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

Application for an order relating to instruments covering new employer and transferring employees to be employed by BHP Olympic Dam Corporation Pty Ltd.

• [1] BHP Olympic Dam Corporation Pty Ltd (BHPOD) has made an application pursuant to s.318 of the Fair Work Act 2009 (Act) for orders that the WorkPac Pty Ltd Non Coal Mining Agreement 2016 (WorkPac Agreement) not cover it or any of the employees that have or will transfer to it from Workpac Pty Ltd (WorkPac). In addition, it seeks that the Olympic Dam Employee Agreement 2023 (Olympic Dam EA) cover the transferring employees.

• [2] The background to the application is that BHPOD is an entity of the BHP Group which employs employees to work at the Olympic Dam Mine (Mine) in Northern South Australia. The Olympic Dam EA covers and applies to:
  1. all surface, open pit and underground mining and associated services and activities;
  2. BHPOD; and
  3. employees of BHPOD who are employed at the Mine in the classifications contained in Schedule 3 of that enterprise agreement.

• [3] The Australian Workers' Union (AWU) and the "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) are also covered by the Olympic Dam EA. The AWU and the AMWU have not opposed the application and were content for it to be determined on the papers.

• [4] WorkPac is currently engaged to provide labour hire personnel to perform work at the Mine under a services contract (Services Contract). However, in late April 2025, BHPOD made offers of direct employment to 7 individuals who are currently employed by WorkPac to perform work as Sentries at the Mine under the Services Contract. These offers of employment are to carry out the same (or substantially the same) work that the employees presently carry out for WorkPac at the Mine. In effect, BHPOD is insourcing the work in question.

• [5] As part of the employment offers, BHPOD provided comprehensive, and what I find to be accurate, comparative and explanatory material concerning the proposed transfer, the two enterprise agreements concerned, the proposed employment conditions, the fact that this application would be made and its impact if granted. The transferring employees were also given the opportunity to accept the employment offers and to indicate their support or otherwise for this application. All of the employees concerned have accepted the offers and indicated support for this application.

• [6] I have determined that this application should be granted, and the proposed orders made with some minor drafting changes. My reasons for so doing are briefly set out below.

• [7] Section 311 of the Act sets out the circumstances in which a transfer of business occurs. It states:

"S.311 When does a transfer of business occur

Meanings of transfer of business, old employer, new employer and transferring work

(1) There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:

(a) the employment of an employee of the old employer has terminated;

(b) within 3 months after the termination, the employee becomes employed by the new employer;

(c) the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;

(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6)."

• [8] Subsection 311(5) contemplates a connection between two organisations where the work in question is insourced in the manner that has occurred here. I also find that the other relevant requirements of s.311 are met. There is a transfer of business for present purposes.

• [9] Section 312 of the Act also indicates that a "transferable instrument" includes "an enterprise agreement that has been approved by the FWC". The WorkPac Agreement (and the Olympic Dam EA) has been approved by the Commission.

• [10] Section 313 of the Act provides that "If a transferable instrument covered the old employer and a transferring employee immediately before the termination of the transferring employee's employment with the old employer", then:

"(a) the transferable instrument covers the new employer and the transferring employee in relation to the transferring work after the time (the transfer time) the transferring employee becomes employed by the new employer".

• [11] I am satisfied that there was a transfer of business and that the relevant employees of WorkPac have or will transfer to BHPOD under the terms of the Act. I am also satisfied that the WorkPac Agreement is a transferable instrument, and subject only to the orders that might be made under this application, would cover BHPOD and the transferring employees.

1. Consideration of the s.318 application

• [12] Section 318 of the Act states:

"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;

1. 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;

Restriction on when order may come into operation

(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;

• [13] BHPOD is entitled under s.318(2)(a) to bring the application as the new employer. The application relies upon the terms of s.318(1)(a) of the Act to, in effect, prevent the WorkPac Agreement covering the transferring employees, and s.318(1)(b) to extend and confirm coverage of the Olympic Dam EA in respect of both itself and those employees.

• [14] In dealing with the application, the Commission is required to have regard to each of the matters in s.319(3) in determining whether the proposed orders should be made. I now turn to deal with each of those considerations, which all weigh in favour of the granting of the application.

The views of the new employer - s.313(3)(a)(i)

• [15] BHPOD as the applicant and the new employer supports the application and the orders that it proposes should be made. In so doing it seeks to ensure that employees of BHPOD who perform Surface, Open Pit and Underground Mining and associated services and activities work at the Mine are covered by a common set of terms and conditions, which is currently achieved by the Olympic Dam EA. This will also have rostering and other business and workplace benefits.

The views of the transferring employees - s.318(3)(a)(ii)

• [16] The transferring employees also support the application. I am also satisfied that this consent is based upon proper information and is a genuine position.

