Application by Australian Turf Club Limited [2016] FWC 336 (29 January 2016) [2016] FWC 336 FAIR WORK COMMISSION DECISION Fair Work Act 2009 s.318 - Application for an order relating to instruments covering new employer and transferring employees Australian Turf Club Limited (AG2015/7901) DEPUTY PRESIDENT BULL SYDNEY, 29 JANUARY 2016 Application for an order relating to instruments covering new employer and transferring employees in agreements [1] On 24 December 2015, Australian Turf Club Limited (the applicant/ATC) lodged an application in the Fair Work Commission (the Commission) for an order under s.318 of the Fair Work Act 2009 (the Act) which relates to instruments covering a new employer and transferring employees in the context of a transfer of business. [2] The applicant is the new employer of the business to which this application relates, and therefore has standing to apply for the order under s.318(2)(a) of the Act. [3] There are two agreements to which this application relates: 1. The Programmed Turnpoint Pty Ltd Enterprise Agreement 2013 (the Turnpoint Agreement, AE406611) which has a nominal expiry date of 5 February 2018; and 2. The ATC & AWU Tracks & Ground Maintenance Agreement 2012 (the ATC Agreement, AE896170) which has a nominal expiry date of 31 July 2015. Orders sought [4] The applicant seeks the following orders: 1. Pursuant to s.318(1)(a) of the Act that the Turnpoint Agreement does not and will not cover the applicant and any transferring employees; and 2. Pursuant to s.318(1)(b) of the Act, that the ATC Agreement cover the transferring employees of the applicant. [5] On 6 January 2016, the Commission requested the applicant provide further submissions in support of its application, namely the affidavit of Ms Jennifer Schembri 1 (Executive General Manager Human Resources) and evidence of the explanatory process to the affected employees. [6] As requested, further submissions were filed by the applicant on 13 and 14 January 2016. The submissions also included a letter from the Australian Workers’ Union (AWU), who is covered by the ATC Agreement stating that the union has had the opportunity to consult with its members who will be affected by this application and that it does not have any objection to the orders sought by the applicant. Background [7] ATC owns and operates four thoroughbred race tracks in Sydney, this application relates to the applicant’s premises at the Royal Randwick and the Warwick Farm race tracks only. [8] As part of its operations, ATC had contracted the grounds maintenance work at the Royal Randwick and Warwick Farm race tracks to Programmed Turnpoint Pty Ltd (Turnpoint). [9] In November 2015, ATC made the decision to directly perform the grounds maintenance at the Randwick and Warwick Farm race tracks and on or around 21 November 2015, the contract between the ATC and Turnpoint for the performance of grounds and track maintenance work at the applicant’s premises at Royal Randwick and Warwick Farm was terminated. [10] Prior to the contract end date, the applicant offered employment to approximately 30 Turnpoint employees (transferring employees) that had been engaged in performing grounds maintenance work at the Randwick and Warwick Farm race tracks. The transferring employees have accepted the offer of employment which had a commencement date of 23 November 2015. Transfer of business [11] The applicant submits that is a transfer of business as defined at s.311(1) of the Act on the basis that: 1. On or about 21 November 2015 the employment of Turnpoint employees (old employer) engaged at the applicants race tracks of Randwick and Warwick Farm terminated (s.311(1)(a) of the Act); 2. On 23 November 2015, the transferring employees commenced employment with the applicant, being the new employer (s.311(1)(b) ; 3. The work the transferring employees performs for the applicant (being the new employer) is the same or substantially the same as the work that the employee performed for Turnpoint (the old employer), as per s.311(1)(c) of the Act; and 4. There is a connection between the applicant and the old employer as described in s.311(1)(d) of the Act, namely that the applicant had previously outsourced the transferring work to Turnpoint (the old employer). Relevant legislation [12] Section 312(1) of the Act defines the meaning of a transferable instrument. Pursuant to s.312(1)(a) the Turnpoint Agreement and the ATC Agreement constitute transferable instruments for the purposes of the Act. [13] Section 313 provides for the transferable instrument (the Turnpoint Agreement ) to, in effect, transfer to the new employer along with the employees who are transferred. [14] Therefore, the applicant and the transferring employees are covered by the Turnpoint Agreement at the applicant’s Randwick and Warwick