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

Estia Investments Pty Limited t/as Estia Health

Application for orders relating to transferable instruments in a transfer of business

• [1] Estia Investments Pty Ltd t/as Estia Health (Estia Health) owns and operates approximately 78 aged care homes across South Australia, Victoria, New South Wales and Queensland. On 20 December 2024, it entered into contingent agreements with Aurrum Pty Limited and its associated entities (Aurrum) for the purchase of seven additional aged care facilities. Three of these are in NSW (in Erina, Wyoming and Norah Head) and two are in Victoria (in Healesville and Reservoir) (together, "the Relevant Facilities"). The Relevant Facilities have employees who are covered by legacy enterprise agreements.

• [2] Estia Health has applied for orders under s.318 of the Fair Work Act 2009 (the Act) to simplify the coverage of industrial instruments in relation to the group of 67 employees at the Relevant Facilities who will transfer from Aurrum to Estia Health in connection with the transfer of business.

• [3] The orders sought in relation to employees in NSW are to the effect that the Estia Health NSW Enterprise Agreement 2024 will cover employees in place of two expired enterprise agreements (listed below):

1. Terrigal Grosvenor Lodge Pty Ltd, NSWNA & HSU East Branch Enterprise Agreement 2012 (Terrigal Agreement)
2. Brisbane Water (NSW) Legacy, NSWNMA and HSU NSW Enterprise Agreement 2014 - 2017 (Brisbane Water Agreement)

• [4] The orders sought in relation to employees in Victoria are to the effect that the Estia Health Victoria Enterprise Agreement 2021 will cover employees in place of the now expired Aberdeen Aged Care Facility, ANF and HSU Enterprise Agreement 2009 (Aberdeen Agreement).

• [5] The question is whether the orders sought by Estia Health should be made.

Orders under section 318 of the Fair Work Act 2009

• [6] Part 2-8 of the Act describes when a transfer of business occurs and provides for the transfer of enterprise agreements from one employer to another in connection with a transfer of business.

• [7] Section 311(1) defines "transfer of business", and section 312 defines the types of "transferable instrument" that may transfer from one employer to another. Sections 317, 318 and 319 empower the Commission to make orders in relation to a transfer of business, including orders that a transferable instrument covers, or does not cover, the new employer in relation to the transferring employees and non-transferring employees.

• [8] Section 318(1) provides:

(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."

• [9] On the material before me, there will be a transfer of business for the purposes of subsection 311(1) of the Act from Aurrum to Estia Health on the Transaction Completion Date, which is scheduled to occur on 1 April 2025 at the latest:

1. The employees' employment with Aurrum at the Relevant Facilities will terminate on the day before the Transaction Completion Date,
2. At the time of the application, most of the employees had accepted employment with Estia Health commencing on the Transaction Completion Date,
3. The work those employees will perform at the Relevant Facilities for Estia Health will be the same, or substantially the same, as the work they currently perform for Aurrum at the Relevant Facilities (the transferring work), and
4. There will be a connection of the type described in subsection 311(3) (transfer of assets) because there is an arrangement between Aurrum and Estia Health for the assets used by Aurrum in the Relevant Facilities to become assets used by Estia Health in connection with the transferring work.

• [10] The Terrigal Agreement, the Brisbane Water Agreement, and the Aberdeen Agreement are transferable instruments. Upon the transfer of business, Aurrum employees who become employees of Estia Health will be transferring employees in relation to the transfer of business.

• [11] Factors relevant to the exercise of the discretion in section 318 of the Act are set out in subsection 318(3) and are now considered in turn.

The views of Estia Health and employees who would be affected by the order

• [12] Estia Health seeks to ensure uniform conditions of employment for existing and transferring employees in its Victoria and NSW facilities. It submits that making the orders will avoid disparities in employment conditions, ensure flexibility and mobility of staff across those facilities, and avoid additional administrative costs and implementation issues in having to apply up to five enterprise agreements and two modern awards.

• [13] Estia Health submits that it has taken reasonable and practicable steps to seek the views of employees affected by this application by holding consultation meetings at each of the Relevant Facilities and providing affected employees with the opportunity to complete a feedback form. Of the 37 completed feedback forms received as of 21 February 2025, 4 employees indicated concerns. After consulting with the four employees individually, the concerns were resolved. Estia Health also consulted with the Australian Nursing & Midwifery Federation (ANMF) and the Health Services Union (HSU) about the business purchases and likely effects for employees.

• [14] In the consultation process, the ANMF (Victorian Branch) raised concerns about Sunday penalty loading and annual leave entitlements. Estia Health responded by letter of 13 February 2025 to Aurrum employees at the Relevant Facilities in Victoria, undertaking to ensure that transferring employees in Victoria will continue to receive a 175% penalty loading for time worked on Sundays and that transferring enrolled nurses will retain a minimum entitlement to 5 weeks' annual leave. The ANMF has separately been assured that any registered nurse who works shifts at a lower level (1 or 2) and who also works as the After Hours Coordinator (Level 3 or 4) ("Nurse in Charge") on shifts will maintain the higher classification for their After Hours Coordinator shifts. Having received these assurances, the ANMF (Victorian Branch) does not oppose the application.