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

• [17] I am satisfied that the employees would not be disadvantaged in relation to their terms and conditions of employment by the making of an Order. There are numerous aspects of the Olympic Dam EA which are more beneficial than the terms of the WorkPac Agreement, including in relation to pay rates, bonuses, paid parental leave, superannuation contributions and redundancy provisions. I am also satisfied that the overall impact of the coverage of the Olympic Dam EA for the employees concerned is positive.

Nominal expiry date of the agreements - s.318(3)(c)

• [18] The nominal expiry date of the WorkPac Agreement is 1 February 2021. The nominal expiry date of the Olympic Dam EA is 5 February 2028.

• [19] This means that if the orders are made, the transferring employees will have the benefit of a more contemporary agreement, and all parties would have certainty around their terms and conditions for a significantly longer period of time under the Olympic Dam EA than the WorkPac Agreement.

Negative impact of the WorkPac Agreement on Productivity - s.318(3)(d)

• [20] I am satisfied that there would be a negative impact on productivity of BHPOD's workplace if the orders sought are not made. This finding is based upon the following impacts, which may result if the Workpac Agreement was to cover the transferring employees in relation to their direct employment with BHPOD, as identified in the application:

• The need to invest in significant activity to take into account the operations of the WorkPac Agreement, including the development and implementation of new payroll systems;

• The development and provision of large-scale training programs to upskill the functional teams (Human Resources, Payroll, Health and Safety) and operations leaders - Supervisors, Superintendents and Managers, to understand and implement the terms and conditions of an additional enterprise agreement (the WorkPac Agreement) at the Mine;

• The establishment and maintenance of two separate time sheet activities across the production workforces which will create additional administrative burden for site administrators and increase risk of inaccuracies; and

• The establishment and maintenance of two significantly different sets of terms and conditions for the one direct workforce and which, for the transferring employees, would be inferior in key respects to the rest of the relevant direct employees at the Mine. This has the potential to lead to disharmony within the workforce and questions from employees working side-by-side with each other as to why two significantly different sets of terms and conditions apply between employees doing the same or substantially the same work at the same site for the same employer.

Economic disadvantage for BHPOD as a result of the WorkPac Agreement - s.318(3)(e)

• [21] Despite the additional benefits provided by the Olympic Dam EA, I consider that the WorkPac Agreement if it were to cover the transferring employees may cause some economic disadvantage as operational efficiencies would be impacted and there is potential for loss of productivity from industrial disharmony as discussed earlier. There are also some additional administrative arrangements considered above that would need to be funded by BHPOD.

Degree of business synergy between the WorkPac Agreement and the Olympic Dam EA - s.318(3)(f)

• [22] "Business synergy" may have wide connotations in the present context. This would include a consideration of the differences between the two enterprise agreements with a view to how consistent they are with the business activities and operations of BHPOD. There are differences between the terms and conditions of the agreements. It is likely that BHPOD could conduct its business under both. However, given the circumstances of this matter, this consideration does not suggest that the orders should not be made. If the orders are granted it will confirm a single framework of regulation that has been negotiated and approved by the Commission in the same context in which it was negotiated and has applied and will continue to apply.

• [23] Further, the WorkPac Agreement applies in practice to many mining workplaces but was not specifically negotiated and agreed in the context of the Mine and its particular operations. Importantly for the future business synergy, that means that the Olympic Dam EA if applying to all relevant employees, including the transferring employees, would be more consistent with the business and operations of BHPOD.

Public interest - s.318(3)(g)

• [24] The public interest in this context is influenced by the objects of this Part of the Act in s.309 and those adopted by the Act more broadly. There are no issues of public interest in this matter that would militate against the orders sought being made. Further, the granting of the application would be consistent with those objects.

• [25] Having considered each of the matters in s.318(3) of the Act, I am satisfied that it is appropriate for the orders to be made as sought in the application.

• [26] I have not included the additional term "(or any successor enterprise agreement)" in the order made under s.318(1)(b) of the Act as sought in the application. This appears to be beyond the scope of that provision as there is no legal instrument (agreement) at this point that can be assessed and specified for that purpose. In any event, when and if a successor enterprise agreement is made at BHPOD that covers the Mine employees, this will include the transferring employees. Section 58 of the Act adequately deals with this issue.

• [27] I have also made some minor drafting changes based around the use of defined terms.

• [28] In accordance with s.318(4) of the Act, the orders will not come into operation in relation to each transferring employee until the later of the following:

• the time when the transferring employee becomes an employee of BHPOD; or
• the day on which the order is made.

• [29] The Orders[1] are issued in conjunction with this decision.

[1]AE523420 PR787356.

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