Fair Work Act 2009

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

Applications for orders relating to transferrable instruments

• [1] DPG Services Pty Ltd, which trades as Opal HealthCare (Opal), has made two related applications under s 318 of the Fair Work Act 2009 (Act). The applications arise in the context of Opal's imminent purchase of the Waverley Valley Aged Care facility (Waverley facility) from Glenvoir Holdings Pty Ltd (Glenvoir), and of the Brentwood Aged Care facility in Geelong (Geelong facility) from Opeka Lodge Pty Ltd (Opeka). The purchases of the relevant assets, plant and equipment will occur on or about 1 July 2022, and have been approved by the Department of Health. Opal will take over and carry on the businesses previously conducted by Glenvoir and Opeka at the two facilities. Employees of Glenvoir and Opeka have been offered employment with Opal. Those employees are currently covered by the Glenvoir Holdings Pty Ltd (trading as Waverley Valley Aged Care) and Opeka Lodge Pty Ltd (trading as Brentwood Nursing Home), ANMF and HSU Enterprise Agreement 2019 (Glenvoir and Opeka Agreement).

• [2] Opal considers that these arrangements will constitute a transfer of business for the purposes of Part 2-8 of the Act, and that, absent an order of the Commission to the contrary, the Glenvoir and Opeka Agreement will cover transferring employees in their employment with Opal. Opal seeks orders from the Commission that the Glenvoir and Opeka Agreement not cover Opal and the transferring employees and that instead any such employees be covered by the enterprise agreement that applies to Opal's existing aged care workers, the Opal Aged Care (Victoria) Enterprise Agreement 2018 (Opal Agreement).

• [3] 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."

• [4] The power to make orders under s 318 is contingent upon the Commission being satisfied that there is, or is likely to be, a transfer of business for the purposes of s 311 of the Act (see ss 317 and 318(1)(a)). I am satisfied that there is likely to be a transfer of business from Glenvoir and Opeka to Opal, and that the applicant is a person who is likely to be the new employer (see s 318(2)(a)), for the following reasons.

• [5] First, the employment of employees of Glenvoir and Opeka who accept employment with Opal will terminate and within three months of termination (in fact, on or about the same day) those employees will become employees of Opal (ss 311(1)(a) and (b)). Secondly, having regard to the information provided in the applications, I consider that the work to be performed by the transferring employees for Opal will be the same or substantially the same as the work these employees performed for Glenvoir and Opeka, namely work comprising nursing, personal care, leisure and lifestyle assistance, maintenance and on-site administrative services connected to the running of an aged care facility (s 311(1)(c)). Finally, there will be a 'connection' between Glenvoir and Opeka on the one hand and Opal on the other, as described in s 311(3), because in accordance with an arrangement between the parties, Opal will own or have the beneficial use of some or all of the assets that Glenvoir and Opeka owned or had the beneficial use of and that relate to or are used in connection with the transferring work (s 311(1)(d)).

• [6] 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.

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

• [7] The view of Opal, the new employer of the transferring employees, is that the applications should be granted. Opal submitted that it wishes to apply uniform conditions of employment to existing and transferring employees to ensure consistency, foster an inclusive and equitable environment, and avoid unnecessary administrative costs and challenges. Opal stated that its primary aim was to avoid disparities in conditions of employment that would otherwise arise that could cause unfairness to transferring employees who undertake the same work as other Opal employees but would not receive the same benefits under the Opal Agreement. It also wishes to avoid the burden of administering two sets of conditions for the same work. The views of the new employer weigh in favour of granting the application.

The views of the employees affected by the order - s 318(3)(a)(ii)

• [8] Opal submitted that it had endeavoured to take all reasonable and practicable steps to seek the views of the transferring employees who would be affected by the proposed orders. In late May and early June 2022, Opal provided employees of Glenvoir and Opeka with a letter containing information about the transfer, as well as copies of the Opal Agreement, the draft applications for orders under s 318 of the Act, and a table comparing conditions under the Glenvoir and Opeka Agreement and the Opal Agreement. Opal also convened meetings at both facilities to hold discussions with relevant employees about the acquisition and its proposed application to the Commission for orders that the Opal Agreement apply to cover the transferring employees in their employment with Opal.

