1 Fair Work Act 2009 s.318 - Application for an order relating to instruments covering new employer and transferring employees DPG Services Pty Ltd T/A Opal Healthcare (AG2024/114) Aged care industry COMMISSIONER SIMPSON BRISBANE, 31 JANUARY 2024 Application for an order relating to instruments covering new employer and transferring employees [1] An application has been made by DPG Services Pty Ltd T/A Opal Healthcare (Opal Healthcare /the Applicant) to the Fair Work Commission (the Commission) for an order pursuant to s.318 of the Fair Work Act 2009 (the FW Act). [2] The Applicant seeks the following orders: (a) Pursuant to s.318(1)(a) of the Fair Work Act 2009 (Cth) (the Act), the Fair Work Commission (Commission) orders that the Jeta Gardens Enterprise Agreement 2019 will not cover DPG Services Pty Ltd T/A Opal HealthCare (Opal HealthCare) or any transferring employees as defined in Part 2-8 of the Act, being employees of Opal HealthCare who were formerly employed by Jeta Gardens (Qld) Pty Ltd (ABN 26 102 975 185) at the Jeta Gardens residential aged care facility in Bethania in Queensland. (b) The Commission further orders, pursuant to section 318(1)(b), that the transferring employees referred to in [1] will be covered in their employment with Opal HealthCare by the Opal Aged Care Qld Enterprise Agreement 2014. (c) In accordance with s.318(4) of the Act, this Order shall come into operation in relation to each transferring employee on and from the date of this Order, or at the time when the transferring employee is employed by Opal HealthCare, whichever is the later. Background [3] On 1 February 2024 (transfer date), there will be a transfer of business from Jeta Gardens (Qld) Pty Ltd (ABN 26 102 975 185) (old employer) to the Applicant, whereby the Applicant will purchase and take over the operations of the Jeta Gardens residential aged care facility (Facility) located in Bethania in Queensland. [2024] FWC 264 DECISION [2024] FWC 264 2 [4] It was submitted that the old employer employs 232 at the Facility who are covered by the Jeta Gardens Enterprise Agreement 2019 (Jeta Gardens Agreement). The Applicant has offered employment to 214 of those employees which, where the offer is accepted, is to commence on the transfer date, being within three months of the termination of their employment with the old employer. The Department of Health and Aged Care has approved the Applicant’s acquisition of the Facility. [5] The Applicant, therefore, will be, or is likely to be, the new employer (for the purposes of section 311(1) of the FW Act). [6] The Applicant submitted that the work that the transferring employees will perform for the Applicant will be the same or substantially the same as the work that they perform for the old employer. Specifically, nursing, personal care, diversional therapy and environmental services (e.g., laundry, cleaning, on-site maintenance, kitchen/cooking and general support functions) to facilitate the running of the Facility and provide residential aged care services to the Facility’s residents. [7] There will be a connection between the old employer and the Applicant in that effective from the transfer date: (a) the business owned by the old employer in respect to ‘Jeta Gardens’ will be transferred to the Applicant; (b) the business assets owned by the old employer in respect to ‘Jeta Gardens’ will be transferred to the Applicant; and (c) the Applicant will carry on the business previously carried on by the old employer in respect to ‘Jeta Gardens’. [8] It was submitted that accordingly, pursuant to section 311(1) of the FW Act, there will be a transfer of business. [9] The Jeta Gardens Agreement presently applies to the transferring employees. [10] The Applicant submitted section 313(1) of the FW Act provides that a transferable instrument that covered the old employer and the transferring employees immediately before the termination of the transferring employee’s employment will cover the new employer (i.e., the Applicant). The operation of these sections means that subject to the foregoing, the Applicant would be covered by the Jeta Gardens Agreement in relation to the transferring employees – subject to section 318(1) of the FW Act. [11] The Applicant seeks an Order that the enterprise agreement that currently covers its existing employees in Queensland also cover the transferring employees. That enterprise agreement is the Opal Aged Care Qld Enterprise Agreement 2014 (Opal Agreement). Applicant Submissions [2024] FWC 264 3 [12] Section 318(3) of the FW Act provides that the FWC must take the following matters into account when making a determination pursuant to section 318(1): (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. [13] The Applicant makes this Application as it seeks to apply uniform conditions of employment to existing and transferring employees to ensure consistency and parity for all employees, foster an inclusive and equitable environment and avoid unnecessary administrative costs and challenges. [14] The Applicant submitted their primary aim is to provide parity to all employees and avoid disparities that would otherwise