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

Application for orders relating to transferable instrument.

• [1] The Spotlight Retail Group acquired Harris Scarfe Pty Ltd (Harris Scarfe) in 2020; consequently, Harris Scarfe and Spotlight Pty Ltd (Spotlight or the Applicant) have common ownership and are associated entities within the meaning of the Corporations Act 2001 (Cth). The Applicant and Harris Scarfe operate a chain of retail stores. In addition, Harris Scarfe has a distribution centre in Sunshine employing 20 employees and Spotlight operates two distribution centres employing 96 employees on Boundary Road in Laverton North, all in Victoria. Harris Scarfe is not renewing their lease which is set to expire on 30 June 2025 and has determined that its distribution centre requirements are to be carried out by the Applicant's distribution centres.

• [2] The twenty employees who work at the Harris Scarfe's Sunshine distribution centre (Transferring Employees) have been offered and accepted employment at Spotlight's distribution centres in Laverton North. The Harris Scarfe Distribution Centre Agreement 2011[1] (the Harris Scarfe Agreement) covers and applies to the employment of the twenty Transferring Employees. The Harris Scarfe Agreement nominal expiry date was 30 October 2014.

• [3] Spotlight filed an application in the Fair Work Commission pursuant to s.318 of the Fair Work Act 2009 (Cth) (the Act) seeking an order that the Harris Scarfe Agreement will not cover it in relation to any of the Transferring Employees and to that effect the Spotlight Distribution Centre Enterprise Agreement 2024[2] (the Spotlight Agreement) will cover the transferring employees in place of the Harris Scarfe Agreement.

• [4] The application was accompanied by a witness statement made by Steve Harrison, Head of Logistics at Spotlight Pty Ltd. Accompanying the application is correspondence provided to the Transferring Employees advising of the decision not to renew the lease and their option to accept an offer to transfer employment to Spotlight or take a redundancy. In addition, copies of further correspondence providing better particulars concerning the terms and conditions of the offer of employment together with the Transferring Employees confirmation of acceptance of employment and support for this application. An email from the Shop, Distributive and Allied Employees Association (SDA) sent to my Chambers on 8 May 2025 confirmed the SDA did not object to the application. Accordingly, in these circumstances I have determined the matter on the papers without the need for a hearing.

• [5] Section 318 of the Act sets out the circumstances in which an Order may be made by the Commission, s.318 provides as follows:

"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) FWA may make the order only on application by any of the following:

(c) the new employer or a person who is likely to be the new employer;

(d) a transferring employee, or an employee who is likely to be a transferring employee;

(e) if the application relates to an enterprise agreement - an employee organisation that is, or is likely to be, covered by the agreement;

(f) 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, FWA 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;

• [6] It is not in dispute that the Commission has jurisdiction to make the order sought as there is likely to be a transfer of business from an old employer to a new employer in accordance with s.317 of the Act and within the meaning of Part 2-8 of the Act.

• [7] On the material before me, I am satisfied there will be a transfer of business from Harris Scarfe (the old employer) to Spotlight (the new employer) within the meaning of s.311(1) of the Act. This is because:

1. the Transferring Employees employment with Harris Scarfe will terminate (s.311(1)(a);
2. within 3 months of the termination of employment the Transferring Employees will commence employment with Spotlight per s.311(1)(b), specifically this will be on a phased basis commencing from 1 May 2025 but before the lease for the Harris Scarfe distribution centre expires of 30 June 2025;
3. the work (the transferring work) the transferring employees will perform for Spotlight is the same, or substantially the same, as the work the employees performed for Harris Scarfe (s.311(1)(c); and
4. there is the requisite connection of the type described in ss.311(4) and (6) between Spotlight and Harris Scarfe because they are both part of part of the Spotlight Retail Group. Spotlight and Harris Scarfe have common ownership and are 'associated entities' within the meaning of the Corporations Act 2001 (Cth), and Harris Scarfe in ceasing the distribution work is outsourcing the transferring work to Spotlight.

• [8] When the transfer of business described above occurs, each of the Transferring Employees will be a transferring employee in relation to the transfer of business within the meaning of s.311(2) of the Act. Further, the Harris Scarfe Agreement is a transferrable instrument within the meaning of s.312(1)(a) of the Act that would, or would likely, cover Spotlight and the Transferring Employees in relation to transferrable work when the Transferring Employees become employed by Spotlight because of s.313(1)(a).

• [9] I will now consider each of the matters set out in s.318(3) of the Act that the Commission must have regard to in determining if orders should be granted.

Section 318(3)(a) - the views of the new employer and the employees who would be affected by the order

• [10] Harris Scarfe met with its employees on 6 March 2025 to advise of its decision not to renew its lease of the distribution centre which is due to expire on 30 June 2025. At the same meeting and subsequently in writing on the same day, employees were informed that the work of the transferring employees will transfer to the Spotlight distribution centres and staff will be offered employment with no change to their wage rate or to key duties.

