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

Application for orders relating to transferable instruments

• [1] AustralianSuper Pty Ltd (AustralianSuper) has lodged two applications under s 318 of the Fair Work Act 2009 (Act) seeking orders from the Commission in relation to transferrable instruments. One application, AG2024/631, seeks an order under s 318(1)(a) that the Link Business Services Collective Agreement 2009 (LBS Agreement) not cover AustralianSuper or any of its employees who were previously employed by Link Business Services Pty Limited (LBS) in its death claims management team and who are 'transferring employees' within the meaning of s 311(2) (the LBS transferring employees). It also seeks an order under s 318(1)(b) that the AustralianSuper Pty Ltd Enterprise Agreement 2023-2026 (AustralianSuper Agreement) cover the LBS transferring employees.

• [2] The other application, AG2024/632, seeks an order that the Superpartners Enterprise Agreement 2023 not cover AustralianSuper or any of its employees who were previously employed by Superpartners Pty Ltd (Superpartners) in its death claims management team and who are 'transferring employees' within the meaning of s 311(2) (Superpartners transferring employees). It also seeks an order under s 318(1)(b) that the AustralianSuper Agreement cover the Superpartners transferring employees.

• [3] The factual setting of these applications is set out in the witness statement of Elizabeth Slavin, who is employed by AustralianSuper as its head of organisational development and planning. AustralianSuper has decided to internalise death claims management, which has previously been undertaken by an external service provider, Australian Administration Services Pty Limited (AAS). The employees who perform the relevant work are currently employed by LBS and Superpartners, which are associated entities of AAS. The employees of LBS are covered by the LBS Agreement and the employees of Superpartners are covered by the Superpartners Agreement. AustralianSuper has made offers of employment to employees of LBS and Superpartners, with employment to commence on or about 2 April 2024. The offers of employment were not conditional upon the Commission making orders under s 318. Employees have accepted the offers. In their employment with AustralianSuper, the former employees of LBS and Superpartners will continue to perform the same or substantially the same work as they currently do for the present employers, which is work related to death claims management (the transferring work).

• [4] AustralianSuper and AAS have agreed that from the date on which the transferring employees commence employment with AustralianSuper, for a transitional period expected to be at least four months, AustralianSuper will have the use of certain assets used by the transferring employees to perform their work. The assets in question include laptops, IT platforms and software for claims management and telephony, as well as various processes and procedures including various training materials and other documents. Further, data in relation to active and historical claims will be transferred to AustralianSuper.

• [5] As I explain further below, I consider that on or about 2 April 2024 there will be a transfer of business within the meaning of s 311(1) from LBS and Superpartners, who are the 'old employers', to AustralianSuper, the new employer, and that employees who have accepted employment with AustralianSuper will be transferring employees within the meaning of s 311(2) of the Act. The transferring employees are currently covered by the LBS Agreement and the Superpartners Agreement, which are transferable instruments within the meaning of s 312(1). In the absence of an order of the Commission under s 318 of the Act, the LBS Agreement and the Superpartners Agreement will cover the transferring employees while they are performing transferring work for AustralianSuper. The applications under s 318 seek orders from the Commission that the LBS Agreement and the Superpartners Agreement not apply, and that the AustralianSuper Agreement apply on its terms to the LBS and Superpartners transferring employees.

• [6] Section 318(1) of the Act provides that the Commission may, on application by a person or organisation identified in s 318(2), 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."

• [7] The power to make orders under s 318 is contingent upon the Commission being satisfied that there has been, or that there is likely to be, a transfer of business for the purpose of s 311 of the Act. I am satisfied that there will be a transfer of business from LBS and Superpartners to AustralianSuper for the following reasons.

• [8] First, the employment of employees of LBS and Superpartners will terminate and within three months of termination (on the next working day) the employees will become employees of AustralianSuper (s 311(1)(a) and (b)). Secondly, having regard to the information before the Commission, I consider that the work to be performed by the transferring employees for AustralianSuper will be the same or substantially the same as the work these employees performed for LBS and Superpartners (s 311(1)(c)). Finally, there is a 'connection' between LBS and Superpartners on the one hand and AustralianSuper on the other as described in s 311(3), because in accordance with an arrangement between an associated entity of the old employers (AAS) and AustralianSuper (the new employer), AustralianSuper will have the beneficial use of some of the assets that LBS and Superpartners owned or had the beneficial use of and that are used in connection with the transferring work (s 311(1)(d)).

