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

Royal Automobile Association of South Australia Limited

RAA Automotive and Technical Grades Agreement 2024

Applications for an order relating to instruments covering new employer and non-transferring employees to be employed by Royal Automobile Association of South Australia Limited.

• [1] The Royal Automobile Association of South Australia Limited (RAA Ltd) has made two applications pursuant to s.319(1)(b) of the Fair Work Act 2009 (Act) for orders that the RAA Roadside Assistance Centre Agreement 2024 (Roadside Assistance Centre Agreement) and RAA Automotive and Technical Grades Agreement 2024 (Automotive and Technical Agreement), collectively the Agreements, cover it and any non-transferring employees who perform the work contained within the scope and coverage of the Agreements.

• [2] The employer party to the Agreements is the Royal Automobile Association of South Australia Incorporated (RAA Inc). RAA Ltd is a successor business to RAA Inc. The background to this is as follows:

• At its 2024 Annual General Meeting, the members of RAA Inc resolved to change its legal status to fall under the Corporations Act 2001 (Cth) and become a Company Limited by Guarantee.

• RAA Ltd was registered on 15 May 2024. RAA Inc was dissolved with effect on 1 July 2025, with RAA Inc's property, rights and liabilities transferring to RAA Ltd on that date.

• RAA Ltd now owns the tangible and intangible assets of RAA Inc and all work of RAA Inc has transferred to RAA Ltd.

• [3] The Roadside Assistance Centre Agreement was approved by the Commission in January 2024 and has a nominal expiry date of 16 January 2027. It is presently expressed to cover employees of RAA Inc who undertake roadside assistance and dispatch work, under the terms of that Agreement. The Australian Municipal, Administrative, Clerical and Services Union (ASU) is also covered by the Roadside Assistance Centre Agreement.

• [4] The Automotive and Technical Agreement was approved by the Commission in September 2024 and has a nominal expiry date of 13 September 2027. It is presently expressed to cover RAA Inc and its employees who undertake mechanical, roadside service and inspection services under the terms of that instrument. The "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) is also covered by the Automative and Technical Agreement.

• [5] The further background to the application is that the present employees have had their employment 'transferred' from RAA Inc to RAA Ltd with effect from 1 July 2025. The employees continue to perform the same or substantially the same work they performed with RAA Inc.

• [6] In the lead up to making the applications, RAA Ltd has consulted with the employees directly impacted by the proposed transfer and confirmed the continuity of their employment, service and agreement provisions. For obvious reasons, this did not include those who would be employed after the transfer date (non-transferring employees).

• [7] Prior to the hearing of these matters, I issued directions that had the effect that all of the transferring employees, and the ASU and AMWU, could make direct submissions to the Commission and/or express any concerns with the application. No concerns or objections have been raised. Indeed, the ASU and AMWU have confirmed their support for the applications and did not seek to be further heard.

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

• [9] 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)."

• [10] Sections 311(1)(a), (b) and (c) are met in these matters.

• [11] Section 311(3) of the Act provides the relevant connection between RAA Inc and RAA Ltd.

• [12] Section 312 of the Act also indicates that a "transferable instrument" includes "an enterprise agreement that has been approved by the FWC". The Agreements are transferable instruments.

• [13] 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".

• [14] Accordingly, I am satisfied that there has been a transfer of business and that the employees of RAA Inc have transferred to RAA Ltd under the terms of the Act. I am also satisfied that the Agreements are transferable instruments that now cover RAA Ltd and the transferring employees.

• [15] 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)."

• [16] In this case, RAA Ltd correctly contends that there are modern awards that would apply to the non-transferring employees; being the Clerks Private Sector Award 2020 and the Vehicle Repair, Services and Retail Award 2020 (Awards). Given the coverage of those modern awards, s.314(1) will not operate to have the Agreements cover the non-transferring employees.

• [17] However, as indicated, the provisions contained in s.314 are subject to s.319 of the Act, which allows the Commission to make an Order that a transferring instrument covers non-transferring employees. This is the purpose of these present applications.

Consideration of the s.319 applications

• [18] 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;

• [19] RAA Ltd is entitled to bring the applications as the new employer. These applications rely upon the terms of s.319(1)(b) of the Act to, in effect, extend the coverage of the Agreements to the non-transferring employees.

• [20] In dealing with the applications, 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)

• [21] RAA Ltd as the applicant and the new employer seeks that the Orders be made. In so doing, RAA Ltd is seeking to ensure that all of the relevant employees in its business are covered by the existing Agreements.

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

• [22] The transferring employees support or at least do not oppose the applications. It is not possible to obtain the views of the non-transferring employees who will be affected by the proposed Orders because there are presently no non-transferring employees employed by RAA Ltd.

• [23] As stated earlier, the applications are supported by the ASU and AMWU.

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

• [24] 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 Orders. The Agreements were relatively recently approved by the Commission applying the better off overall test of s.193 of the Act, and contain many terms and conditions of employment that are more generous than those provided by the relevant Awards.

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

• [25] The nominal expiry date of the Agreements are 16 January 2027 and 13 September 2027 respectively. They have a long nominal term to run, and this supports the making of the proposed Orders.

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

• [26] I am satisfied that there will be no negative impact on productivity if the Orders are made. In contrast, if the Orders are not made and transferring and non-transferring employees are on different terms and conditions of employment when performing the same work, this may have a negative impact on team engagement, and in turn upon administrative and operational efficiency.

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

• [27] The Agreements' coverage of non-transferring employees will not cause any significant economic disadvantage. The transfer and the proposed Orders will have the effect of reducing administrative and compliance costs, and this is likely to offset some or all of the additional costs associated with employee remuneration for the non-transferring employees involved in each case.

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

• [28] "Business synergy" may have wide connotations in the present context. If the Orders are granted it will confirm a single framework of regulation for each workgroup that has been negotiated, and approved in the context in which they have and will continue to apply. This is likely to enhance the degree of synergy that exists within the transferred operational areas.

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

• [29] 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 Agreements continue to operate with certainty for all relevant employees in the context in which they were agreed is consistent with those objects.

• [30] Having considered each of the matters in s.319(3) of the Act, I am satisfied that it is appropriate for the Orders to be made in each case in the form discussed with the parties during the hearing.

• [31] In accordance with s.319(4) of the Act, the Order in each case 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.

• [32] The Orders[1] are issued in conjunction with this decision.

C Victory, for Royal Automobile Association of South Australia Limited.

[1] PR789039 and PR789040.

Printed by authority of the Commonwealth Government Printer