Fair Work Act 2009

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

• [1] This decision concerns an application by Insurance Australia Group Services Pty Limited (Applicant) for orders pursuant to s.318 of the Fair Work Act 2009 (FW Act) (Application).

• [2] The Applicant is a wholly owned subsidiary of the Insurance Australia Group (IAG), a financial services business offering insurance services. Insurance Group Australia Limited, the parent entity of IAG, has reached an agreement with Club Insurance Holdings Pty Ltd and the Royal Automobile Club of Queensland (RACQ) to acquire 90% of the shares of RACQ Insurance Limited. Pursuant to that agreement, IAG will underwrite RACQ general insurance products sold under the RACQ brand and the employees undertaking that work will be employed by the Applicant. The transaction is expected to complete on 1 September 2025.

• [3] Employees who work within the business of RACQ are currently employed by RACQ Operations Pty Ltd (RACQO) and covered by the RACQ Group Enterprise Agreement 2022-2025 (RACQ Agreement).

• [4] The Applicant has offered employment to the employees of RACQO which are conditional, and commence, on completion of the transaction (Transferring Employees). Current employees of the Applicant who provide support for a range of personal and commercial insurance products under different brands are covered by the IAG Enterprise Agreement 2024 (IAG Agreement).

• [5] The Applicant seeks orders in the following terms:

• (i) Pursuant to s.318(1)(a) of the FW Act_,_ the RACQ Group Enterprise Agreement 2022-2025[1] does not, and will not, cover Insurance Australia Group Services Pty Limited or any transferring employees as defined in Part 2-8 of the FW Act being employees formerly employed by RACQ Operations Pty Ltd; and

• (ii) Pursuant to s.318(1)(b) of the FW Act_,_ the IAG Enterprise Agreement 2024[2] covers, or will cover, any transferring employees as defined in Part 2-8 of the FW Act being employees formerly employed by RACQ Operations Pty Ltd.

• [6] Upon the matter being allocated to my Chambers, the matter was listed for hearing on 1 August 2025 and directions were issued for the parties to file any material and submissions in support of, or in opposition to, the Application. I also directed the Applicant to provide a copy of the notice of listing, the directions, the Application, and the witness statement of Ms Jodie-Leigh Smith (Exhibit 1) to each Transferring Employee.

• [7] There were no submissions or material filed by any Transferring Employee. However, in the material filed by the Applicant, there was correspondence from the Finance Sector Union of Australia stating that it supported the Application.[3]

• [8] Section 311(1)-(3) of the FW Act provides:

(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).

(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.

(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:

(a) the old employer or an associated entity of the old employer; and

(b) the new employer or an associated entity of the new employer;

the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):

(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and

(d) that relate to, or are used in connection with, the transferring work.

313 Transferring employees and new employer covered by transferable instrument

(1) 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; and

(b) while the transferable instrument covers the new employer and the transferring employee in relation to the transferring work, no other enterprise agreement or named employer award that covers the new employer at the transfer time covers the transferring employee in relation to that work.

(2) To avoid doubt, a transferable instrument that covers the new employer and a transferring employee under paragraph (1)(a) includes any individual flexibility arrangement that had effect as a term of the transferable instrument immediately before the termination of the transferring employee's employment with the old employer.

(3) This section has effect subject to any FWC order under subsection 318(1).

• [10] Sections 317 and 318 of the FW Act provide:

317 FWC may make orders in relation to a transfer of business

This Division provides for the FWC to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer.

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) 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;

(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;

(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;

• [11] In deciding whether to make an order pursuant to s.318(1) of the FW Act, the Commission must take into account the matters set out in s.318(3).

• [12] Before turning to those matters, I have had regard to all of the materials before the Commission and I am satisfied as to the following:

(i) That there will be, or is likely to be, a transfer of business from RACQO to the Applicant (ss.311(1) and 317 of the FW Act);

(ii) That the employees of RACQO who will be, or are likely to be, employed by the Applicant will be Transferring Employees (s.311(2) of the FW Act);

(iii) That the RACQ Agreement covers RACQO and the persons likely to be Transferring Employees (s.313(1) of the FW Act);

(iv) That the RACQ Agreement is a transferable instrument (s.312(1) of the FW Act); and

(v) That the Applicant as the new employer, or a person who is likely to be the new employer, of the Transferring Employees can make an application for the order sought (s.318(2)(a) of the FW Act).

• [13] I now turn to a consideration of the matters set out in s.318(3) of the FW Act.

• [14] The Applicant is the new employer, or a person who is likely to be the new employer, who seeks, and is supportive of, the proposed orders. This weighs in favour of making the proposed orders.

Views of the employees who would be affected by the order - s.318(3)(a)(ii)

• [15] The directions issued by my Chambers sought the views of the Transferring Employees. No employees sought to provide their views directly to the Commission. However, in a consultation process conducted by the Applicant, an overwhelming majority of the Transferring Employees have indicated their support for the making of the proposed orders.

• [16] This weighs in favour of making the proposed orders.

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

• [17] Having regard to the material before me, I am satisfied that the Transferring Employees will not be disadvantaged in relation to their terms and conditions of employment by the making of the proposed orders. In addition to a range of more beneficial entitlements under the IAG Agreement, I note that the Applicant has committed to maintaining base salaries for the Transferring Employees that are at least equal to the base salary they will be entitled to immediately before completion and has provided an undertaking to preserve paid meal break entitlements. This weighs in favour of making the proposed orders.

The nominal expiry date of the agreement - s.318(3)(c)

• [18] The nominal expiry date of the RACQ Agreement is 31 May 2025. The nominal expiry date of the IAG Agreement is 30 October 2027. I consider this a neutral factor in relation to the making of the proposed orders.

Whether the transferable instrument would have a negative impact on the productivity of the new employer's workplace - s.318(3)(d)

• [19] The Applicant submitted that the operation of different enterprise agreements within the same employee cohort may lead to dissatisfaction amongst employees resulting in a negative impact on the productivity of the Applicant's workplace. Furthermore, the Applicant submitted the requirement to administer two enterprise agreements will impose an additional administrative burden and cost on the Applicant.

• [20] I accept these submissions and that this weighs in favour of making the proposed orders.

Whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer - s.318(3)(e)

• [21] The Applicant submitted that if it were required to administer two different enterprise agreements it would incur additional costs associated with training staff and leadership and reconfiguring and managing payroll processing.

• [22] I accept that if the proposed orders are not made there is potential for the Applicant to suffer economic disadvantage arising from the administration of two different enterprise agreements. This weighs in favour of the making the proposed orders.

The degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer - s.318(3)(f)

• [23] Having regard to the materials before me, I am satisfied that there is limited synergy between the RACQ Agreement and the IAG Agreement and that this weighs in favour of making the proposed orders.

• [24] The Applicant submitted that the making of the proposed orders are in the public interest as it will ensure there is a cohesive, harmonious, and productive workforce and the risk of non-compliance is minimised.

• [25] Having regard to the material before me, I am not of the view that there are public interest reasons weighing against making the proposed orders.

• [26] Having considered the matters required by s.318(3) of the FW Act and all the materials before me, I am satisfied that it is appropriate that the Application be granted. An Order to that effect will be issued in conjunction with this decision.

• [27] In accordance with s.318(4) of the FW Act, the Order shall take effect from the later of the following:
  1. the time when the transferring employees become employed by the Applicant; or

Printed by authority of the Commonwealth Government Printer