Farm race tracks . [15] The applicant seeks that the Turnpoint Agreement not cover the applicant and the transferring employees at the Randwick and Warwick Farm race tracks, and that the ATC Agreement apply in its place. [16] The relevant sections of the Act which allows the Commission to provide the Orders sought by the applicant are: “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.” [17] Section 318(3) of the Act sets out considerations that the Commission must take into account in deciding whether to make the order: “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....” Consideration [18] In its application, the applicant has addressed each of the matters the Commission is required to consider when issuing an order under s.318. The application and submissions were accompanied by: 1. Statutory declaration of Jennifer Schembri, Executive General Manager Human Resources for the applicant (Ms Schembri’s statutory declaration details how the applicant had held formal meetings with the transferring employees regarding the transfer of business and the subject of this application) ; 2. Explanatory letter regarding the outsourcing of work from the old employer, Turnpoint to the applicant which was distributed to the transferring employees; and 3. Offers of employment to the transferring employees and their signed acceptance of the offers. Section.318(3)(a)(i)- Views of the new employer or the likely new employer [19] The applicant stated that the transferring employees have been covered by the Turnpoint Agreement since 23 November 2015 and that it also employs other persons who are covered by the ATC Agreement (Non transferring employees). [20] The applicant submits that it prefers the transferring employees to be covered by the ATC Agreement . The terms and conditions in the Turnpoint Agreement would cause some operational difficulty between the span of ordinary hours as the hours are between the two agreements. s.318(3)(a)(ii) - Views of the employees who would be affected by the order [21] The applicant states that the transferring employees were extensively consulted with prior to the offers of employment by: 1. Providing the transferring employees with a copy of the application on or around 29 December 2015; 2. On 6 and 8 January 2016, representatives of the applicant met with the transferring employees to discuss the ATC Agreement and the address any questions those employees may have had in relation to the ATC Agreement in comparison to the Turnpoint Agreement . 3. Providing transferring employees with a comparison of the rates of pay and key conditions of employment between the ATC Agreement and the Turnpoint Agreement . [22] The applicant states that no transferring employee has expressed a view that it is opposed to the orders sought. The applicant has also sought to rely on the letter from the AWU stating that the Union and the members which it represents also does not oppose the orders ought. s.318(3)(b) - Whether any employee would be disadvantaged by the order in relation to their terms and conditions of employment [23] The applicant submits that no transferring employee would incur any disadvantage in a direct comparison of the rates of pay and terms and conditions of employment as a result of the orders sought. [24] Further, it is submitted that the ATC Agreement provides comparable or superior terms and conditions of employment when compared to the Turnpoint Agreement including but not limited to: ● Higher hourly rates of pay; ● Notice of termination for casual employees; ● Horse handling allowance; ● Shorter spread of ordinary hours; ● An average of two consecutive days off per week; ● Additional paid meal breaks for employees commencing work prior to 6.30am; ● Additional loading for work performed on a Saturday night; and ● Additional day of annual leave for each year of service for all eligible employees. s.318(3)(c) - the nominal expiry date of the agreement [25] The Turnpoint Agreement has a nominal expiry date of 5 February 2018, and the ATC Agreement has a nominal expiry date of 31 July 2015. [26] The Commission requested the applicant address how it would be in the public interest for an out of term agreement ( ATC Agreement ) to cover the transferring employees as opposed to an agreement which still has more than 2 years to run before the expiration date ( Turnpoint Agreement ). [27] In response to the Commission, it was submitted that the ATC Agreement remains in operation despite the nominal term having expired and referenced s.54(2)(a) of the Act which provides: “An enterprise agreement ceases to operate on…. (a) The day on which a termination of the agreement comes into operation under section 224 or 227 ” [28] The applicant does not intend to make an application to terminate the ATC Agreement and intends