agreements transferred to IMCA in accordance with ss 311, 312 and 313 of the Act.
Mr Kaestner explained it was the Applicant’s initial understanding that the IMS Agreements would automatically apply to new hire non-transferring employees as well as the transferred employees, from the commencement of their employment.[21] It followed that the Applicant had been engaging new hire non-transferring employees and the transferring employees on the same terms as the applicable IMS EA.[22]
Mr Kaestner stated that on 23 April 2024, he discussed the IMS Infrastructure Agreement with the ‘Woodside blue collar team’, asking for their view on the IMS Infrastructure EA and if there were any areas of the Award they felt should apply.[23] Mr Kaestner said the consensus was that both the transferring and non-transferring employees were happy with the conditions under the IMS Agreements.[24]
On 1 May 2024, Mr Kaestner arranged for an email to be sent to employees with their payslips informing them that the Applicant was seeking orders from the Commission that the IMS Agreements would cover any new hire employees engaged by the Applicant and views were invited.[25] Mr Kaestner expressed that no issues or objections were raised as of 10 May 2024.[26]
The Applicant further sought the views of the non-transferring employees by issuing a survey on 15 May 2024.[27] In respect of the non-transferring employees who would be covered by the IMS Infrastructure EA there were two out of two yes votes supporting the order sought, and for the IMS EA, there were nine out of 12 votes supporting the order sought, with three employees not voting.[28]
Transfer of business
Section 311 of the Act sets out the circumstances in which a transfer of business occurs.
Section 312 of the Act indicates that a ‘transferable instrument’ includes ‘an enterprise agreement that has been approved by the FWC’.
The Applicant submitted that the work carried out by the transferring employees for the Applicant was the same, or substantially the same, as the work that they carried out within the three months prior to their employment ending with IMS and commencing with the Applicant.[29]
The Applicant asserts that there has been a transfer of business within the meaning of s 311(1) of the Act. It contends that the transferring employees:
a) ceased employment with IMS as required by s 311(1)(a) on or by 1 May 2023;
b) commenced employment with the Applicant on 1 May 2023, this being within the three months prescribed by s 311(1)(b); and
c) perform the same or substantially the same work for the Applicant as they did for IMS, as required by s 311(1)(c).
Furthermore, there was a connection between the Applicant and IMS on the basis that they were related entities for the purposes of the Transaction, in that the Applicant was a wholly owned subsidiary of IMS (see section s 311(6) of the Act).
I am satisfied that there was a transfer of business and that the transferring employees transferred to the Applicant, as contemplated by the Act. I am, in addition, satisfied that the Agreements are transferrable instruments[30] to which this application relates, and it is evident that the Applicant is the new employer. As such and as noted, I consider the Applicant has standing to make the application under s 319(2)(a).
Legislative framework regarding transferable instruments
Section 314 of the Act makes provision for a transferable instrument to automatically cover non-transferring employees in certain circumstances. It provides:
314 New non-transferring employees of new employer may be covered by transferable instrument
(1) If:
(a) a transferable instrument covers the new employer because of paragraph 313(1)(a); and
(b) after the transferable instrument starts to cover the new employer, the new employer employs a non-transferring employee; and
(c) the non-transferring employee performs the transferring work; and
(d) at the time the non-transferring employee is employed, no other enterprise agreement or modern award covers the new employer and the non-transferring employee in relation to that work;
then the transferable instrument covers the new employer and the non-transferring employee in relation to that work.
(2) A non-transferring employee of a new employer, in relation to a transfer of business, is an employee of the new employer who is not a transferring employee.
(3) This section has effect subject to any FWC order under subsection 319(1).
The Applicant is covered by the Award and the MIA, which are modern awards within the meaning of s 314(1)(d) of the Act. Therefore, the coverage of the IMS Agreements to the non-transferring employees, as contemplated by s 314, does not operate in relation to those employees.
However, the operation of s 314 is subject to s 319, which allows for the Commission to make an order notwithstanding the provisions of s 314, that a transferable instrument covers non-transferring employees.
Section 319(1) provides:
319 Orders relating to instruments covering new employer and non‑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 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.
Note: Orders may be made under paragraphs (1)(b) and (c) in relation to a non-transferring employee who performs, or is likely to perform, the transferring work for the new employer, whether or not the non-transferring employee became employed by the new employer before or after the transferable instrument referred to in paragraph (1)(b) started to cover the new employer.
Consideration of factors in s 319(3)
The discretion to make the order sought by the Applicant under s 319(1)(b) of the Act will only be exercised after taking into account the matters set out in s 319(3) of the Act. These factors, which must be read having regard to the objects of the Part, are intended to enable the Commission to balance appropriately the protection of employees’ entitlements under certain instruments with the need for some flexibility to depart from the default rules about coverage of instruments following a transfer of business.[31] I now deal with each of the matters under s 319(3) of the Act.
Views of the new employer – s 319(3)(a)(i)
Expanding upon the information detailed in the background of this decision, the Applicant supports the application. The Applicant submitted that proposed orders would assist in avoiding circumstances where some employees within its workforce would be award covered and others covered by the IMS Agreements.[32] Further, IMS Agreements would be able to provide industrial certainty when tendering for work, the increased rates of pay under the IMS Agreements made it easier to attract and retain employees, and the IMS Agreements would decrease the administrative burden associated with applying the two IMS Agreements and two modern awards.[33]
Views of the employees who would be affected by the Order – s 319(3)(a)(ii)
The Applicant submitted evidence of the views of the non-transferring employees, and I am satisfied that they are supportive of the Orders sought. The non-transferring employees were consulted about the application and given ample opportunity to contact the Applicant to discuss matters relating to the application but, according to the Applicant, had not exercised that option and simply indicated their support through either the completion of a survey or an individual supportive letter.
