Woolworths Group Limited T/A Woolworths/Primary Connect
[2022] FWC 1021
•17 MAY 2022
| [2022] FWC 1021 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Woolworths Group Limited T/A Woolworths/Primary Connect
(AG2022/1248)
| COMMISSIONER LEE | MELBOURNE, 17 MAY 2022 |
Application for an order relating to instruments covering new employer and transferring employees.
Introduction
An application has been made by Woolworths Group Limited T/A Woolworths/Primary Connect (the Applicant) to the Fair Work Commission (the Commission) for an order pursuant to s.318 of the Fair Work Act 2009 (the Act).
The Applicant seeks an order in the following terms:
1. The Linfox – Big W Distribution Centres Greenfields Agreement 2021 (Linfox Agreement 2021) does not, and will not, cover Woolworths Group Limited (Woolworths) in respect of employees transferring from employment with Linfox Australia Pty Ltd (Linfox) to Woolworths.
2. The Linfox Agreement 2021 does not, and will not, cover any employee whose employment transfers from Linfox to Woolworths.
3. The Commission notes that the Storage Services and Wholesale Award 2020 will apply to former employees of Linfox who are employed by Woolworths to perform work at 368-426 Old Geelong Road, Hoppers Crossing 3029 VIC (the Hoppers Crossing Site) within the scope of the classifications referred to in the Linfox Agreement 2021.
The Applicant seeks that the order come into operation from the date when the first employee transferring from Linfox becomes employed by Woolworths to perform work at the Hoppers Crossing Site.
The application consists of a Form F40 - Application for orders in relation to transfer of business. The application is also accompanied by a statement by Ms Natalie Mooy, Employee Relations Partner, and associated attachments. The Applicant requests that the application be determined on the papers and the United Workers’ Union support that request. In the circumstances I have determined the matter on the papers without the need for a hearing.
Legislation
“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.”
Background
The background of this matter as set out in the statement of Ms Mooy is outlined below.
On or around 2 August 2019, the Applicant entered into an outsourcing arrangement with Linfox Australia Pty Ltd (Linfox) in relation to the provision by Linfox of warehousing services at two sites:
(a)a new facility at 368-426 Old Geelong Road, Hoppers Crossing 3029 VIC (the Hoppers Crossing Site); and
(b)an existing facility at 4 Terminal Road Kewdale 6105 WA (the Kewdale Site).
The Linfox - Big W Distribution Centres Greenfields Agreement 2021 (the Agreement) covers Linfox, each employee of Linfox who performs work in a classification specified in Appendix 1 of the Agreement at those two distribution sites, and the United Workers' Union (the UWU).
The Applicant, through its "Primary Connect" business division, intends to insource work currently completed by Linfox and its employees at the Hoppers Crossing Site.
On or around 27 June 2022 (the Transfer Date), it is anticipated that a transfer of business (Transfer) will occur under s.311 of the Act, when the employment of employees of Linfox who are covered by the Agreement and perform work at the Hoppers Crossing Site will terminate, and employees who accept the Applicant's offers of employment will immediately become employed by the Applicant (the Transferring Employees). The work the Transferring Employees perform for the Applicant will be the same, or substantially the same, as the work the Transferring Employees perform for Linfox at the Hoppers Crossing Site (the Transferring Work). The effect of the Transfer is likely to be that approximately 70 Transferring Employees will become employees of the Applicant on the Transfer Date.
In addition to the Transferring Employees, the Applicant also intends to engage employees who will perform the same work as the Transferring Work at the Hoppers Crossing Site (the New Employees). The New Employees may be engaged prior to or following the Transfer Date.
This application only relates to the Hoppers Crossing Site. The Kewdale Site did not become operational (as far as the Applicant was concerned) and Linfox does not provide any services to the Applicant in relation to that site. The Agreement also refers, in clause 2, to any replacement site or additional site "to service the relevant contracts". The relevant contracts are a reference to the arrangements described in paragraph [6] above. This application does not relate to, and the Applicant is not aware of, any such replacement sites or additional sites being operated by Linfox in relation to those arrangements.
