Fair Work Act 2009

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

MACWELD CRANE HIRE PTY LTD ENTERPRISE AGREEMENT 2017

Application for an order relating to instruments covering new employer and transferring employee

[1] These reasons record in formal form a decision and order delivered ex tempore on 31 August 2020.

[2] On 14 August 2020 Fleurieu Cranes Pty Ltd (Fleurieu Cranes or the Applicant) applied to the Commission under section 318 of the Fair Work Act 2009 (FW Act) for orders in relation to a transfer of business.

[3] The orders sought concern to the Macweld Crane Hire Pty Ltd Enterprise Agreement 2017 (the Macweld Agreement)[1] and the Fleurieu Cranes Pty Ltd Enterprise Agreement 2018[2]. Each Agreement covers the Construction, Forestry, Maritime, Mining and Energy Union (the CFMMEU).

[4] On 18 August 2020 I listed the application for hearing on 31 August 2020 and contemporaneously issued directions requiring the Applicant to serve its application, the notice of listing and my directions "on each of the transferring employees and the CFMMEU by no later than close of business 21 August 2020."[3]

[5] Additionally, I directed that any employee or the CFMMEU who wish to be heard notify the Commission and Fleurieu Cranes Pty Ltd by close of business Thursday 27 August 2020 and attend the hearing.

[6] My Chambers did not receive such notification, nor did any employee attend the hearing. The CFMMEU advised of its conditional consent in advance of the hearing.

[7] I heard the matter by telephone on 31 August 2020. I granted permission for the Applicant to be represented. I received written[4] and oral evidence from Mr Brandon Freer General Manager of Fleurieu Cranes.

[8] The factual narrative can be briefly stated.

[9] Fleurieu Cranes and Macweld Hire Pty Ltd (Macweld) are associated entities. Each operates the business of crane hire for construction and related projects and works.

[10] An agreement has been reached for the business of Macweld to be transferred to Fleurieu Cranes. An indicative date for the transfer had been set for 26 October 2020 though that date remains capable of variation due to current economic and project uncertainty brought about by the COVID-19 pandemic.

[11] Upon the transfer of business, eight employees that perform crane operations and/or rigging duties for Macweld will transfer their employment from Macweld to Fleurieu Cranes (the transferring employees).

[12] The Applicant is seeking orders under section 318(1)(a) and (b) of the FW Act:

• that, upon the transfer, the Macweld Crane Hire Pty Ltd Enterprise Agreement 2017 will not apply to the transferring employees; and

• that, upon the transfer, the Fleurieu Cranes Pty Ltd Enterprise Agreement 2018 will apply to the transferring employees.

"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) 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, 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;

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;

[14] I turn to consider the factors required by section 318(3) of the FW Act to be taken into account.

[15] Fleurieu submit that:

• the transferring employees will perform the same or substantially the same work as that which they perform for Macweld (being the operation of mobile cranes;

• most of the terms and conditions of the Fleurieu Agreement are superior to those contained in the Macweld Agreement which would otherwise apply to the transferring employees and are better off on an overall basis. To the extent there are terms which may be less beneficial to the employees (e.g. redundancy), employees receive appropriate compensation;

• the one employer employing persons under both the Macweld and Fleurieu Agreements, in view of their differences, may create conflicting business synergies if the Applicant had to apply both Agreements to their employees;

• the nominal expiry date of the Macweld Agreement is 10 May 2020 (which has passed) whereas the nominal expiry date of the Fleurieu Agreement is prospective (6 May 2022).

[16] Each of these grounds advanced by the Applicant weigh in favour of granting the application.

[17] Whilst provided the opportunity to do so, no employees (other than via the CFMMEU) took part in these proceedings.

[18] The evidence of Mr Freer is that, by letter of 26 June 2020, all transferring employees were informed of the transfer and the Applicant's intent to apply to the Commission to seek orders. Employees were invited to express their views on the proposed application.

