Fair Work Act 2009

s.318 - Application for an order relating to instruments covering new employer and transferring employees

Australian Catholic University Limited t/a Australian Catholic University

s.318 - Application for an order relating to instruments covering new employer and transferring employees

• [1] Australian Catholic University Ltd (Applicant, or ACU) has applied for an order under s.318(1) of the Fair Work Act 2009 (Cth) (Act). The application follows on from an agreement to transfer the management and assets of the Macquarie University Reading Clinic (Clinic) from Macquarie University to the Applicant. One consequence of the transfer is that from 1 January 2024, the Applicant has commenced employing twelve staff previously employed by Macquarie University at the Clinic (Transferred Employees) whose employment is presently covered by the Macquarie University Professional Staff Enterprise Agreement 2023 (MUPSEA) and the Macquarie University Academic Staff Enterprise Agreement 2023 (MUASEA) (together, the MU Agreements).
• [2] The effect of the order sought by the Applicant is to displace the operation of s.313(1) of the Act such that the Transferred Employees would no longer be covered by the MU Agreements and would instead be covered by the Australian Catholic University Staff Enterprise Agreement 2022-2025 (ACU Agreement).

• [3] ACU and Macquarie University entered into a Business Sale Agreement in December 2023, the effect of which is to transfer the management and assets of the Clinic from Macquarie University to ACU.
• [4] Following the sale, ACU began to employ all of the Transferred Employees and generally took over operations of the Clinic.
• [5] The MU Agreements are transferable instruments by operation of section 312(1)(a) of the Act. Section 313 of the Act provides that a transferable instrument that covered the old employer (i.e. Macquarie University) and the transferring employees immediately before the termination of the employment, will cover the new employer (ACU). The operation of these sections means that ACU is covered by the MU Agreements in relation to the Transferred Employees, subject to any order of the Commission made pursuant to section 318 of the Act.

• [6] The proposed order is in the following terms:
  1. That the MUPSEA and the MUASEA will not cover, as applicable, the 12 employees of the University who were transferring employees from Macquarie University for the purpose of s.311 of the Fair Work Act 2009 (Cth) (Transferred Employees), in connection with the acquisition by the University of selected assets of Macquarie University to operate the University's Reading Clinic (Acquisition).

1. That the Australian Catholic University Staff Enterprise Agreement 2022-2025 (ACUEA) will cover the Transferred Employees. (the Proposed Orders)

• [7] After the filing of the application, I directed the Applicant to serve a copy of the application, the supporting material and the directions themselves, on the following:

(a) The other parties to the transferable instruments referred to in the application;

(b) The transferring employees (as referred to in the application);

(c) Any employee organisation that ordinarily represents the industrial interests of the transferring employees;

• [8] The parties referred to above were then directed to file and serve any material in response to the application by 18 September 2024. Nothing was received from any of these parties by the specified date. The matter has been determined on the basis of written material supplied by the Applicant.

• [9] Section 317 and 318 of the Act are in the following terms:

317 FWC may make orders in relation to a transfer of business

This Division provides for the FWC to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer.

318 Orders relating to instruments covering new employer and transferring employees

(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.

(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).

(3) In deciding whether to make the order, the FWC must take into account the following:

(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;

(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;

• [10] Section 311 sets out the circumstances in which a transfer of business occurs. It is unnecessary to set the section out in full. The uncontested submission establishes that there are transferring employees (as defined in s.311(2)) in relation to a transfer of business (as defined in s.311(1)) which has occurred or is likely to occur[1]. The Applicant has standing to make the application under s.318(2)(a) and the proposed order is an order of the kind contemplated by s.318(1)(a). I turn then to consider the matters listed in s.318(3) to determine whether the proposed order should be made.

Submissions and Conclusions on the Statutory Criteria

• [11] The submissions of the Applicant in relation to the statutory criteria set out in s.318(3) are set out below.

Subsection 318(3)(a)(i) - views of the new employer, or a person who is likely to be the new employer

• [12] The Applicant is the new employer and supports the making of the proposed order. The Applicant's evidence on this point was set out in the Witness Statement of Angelle Laurence, the Chief People Officer for the Applicant. That evidence was that the proposed order will:

1. Ensure that the Transferred Employees are not the subject of differing terms and conditions of employment than those of other staff in the same team; 2. Remove the requirement for ACU to have to administer two additional and separate enterprise agreements and the administrative difficulties, time and resources accompanying that requirement, including the following:

(i) The need to adjust payroll systems and processes to incorporate the rates and conditions of the MU Agreements; and > > (ii) The requirement for the People & Capability team to advise on the MU Agreements on a regular and ongoing basis involving such things as responding to queries about the operation of the MU Agreements, the development of forms to account for the separate entitlements (such as leave requests, payroll forms) and the development of payroll processes to accommodate matters such as pay increments and leave accruals; > > (iii) The ongoing monitoring and auditing of the changes.