arise, should the transferring employees undertaking the same work, not receive the benefit of the Opal Agreement and be subject to differently structured wages and entitlements. [15] The Applicant submitted that the Opal Agreement provides wages and benefits which, overall and together with the Applicant’s commitment to preserve particular more superior entitlements under the Jeta Gardens Agreement as detailed below, are more beneficial to those conferred by the Jeta Gardens Agreement. [16] The Applicant further submitted that there are administrative difficulties in applying two sets of wage structures and terms and conditions of employment within the same workplace, particularly when the Applicant is not familiar with the transferable instrument nor are their systems set up to account for and accommodate the differences. Accordingly, should it be required to apply varying sets of wage structures and conditions of employment within the same workplace, the Applicant submitted they will be subject to increased administrative costs and associated burdens. The employees affected [17] The Applicant submitted they have sought the views of the transferring employees who would be affected by the Order, and endeavoured to take all reasonable and practicable steps to do so. In this regard: a. On 13 December 2023, the Applicant convened an information session on site at the Facility (with electronic attendance via Microsoft Teams also made available) to announce the Applicant’s acquisition of the Facility and provide a general overview of the transition process; b. On 13 December 2023, the Applicant sent a memo to the transferring employees by email, advising of the Applicant’s acquisition of the Facility and providing responses to a list of anticipated questions regarding the transition process and employment entitlements. [2024] FWC 264 4 c. On 11 January 2024, the Applicant conducted multiple staff meetings on site at the Facility with the transferring employees to discuss the transfer, contracts of employment and the Applicant’s proposed application to the Commission to obtain an order that the Opal Agreement cover the transferring employees in respect to their employment with the Applicant. In those meetings – which were also attended by representatives of the Queensland Nurses and Midwives’ Union (QNMU) – the following documents which provided key information about the transfer were provided to staff in attendance, and copies were additionally sent to the transferring employees via email: i. a comparison table comparing conditions under the Jeta Gardens Agreement and the Opal Agreement; ii. a copy of the draft Form F40 (as prepared at the relevant time); and iii. an information and consent form which, amongst other things, contained various questions and answers about the transfer, the Applicant’s proposed application to the Commission and the Applicant’s commitment to preserve certain more beneficial entitlements that are conferred under the Jeta Gardens Agreement (Consent Form). d. Representatives of the Applicant have made themselves available onsite at the Facility since the announcement date to assist with the transition for transferring employees and answer any questions from the transferring employees pertaining to same. This has included the Applicant’s Regional Support Manager being available at the Facility since 15 January 2024, and a representative of the Applicant’s People and Culture Team being available at the Facility on approximately 3 days per week since the announcement to Facility staff on 13 December 2023, to answer any questions from the transferring employees; e. the documentation provided to transferring employees included the contact number of the Applicant’s HR Service Desk in the event a transferring employee had any questions in respect to the transfer. [18] It was submitted that the Consent Form provided to transferring employees sought their views by asking them if they had any concerns surrounding the transfer, and whether they objected to the Applicant making an application to the Commission seeking an order that the Opal Agreement cover their employment with the Applicant. The Consent Form explained the Applicant’s commitment to preserve certain more beneficial conditions conferred under the Jeta Gardens Agreement. [19] The Applicant submitted that a total of 143 out of 214 employees returned the Consent Form to the Applicant as at the date of the application, of which: a. 76 employees indicated that they have no concerns at all and agree to the Opal Agreement applying to their employment with the Applicant (subject to the Commission granting the Order sought); [2024] FWC 264 5 b. 67 employees variously stated concerns in their respective consent forms that related to the following matters: i. The length of time that has passed since the Opal Agreement nominally expired – this was a concern raised by 6 employees and the Applicant notes bargaining has already commenced between the Applicant and the relevant union employee organisations for a replacement enterprise agreement; ii. Contracted hours of work – this was a concern raised by 30 