s.320 - Application to vary a transferable instrument - agreement

Veolia Environmental Services (Australia) Pty Ltd trading as Veolia

Orontide Group Limited Enterprise Agreement 2021

s.320 - Application to vary a transferable instrument - enterprise agreement to remove ambiguity about coverage in new employer's business - variation made.

• [1] Veolia Environmental Services (Australia) Pty Ltd trading as Veolia (Veolia or Applicant) has applied to the Fair Work Commission under s.320 of the Fair Work Act 2009 (Cth) (Act) to vary the Orontide Group Limited Enterprise Agreement 2021 (Agreement). The Agreement was approved by the Commission in October 2021.[1]

• [2] The Agreement presently covers Orontide Group Limited, Orontide Wovodich Pty Ltd, Orontide Madco Pty Ltd, Orontide Alphablast Pty Ltd and Orontide Robil Pty Ltd (collectively the Orontide companies) and their employees who are engaged in the employment classifications set out in Schedule 1 of that instrument. The Orontide companies are providers of mechanical (engineering and fabrication) services at three locations in Western Australia. This business is of a different nature than any of the present activities of Veolia.

• [3] The background to the application according to materials now before the Commission is that Veolia has acquired the Orontide business and companies through an asset sale. This included the transfer of all Orontide employees to Veolia, effective from 1 May 2025. Further, while the business has been acquired as an asset, "Veolia did not acquire Orontide's ABN, and the Orontide business entity will be closed at a later date." Veolia intend to conduct the Orontide business as a separate business unit.

• [4] The effect of the proposed variations to the Agreement would be to replace references to "Orontide Group Limited (ABN 40 115 288 492)" with "Veolia Environmental Services Pty Ltd (20 051 316 584)" in clause 2 and clause 3.1.

• [5] Following the hearing conducted in this matter, Veolia has sought to amend the proposed variation to confirm that the coverage of the Agreement is to be confined to employees engaged within its classifications who work in the business unit formed with the transfer of the Orontide companies. I have granted leave to amend the application accordingly.

• [6] Veolia is lodging this application in its capacity as the new employer for all employees who were previously employed by the Orontide companies and have now transferred to Veolia (transferring employees).

• [7] Prior to the hearing conducted in this matter, the Commission issued directions requiring that the application and notice of listing be made available to the transferring employees. The directions also provided these employees with an opportunity to express any concerns with the application directly to the Commission. No concerns have been raised and no party other than Veolia has sought to be heard.

• [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] Subsection 311(3) contemplates a connection between two organisations in the circumstances that have occurred here. I also find that the other relevant requirements of s.311 are met. There is a transfer of business for present purposes.

• [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 has been approved by the Commission.

• [11] Section 313(1) 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 was a transfer of business and that the relevant employees of Orontide have or will transfer to Veolia under the terms of the Act. I am also satisfied that the Agreement is a transferable instrument, and now covers Veolia and the transferring employees.

• [13] This application seeks that the variations be made under s.320 of the Act which provides as follows:

(1) This section applies in relation to a transferable instrument that covers, or is likely to cover, the new employer because of a provision of this Part.

(2) The FWC may vary the transferable instrument:

(a) to remove terms that the FWC is satisfied are not, or will not be, capable of meaningful operation because of the transfer of business to the new employer; or

(b) to remove an ambiguity or uncertainty about how a term of the instrument operates if:

(i) the ambiguity or uncertainty has arisen, or will arise, because of the transfer of business to the new employer; and

(ii) the FWC is satisfied that the variation will remove the ambiguity or uncertainty; or

(c) to enable the transferable instrument to operate in a way that is better aligned to the working arrangements of the new employer's enterprise.

(3) The FWC may make the variation only on application by:

(a) a person who is, or is likely to be, covered by the transferable instrument; or

(b) if the application is to vary a named employer award--an employee organisation that is entitled to represent the industrial interests of an employee who is, or is likely to be, covered by the named employer award.

(4) In deciding whether to make the variation, the FWC must take into account the following:

(a) the views of:

(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 transferable instrument as varied;

(b) whether any employees would be disadvantaged by the transferable instrument as varied in relation to their terms and conditions of employment;

(c) if the transferable instrument is an enterprise agreement--the nominal expiry date of the agreement;

(d) whether the transferable instrument, without the variation, 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, without the variation;

(f) the degree of business synergy between the transferable instrument, without the variation, and any workplace instrument that already covers the new employer;

(g) the public interest.

