Zinfra Contracting Pty Ltd

[2013] FWC 6725

[2013] FWC 6725

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.319—Transferable instrument

Zinfra Contracting Pty Ltd
(AG2013/6846)

Electrical power industry
COMMISSIONER LEE	MELBOURNE, 2 DECEMBER 2013

Application for an order re instruments covering new employer and non-transferring employees in agreements.

[1] An application has been made by Zinfra Contracting Pty Ltd (the Applicant) to the Fair Work Commission (the Commission) for an order pursuant to section 319 of the Fair Work Act 2009 (the Act).

[2] The Application seeks an order that the Jemena Tasmania Electrical Works Collective Agreement 2011-2014 (as varied by Order PR534135) (the Agreement) now cover:

(a) current employees who are currently employed by Zinfra and who are performing transferring work; and

(b) any ‘new’ employees of Zinfra engaged to perform, or likely to perform, the transferring work.

[3] The Application is supported by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU), an employee organisation covered by the Agreement.

Background

[4] The Agreement was approved by Commissioner Lewin on 15 June 2011. The application for approval of the Agreement was made by Jemena Asset Management (2) Pty Ltd. Clause 1.3 sets out the parties bound by the Agreement, and states that the Agreement shall apply to and be binding upon;

“(a) Jemena Asset Management (2) ACN 073 613 733; and any successor, assignee or transmittees of the abovementioned companies and its employees engaged in the State of Tasmania to perform work in the electrical contracting, distribution and transmission industry and who are engaged in the classifications set out in Appendix A;”

[5] The Applicant submits that the “...parties to the Agreement are ZNX Pty Ltd (ABN 52 104 352 650) (formerly Jemena Asset Management (2) Pty Ltd), employees engaged in Tasmania in the classification structure in the Agreement and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU)”. 1

[6] The application was made on 5 June 2013. A telephone mention was heard by me on 28 June 2013. At the telephone mention I directed the Applicant to provide further materials in support of the application. Further submissions were received on 6 August 2013.

[7] I considered the additional materials received from the Applicant and the matter was listed for approval on 17 September 2013. Prior to the approval time, I sought further information from the Applicant as to the instrument which would cover non-transferring employees.

[8] The Applicant’s representative submitted that non-transferring employees would be covered by the Cape Cable Layers Pty Ltd Electrical Agreement 2009. The Applicant’s representative submitted that that agreement was currently the subject to a dispute matter before Commissioner Blair. The Applicant’s representative asked that this matter be stood down for a period of four weeks. I consented to the matter being stood down pending further information from the Applicant.

[9] On 27 September 2013 and 24 October 2013, the Applicant’s representative sought for the matter to remain stood down, as application had been made to terminate the Cape Cable Layers Pty Ltd Electrical Agreement 2009.

[10] On 27 November 2013, the Applicant’s representative advised that they sought determination of the matter.

[11] A draft order has been submitted by the Applicant.

Transfer of business and the transfer of the enterprise agreement

Transfer of business

[12] Section 311 of the Act provides as follows in relation to a transfer of business;

“311 When does a transfer of business occur

Meanings of transfer of business, old employer, new employer and transferring work

(1) There is a transfer of business from an employer (the old employer) to another employer (the new employer) if 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).

Meaning of transferring employee

(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.

Transfer of assets from old employer to new employer

(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:

(a) the old employer or an associated entity of the old employer; and

(b) the new employer or an associated entity of the new employer;

the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):

(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and

(d) that relate to, or are used in connection with, the transferring work.

Old employer outsources work to new employer

(4) There is a connection between the old employer and the new employer if the transferring work is performed by one or more transferring employees, as employees of the new employer, because the old employer, or an associated entity of the old employer, has outsourced the transferring work to the new employer or an associated entity of the new employer.

New employer ceases to outsource work to old employer

(5) There is a connection between the old employer and the new employer if:

(a) the transferring work had been performed by one or more transferring employees, as employees of the old employer, because the new employer, or an associated entity of the new employer, had outsourced the transferring work to the old employer or an associated entity of the old employer; and

(b) the transferring work is performed by those transferring employees, as employees of the new employer, because the new employer, or the associated entity of the new employer, has ceased to outsource the work to the old employer or the associated entity of the old employer.

New employer is associated entity of old employer

(6) There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employed by the new employer.”

[13] The Applicant submits that pursuant to section 311(1) of the Act;

“(a) on 15 April 2013 the employment of all transferring employees covered by the agreement was transferred from ZNX to Zinfra;

(b) the work performed by the transferring employees for Zinfra is the same or substantially the same as the work performed for ZNX (transferring work); and

(c) ZNX and Zinfra are both wholly owned subsidiaries of the Zinfra Group.”

