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

BALLESTRIN CONSTRUCTION SERVICES PTY LTD ENTERPRISE AGREEMENT 2023

Application for an order relating to instruments covering new employer and non-transferring employees to be employed by McMahon Services Australia Pty Ltd

• [1] McMahon Services Australia Pty Ltd (McMahon) has made an application pursuant to s.319(1)(b) of the Fair Work Act 2009 (Act) for an order that the Ballestrin Construction Services Pty Ltd Enterprise Agreement 2023 (Agreement) covers it and any non-transferring employees who perform the work contained within the classification structure of the Agreement.

• [2] The employer party to the Agreement is Ballestrin Construction Services Pty Ltd (Ballestrin) which is a wholly owned subsidiary of McMahon and is therefore an associated entity for present purposes. The Agreement was approved by the Commission in April 2024 and has a nominal expiry date of 5 April 2028. It presently applies to around 25 employees who undertake construction and remedial services under the terms of the Agreement. There is no employee organisation covered by the Agreement.

• [3] The further background to the application is that the present employees will have their employment transferred from Ballestrin to McMahon commencing on 1 July 2025. The employees will be performing the same or substantially the same work they perform for Ballestrin, but in the 'Ballestrin Business Unit' of McMahon.

• [4] In the lead up to making the application, McMahon has consulted with the directly impacted employees and sought their views about the transfer to the new employer, the intended continued coverage of the Agreement and the intention to make this application to ensure that all employees, including those who would be employed after the transfer date (non-transferring employees) would also be covered. The Commission has been provided with the details of the consultation and the written consent of the employees.

• [5] The application is supported by an Affidavit from James Rolston, Operations Manager for Ballestrin.

• [6] Prior to the hearing, I issued directions that had the effect that all of the directly impacted employees could make direct submissions to the Commission and/or express any concerns with the application. No concerns or objections have been raised.

• [7] I have determined to grant the application and issue the Order as sought. My reasons for doing so are briefly set out hereunder.

• [8] Section 311 of the Act sets out the circumstances in which a transfer of business occurs. It states:

"S.311 When does a transfer of business occur

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)."

• [9] Section 311(4) of the Act, provides the relevant connection between Ballestrin and McMahon and the other requirements will apply as of 1 July 2025.

• [10] Section 312 of the Act also indicates that a "transferable instrument" includes "an enterprise agreement that has been approved by the FWC". The Agreement will be a transferable instrument.

• [11] Section 313 of the Act provides that "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".

• [12] I am satisfied that there will be a transfer of business and that the employees of Ballestrin will transfer to McMahon under the terms of the Act. I am also satisfied that the Agreement is a transferable instrument and that it will cover McMahon and the transferring employees.

• [13] 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)."

• [14] In this case, McMahon correctly contends that there is a modern award that would apply to the non-transferring employees; being the Building and Construction General Onsite Award 2020 (Award). Given the coverage of that modern award, s.314(1) will not operate to have the Agreement cover the non-transferring employees.

• [15] 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.

Consideration of the s.319 application

• [16] Section 319 of the Act states:

(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;

• [17] McMahon is entitled to bring the application as the person who is likely to be the new employer. That application relies upon the terms of s.319(1)(b) of the Act to, in effect, extend the coverage of the Agreement to the non-transferring employees.

• [18] 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)

• [19] McMahon as the applicant and the new employer seeks that the Order that it proposes should be made. McMahon is seeking to ensure that all of the employees in the relevant business unit are all covered by the existing Agreement.

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

• [20] The transferring employees support the application. It is not possible to obtain the views of the non-transferring employees who will be affected by the proposed Order because there are presently no non-transferring employees employed by McMahon.

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

• [21] I am satisfied that the employees would not be disadvantaged in relation to their terms and conditions of employment by the making of the proposed Order. The Agreement was recently approved by the Commission and contains a number of terms and conditions of employment that are substantially more generous than those provided by the Award.

Expiry date of the agreement - s.319(3)(c)

• [22] The nominal expiry date of the Agreement is 5 April 2028. It has a long nominal term to run, and this supports the making of the proposed Order.

Negative impact on Productivity - s.319(3)(d)

• [23] 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.

Economic disadvantage - s.319(3)(e)

• [24] The Agreement's coverage of non-transferring employees will not cause any significant economic disadvantage. The proposed transfer and the proposed Order will have the effect of reducing administrative and compliance costs and McMahon has submitted that this will offset any additional costs associated with employee remuneration.

Degree of business synergy - s.319(3)(f)

• [25] "Business synergy" may have wide connotations in the present context. If the 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. This is likely to enhance the degree of synergy that exists within the acquired business unit.

Public interest - s.319(3)(g)

• [26] The public interest in this context is influenced by the objects of this Part of the Act in s.309 and those adopted by the Act more broadly. There are no issues of public interest in this matter that would militate against the orders sought being made. Indeed, for reasons outlined earlier, having the Agreement continue to operate with certainty for all employees in the context in which it was agreed is consistent with those objects.

• [27] 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 the form discussed with the parties during the hearing.

• [28] In accordance with s.319(4) of the Act, the Order will not come into operation in relation to each non-transferring employee until the later of the following:

• 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.

• [29] The Order[1] is issued in conjunction with this decision.

T Earls, of Fair Work Lawyers, with permission, with J Rolston for McMahon Services Australia Pty Ltd.

[1] AE524102 PR787452.

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