In light of the relevant coverage provisions and the Applicant's business operations, the Applicant considers that the Storage Services and Wholesale Award 2020 (the Award) will apply to the Applicant and any New Employees. Although it was the underlying award for the Agreement in respect of employment with Linfox, the Applicant does not consider that the Road Transport and Distribution Award 2020 will apply to the Applicant or the New Employees. The Applicant wants to engage both Transferring Employees and New Employees on a common set of terms and conditions, based on the Award.
The UWU is covered by the Agreement and supports the application.
The Agreement has a nominal expiry date of 29 February 2024, meaning the Agreement continues to operate within that nominal term and thereafter until replaced or terminated
Transferrable instrument
Section 311 of the Act sets out when a transfer of business occurs. On the evidence before me, it is likely that there will be a transfer of business within the meaning of s.311(1) of the Act.
Section 312 of the Act details instruments that may transfer:
“312 Instruments that may transfer
Meaning of transferable instrument
(1) Each of the following is a transferable instrument:
(a) an enterprise agreement that has been approved by the FWC;
(b) a workplace determination;
(c) a named employer award.
Meaning of named employer award
(2) Each of the following is a named employer award:
(a) a modern award (including a modern enterprise award) that is expressed to cover one or more named employers;
(b) a modern enterprise award that is expressed to cover one or more specified classes of employers (other than a modern enterprise award that is expressed to relate to one or more enterprises as described in paragraph 168A(2)(b)).
Note: Paragraph 168A(2)(b) deals with employers that carry on similar business activities under the same franchise.”
The Agreement was approved by the Fair Work Commission on 8 February 2021 and pursuant to s.312(1) of the Act is a transferrable instrument.
Who may apply for an order?
The application has been made by Woolworths Group Limited T/A Woolworths/Primary Connect, the new employer. The requirements of s.318(2) have therefore been met.
Section 318(3) – Matters that the FWC must take into account
The grounds relied on by the Applicant are set out in the witness statement of Ms Mooy. The submissions as set out in the statement of Ms Mooy are made on behalf of Woolworths and are outlined below.
Section 318(3)(a) – the views of the new employer and the employees who would be affected by the order
Section 318(3)(a)(i) – the views of the new employer
The Applicant states that it wants to engage both Transferring Employees and New Employees on a common set of terms and conditions. The Applicant submits that if the order sought by the Applicant is not made by the Fair Work Commission, there will be two sets of employment terms and conditions for employees working side-by-side in the same roles at the Hoppers Crossing Site (that is, Transferring Employees and New Employees). This will result in:
(a)industrial disharmony, lower employee engagement and potentially more difficulty with recruitment;
(b)practical complexity for the distribution centre, which will need to apply different rostering rules and entitlements;
(c)system complexity, as the Applicant will need to configure its payroll, time and attendance and employment contract systems and processes to provide for different entitlements to team members in the same roles; and
(d)added complexity for the Applicant's support functions, for example the payroll, talent acquisition and human resources teams.
I have taken into account the views of the employer who would be affected by the order, including the effects of not engaging both Transferring Employees and New Employees on a common set of terms and conditions. In the circumstances, this matter weighs in favour of making the order sought.
Section 318(3)(a)(ii) – the views of the employees
The Applicant’s evidence is on 8 April 2022, two "team talks" were held to explain to the Transferring Employees the proposed approach and the Applicant's application to the Fair Work Commission, how this would affect their pay and entitlements, and next steps. A copy of the script used for those team talks is attached to the statement of Ms Mooy and marked "NM-2".
The Applicant states that Ms Samantha Thompson (People Lead - Victoria, Primary Connect) attended each team talk with Mr Justin Dowling (Director, Primary Connect B2B and Everyday Needs, who is the individual responsible for managing the commercial relationship between the Applicant and Linfox) indicated that approximately 60-80 individuals attended each team talk. In light of the nature of those team talks, both Transferring Employees and other individuals (such as casuals engaged by third party labour hire providers) were in attendance.