[19] Mr Freer met with the eight transferring employees on 2 July 2020 to discuss the issue. Mr Des Savage, of the CFMMEU, attended the meeting briefly by telephone and discussed the transfer with the employees following the meeting.

[20] The eight employees subsequently returned ballots to the Applicant unanimously confirming their support for the transfer. Each was given a further opportunity to ask questions or provide comments. Two such employees raised issues which pertained to back pay, and whether the backpay would attract superannuation contributions.

[21] Prior to hearing, the CFMMEU emailed my Chambers, a relevant extract of which follows:[5]

"We consent to the application, and do not seek to be heard further on the matter other than to seek that it be noted that our consent is provided on the basis that the Employer has undertaken to back pay entitlements to relevant employees from May 2020."

[22] I am satisfied that the transferring employees, and their representative Union, do not object to the application being granted. This factor weighs in favour of the orders sought.

Whether employees will be disadvantaged (section 318(3)(b))

[23] The Applicant provided a list of the advantages, disadvantages and undertakings made to the transferring employees. The Applicant identifies potential disadvantages being that employees will move from weekly to daily hiring, redundancy pay is capped, lesser benefits from lower BIRST contributions, a lower leading hand allowance, a lower income maintenance payment and a reduced radial areas allowance.

[24] Offsetting these disadvantages are certain superior conditions in the Fleurieu Agreement including higher hourly rates of pay. The Applicant has undertaken to backpay employees from 17 May 2020 (including superannuation) using the higher rate of pay in the Fleurieu Agreement, and undertaken to top up any transferring employee's redundancy entitlements should they be made redundant and if there is a shortfall in their BIRST fund.

[25] Further, the Applicant points out that the Fleurieu Agreement provides higher meals and daily fare allowances, increased superannuation contributions, access to redundancy pay in a broader range of circumstances, casual conversion rights and certain penalty rates not found in the Macweld Agreement.

[26] The Applicant submits that overall employees will be better off under the Fleurieu Agreement. I am satisfied that the combination of undertakings and advantages in the Fleurieu Agreement offset any potential disadvantage faced by the transferring employees.

[27] The Macweld Agreement has passed its nominal expiry date being 10 May 2020. The Fleurieu Agreement has a nominal expiry date of 6 May 2022. This factor weighs in favour of making the orders.

Productivity, economic impact and business synergy (sections 318(3)(d), (e) and (f))

[28] I note that Macweld and Fleurieu Cranes are associated entities. The Applicant submits that the transferring employees are set to work alongside their Fleurieu counterparts. Having employees on the same site performing work encompassed by the one agreement and paid according to that single instrument is likely to lessen the administrative burden of processing payroll according to two industrial instruments. It may also avoid potential disputes.

[29] This factor weighs in favour of making the orders sought.

[30] There was no evidence that making the orders is contrary to the public interest. This is a neutral factor.

[31] Being the proposed new employer of the transferring employees, Fleurieu Cranes has standing to make this application.[6] I am satisfied that the jurisdictional facts necessary for the exercise of the Commission's powers under section 318(1)(a) and (b) have been made out.

[32] Having taken into account the considerations under section 318(3), I am satisfied that these factors collectively weigh in favour of making the proposed orders. Any potential disadvantage to the transferring employees is adequately addressed by the undertakings made by the Applicant employer.

[33] Consistent with section 318(4)(a), the date of effect of my order will be the day upon which the employees employed under the Macweld Agreement come to be transferred from the employment of Macweld to the employment of Fleurieu Cranes. From that date they will be employed under the Fleurieu Cranes Pty Ltd Enterprise Agreement.

[34] In conjunction with this decision, I issue an order in the foregoing terms.[7]

Mr T Earls, with permission, for Fleurieu Cranes Pty Ltd.

[1] [2017] FWCA 2558

[2] [2019] FWCA 2867

[3] Fair Work Rules 2010 Rule 41 and Schedule 1

[4] A1; Statement of Brandon Freer 6 August 2020

[5] A2; Email CFMMEU (Mr Russell) to Chambers 31 August 2020 3.37pm

[7] PR722459

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