s.319 - Application for an order relating to instruments covering new employer and non-transferring employees

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

[1] On 7 February 2025, the Fair Work Commission (the Commission) approved the Kraftur® Enterprise Agreement 2025 (the Transferable Instrument). The Transferable Instrument has a nominal expiry date of 7 February 2029. The Transferable Instrument is an agreement entered into by Shepcon Qld Pty Ltd (the Previous Employer) and its employees.

[2] Since the approval of the Transferable Instrument, all relevant employees of the Previous Employer who were covered by the Transferable Instrument transferred employment from the Previous Employer to Kraftur Pty Ltd (the Applicant).

[3] The Applicant has applied for an order under s.319(1)(b) of the Fair Work Act 2009 (the Act) for an order that the Transferable Instrument will cover any non-transferring employees of the Applicant who perform, or are likely to perform, transferring work in a role within the classifications provided by the Transferable Instrument.

[4] Section 311(1) of the Act sets out the circumstances in which a transfer of business occurs. It states:

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)."

[5] Section 312 of the Act also indicates that a "transferable instrument" includes "an enterprise agreement that has been approved by the FWC".

[6] Section 313 of the Act provides that "If a transferable instrument covered the old employer and a transferring employee immediate 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...".

[7] I am satisfied that there was a transfer of business and that the employees of the Previous Employer transferred to the Applicant under the terms of the Act. I am also satisfied that the Transferable Instrument is a transferable instrument and that it now covers the Applicant and the transferring employees.

[8] Section 314 of the Act also provides for a transferable instrument to cover other employees in certain circumstances. It states:

"314 New non‑transferring employees of new employer may be covered by transferable instrument

(a) a transferable instrument covers the new employer because of paragraph 313(1)(a); and

(b) after the transferable instrument starts to cover the new employer, the new employer employs a non‑transferring employee; and

(c) the non‑transferring employee performs the transferring work; and

(d) at the time the non‑transferring employee is employed, no other enterprise agreement or modern award covers the new employer and the non‑transferring employee in relation to that work;

then the transferable instrument covers the new employer and the non‑transferring employee in relation to that work.

(2) A non‑transferring employee of a new employer, in relation to a transfer of business, is an employee of the new employer who is not a transferring employee.

(3) This section has effect subject to any FWC order under subsection 319(1)."

[9] I observe that the Building and Construction General On-Site Award 2020 (the Award) is likely to cover the Applicant's enterprise. Given the coverage of a modern award, s.314(1) does not operate to have the Transferable Instrument cover the non-transferring employees.

[10] However, as indicated, the provisions contained in s.314 are subject to s.319 of the Act, which allows for the Commission to make an order that a transferring instrument covers non-transferring employees.

[11] Section 319 of the Act provides as follows:

"319 Orders relating to instruments covering new employer and non‑transferring employees

(a) an order that a transferable instrument that would, or would be likely to, cover the new employer and a non‑transferring employee because of subsection 314(1) does not, or will not, cover the non‑transferring employee;

(b) an order that a transferable instrument that covers, or is likely to cover, the new employer, because of a provision of this Part, covers, or will cover, a non‑transferring employee who performs, or is likely to perform, the transferring work for the new employer;

(c) an order that an enterprise agreement or a modern award that covers the new employer does not, or will not, cover a non‑transferring employee who performs, or is likely to perform, the transferring work for the new employer.

Note: Orders may be made under paragraphs (1)(b) and (c) in relation to a non‑transferring employee who performs, or is likely to perform, the transferring work for the new employer, whether or not the non‑transferring employee became employed by the new employer before or after the transferable instrument referred to in paragraph (1)(b) started to cover the new employer.

(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 non‑transferring employee who performs, or is likely to perform, the transferring work for the new employer;

(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;

Restriction on when order may come into operation

(4) The order must not come into operation in relation to a particular non‑transferring employee before the later of the following:

(a) the time when the non‑transferring employee starts to perform the transferring work for the new employer;

[12] The Applicant is entitled to bring the application, which relies upon the terms of s.319(1)(b) of the Act, in effect, to extend the coverage of the Transferable Instrument to the non-transferring employees.

[13] In dealing with the application, the Commission is required to have regard to each of the matters in s.319(3) in determining whether an Order should be made. I now turn to deal with each of those considerations.

The views of the new employer - s.319(3)(a)(i)

[14] The Applicant, as the applicant and new employer, supports the application and the sought order.

The views of the new employees - s.319(3)(a)(ii)

[15] It is not possible to obtain the views of the new employees who will be affected by the Order because there are no non-transferring employees currently employed by the Applicant.

Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment - s.319(3)(b)

[16] The Applicant stated that there would be no disadvantage to the affected employees as a result of granting the order. This is on the basis that the affected employees would receive the same conditions and entitlements as existing employees under the Transferable Instrument, which provides minimum wages and conditions which are superior overall to those of the Award.

[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.

The nominal expiry date of the Transferable Instrument - s.319(3)(c)

[18] The nominal expiry date of the Transferable Instrument is 7 February 2029.

Negative impact on the productivity - s.319(3)(d)

[19] The Applicant submitted that the Transferable Instrument was drafted to promote workplace productivity as it rewards employees for performance and provides entitlements in excess of those provided by the Award.

[20] I am satisfied that there will be no negative impact on productivity if the order is made. In contrast, if the order is not made and transferring and non-transferring employees are on different terms and conditions of employment, this may have a negative impact on team engagement and in turn upon workplace productivity.

[21] The Applicant does not consider it would incur a significant economic disadvantage should an Order be issued.

[22] The Applicant submitted that it has been an associated entity of the Previous Employer and is therefore familiar with the Transferable Instrument. It stated that the Transferable Instrument would integrate with the Applicant's operations.

[23] I am satisfied that if the sought order is granted, it will confirm a single framework of regulation that has been negotiated and approved in the context in which it has and will continue to apply.

[24] The Applicant did not make any submissions in relation to the public interest. However, I am satisfied that the public interest is served by facilitating an arrangement that permits the application of a recently approved enterprise agreement to cover employees who would otherwise be covered by the Award, and consequently entitled only to minimum industry wages.

[25] Having considered each of the matters in s.319(3) of the Act, I am satisfied that it is appropriate for an order to be made. In accordance with s.319(4) of the Act, the Order will come into operation in relation to each non-transferring employee when the later of the following occurs:

• the time when the non-transferring employee starts to perform the transferring work for the new employer; or
• the day on which the order is made.

An Order [PR796916] will be issued to this effect.

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