Furthermore, the Applicant’s evidence is that at the conclusion of each team talk, a fact sheet was made available to those Transferring Employees in attendance, which outlined the key differences between their current entitlements (including under the Agreement) and the proposed future entitlements (under the Award and the contracts of employment to be offered by the Applicant). The fact sheet was also posted on the noticeboard at the Hoppers Crossing Site and was made available, either electronically or in hard copy, to Transferring Employees upon request. A copy of the fact sheet is attached to the statement of Ms Mooy and marked "NM-3".
The Applicant advises that from 8 April 2022, Transferring Employees were asked to provide their views about the proposal and this application to the Fair Work Commission (including whether they were supportive) by completing an online survey. Transferring Employees were able to complete the survey by using a QR code that was included on the fact sheet and also posted on the noticeboard at the Hoppers Crossing Site. As of 27 April 2022, the Applicant had received thirty-seven responses to the survey. Six of those responses are identified as being from casuals engaged by a third party labour hire provider (and who are therefore not the subject of this application, although all were supportive of it).
Thirty-one of the responses were from individuals who are identified as being either casuals who are employed by Linfox or full-time employees of Linfox, comprising:
26 individuals who responded that they were supportive of Woolworths making this application (with one individual asking for further information about the impact on their recent promotion, and another about the process as they will be on leave);
5 individuals who responded by asking for further information (including about the increase to the base rate, and another expressing interest in joining the IT team); and
no individuals indicating that they were not supportive of Woolworths making this application.
The Applicant’s evidence is that where an individual provided appropriate contact details, the Applicant provided further information to address their questions or feedback.
The Applicant advises that on 14 April 2022, a meeting was held with UWU organisers Mr Alex Snowball and Ms Tegan Milliken, wherein the Applicant provided a commitment to increase by $2 the hourly base rates of pay provided by the Agreement and an update on Transferring Employees' entitlements, and shared the intention to commence bargaining with the UWU for a new enterprise agreement after the transfer occurs. On 22 April 2022, the UWU provided the Applicant with a letter in support of the application to the Fair Work Commission. A copy of the UWU's letter is attached to the statement of Ms Mooy and marked "NM-4".
I have taken into account the views of the employees who would be affected by the order. The evidence of the Applicant demonstrates that the majority of the employees who would be affected by the order support the application. There were no employees that indicated they were not in support of the application. In the circumstances, this matter weighs in favour of making the order sought.
Section 318(3)(b) – whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
The Applicant submits that transferring Employees will, on an overall basis, be better off, and not disadvantaged, in relation to their terms and conditions of employment if the order sought is made.
The Applicant states that the Award contains a number of terms that are more beneficial to employees than if the Agreement applied. For example:
team members aged 19 years of age are better off under the Award (as they receive 100% of the adult rate, as opposed to 80% under the Agreement);
the meal allowance in the Award is $1.13 greater than the meal allowance under the Agreement (and is paid whether or not notice of overtime is provided, although only if at least one hour's overtime is worked);
the first aid allowance is slightly ($0.21) higher under the Award;
the span of ordinary hours is more confined under the Award (7am-5.30pm Monday to Friday) as opposed to the Agreement (5am-6pm Monday to Sunday), so employees may have an entitlement under the Award to overtime for certain hours worked when they would not have an entitlement under the Agreement;
there are some additional times in which a shift would be considered an afternoon shift or night shift (an additional half an hour) or an early morning shift (an additional two hours) under the Award, and therefore would attract additional loadings;
overtime is payable under the Award where a full-time or part-time team member works more than five days in one week;
the overtime rates for casual team members are 175% for the first two hours and 225% for any additional hours under the Award, as opposed to 160% and 210% under the Agreement; and
the Award provides for a 10 minute paid rest break each morning and afternoon, while the Agreement does not expressly provide for a rest break (other than when team members are required to work overtime).
The Applicant further submits that there are some terms of the Award where the Award is less beneficial that the current entitlements of Transferring Employees. The principal difference is that the hourly rate of a Storeworker Grade 4 under the Award (highest classification) is currently $23.80, which is lower than the training rate (lowest classification) of $24.60 under the Agreement.
However, the Applicant states that it has not only committed to maintaining existing base rates for the Transferring Employees, but has also committed to a $2 per hour increase to the relevant hourly base rate of pay under the Agreement. The Applicant's offers of employment to the Transferring Employees will give contractual effect to that commitment. The Applicant has made this commitment in order to retain Transferring Employees (and to attract New Employees) but also to address any areas where the Agreement is more beneficial than the Award.