• [9] Next it is necessary for me to consider s 318(3), which states that, in deciding whether to make an order under s 318(1), the Commission must take into account certain matters. I consider each of these matters below, as they apply to the present applications.

The views of the new employer and employees - s 318(3)(a)(i) and (ii)

• [10] The view of AustralianSuper, the new employer of the transferring employees, is that the applications should be granted. It said that the proposed orders would provide the company with certainty and consistency in relation to its employment arrangements and the application of industrial instruments with respect to the transferring work. It would also ensure parity of conditions between transferring employees and other employees who will perform the transferring work. AustralianSuper further submitted that the AustralianSuper Agreement would afford financial and non-financial benefits to the transferring employees which are, on an overall basis, more beneficial than those contained in the LBS and Superpartners Agreements (see further below).

• [11] AustralianSuper noted that the letters of offer that it had given to the employees of LBS and Superpartners had explained its intention to make the present applications to the Commission under s 318. This was also addressed at an information session for relevant employees on 1 February 2024. On 6 March 2024, contracts of employment were issued to employees of LBS and Superpartners who had accepted offers of employment. No employees had raised any concerns with AustralianSuper about the prospect of the AustralianSuper Agreement covering them in their employment with AustralianSuper.

• [12] The views of the employer weigh in favour of granting the applications. The views of employees who would be affected by the order are not known, however I consider that it may reasonably be inferred that they are not opposed to the applications.

Whether any employees would be disadvantaged by the order - s 318(3)(b)

• [13] AustralianSuper submitted that in almost all respects the AustralianSuper Agreement contains terms and conditions of employment that are equal to or more favourable than those in the LBS Agreement and the Superpartners Agreement. It said that examples of provisions in the AustralianSuper Agreement that are more beneficial to employees include rates of pay and superannuation contributions, a 36 hour week, and various leave arrangements. It contended that the only areas in which the LBS Agreement provided conditions more beneficial to employees than the AustralianSuper Agreement were higher duties, certain conditions applicable to redeployment in a redundancy situation, and four weeks' notice of termination, although the latter condition is reflected in employees' letters of offer. The only areas where the Superpartners Agreement is more beneficial to employees than the AustralianSuper Agreement is in relation to overtime for part-time employees at grades 1 to 5 (although under the AustralianSuper Agreement such employees receive time off in lieu), and certain redeployment benefits. AustralianSuper submitted a table comparing the conditions in the AustralianSuper Agreement with those in the LBS Agreement and the Superpartners Agreement.

• [14] I consider that the AustralianSuper Agreement provides for terms and conditions of employment that overall are more generous to employees than those of the LBS Agreement and the Superpartners Agreement. I am satisfied that the transferring employees will not be disadvantaged by the proposed order. This weighs in favour of granting the applications.

• [15] The Finance Sector Union (FSU) is covered by the AustralianSuper Agreement and the Superpartners Agreement. At a mention hearing on 18 March 2024, the FSU raised a concern about the effect of the proposed arrangements on certain employees of LBS whose actual rate of pay exceeds the rates in the LBS Agreement and the AustralianSuper Agreement. The FSU said that AustralianSuper had not offered to maintain the 'above-agreement' rates of pay for these employees and that they would therefore suffer a financial disadvantage. AustralianSuper submitted that from 1 July 2024, the rates of pay in the AustralianSuper agreement would exceed the above-agreement rates currently received by LBS employees, and that from the commencement of their employment with AustralianSuper in early April 2024 they would receive various other benefits under the AustralianSuper Agreement that were more generous than their current conditions.

• [16] Section 318(3)(b) requires the Commission to take into account whether any employees would be 'disadvantaged by the order in relation to their terms and conditions of employment.' If an order is made under s 318, its effect would relevantly be to disengage the application of the LBS Agreement and to have the AustralianSuper Agreement apply to LBS employees in its place. The concern identified by the FSU was a disadvantage arising from the difference between the contractual arrangements of the employees with LBS and AustralianSuper respectively. It was not a disadvantage that would arise from an order. The considerations that the Commission must take into account under s 318(3) are not necessarily exhaustive. Nevertheless, in light of the short period for which the identified disadvantage would exist, and the fact that the AustralianSuper Agreement is more favourable to employees on an overall basis than the LBS Agreement, I do not consider that the issue raised by the FSU weighs against the first application. I note that following further discussions between AustralianSuper and the FSU, an arrangement was agreed to, and the FSU ultimately decided to support the applications.