1. Reduce the risk of payroll errors and provide for greater ease of monitoring for compliance; and

1. Help to ensure that the Transferred Employees have access to the benefits and opportunities offered to employees covered by the ACU Agreement, such as career progression and promotion and have a greater sense of belonging which has an impact on overall engagement and productivity.

Subsection 318(3)(a)(ii) - views of the employees who would be affected by the order

• [13] The Applicant submitted that the employees favoured the making of the proposed order. They relied on the fact that there had been a consultation process with the Transferred Employees in November and December 2023 in which they were advised about the acquisition of the Clinic by the Applicant and the application to seek the proposed orders. This process involved face-to-face discussions and the provision of documentation to the Transferred Employees, including documentation containing a comparison between the MU Agreements and the ACU Agreement. It also included an anonymous survey of the Transferred Employees the results of which were that 11 of those employees supported the application for the proposed order and the remaining employee saying they were unsure about the benefit of the proposed order and that they 'feel it's the same.' A follow-up survey was conducted on 5 July 2024 to see if the Transferred Employees' views had changed. Eight employees responded to the survey and all of them indicated that their views remained unchanged.
• [14] The Applicant indicated that the consultation process also involved notifying the National Tertiary Education Union (NTEU) and the Community and Public Sector Union (CPSU) and advising them about the present application and the proposed orders. These unions are both covered by the ACU Agreement[2]. The NTEU is covered by the MU Agreements[3]. The CPSU is covered by the MUPSEA[4].
• [15] The new employer (the Applicant) favours the making of the order for the reasons given. Each of the reasons can be readily accepted as embodying the legitimate interests of the Applicant. I also accept that there has been an expression of majority support for the application by the employees affected by the order through the anonymous surveys and that this should be taken into account in the determination of the application. The employees were given a further opportunity to express any views about the application when they were served with the application and supporting material. None of the employees chose to express any other views to the Commission about the making of the proposed order. I consider that the views of the new employer and the affected employees that have been provided favour the making of the order.

Subsection 318(3)(b) - whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment

• [16] The Applicant acknowledged that there are a number of differences in the terms and conditions of employment under the MU Agreements compared with the ACU Agreement. The Applicant submitted documents which compare the terms and conditions of the MUPSEA and MUASEA against the ACU Agreement. I have considered that material and the terms of the respective instruments.
• [17] The Applicant also took steps to ensure that Transferred Employees will not be disadvantaged by their coverage under the ACU Agreement where there are differences in terms and conditions of employment under the MUPSEA/MUASEA and the ACU Agreement affecting Transferred Employees. In particular, the Applicant has confirmed that a number of equivalent entitlements to those provided under the MUPSEA/MUASEA (but not provided under the ACU Agreement) were offered to Transferred Employees as a contractual benefit in their contracts of employment. Those equivalent entitlements offered to Transferred Employees (as set out in the Transferred Employees' letters of offer) include:

• Recruitment and Selection - Appeals against non-appointments.

• [18] Further, the Applicant offered Transferred Employees in their letters of offer, a classification, increment and/or salary which was equivalent to, or higher than, their classifications and/or salaries under the MUPSEA/MUASEA during their employment with Macquarie University. This is a significant point given that the rates of pay in the ACU Agreement are, with the exception of some classifications by comparison with the equivalent classifications in the MUASEA, below those provided for in the MU Agreements.
• [19] I raised a concern with the Applicant in relation to the overtime provisions in the ACU Agreement by comparison with the MUPSEA, the latter of which provides for overtime at the rate of 200% for time worked after the first two hours of overtime and the former provides for such payments only after 3 hours of overtime. The Applicant advised that none of the relevant employees have worked any overtime (or made any claim for overtime) since transferring to the employment of the Applicant. They also confirmed that they had undertaken to pay any such Transferred Employee who does work in excess of two hours overtime, at the higher rate of 200% consistent with the MUPSEA and that they were in the process of amending their payroll system to incorporate this entitlement.
• [20] The Applicant's position is that other entitlements under the MUPSEA/MUASEA were either lesser than, the same, or very similar to, the entitlements afforded under the ACU Agreement, or otherwise not relevant to the circumstances of Transferred Employees, such that no Transferred Employees would be disadvantaged if the Commission made the Proposed Orders.
• [21] The Applicant has taken positive steps to ameliorate any potential disadvantage to Transferred Employees where there are differences between the rates and conditions provided by the respective agreements. In particular, the Applicant has offered classifications and/or salaries equivalent to or higher than those under the MU Agreements and will maintain certain existing provisions from the MU Agreements as a term of the Transferred Employees' employment.[5] This has likely contributed to employee support for the making of the proposed order. In the circumstances I am satisfied that the Transferred Employees would not be disadvantaged by the making of the Proposed Orders. This weighs in favour of the making of the orders.