employees. Whilst this was an operational matter that does not relate to the Applicant’s proposed application or to the level of conditions / entitlements under the Opal Agreement, by way of resolution, the Applicant has committed to completing a review to ensure contracted hours are reviewed in line with rosters worked and agreed; iii. Reduced entitlements to annual leave and long service leave under the Opal Agreement – these concerns were raised by 50 employees. The Applicant has committed to preserve the more beneficial annual leave and long service leave entitlements under the Jeta Gardens Agreement for all transferring employees for the life of their employment with the Applicant should they transfer on the transfer date; iv. Lower public holiday penalty rates under the Opal Agreement – this was a concern raised by 48 employees. The Applicant has committed to preserving the more beneficial public holiday penalty rates under the Jeta Gardens Agreement for transferring employees for the period commencing from the transfer date and ending on the date of operation of a new enterprise agreement that replaces the Opal Agreement and applies to the transferring employees’ employment with the Applicant; v. Non-conferral of a specialty work allowance under the Opal Agreement – this was a concern raised by 12 employees. The Applicant has committed to preserving this entitlement under the Jeta Gardens Agreement to transferring employees for a period of 12 months from the transfer date; vi. Rates of pay – this was a concern raised by nine employees. Any transferring employee with a more superior base rate of pay compared to the corresponding base rate of pay for their classification under the Opal Agreement will have their base rate of pay preserved and maintained on transfer; vii. Provisions for broken shifts in the Opal Agreement – this was a concern raised by two employees and the Applicant notes that in accordance with clause 25 of the Opal Agreement, broken shifts may only be worked by mutual agreement and will not be a regular rostering practice; viii. Shift work loadings – this was a concern raised by three employees. The Applicant has committed to preserving the payment of the 15% night shift penalty rate for non-nursing transferring employees performing a night shift [2024] FWC 264 6 that commences at or after midnight and before 4am, or commences at or after 4pm and finishes before midnight on the same day; ix. Provision of uniforms – this was a concern raised by six employees. The Applicant notes that an initial allocation of uniforms will be supplied to transferring employees free of cost; x. Changes to rosters – this was a concern raised by five employees. The Applicant submits that the provisions in the Opal Agreement regarding changes by the employer to rosters (including required notice periods) and any associated consultation requirements, are equivalent to those contained in the Jeta Gardens Agreement; and xi. General operational matters (raised by 10 employees) that do not relate to the Applicant’s proposed application or to the level of conditions / entitlements under the Opal Agreement. [20] It was submitted that on 13 December 2023, the Applicant informed the QNMU, the United Workers’ Union (UWU), the Australian Workers’ Union (AWU) and the Health Services’ Union (HSU) via email correspondence of the Applicant’s anticipated acquisition of the Facility on the transfer date (pending approval by the Department of Health and Aged Care), the Applicant’s intention to provide offers of employment to a significant number of employees of the old employer at the Facility, and for the employment of those employees with the Applicant to be covered by the Opal Agreement. [21] On 17 January 2024, the QNMU raised concerns with the Applicant regarding the less beneficial long service leave entitlements under the Opal Agreement, and operational matters pertaining to the contracts of employment issued to transferring employees. [22] The Applicant submitted they have corresponded and continue to engage with the QNMU to address these concerns. In doing so, and in consideration of the concerns raised, the Applicant informed the QNMU by correspondence dated 22 January 2024 that it has enhanced its original position regarding the preservation of the more beneficial annual leave and long service leave entitlements under the Jeta Gardens Agreement – specifically, that the Applicant will commit to preserving the more beneficial annual leave and long service leave conditions under the Jeta Gardens Agreement for all transferring employees for the life of their employment with the Applicant where they transfer to the Applicant as at the transfer date. (b) Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment [23] The Applicant submitted they have undertaken detailed comparisons of the Jeta Gardens Agreement and the Opal Agreement, in relation to wages and other employment entitlements. A copy of the table comparing employee conditions and entitlements between the Jeta Gardens Agreement and the Opal Agreement was submitted with the application. [24] Based on the comparator documents, the