The nominal expiry dates of relevant agreements - s 318(3)(c)

• [17] AustralianSuper submitted that the LBS Agreement is a so-called 'zombie' agreement which reached its nominal expiry date on 30 June 2014. On 9 February 2024, the Commission ordered, pursuant to subitem 20A(6) of Schedule 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, that the default period of the agreement be extended to 6 December 2024. AustralianSuper submitted that the nominal expiry date of the LBS Agreement, which is many years in the past, weighed in favour of the application for orders under s 318 in respect of that agreement. I agree.

• [18] The nominal expiry date of the Superpartners Agreement is 31 July 2026, and the nominal expiry date of the AustralianSuper Agreement is 30 June 2026. Each agreement has some two years of nominal life to run. The nominal expiry dates of these agreements are neutral considerations.

Whether negative impact on productivity of new employer's workplace - s 318(3)(d)

• [19] Section 318(3)(d) requires the Commission to take into account whether the transferrable instruments would have a negative impact on the productivity of the new employer's workplace. AustralianSuper submitted that its enterprise agreement was the only one which applies to its workforce of some 1600 employees, and that if the proposed orders were not made, it would be required to divert resources to administer and manage the different terms and conditions in the LBS Agreement and the Superpartners Agreement, thereby adding unnecessary complexity to its payroll and human resources functions. It submitted that the disparity in conditions of employment might also result in discontent that the same work attracted different benefits, which could adversely affect morale and productivity. I accept that the transferable instruments, were they to apply to AustralianSuper, would have a negative impact on productivity, but only to a limited extent. Nevertheless, this weighs in favour of granting the applications.

Whether significant economic disadvantage - s 318(3)(e)

• [20] Section 318(3)(e) directs the Commission to consider whether the new employer would incur significant economic disadvantage as a result of being covered by a transferable instrument. AustralianSuper contended that it would suffer economic disadvantage as a result of the additional administrative burden and complexity associated with managing different terms and conditions of employment. It said that an investment of time and cost would need to be made in reconfiguring the payroll function to accommodate the new employment arrangements. However, AustralianSuper does not contend that it would suffer significant economic disadvantage as a result of the transferable instruments covering it. This factor does not support the granting of the applications.

Whether there is business synergy between instruments s 318(3)(f)

• [21] AustralianSuper contended that there was little business synergy between the LBS or Superpartners Agreements on the one hand and the AustralianSuper Agreement on the other. I accept this submission. This consideration weighs in favour of granting the applications.

• [22] AustralianSuper contended that the orders it seeks are in the public interest because they are consistent with the objects of the transfer of business provisions in the Act, and would strike an appropriate balance between protecting employees' conditions of employment and its interest in the efficient running of its operations without unnecessary complications and costs.

• [23] Section 318(3)(g) requires the Commission to consider 'the public interest'. It does not specify whether this consideration is concerned with the question of whether the application is in the public interest, or instead not contrary to the public interest. The reference to the 'public interest' here is informed by the objects of Part 2-8 (see s 309) as well as the object of the Act as a whole (see s 3). This entails a concern for the protection of transferring employees' conditions of employment and the importance of an employer being able to run its enterprise efficiently. The applications are compatible with the public interest. But the public interest does not carry any particular weight in these matters. In my view it is a neutral consideration.

• [24] Taking into account the matters in s 318(3), I have decided to grant the applications under s 318(1). I consider that AustralianSuper has presented a persuasive case. In particular, the terms of the AustralianSuper Agreement that will apply to transferring employees are overall more beneficial to employees than the terms of the transferrable instruments. I will make orders under s 318(1) that the LBS Agreement and the Superpartners Agreement will not cover AustralianSuper or any of the LBS transferring employees or Superpartners transferring employees, and that the AustralianSuper agreement will apply to such employees. Orders will be issued separately in PR772598 and PR772600.

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