[14] The transferring employees employment with the old employer was terminated on 15 April 2013 and the transferring employees were re-employed by the new employer that same day. Accordingly I am satisfied that section 311(1)(a) and (b) have been satisfied.

[15] The work that the transferring employees perform for the new employer is the same or substantially the same as the work performed for the old employer (s.311(1)(c)).

[16] There is a connection between the old employer and the new employer in that both are wholly owned subsidiaries of the Zinfra Group (s.311(1)(d), s.311(6)).

[17] Accordingly, pursuant to section 311 of the Act, there is a transfer of business and the employees of the old employer are transferring employees within the meaning of the Act.

The transfer of the enterprise agreement

[18] 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.”

[19] As described above, the Agreement was approved by Commissioner Lewin on 15 June 2011. I find that it is a transferrable instrument under section 312(1)(a) of the Act.

[20] Section 313 of the Act provides for the transferrable instrument (the Agreement) to, in effect, transfer to the new employer along with the employees who are transferred. Therefore, the Applicant (the new employer) and the transferring employees are already covered by the Agreement.

Whether the Agreement covers non-transferring employees

[21] Section 314 of the Act sets out when non-transferring employees are automatically covered by the transferring instrument (the Agreement). This only occurs in certain circumstances.

[22] Section 314 of the Act provides as follows;

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).”

[23] The Applicant is covered by the Electrical, Electronic and Communications Contracting Award 2010, a modern award within the meaning of section 314(1)(d). The non transferring employees are thus not covered by the transferable instrument. I note however, that section 314 of the Act has effect subject to any FWC order made under subsection 319(1) of the Act.

Whether the Agreement should cover non-transferring employees

Section 319 of the Act

[24] Section 319 of the Act provides as follows;

“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.

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 non-transferring employee who performs, or is likely to perform, the transferring work for the new employer;

(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.”

[25] In this matter, the Applicant seeks orders pursuant to section 319(1)(b). The application has been made by the Applicant, the new employer, pursuant to section 319(2)(a). I must now consider the requirements in subsection 319(3), and will deal with each requirement now in turn.

Section 319(3)(a)(i) - the views of the new employer

[26] The Applicant seeks the orders so that “non-transferring employees are covered by the same industrial instrument as those employees whose employment transferred...on 15 April 2013”.

Section 319(3)(a)(ii) - the views of the employees who will be affected by the order

[27] The Applicant submits that they have consulted with the CEPU regarding the transfer from ZNX to the Applicant and that the CEPU supports the application for orders.

[28] The Applicant further submits that the Applicant has “...consulted with the existing non-transferring employees regarding this application and its effects and they have indicated their support.” 2

Section 319(3)(b) - whether any employees would be disadvantaged

[29] The Applicant submits that employees will not be disadvantaged. It was submitted that the orders will ensure “that all employees of Zinfra performing electrical contracting work in Tasmania will be covered by the same industrial instrument thereby ensuring consistency in terms and conditions of employment”.

Section 319(3)(c) - the nominal expiry date of the agreement

[30] The nominal expiry date of the Agreement is 1 May 2014. The Applicant submits that “[the] Agreement will therefore be in operation for a reasonable period of time in the event the orders sought are made.”

Section 319(3)(d) - whether negative impact on the productivity of the new employer

[31] The Applicant submits that there is no negative impact on productivity from the application of the orders sought.

Section 319(3)(e) - whether the new employer would incur significant economic disadvantage

[32] The Applicant submits that it seeks consistency in the instruments covering its workforce. The Applicant submits that such “consistency has considerable cost benefits for employers, particularly in respect of payroll issues”.

Section 319(3)(f) - the degree of business synergy

[33] The Applicant submits that ensuring transferring and non-transferring employees are covered by the same industrial instrument will achieve synergy within the Applicant’s operations.

Section 319(3)(g) - the public interest

[34] There is no evidence that the public interest is agitated in this matter.

Conclusion

[35] Taking into account each of the matters set out in section 319(3) of the Act, I am satisfied that the order as sought should be granted.

[36] An Order [PR541479] will be issued concurrently with this decision.

COMMISSIONER

 1   Submissions of Zinfra Contracting Pty Ltd, filed 6 August 2013, [3].

 2   Submissions of Zinfra Contracting Pty Ltd, filed 6 August 2013, [12]

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<Price code C, AE886171  PR541480 >