Those other differences are outlined in the statement of Ms Mooy and include the following:
Employees aged 17 years or younger are better off under the Agreement (as they receive 70% of the adult rate, as opposed to 60% or less under the Award). There are no team members currently under the age of 18 that are employed at the Hoppers Crossing Site;
The meal allowance is paid under the Agreement for any overtime worked (if at least two hours' notice is not provided or if the team member is not notified during the prior rostered shift), as opposed to only being paid for more than one hour's overtime under the Award;
An employee performing less than three hours of higher duties would be paid the higher rate for the whole day under the Agreement. Under the Award, more than three hours would need to be worked in order to receive a full day's pay at the higher rate;
Transferring Employees who are part-time employees currently have a minimum engagement of four hours, as opposed to three hours under the Award (although, upon transfer, the Applicant does not envisage rostering part-time employees for three hour shifts);
An employee is entitled to a loading of 17.5% for an afternoon shift under the Agreement as opposed to a loading of 15% under the Award;
Full-time and part-time Transferring Employees who work Good Friday or Christmas are entitled to be paid 200% (in addition to their weekly wage) or 300% if it falls outside the range of ordinary working time under the Agreement, as opposed to 250% of their base rate of pay under the Award; and
A Team Member is entitled to 200% of the applicable minimum hourly rate if required to work through a break under the Agreement.
The Applicant submits that Transferring Employees currently required by Linfox to act as a Team Leader would, if the Award applied, no longer receive the Team Leader allowance (currently $2.76 per hour, being specified as $102.50 per week in Appendix 3 of the Agreement but subject to the increases specified in Appendix 4). However, Transferring Employees and New Employees will not be required to perform these duties by the Applicant.
In the event that Transferring Employees or New Employees are engaged in a Team Leader role, the Applicant intends to:
pay Transferring Employees and New Employees an annual salary which is sufficient to satisfy both their entitlements under the Award (at the increased base rates referred to above) and an amount equivalent to the Team Leader allowance; or
for individuals who are undertaking a secondment at the Hoppers Crossing Site, pay a salary which is sufficient to satisfy both their entitlements under the Award (at the increased base rates referred to above) and an amount equivalent to the Team Leader allowance; or
for individuals who are required to undertake work in a short term relief capacity at the Hoppers Crossing Site which would currently result in an entitlement to the Team Leader allowance under the Agreement, pay an additional amount of $20 per day.
The Applicant clarifies that the issue of the Team Leader allowance was not addressed in the fact sheet or team talks but was instead identified in discussions with the UWU. It was resolved prior to the UWU issuing its letter of support.
I have taken into account whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment. It is apparent that while the Award contains a range of more beneficial terms when compared to the Agreement, there are also some less beneficial terms arising. Furthermore, the Applicant has made clear its intention to alleviate some of the less beneficial terms by way of additional renumeration. In the circumstances, this matter weighs in favour of making the order sought.
Section 318(3)(c) – if the order relates to an enterprise agreement—the nominal expiry date of the agreement
The nominal expiry date of the Agreement is 29 February 2024. This matter is a neutral consideration.
Section 318(3)(d) – whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
The Applicant submits that if Agreement covers Transferring Employees, there will be a negative impact on the productivity of the Applicant's workplace. It is expected that if the order is not granted, this will affect productivity, including by giving rise to practical difficulties associated with applying two different sets of terms and conditions of employment at the one workplace. For example, if the Agreement does not apply to Transferring Employees:
rostering will be simpler for line managers;
breaks, leave and other entitlements (such as meal allowances, overtime, applicable penalties and loadings) will be simpler to understand and implement; and
substantial and expensive reconfiguration of the Applicant's payroll and time and attendance systems will not be required.
I have taken into account whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace. I agree with the Applicant’s submissions that if the order is not granted it will affect productivity by giving rise to practical difficulties. In the circumstances, this matter weighs in favour of making the order sought.
