Application by Coles Supermarket Australia Pty Ltd [2016] FWC 2966 (12 May 2016) [2016] FWC 2966 FAIR WORK COMMISSION DECISION Fair Work Act 2009 s.318 - Application for an order relating to instruments covering new employer and transferring employees Coles Supermarket Australia Pty Ltd (AG2016/3088) WESTRALIAN EMPLOYEE COLLECTIVE AGREEMENT 2007 [AC310361] Retail industry COMMISSIONER GREGORY MELBOURNE, 12 MAY 2016 Application for an order relating to instruments covering new employer and transferring employees. [1] This matter involves an application under s.318 of the Fair Work Act 2009 (Cth) (“ the Act ”). It is made as a consequence of the decision by Coles Supermarkets Australia Pty Ltd (“ Coles ”) in Western Australia to bring to an end certain outsourced cleaning and trolley [2] collection contracts and to instead directly engage employees to provide these services. Coles currently has contracts with Westralian Pty Ltd (“ Westralian ”) to provide these services. That arrangement has been in place since July 2009. [3] The application was dealt with in a hearing on 11 May 2016 and a decision handed down in transcript at the conclusion of those proceedings. This decision reflects what is contained in transcript. It also includes some minor corrections and amendments but these do not change the intent of the decision in any way. [4] Coles intends as part of the changes outlined above to offer employment to those employees of Westralian, who are interested in being employed by Coles and who are successful in the recruitment process. Those employees are now employed under the terms and conditions contained in the Westralian Employee Collective Agreement 2007 1 . Its nominal expiry date is 22 October 2012. However, Coles does not want that Agreement to cover it, or any of the employees who may transfer to Coles from Westralian as a consequence of these changes. [5] Coles intends instead that those employees will be covered by the Coles Store Team Enterprise Agreement 2014 – 2017 2 (“ the Coles Agreement ”). That agreement was approved by the Commission on 10 July 2015 and commenced operating on 17 July. Its nominal expiry date is 31 May 2017. It is understood that these changes in Western Australia will bring the stores in that State into line with the arrangements in all other States where Coles employs staff to undertake cleaning and other services in its stores under the coverage of the Coles Agreement. [6] The application accordingly seeks orders under s.318 of the Act that the Westralian Agreement not apply to Coles, or to any of the Westralian employees who are subsequently offered and accept employment following these changes to the provision of services by Coles in its stores in Western Australia. [7] Section 318 of the Act enables an Order to be made to the effect that an existing transferable instrument that would otherwise “cover the new employer and a transferring employee does not, or will not, cover the new employer and transferring employee.” [8] It also provides that any such Order can be made on application by various parties, including “the new employer or a person who is likely to be the new employer.” [9] Section 318(3) further provides that in deciding whether to make any such Order the Commission must take into account various matters set out in the sub section. I therefore now turn to consider each of those matters in the context of the present application. The views of the new employer or a person who is likely to be the new employer. [10] The application has been made by the new employer, Coles Supermarkets Australia Pty Ltd, and it clearly supports the application and seeks that an Order in the form of the draft Order attached to the application be made. [11] A Statutory Declaration made by Mr Daniel Crofts, the Head of Central Operations for Store Services at Coles Supermarkets, provided with the application, contains some additional explanation about why the Order would be of benefit to Coles. The Declaration indicates Mr Crofts is responsible for various aspects of the service operations at Coles, including the arrangements to do with the insourcing of the cleaning and trolley collection operations in the stores in Western Australia. [12] The Declaration continues to indicate that if the Order sought is not made, and any employees who transfer from Westralian to Coles remain covered by the existing Westralian Agreement, this would require Coles to set up and administer a separate payroll system for the transferring employees, and would require it to apply separate terms and conditions in order to comply with the existing Westralian Agreement. [13] The Declaration continues to indicate that if the application is granted, and the Order made, this would – ● provide that all employees are engaged on common terms and conditions, ● avoid unnecessary administrative costs in having to establish a separate payroll system and employee management arrangements for any transferring employees, and ● remove any disincentive to Coles offering employment to the current employees of Westralian. [14] The Declaration provided by Mr Crofts also attaches a “Wages Comparison Document,” which provides a comparison between the rates of pay now paid to employees of Westralian, and the rates for the relevant classification levels under the Coles Agreement. That document indicates that the base rates of pay under the Coles Agreement are higher than the base rate of pay now paid to Westralian employees. However, it also indicates the rates of pay now paid to Westralian employees for weekend work are, in some cases, higher than under the Coles Agreement. [15] The Declaration continues to indicate that Coles has accordingly decided that if the Order sought is made any Westralian employees who subsequently obtain employment at Coles will continue to be paid the difference between what they currently receive and what they are entitled to under the Coles Agreement for any such weekend work. However, this difference will be gradually reduced at the time of future wage increases under the Coles Agreement until it has been fully absorbed. The views of the employees [16] Section 318 next requires that the Commission take account of the views of the employees who would be affected by the application, and by the making of any Orders pursuant to the application. [17] When this application was listed for hearing the Commission indicated in the Notice of Listing that the Applicant was to ensure that any employees affected, or Union representatives acting on behalf of those employees, are aware of the application and informed about the hearing by posting the Notice of Listing on relevant store notice boards. It also indicated that any interested party is able to make submissions in writing prior to the hearing, or can attend the hearing in person or by telephone in order to make submissions. It also advised that anyone who wishes to be heard is to provide confirmation to the Commission of that intention by 12 noon on Tuesday, 10 May. [18] Coles have confirmed in their submissions that the Notice of Listing was posted in accordance with the directions contained in the Notice of Listing. It is also noted that the Commission has not been contacted by any employees, or any representatives of those employees, indicating they wish to make submissions in regard to the application. [19] Coles also indicated in its submissions that a copy of the application and the Notice of Listing was provided to both