Subsection 318(3)(c)- if the order relates to an enterprise agreement - the nominal expiry date of the agreement;

• [22] The MU Agreements have not passed their nominal expiry dates and will not do so until June 2026. They are transferrable instruments that have been negotiated relatively recently. The proposed order would displace their operation in favour of the ACU Agreement which is also within its nominal term. I regard this as a neutral consideration in the overall assessment.

Subsection 318(3)(d) - whether the transferable instrument would have a negative impact on the productivity of the new employer's workplace;

• [23] The Applicant argued that if the Proposed Orders are not made, the ACU will be required to administer and manage two additional separate enterprise agreements, being the MUPSEA and MUASEA, which will require additional staff time and resources. In particular:

(i) The whole P&C team will be required to familiarise themselves and advise on two additional enterprise agreements; and

(ii) The Applicant will need to develop, review and monitor on an ongoing basis new administrative processes and systems, forms, and payroll processes.

• [24] I accept that there would be at least some additional input costs associated with maintaining a payroll system that accommodates the two additional industrial instruments. I also consider that there is the potential for a negative productivity impact in having employees doing the same work in the same workplace engaged under separate instruments. These factors weigh in favour of the making of the proposed order.

Subsection 318(3)(e)- whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer

• [25] The ACU said it will incur economic disadvantage due to the cost and time required by its staff to:

• manage the additional administration and processes required for Transferred Employees covered under separate enterprise agreements; and

• ensure and monitor compliance with the relevant enterprise agreements, including that all staff are being afforded their correct and proper entitlements under the additional enterprise agreements, in circumstances where the Applicant's staff have no or little familiarity with the two additional MU agreements.

• [26] I note that the transfer occurred some time ago and as a consequence, the Applicant would have already had to establish processes to administer the application of the MU Agreements as transferrable instruments. Although I accept that there would be some administrative costs involved for the Applicant if the proposed order is not made, I do not consider that there is sufficient material for me to be positively satisfied that there would be significant economic disadvantage to the new employer. I regard this as a neutral consideration.

Subsection 318(3)(f) - the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer

• [27] The Applicant argued that while there are similarities between the three enterprise agreements (MUPSEA/MUASEA and the ACU Agreement), there are also a number of differences between them. These differences were set out in the Comparison Document provided to the Commission. As described in the witness statement of Angelle Laurence, these differences and the administration of multiple enterprise agreements would, it was argued, significantly impact the Applicant's operational and business efficiencies. For these reasons, it was the Applicant's view that there is limited business synergy between the MU Agreements and the ACU Agreement. I am of the view that granting the order would on balance result in greater business synergy as a single industrial instrument (the ACU Agreement) would apply to all of the Applicant's employees employed at the Clinic.

Subsection 318(3)(g) - the public interest.

• [28] The Applicant submitted that making the proposed orders would be consistent with the objects of Part 2-8 of the Act and that the orders would provide an appropriate balance between the protection of the interests of Transferred Employees and the interests of the Applicant in running its enterprise efficiently. I also note that the making of the proposed orders would result in the employment of the Transferred Employees continuing to be covered by an agreement that has been approved by the Commission. I am unaware of any public interest grounds that would weigh against the making of the proposed order. Whilst the public interest is separate and distinct from the interests of the parties, both may be engaged at the same time.[6] I regard this as a factor that weighs slightly in favour of the making of an order.
• [29] Applications of this kind involve an assessment of the desirability of departing from the default position provided for by Part 2-8 of the Act that the instrument follows the employees where there is a transfer of business. The objects of Part 2-8 dictate that there must be a balance struck between the protection of employees' conditions of employment and the interests employers have in running their enterprises efficiently. Section 318 recognises the need for flexibility in some transfer of business scenarios provided an appropriate balance is achieved. Having regard to the conclusions I have reached in relation to each of the above matters I have come to the view that the application should be granted, and the order made.
• [30] Section 318(4), referred to above, limits the time by which any order under s.318 can come into operation. As the employees have already become employed by the Applicant, the order accompanying this decision will take effect from the date of the decision consistent with the requirements of s318(4).

[1] Lend Lease Engineering Pty Ltd and Ors [2014] FWC 5499 at [11] to [14].

[2] [2023] FWCA 319.

[3] [2023] FWCA 3440 and [2023] FWCA 3338.

[4] [2023] FWCA 3338.

[5] DPG Services Pty Ltd [2022] FWC 1651at [11].

[6] Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (2005) 139 IR 34 at 40.

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