• [11] On 12 March 2025, Spotlight issued a letter to transferring employees offering employment in its distribution centres in Laverton North. In the same letter the employees were informed that Spotlight intended to make this application to avoid having two enterprise agreements covering the same work in the one establishment. On their acceptance of employment, they would transfer from the Harris Scarfe to the Spotlight Agreement. Employees were informed of the difference between the two Agreements, and they were invited to a further meeting that day where a copy of the Spotlight Agreement with supplementary information was provided and they could ask questions.

• [12] A further meeting took place with the employees on 25 March 2025 where they were handed written letters of offer of employment. Employees were informed that their rates of pay, and key duties would not be altered and their employment would be treated as continuous.

• [13] All employees signed the letters of offer and the support for Spotlight to make this application by 4 April 2025. The consultation process was confirmed with the documentation attached to Mr Steve Harrison's witness statement. I observe that a copy of each of the letters to the 20 Transferring Employees on 6, 12 and 25 March 2025 was submitted and the 25 March letter contains the signatures from each employee accepting both the offer of employment and transfer of Agreement.

• [14] The views of the new employer and of the Transferring Employees indicate clear agreement to transfer employment from Harris Scarfe to Spotlight and to transfer from the Harris Scarfe Agreement to the Spotlight Agreement on commencement of employment. I am satisfied that the correspondence was clear and unambiguous. I am satisfied that both the new employer and the 20 Transferring Employees support this application and effect of the Order.

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

• [15] Spotlight provided to employees a comparison of the Harris Scarfe and Spotlight Agreements which demonstrates the difference in key conditions. While the Harris Scarfe has some better conditions, the Spotlight Agreement overall is more beneficial. Further I observe that Spotlight had confirmed in writing to employees that their employment will be continuous, that the current pay rates will not change on commencement of employment and despite their ineligibility, the cost of living bonus under the Spotlight Agreement will be paid.

• [16] I am satisfied that the Transferring Employees will not be disadvantaged by the Order.

Section 318(3)(c) - the nominal expiry date of the agreement

• [17] The Harris Scarfe Agreement nominally expired on 30 October 2014. The Spotlight Agreement was recently approved and has a nominal expiry date of 31 August 2027. I accept the Applicant's submissions that this weighs in favour of granting the orders sought as the Harris Scarfe Agreement is relatively outdated and not reflective of modern requirements. In comparison, Spotlight's nominal expiry date provides greater certainty to Transferring Employees regarding their terms and conditions of employment going forward. I therefore find this a favourable consideration.

Section 318(3)(d) - whether the transferable instrument would have a negative impact

on the productivity of the new employer's workplace

• [18] I accept that maintenance of the transferable instrument would have a negative impact due to the requirement to operate two separate payroll systems for rostering and payroll, further to the additional costs in resourcing the set up and maintenance of the systems. I also accept the submissions of the Applicant that maintaining two separate Agreements for employees performing the same type of work would give rise to concerns of equity and fairness between employees and has the potential to affect the culture and productivity of the workplace. These negative impacts are reasonable concerns which weigh in favour of the Order.

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

• [19] Spotlight has not identified significant economic disadvantage but has identified the additional cost in setting up and administering two separate systems for payroll and rostering. I accept these submissions from the Applicant.

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

• [20] There is synergy between the predominant activity of the distribution centres, but the numerous differences in the Agreements show that the transferable instrument lacks synergy with the business that applies the Spotlight distribution Agreement. It is reasonable to consider that these differences sway in favour of granting the Order.

Section 318(3)(g) - public interest

• [21] Spotlight submit that making the orders is consistent with the objects of Part 2-8 of the Act addressing balance between the protection of employee terms and conditions under an enterprise agreement with the interest of the Applicant in efficiently running its business.[3]

• [22] I am satisfied that the substance of the Application is consistent with the objects of Part 2-8 and application of the Spotlight Agreement rather than the transferring instrument will benefit the transferring employees and the employer. The application of the Spotlight Agreement for all employees and the employer in the workplace is in the public interest.

• [23] I have taken into account the application and accompanying material provided by the Applicant in support of its application and the matters set out in s.318(3) of the Act. I am satisfied the materials provided by the Applicant, when considered against the matters set out in s.318(3) of the Act, support the making of the order. The support by the Transferring Employees and the submission of the SDA are relevant to my consideration of this Application.

• [24] I am satisfied that the requirements of s.318 of the Act have been met and an Order giving effect to this decision is issued separately in PR787534.

[3] S.309 of the Fair Work Act 2009.

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