Applicant submitted that while there are a small number of conditions conferred by the Opal Agreement that are less beneficial compared [2024] FWC 264 7 to comparable conditions under the Jeta Gardens Agreement, there are a significant number of equal and more superior conditions under the Opal Agreement (for example, higher duties entitlements for non-nursing classifications, the application of certain shift allowances, annual leave loading for non-shiftworkers is not capped per annum, redundancy pay entitlement) as well as entitlements under the Opal Agreement that are not otherwise conferred by the Jeta Gardens Agreement (for example, in charge allowance, remain on premises allowance, leading hand allowance, tool allowance, provisions for the correction of underpayments of wages / allowances, paid parental leave, paid emergency services leave) and taking to consideration the Applicant’s commitment as detailed below, the transferring employees will be better off overall under the Opal Agreement. [25] The Applicant submitted they have ensured that transferring employees will not be worse off overall as a result of the Application by committing to the following: a. the Applicant has, on an annual basis, provided administrative increases to wages and allowances since the nominal expiry date of the Opal Agreement on 30 June 2017. The Applicant has offered all transferring employees either their current base rate of pay as paid by the old employer, or the rate under the Opal Agreement for their translated classification (as adjusted by the administrative wage increases that have been applied since the nominal expiry date of the Opal Agreement), whichever is the higher. Where a transferring employee’s current base rate of pay is higher than the base rate of pay for their comparable classification under the Opal Agreement, the higher rate of pay will be paid to the transferring employee until such time as the rate of pay under the Opal Agreement (as amended or replaced) exceeds the transferring employee’s current base rate, at which point the transferring employee’s base rate will be adjusted to align with the relevant (and higher) base rate under the Applicant’s enterprise agreement; b. for transferring employees who transfer to the Applicant as at the transfer date, the Applicant will preserve the following (more beneficial) entitlements under the Jeta Gardens Agreement for the life of their employment with the Applicant and including for transferring employees with less than seven years’ service as at the transfer date: i. long service leave accrual; ii. pro-rata long service leave payments on termination; iii. annual leave accruals at the rate of 6 weeks for each year of service (inclusive of the NES entitlement) for full-time and part-time transferring employees who are employed as continuous shift workers where work is performed in three shifts per day (morning, afternoon and night) per 24 hour period, over seven days per week, and where such transferring employees are regularly rotated through such shifts over a 12 month period; and iv. annual leave accruals at the rate of 5 weeks for each year of service for full- time and part-time transferring employees not otherwise entitled to 6 weeks of annual leave per year of service in accordance with subparagraph iii above; [2024] FWC 264 8 c. for a period of 12 months from the transfer date, the Applicant will preserve the entitlement of transferring employees under the Jeta Gardens Agreement to the payment of a specialty work allowance ($1.40 per hour) where a transferring employee is appointed by the Applicant to a specialty role (e.g., dementia specialists, team leaders, quality team leaders, workplace health and safety officer, rehabilitation officer, continence specialists, workplace assessors, language liaison) which requires the transferring employee to carry out a specified range of tasks additional to those defined In the Opal Agreement; d. for the period commencing from the transfer date and ending on the date of operation of a new enterprise agreement that is approved by the Commission, replaces the Opal Agreement and applies to the transferring employees, the Applicant will preserve the following (more beneficial) entitlements of transferring employees under the Jeta Gardens Agreement: i. payment of the penalty rate (250% of the ordinary hourly rate) for ordinary hours performed on public holidays by full-time and part-time transferring employees; ii. payment of the penalty rate (275% of the ordinary hourly rate inclusive of the casual loading) for ordinary hours performed on public holidays by casual transferring employees; iii. payment of overtime rates to transferring employees for training undertaken that is compulsory (as determined by the Applicant) and which is in excess of ordinary rostered working hours; and iv. payment of the 15% night shift penalty rate for non-nursing transferring employees performing a night shift that commences at or after midnight and before 4am, or commences at or after 4pm and finishes before midnight on the same day; and e. the Applicant will recognise the accrued personal/carer’s