• [9] On 1 and 2 June 2022, Opal provided employees of Glenvoir and Opeka with a form asking them to express their views about its proposal that the Opal Agreement should apply to their employment with Opal and its proposed applications to the Commission to obtain orders to this effect. Opal submitted that of the 155 transferring employees at Glenvoir, 109 submitted responses, all of which expressed support for the proposed arrangements. Of the 73 transferring employees of Opeka, 47 returned the form, 42 of whom indicated that they had no concerns. Four employees advised that they had some concerns based on advice from their union but did not indicate the nature of their concerns. One employee stated that he or she was 'cautious in signing any agreements to anything'.

• [10] I consider that the transferring employees have been afforded a reasonable opportunity to express their views about the applications. A majority of employees of Glenvoir and Opeka have voiced support for the applications. I infer that those who have not expressed any view are agnostic about the applications. A small number expressed concerns however I consider it likely that these concerns will have been met by the arrangements that have been agreed between Opal and the unions, referred to below. In my opinion the views of employees who would be affected by the proposed orders weigh in favour of the applications being granted.

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

• [11] Section 318(3)(b) requires the Commission to consider whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment. In my view this consideration is concerned with the question of whether any employees would be disadvantaged on an overall, rather than a line-by-line basis. Further, although s 318(3)(b) requires the Commission to consider whether employees would be disadvantaged by the order, I consider it relevant to take into account benefits and detriments that might accrue to employees outside of the terms of the instrument that would apply as a consequence of the order, because the question of whether employees would be disadvantaged by the order can only be meaningfully assessed objectively and in the context of all of the circumstances that are likely to exist if the order is made. For example, an order under s 318 might on its terms bring about a particular detriment because a condition in a transferable instrument would not apply to transferring employees. But if the new employer undertook to provide that condition, the detriment would be removed.

• [12] Opal submitted that it had undertaken detailed comparisons of the Glenvoir and Opeka Agreement and the Opal Agreement in relation to wages and other employment conditions. It appended to its applications a copy of a spreadsheet comparing minimum wages and a table comparing terms and conditions. It submitted that these documents indicated that the Opal Agreement is, overall, more beneficial to employees than the Glenvoir and Opeka Agreement. I agree. There are some conditions conferred by the Opal Agreement that are less beneficial compared to comparable conditions under the Glenvoir and Opeka Agreement. In particular, rates of pay for grade 2 registered nurses are generally higher under the Glenvoir and Opeka Agreement. However, taking into account the additional benefits that Opal proposes to afford to transferring employees, including in relation to the rates of pay for registered nurses and other employees, I consider that transferring employees will not be disadvantaged by the proposed orders in relation to their terms and conditions of employment. Those additional benefits were set out in correspondence sent by Opal to the Australian Nursing and Midwifery Federation (ANMF) and the Health Workers' Union (HWU) on 23 June 2022, and are as follows:

• Opal will pay transferring employees a 2.5% administrative wage increase on their base hourly rate with effect from the first full pay period in July 2022.

• In cases where there is a direct translation in classification from one enterprise agreement to the other, Opal will preserve the transferring employee's current base hourly rate of pay until such time as the Opal Agreement rate of pay is equal to or in excess of the employee's current base rate, at which point the transferring employee's base rate will be adjusted to align with the relevant base rate under the Opal Agreement.

• Opal will recognise transferring employees' accrued personal/carer's leave, accrued annual leave and service with the old employers for the purposes of service-related entitlements under the Opal Agreement.

• The entitlement to a sixth week of annual leave for part-time registered nurses under clause 53.2 of the Glenvoir and Opeka Agreement will continue to apply to existing transferring part-time registered nurses until such time as the Opal Agreement is terminated or replaced by another enterprise agreement.