Whether any employees would be disadvantaged by the Order – s 319(3)(b)
The application was accompanied by an undertaking which is attached to this decision and marked Annexure A.
The Applicant submitted that by virtue of the accompanying undertaking proffered, it was open to the Commission to find that no new or non-transferring employees would be disadvantaged by the orders sought and that the requirements of s 319(3)(b) of the Act weighed in favour of granting the orders sought.
Having regard to the materials filed by the Applicant, I have formed the view that the non-transferring employees would not be disadvantaged by the orders in relation to their terms and conditions of employment.
The nominal expiry date of the agreement (s 319(3)(c))
The nominal expiry date of the IMS Infrastructure EA is 21 September 2026 and for the IMS Agreement is 27 September 2026. It follows that the IMS Agreements will be in operation for a reasonable period in the event that the Orders sought are made – hence providing the non-transferring employee with the benefit of established terms and condition of employment until 2026.
Productivity – s 319(3)(d)
The Applicant submits that the IMS Agreements would not have a negative impact on the productivity of the workplace, because providing the same terms and conditions for all employees whether transferring or non-transferring, would give rise to industrial harmony and decreased dissatisfaction, in this respect.
Having considered the Applicant’s evidence and submissions, I am persuaded that there will be no negative impact on productivity if the orders sought are made. In contrast, it would seem that the administrative and operational procedures of the Applicant would run more efficiently if one industrial instrument applied consistently to each transferring and non-transferring employee, and there would be less risk of disharmony in the workplace.
Economic disadvantage – s 319(3)(e)
The Applicant pressed that it would not incur significant economic disadvantage as a result of the proposed orders being granted, instead the granting of the proposed orders would result in an economic advantage; Operational and administrative inefficiencies that arose from administering the Award, MIA, and IMS Agreements would be addressed if the orders issued.
In short, I am satisfied that the Applicant would not incur significant economic disadvantage as a result of the transferable instruments covering it.
Degree of business synergy – s 319(3)(f)
If the proposed orders are granted, they will, in my view, confirm a single framework of regulation for each employee cohort that has been negotiated and approved in the same general context in which they have applied and will continue to apply. This will likely enhance the degree of synergy that exists and will avoid circumstances where employees performing the same work are afforded different terms and conditions of employment because of the application of the Award and MIA, or one of the IMS Agreements.
Public interest – s 319(3)(g)
The public interest in this context is influenced by the objects of this Part of the Act in s 309 and those adopted by the Act more broadly.
It is not apparent that it would be against the public interest to issue the orders sought. The evidence before me points to the proposed orders allowing for non-transferring employees to be afforded the benefit of increased minimum terms and conditions of employment under the IMS Agreements.
This may lead to a conclusion that the public interest in this matter is served by facilitating arrangements that permit the maintenance of the presently approved employment conditions that apply to the transferring employees to extend to the non-transferring employee(s), pending the making of any new instrument that might apply in the years to come.
Conclusion
I have considered the material provided by the Applicant in support of its application and the matters set out in ss 314 and 319 of the Act. I am satisfied the materials provided by the Applicant, when considered against the matters set out in s 319(3) of the Act, support the making of the orders.
In accordance with s 319(4) of the Act, orders will come into operation in respect of each non-transferring employee the later of the following:
a) the time when the non-transferring employee starts to perform the transferring work for the new employer; or
b) the day on which the Order is made.
DEPUTY PRESIDENT
Matter determined on the papers.
Annexure A
[1] [2022] FWCA 3302; AE517524, PR746109 (PR746109).
[2] [2022] FWCA 3285; AE517507, PR746069 (PR746069).
[3] Applicant’s Outline of Submissions, [5].
[4] Form F40 – Application for orders in relation to a transfer of business, [2.3] (the Application).
[5] Ibid; Witness Statement of Ray Kaestner, 4 (Kaestner Statement) and Attachment C1.
[6] Ibid; Kaestner Statement (n 5) [3].
[7] Kaestner Statement (n 3)[5].
[8] Ibid [6].
[9] Ibid [7] and Attachment C1.
[10] Ibid [9].
[11] Ibid [10].
[12] Ibid [12].
[13] Ibid [13].
[14] MA000020, MA000011.
[15] PR775951, PR775952.
[16] PR746109 (n 1).
[17] PR746069 (n 2).
[18] The Application (n 4).
[19] Ibid [2.3].
[20] Ibid.
[21] Kaestner Statement (n 3) [16].
[22] Ibid.
[23] Ibid [22].
[24] Ibid.
[25] Ibid [24].
[26] Ibid.
[27] Ibid [27].
[28] Ibid.
[29] The Application (n 4) [2.3(4)].
[30] Fair Work Act 2009 (Cth), s 312(1)(a).
[31] Explanatory Memorandum, Fair Work Bill 2008 (Cth), [1259].
[32] The Application (n 4) [2.3(11)].
[33] Ibid [2.3(12)].
Printed by authority of the Commonwealth Government Printer
<AE517524, AE517507, PR775950>
0
2
0