Section 318(3)(e) – whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer
The Applicant submits that it would incur significant economic disadvantage if the order sought is not granted and the Agreement covers Transferring Employees.
The Applicant submits that it is expected that the Applicant will be disadvantaged if the order sought is not made because the Applicant would be required to administer the Agreement and the Award simultaneously, resulting in significant administrative, rostering and payroll burdens. The costs of setting up and administering two separate configurations and interpretations for rostering and payroll for Transferring Employees would be economically inefficient, confusing for employees and managers, and problematic for the Applicant. It would have a negative impact on operations, which in turn will impact productivity and lead to negative economic consequences.
The Applicant submits that having employees on the same site performing work encompassed by one instrument and paid according to that single instrument is likely to lessen the administrative burden of processing payroll according to two instruments and avoid potential disputes (and the cost of such disputes).
I have taken into account whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer. I agree with the Applicant’s submissions that it will be disadvantaged if the order sought is not made because the Applicant would be required to administer the Agreement and the Award simultaneously, resulting in significant administrative, rostering and payroll burdens. In the circumstances, this matter weighs in favour of making the order sought.
Section 318(3)(f) – the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer
The Applicant submits that there is a lack of business synergy between the Agreement and the Award. The Applicant provided an attachment to Ms Mooy’s statement (NM-3) which outlines the key differences between the terms and conditions of employment between these two industrial instruments.
In addition to the practical complexity of applying different sets of terms and conditions, the Applicant submits that there would be a risk of industrial disharmony if the Agreement was to apply to Transferring Employees and the Award to New Employees.
Furthermore, that if the Applicant was required to operate two distinct rostering and payroll configurations and interpretations to accommodate requirements under the Agreement, this would cause a lack of operational efficiency and a disparity between terms and conditions of employment between the two groups of employees.
I have taken into account the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer. I agree with the Applicant’s submissions that there is a lack of business synergy between the Agreement and the Award, which would result in complexity of applying different sets of terms and conditions, as well as decreased efficiency and grater disparity. In the circumstances, this matter weighs in favour of making the order sought.
Section 318(3)(g) – the public interest
The Applicant submits that it would be in the public interest to grant the order sought.
The Applicant states that the order sought facilitates arrangements that permit and encourage the maintenance of employment for the employees through the transfer of business process. The proposed order would allow for the majority of the current workforce of Linfox employed at the Hoppers Crossing Site to take up new positions with the Applicant that are similar in role and location.
Furthermore, that the proposed order is consistent with the object of the transfer of business provisions of the Act, in striking a balance between the protection of employees' terms and conditions of employment and the interests of employers in running their enterprises efficiently without the burden of unnecessary complications in their employment arrangements.
I have taken into account whether it is in the public interest to grant the order sought. The Applicant makes submissions that the order sought encourages the maintenance of employment and promotes the objects of the Act. In the circumstances, this matter weighs in favour of making the order sought.
Conclusion
Having considered the matters above, while there is one neutral consideration, it is apparent that most matters weigh towards the granting of the application sought. Taking into account each of the matters set out in s.318(3) of the Act, I am satisfied that the order as sought should be granted, with one exception. That exception being point 3 of the order sought which states as follows:
“The Commission notes that the Storage Services and Wholesale Award 2020 will apply to former employees of Linfox who are employed by Woolworths to perform work at 368-426 Old Geelong Road, Hoppers Crossing 3029 VIC (the Hoppers Crossing Site) within the scope of the classifications referred to in the Linfox Agreement 2021.”
I indicated to parties by way of correspondence that if the Applicant intends to apply the Storage Services and Wholesale Award 2020, that is not a matter that is appropriate to include in an order made pursuant to s.318 of the Act. The Applicant responded to the correspondence and advised that both the Applicant and UWU agree not to press for that part of the order sought. As such, point 3 in the proposed order will not be included in the order made by the Commission. An order to that effect will be issued concurrently with this decision in PR741201.
The order will come into operation from the date when each Transferring Employee becomes employed by Woolworths to perform work in its facility located at 368-426 Old Geelong Road, Hoppers Crossing 3029 VIC.
COMMISSIONER
Determined on the papers.
Printed by authority of the Commonwealth Government Printer
<PR741200>
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