• The entitlement of personal care workers to the PCW medication awareness and assistance allowance at 2% of their ordinary hourly rate, as per clause 19.5 of the Glenvoir and Opeka Agreement, will continue to apply to existing transferring personal care workers until such time as the Opal Agreement is terminated or replaced by another enterprise agreement.

• A once-off top up of three (3) days of personal leave accruals will be made to existing transferring employees who are full-time or part-time and who have completed more than five years of service at the time of transfer.

• Opal will classify the three registered nurses currently sitting at 'RN Grade 2, Year 2' under the Glenvoir and Opeka Agreement to 'RN Grade 2, Year 9' under the Opal Agreement.

• Opal will provide a once-off payment on transfer to full-time and part-time registered nurses in the amount of the difference between the annual leave loading cap in clause 28.7(a) of the Opal Agreement ($624.79 for 152 hours of annual leave, or a proportionate amount for a lesser quantity of annual leave) and the amount of annual leave loading that would otherwise apply for annual leave taken under clause 53.10(a)(i)(A) of the Glenvoir and Opeka Agreement (loading calculated at 17.5% of the employee's ordinary rate of pay). The payment will be based on the registered nurse's contracted hours and their accrued annual leave balance as at the time of transfer, capped to a maximum of 4 weeks (152 hours). An example is provided in the company's correspondence of 23 June 2022.

• Opal will ensure that employees receive the same minimum number of contracted hours that they currently have in their employment with Glenvoir or Opeka.

• [13] On 27 June 2022, the ANMF and the HWU advised my chambers that they accepted the company's undertaking to apply the above arrangements and requested that the company's correspondence of 23 June 2022 be placed on the file.

• [14] I am satisfied that the transferring employees will not be disadvantaged by the proposed orders in relation to their terms and conditions of employment. The consideration in s 318(3)(b) weighs in favour of granting the applications.

The nominal expiry date of enterprise agreements - s 318(3)(c)

• [15] The nominal expiry dates of the Glenvoir and Opeka Agreement and the Opal Agreement are 12 November 2023 and 30 June 2022. These are neutral considerations.

Whether negative impact on productivity etc - s 318(3)(d)

• [16] The Commission must consider whether the transferrable instrument would have a negative impact on the productivity of the new employer's workplace. Opal submitted that having employees performing the same work on different conditions may lead to dissatisfaction and disharmony. I agree. I accept that this could have a negative impact on productivity, but not that it necessarily would have such an impact. I consider this to be a neutral consideration.

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

• [17] Section 318(3)(e) requires the Commission to consider whether the new employer would incur 'significant economic disadvantage' as a result of the transferrable instrument covering the new employer. Opal submitted that it would suffer disadvantage if it were required to administer different industrial instruments for employees performing the same work in the same location. In particular, Opal's 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. I accept these submissions but note that Opal does not contend that it would incur significant economic disadvantage as a result of the transferrable instrument covering it, nor do I believe this would be the case. This factor does not support the granting of the applications in this case.

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

• [18] The Commission must consider 'the degree of business synergy' between the transferrable instrument and any existing workplace instrument of the new employer. Opal contended that there was little business synergy between the Glenvoir and Opeka Agreement and the Opal Agreement and that it would be incongruous for there to be a select group of employees of the new employer (the transferring employees) who would be left out of the coverage of the Opal Agreement. I agree that there is little business synergy between the two instruments. This weighs moderately in favour of granting the applications.

The public interest - s 318(3)(g)

• [19] Opal submitted that the public interest was not engaged by its applications. I agree. This is a neutral consideration.

• [20] Taking into account the matters in s 318(3), I have decided to grant the applications under s 318(1). Opal has presented a persuasive case. In my assessment it is appropriate that the Commission exercise its discretion under s 318 to make the orders that are sought.

• [21] I will make orders under s 318(1)(a) that the Glenvoir and Opeka Agreement will not cover Opal or any of the transferring employees of Glenvoir or Opeka and that such employees will be covered by the Opal Agreement. Orders will be issued separately in PR743106 and PR743107.

Printed by authority of the Commonwealth Government Printer