the State office of United Voice in Western Australia and to the National office. United Voice is the Union that has coverage of the employees involved. However, the Union has also not been in contact with the Commission since that time to indicate it wishes to make submissions about the application. [20] The application attaches a Statutory Declaration provided by Ms Ashleigh Adamek, a Human Resources Business Partner with Coles Supermarkets Australia Pty Ltd. Her Declaration provides further detail about the nature of the application, and the proposal to offer employment to existing Westralian employees, who now work in the Coles stores in Western Australia and are interested in applying to be employed by Coles, and are successful in the recruitment process. [21] Her Declaration also indicates she has been involved in consultations with the affected Westralian employees, on behalf of Coles, to provide information to those employees about the proposed changes and to obtain their views in response. It continues to provide details about the discussions with those employees, and attaches a document which was provided to all Westralian employees who attended those discussions. The document is entitled “Coles Services – TeamTalk: Recruitment Information Session”, and contains various details, including information about the proposed recruitment process and about the Coles Agreement. The Declaration also provides details of various questions that were raised by the employees in those discussions and the responses provided by Ms Adamek on behalf of Coles. [22] Her Declaration also attaches a copy of a further document which was provided to those employees and contains a comparison between the terms and conditions contained in the Westralian Employee Collective Agreement 2007 and the Coles Store Team Agreement 2014 – 2017 . [23] Ms Adamek concludes by indicating that based on the feedback she received from approximately 80 Westralian employees who attended those discussions that they support the application on the basis that they understand if the orders sought are granted it will mean the Westralian Agreement no longer applies to any of them who are successful in obtaining employment with Coles. [24] I am accordingly satisfied, based on the material contained in those Declarations, that the majority of the employees now covered by the Westralian Agreement support, or at least do not oppose, the present application and the Order being sought. Whether any employees would be disadvantaged by the Order in relation to their terms and conditions of employment [25] The submissions provided in the proceedings on behalf of Coles indicate that in the main the employees will not be disadvantaged by the Order sought in relation to their terms and conditions of employment. However, they do make reference to some differences in regard to junior rates and rates of pay for work at weekends. It is indicated in response that there will be no employees engaged at the particular junior classification levels and, secondly, the former Westralian employees will continue to receive the more advantageous rates, when they apply at weekends, until such time as they are absorbed into future wage increases that flow to employees covered by the Coles Agreement. [26] I am satisfied based on the submissions provided in the proceedings and by the materials contained in the Declarations that there are no employees that would be disadvantaged in any significant way in relation to their terms and conditions of employment by the Order sought being made. [27] There appears, in fact, to be some benefits that flow to the employees, particularly in regard to their security of employment, and the fact that the existing Agreement still has some time to run until it reaches its nominal expiry date. There are also various pay increases which apply during the remaining term of that Agreement, whereas the Westralian Agreement has long since passed its nominal expiry date. In summary, there is no evidence to indicate any employees will be disadvantaged by the Order sought in relation to their terms and conditions of employment. If the Order relates to an enterprise agreement – the nominal expiry date of the agreement. [28] As indicated, the transferable agreement, being the Westralian Agreement has already passed its nominal expiry date of 22 October 2012, whereas the existing Coles Agreement does not reach its nominal expiry date until 31 May 2017. I am satisfied that these circumstances provide further support for the Order to be made. Whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace. [29] I am satisfied that the continuing application of the transferable instrument at the various supermarket locations would have some negative impact on the productivity of the new employer for the reasons indicated in the Statutory Declaration provided by Mr Crofts. This provides further support for the making of the Order sought. Whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer. [30] There is no suggestion that the new employer would incur significant economic disadvantage if the transferable instrument were to apply to it. However, again for the reasons already referred to and particularly set out in the Statutory Declaration provided by Mr Crofts, I am satisfied Coles would suffer some economic disadvantage, particularly in terms of the different industrial arrangements that would need to be maintained, applied and administered for any Westralian employees, who are subsequently employed by Coles, if the Order is not made. The degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer. [31] I am satisfied that in the main these issues have already been canvassed in response to the other matters that I am required to take into account of. I am satisfied there would be some lack of business synergy between the relevant instruments, if for no other reason that they contain different terms and conditions of employment, and would require Coles to administer and manage these different arrangements. In addition, the fact the Westralian instrument has now passed its nominal expiry date means the employees covered by it could potentially initiate various forms of industrial action that might not be available to other Coles employees given the existing Coles Agreement has some time to run before it reaches its nominal expiry date. The public interest [32] Coles made reference to the fact that if the Order sought is made it will enable the employment opportunities that might be provided by Coles to be maximised. I am not aware of any other public interest considerations that need to be taken account of. Conclusion [33] In conclusion, having considered all of the matters in s.318(3) that I am required to take account of I am satisfied it is appropriate for an Order to be made. 3 An Order will accordingly be made in the terms of an amended draft Order provided in conjunction with the application. The Order issued will have application from the date of the Decision issued in transcript, being 11 May 2016, but in accordance with the provisions contained in s.318(4), it will not come into operation for any employee until such time as those employees become employed by the new employer. COMMISSIONER Appearances : Ms J Tilse of Minter Ellison appeared on behalf of the Applicant. Hearing details: 2016. Melbourne: 11 May. 1 AC310361 2 AE414390 3 PR580273 Printed by authority of the Commonwealth Government Printer <Price code C, AC310361 PR580261 >