for the agreement to continue to operate until it is replaced by a new enterprise agreement. While the Turnpoint Agreement remains in operation over the balance of the nominal term of the ATC Agreement , the rates of pay continue to be more beneficial to the transferring employees than the corresponding rates of pay under the Turnpoint Agreement. [29] It is further submitted that the applicant is committed to forming a new enterprise agreement to replace the ATC Agreement , and in which case will negotiate the terms of any new enterprise agreement with all relevant employees, which would also include the transferring employees. To support this submission, the applicant provided correspondence between the applicant and the AWU regarding proposed meetings for negotiations for a proposed enterprise agreement (who will be a bargaining representative for the proposed new enterprise agreement). [30] On this basis, it is submitted that despite the ATC Agreement having past its nominal expiry date, this should not weigh against the orders sought in the application. s.318(3)(d) - Whether the Turnpoint Agreement would have a negative impact on the productivity on the new employer’s (the applicant) workplace [31] It is submitted that should the Turnpoint Agreement apply, it would have a negative impact on the productivity of the applicant’s workplace for the following reasons: 1. As the Turnpoint Agreement and the ATC Agreement provides different roster cycles, the applicant would have to run two roster cycles simultaneously. The ordinary hours of work and work times being different between the two agreements would require greater resources and result in additional administration costs. 2. Further, having employees who are performing the same type of work under separate roster cycles and arrangements would create considerable workplace dislocation. s.318(3)(e) - Whether the applicant would incur significant economic disadvantage as a result of the Turnpoint Agreement covering it [32] It is submitted that the applicant would incur significant economic disadvantage as a result of the Turnpoint Agreement covering it for the reasons stated above. s.318(3)(f) – The degree of business synergy between the Turnpoint Agreement and the ATC Agreement [33] The applicant submits that given the nature of the work performed by the transferring employees, there is a degree of business synergy to be achieved by ensuring all track grounds and maintenance employees are covered by a single enterprise agreement. s.318(3)(g) - The public interest [34] It is submitted that it is in the public interest for the applicant to have one agreement cover all of its employees, as this will prevent a disparity arising between transferring employees and non-transferring employees. It is further submitted that given there has been no objection from the transferring employees or the AWU, significant weight should be given to the views of the applicant. [35] It was emphasised by the applicant that the transferring employees will suffer no disadvantage to their terms and conditions of employment. Conclusion [36] I am satisfied that the Turnpoint Agreement and the ATC Agreement are transferable instruments as described in s.312(1)(a) of the Act and the circumstances described are a transfer of business within s.311 of the Act. [37] Having regard to the grounds and reasons stated in support of the application, I am satisfied that the requirements of the Act have been met. [38] With respect to the public interest consideration, there is nothing which demonstrates that the orders sought would be contrary to the public interest but rather a beneficial increase to employees' terms and conditions and ensuring that the applicant's business operates effectively and efficiently. [39] Having considered the submissions of the applicant, with respect to the ATC Agreement to apply, despite the agreement having passed its nominal expiry date, the Commission adopts an approach such that the efficient and effective operation of the business of an applicant is a matter within the public interest (see for example Optus Administration Pty Ltd v ASU- Communications Division 2 ), which supports the applicant's contention that it is not in the public interest for a workforce to be covered by multiple industrial instruments. [40] For the reasons set out above, an order [ PR576199 ] will issue that the Turnpoint Agreement cease to cover the applicant or any transferring employees at the Royal Randwick and Warwick Farm race tracks, and the ATC Agreement will apply in its place. DEPUTY PRESIDENT 1 The application stated that a copy of Ms Schembri’s affidavit would be filed, but not attached to the application. 2 [2010] FWA 3567 Printed by authority of the Commonwealth Government Printer <Price code C, PR576197>