leave, accrued annual leave and service with the old employer of the transferring employees for the purposes of service-related entitlements under the Opal Agreement. (c) If the order relates to an enterprise agreement—the nominal expiry date of the agreement [26] The nominal expiry date of the Jeta Gardens Agreement is 30 June 2022. [27] The nominal expiry date of the Opal Agreement is 30 June 2017. Bargaining has already commenced between the Applicant and the relevant union employee organisations (the QNMU, the UWU, the AWU and the HSU) for a new enterprise agreement to replace the Opal Agreement. The bargaining process is progressing and is expected to continue beyond the transfer date. (d) Whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace [2024] FWC 264 9 [28] The Applicant submitted that if the Order is not granted, there will be a negative impact to the Applicant’s productivity. [29] The Applicant submitted having employees of the same cohort covered by two different enterprise agreements which provide for different entitlements may lead to dissatisfaction amongst employees. The transferring employees may be required to undertake similar or identical duties side- by-side with the Applicant’s existing (non-transferring) employees, whilst receiving different and in some cases lesser entitlements. [30] The Applicant considers that applying varying conditions to employees who perform identical work will not promote a cohesive, equitable and inclusive work culture, but rather this has the potential to result in division and negatively impact morale. In turn, productivity will be negatively impacted which has a direct impact on the quality of care provided to residents. (e) Whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer [31] The Applicant submitted that the potential economic disadvantage flowing from the requirement to administer multiple and different industrial instruments within the workplace in respect of employees who perform the same (or identical) work, especially within the same location, will be burdensome. [32] The Applicant submitted should it be required to apply varying sets of conditions to its employees, the Applicant will be subject to increased administrative costs and associated burdens. Specifically, the payroll system in its current form would not be able to accommodate the differences in pay and conditions without reverting to manual processing for a select group of employees. As a result, additional resourcing would be required in order to rewrite the payment rules and to manually process and reconcile payments. (f) The degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer [33] The Applicant submitted there is little business synergy between the Jeta Gardens Agreement in comparison to the Opal Agreement. [34] The Applicant submitted there are ample points of difference between the instruments, such that greater business synergy arises from the application of the Opal Agreement to the transferring employees. Ensuring that the transferring employees are covered by the Opal Agreement will allow for consistency across the Applicant’s nursing and aged care workforce in Queensland. In other words, it would be incongruous for there to be a select group of employees of the new employer (i.e., the transferring employees) who would be covered by the Jeta Gardens Agreement rather than the Opal Agreement. (g) The public interest. [35] The Applicant submitted the public interest is not agitated by this application. [2024] FWC 264 10 Directions Hearing [36] A Directions Hearing was held on 29 January 2024. This was attended by the Applicant, UWU, AWU and the QNMU. It was decided that the Applicant would provide written undertakings and once received, the unions were to raise any concerns by 5:00pm on 31 January 2024. [37] The Undertakings are attached as Annexure A to this decision. [38] The AWU, UWU and QNMU notified my chambers there were no objections to the orders sought. Consideration [39] I have considered the submissions and am satisfied, particularly in light of the undertakings that have been made to the FWC in regard to this application that employees will not be disadvantaged overall if the orders sought are granted. Whilst the nominal expiry date of the transferrable instrument occurred after the nominal expiry date of the Opal Agreement, it is clear there are ongoing negotiations to replace that Agreement involving relevant unions. I am satisfied that if the orders are not issued it will have a negative impact on the productivity of the Applicant as many staff will be working alongside one another covered by different industrial instruments on different terms and conditions, which may create dissatisfaction and will also create an administrative burden. [40] There are no public interest grounds that would prevent the granting of the application. Conclusion [41] I am satisfied that the requirements of s.318 of the FW Act have been met. Orders will be issued with this Decision. COMMISSIONER Printed by authority of the Commonwealth Government Printer <AE507541 PR770833> [2024] FWC 264 11 Annexure A [2024] FWC 264 12 [2024] FWC 264 13