Restriction on when variation may come into operation

(5) A variation of a transferable instrument under subsection (2) must not come into operation before the later of the following:

(a) the time when the transferable instrument starts to cover the new employer;

(b) the day on which the variation is made."

• [14] The application is brought on the grounds that the transferable instrument (the Agreement) has created an ambiguity and uncertainty because there is an uncertain scope of the Agreement when considered in the context of the Veolia business as a whole. This arises because Veolia already has a series of enterprise agreements that do not contemplate the form of work and classifications undertaken with the Agreement. However, the Agreement's scope presently only refers to a series of relatively generic classifications.

• [15] Given the findings above, this application is largely to confirm what has already been provided by direct operation of the Act itself. However, I am satisfied that there is an uncertainty created because the scope of operation of the Agreement within the Veolia business is not clear.

• [16] I am satisfied that the amended application should be granted. In so finding I have considered the various considerations established under s.320(4) of the Act. I briefly set out my findings below.

• [17] Veolia as the applicant and the new employer has made the application and seeks that the variation that it proposes be made. In so doing it seeks to remove the ambiguity and uncertainty and ensure that the Agreement continues to apply to the intended employees and not otherwise.

The views of the employees who would be affected by the transferable instrument as varied

• [18] The transferring employees support or alternatively are not opposed to the application. There are presently no non-transferring employees whose views could be ascertained.

Whether any employees would be disadvantaged by the transferable instrument as varied in relation to their terms and conditions of employment

• [19] The Agreement has been approved by the Commission in the same context in which it has been and will continue to operate with the certainty of the proposed orders. That approval included the Commission's satisfaction that the Agreement met the better off overall test of s.193 of the Act.

• [20] There are numerous aspects of the Agreement which are more beneficial than the relevant modern award and I am also satisfied that the overall impact of the coverage of the Agreement for the employees concerned is positive.

• [21] The nominal expiry date of the agreement is 27 October 2025. Although this means that the Agreement only has a relatively short period before it nominally expires and would then be open for negotiation, it is important that in that period it operates with certainty inside of the Veolia business. In the normal course, the Agreement will also operate beyond its nominal life unless and until it is replaced or terminated. Further, it is also important that its coverage operates on a sound footing to ensure that the group of employees who would be involved in any renegotiation are clearly identifiable.

Whether the transferable instrument, without the variation, would have a negative impact on the productivity of the new employer's workplace

• [22] It is unlikely that the Agreement without the variation would have a negative impact upon the productivity of Veolia's workplace and nothing has been contended in this regard.

Whether the new employer would incur significant economic disadvantage as a result of the transferable instrument, without the variation

• [23] It is unlikely that the Agreement without the variation would lead to significant economic disadvantage to Veolia and nothing has been contended in this regard.

The degree of business synergy between the transferable instrument, without the variation, and any workplace instrument that already covers the new employer

• [24] "Business synergy" may have wide connotations in the present context. This would include a consideration of the impact of the unvaried Agreement and how consistent this is with the business activities and operations of Veolia. It is likely that Veolia could conduct its business without the variation, however, this is not the test and given the circumstances of this matter, this consideration does not suggest that the orders should not be made. If the orders are granted it will confirm a single framework of regulation that has been negotiated and approved by the Commission in the same context in which it was negotiated and has applied and will continue to apply. It will also ensure that the other enterprise agreements that have also been negotiated and approved in other contexts are not disturbed.

• [25] 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 in the context in which it was agreed is consistent with those objects.

• [26] Having considered each of the matters in s.320(4) of the Act, I am satisfied that it is appropriate for the variation to be made as sought in the amended application.

• [27] In accordance with s.320(5) of the Act, the orders will not come into operation in relation to each transferring employee until the later of the following:

• the time when the transferring instrument starts to cover the new employer (Veolia); or
• the day on which the variation is made - 30 May 2025.

• [28] The Orders[2] confirming the variation are issued in conjunction with this decision.

C Knott with J Micallef for Veolia Environmental Services (Australia) Pty Ltd trading as Veolia.

[1] [2021] FWCA 6445.

[2]AE513671 PR787436.

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