• [15] The ANMF (NSW Branch) raised a separate concern about clause 13.1(a)(i) of the Brisbane Water Agreement which provides that the rate of pay for an Assistant in Nursing (AIN) classified employee will be the greater of the relevant rate in the Brisbane Water Agreement or 3.5% above the AIN rate of pay in the Nurses Award 2010. Estia Health has confirmed to the ANMF (NSW Branch) that its approach to classification and pay for transferring AIN classified employees will ensure that they are paid at an increment under the relevant Estia Health enterprise agreement which attracts a higher rate than if the employees remained on the Brisbane Water Agreement. The ANMF (NSW Branch) does not oppose the application.

• [16] The HSU did not participate in the consultation process and has not provided any views in relation to the application.

Whether any employees would be disadvantaged in relation to their terms and conditions of employment

• [17] Estia Health has provided comprehensive comparisons of the terms and conditions of employment in its own enterprise agreements as against the Aberdeen Agreement, the Terrigal Agreement, and the Brisbane Water Agreement.

• [18] Wages: All but two relevant employees who are covered by the Aberdeen Agreement, the Terrigal Agreement, or the Brisbane Water Agreement will receive a pay increase if the relevant Estia Health Agreement applies to their employment instead. Of the two exceptions, one is classified as a Registered Nurse Level 5 working at the Healesville Facility and one is classified as a Bus Driver at the Erina Facility. Estia Health has advised that it will create separate payroll rules in relation to these two employees to maintain their existing rates of pay until such time as the applicable Estia Health enterprise agreement provides for a higher rate of pay.

• [19] In relation to the Commission's published final determination in the work value case for nurses working in residential and home care aged care (Determination MA000034 PR782723) (Determination), Estia Health confirms that it will pass on any government funding it receives because of the Determination to registered and enrolled nursing employees.

• [20] Allowances: The majority of allowances in the relevant Estia Health enterprise agreements are higher than comparable allowances in the Aberdeen Agreement, the Terrigal Agreement, and the Brisbane Water Agreement respectively.

• [21] Other terms and conditions: Most terms and conditions in the Estia Health enterprise agreements are either more favourable, substantially the same, or not materially different when compared to similar provisions in the Aberdeen Agreement, the Terrigal Agreement, and the Brisbane Water Agreement. There are also some less beneficial conditions in the Estia Health enterprise agreements and some that are not relevant to the operations of Estia Health.

• [22] On balance, I am satisfied that transferring employees will not be disadvantaged on an overall basis if the application is granted.

• [23] The Aberdeen Agreement nominally expired on 30 November 2012. The Estia Health Victoria Enterprise Agreement 2021 also nominally expired (although more recently) on 30 November 2024. Estia Health is now negotiating with relevant unions for a replacement enterprise agreement.

• [24] The Terrigal Agreement nominally expired on 30 June 2015 and the Brisbane Water Agreement nominally expired on 30 June 2017. The Estia Health NSW Enterprise Agreement 2024 was approved by the Commission on 2 October 2024 and nominally expires on 3 July 2026.

Whether the Aberdeen, Terrigal, or Brisbane Water Agreements would have a negative impact on productivity at Estia Health

• [25] The continuing operation of the Aberdeen Agreement, the Terrigal Agreement, and the Brisbane Water Agreement would require Estia Health to allocate additional resources to its payroll and compliance functions across five different enterprise agreements and two modern awards. This would increase the regulatory complexity of the business and likely have a negative impact on productivity. It may also operate to limit opportunities for employees to work in more than one facility because their terms and conditions are specific to a particular enterprise agreement. Differing terms and conditions for employees working side by side in the same or similar functions may also have a negative effect on productivity if some of the employees feel they are missing out or undervalued.

Whether Estia Health would incur significant economic disadvantage as a result of coverage by the Aberdeen, Terrigal, and Brisbane Water Agreements

• [26] Estia Health has provided an estimate of the cost of additional resources required for rewriting of payment rules in the electronic systems, manual processing and reconciliation of payments for the transitional period and testing as approximately $229,750 in the first year of implementation. While there is a degree of speculation inherent in this estimate, I accept that there are real costs associated with the implementation of multiple enterprise agreements and modern awards and it is reasonable to consider that continuing coverage of the Aberdeen Agreement, the Terrigal Agreement and the Brisbane Water Agreement at the Relevant Facilities will cause it to incur some not insignificant economic costs. To the extent that these are capable of being characterised as unnecessary costs, they will be disadvantageous to Estia Health because they will divert valuable resources away from investment in its core business of providing aged care.

Degree of business synergy between the transferrable instruments and other workplace instruments covering Estia Health

• [27] There is a degree of business synergy as between the various industrial instruments insofar as they cover the same or similar types of work. But there is also a degree of differentiation which for the reasons above would require the implementation of separate payment rules, processing and implementation and would likely result in employees performing the same work alongside each other but on different rates of pay. The Aberdeen Agreement incorporates specific terms from the Nurses (Victorian Health Services) Award 2000 and the Health and Allied Services - Private Sector - Victoria Consolidated Award 1998 1998 as in operation on 31 December 2009. No similar continuation of legacy federal award terms is found in the Estia Health enterprise agreements.

• [28] The matter does not appear to attract the public interest. It deals instead with the private interests of the parties in a way that does not undermine the established legislative safety net of minimum terms and conditions of employment.

• [29] On balance, I am satisfied that the conditions for the making of an order have been met, and it is appropriate to grant the application under section 318 of the Act, noting that the orders will largely operate to the benefit of the parties and are not opposed.

• [30] Order [PR785183] will issue separately to this decision.

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