Fair Work Act 2009

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

Application for orders relating to instruments covering new employer and transferring employees under s 318 - Orders made.

• [1] VicGrid Body Corporate is a Victorian state-owned enterprise established by an order of the Governor Council in the State Owned Enterprises (VicGrid Body Corporate) Order 2025[1] under s 14(1) of the State Owned Enterprise Act 1992 (Vic). Paragraph 4 of the Order sets out the purpose of VicGrid, which is to

support the State of Victoria's strategic objectives for developing new energy transmission infrastructure and a smooth transition to renewable energy...

• [2] VicGrid is empowered to employ people[2] and its functions are to[3]

(a) undertake activities preparatory to, incidental to, or necessary for any future conferral of Victoria's Declared Network Functions on VicGrid Body Corporate, including:

(i) administering, making and negotiating conditional offers of employment or contracts with potential future employees, agents or contractors...

• [3] Victoria's Declared Network Functions is defined in the Order to mean[4]

the Australian Energy Market Operator's declared network functions under section 50C of the National Electricity Law (as applied in Victoria pursuant to section 6 of the National Electricity (Victoria) Act 2005, and which are declared to apply in Victoria).

• [4] As such, when relevant laws are passed, VicGrid will assume responsibility for the Declared Network Functions and the Australian Energy Market Operator (AEMO) will cease to undertake that role. VicGrid say that they will employ 21 current employees of AEMO who are covered by the AEMO Agreement, and 50 current employees of AEMO who are not covered by the AEMO Agreement. VicGrid will also employ about 130 current employees of the Department of Energy, Environment and Climate Action (DEECA) and over time, will employ additional and replacement employees who have not transferred from AEMO or DEECA.

• [5] VicGrid has applied under section 318 of the Fair Work Act 2009 (Cth) for orders that a transferable instrument that would, or would be likely to, cover a new employer and a transferring employee does not cover the new employer and a transferring employee. VicGrid is the new employer. The transferable instrument is the AEMO Enterprise Agreement 2024.[5] It was approved by Deputy President Millhouse on 13 June 2024 and began to operate on 20 June 2024. Its nominal expiry date is 30 June 2026.

• [6] VicGrid also sought an order that the VicGrid Enterprise Agreement 2025, which is an agreement that covers it, will cover the Transferring Employees. The VicGrid Agreement was approved by me on 20 August 2025 and will begin to operate on 1 November 2025.[6] Its nominal expiry date is 31 October 2027.

• [7] Together with its application dated14 July 2025, VicGrid filed detailed submissions, a draft order and witness statement of Ms Jasmine Doak, Executive Director - Organisational Performance for VicGrid.

• [8] Having considered all the factors in s 318, I am satisfied that it is appropriate to make the orders sought. My reasons follow.

• [9] VicGrid is the new employer or likely to be the new employer. It may make the application under s 318(2)(a). It supports the making of the orders.

318(3)(a) - Views of employees who would be affected by the order, including s 318(3)(b) - whether they would be disadvantaged by the order

• [10] I issued directions that required VicGrid to serve its application and my directions on all Transferring Employees. My directions allowed for Transferring Employees to provide their views confidentially to my Chambers only. I did not receive any views.

• [11] Ms Doak informed me that VicGrid has engaged and consulted with the Transferring Employees, including providing them with a document that compared their current entitlements under the AEMO Agreement and the proposed entitlements under the VicGrid Agreement. I was also provided with this comparison document. Ms Doak says that during the consultation process, VicGrid informed employees that it intended to make offers by no later than 21 August 2025. Transferring Employees' employment with AEMO would then end on 31 October 2025 and commence on 1 November 2025.

• [12] In general terms, the VicGrid Agreement provides employment conditions that are equivalent to the AEMO Agreement. There are some entitlements under the AEMO Agreement that are more favourable for employees, such as reimbursement for courses where study is approved as relevant to AEMO's needs. There are entitlements under the VicGrid Agreement that are more favourable for employees, such as higher pay, a greater range of allowances, guaranteed wage increases and better leave entitlements (Family Violence Leave and Volunteer, Community and Defence Force Service Leave). There are entitlements that, depending on an employee's years of service, are more beneficial under one or the other agreement (notice of termination). There are entitlements that are simply different and cannot be said to be more beneficial under one agreement than the other (rostering, and disciplinary and performance processes).

• [13] A key entitlement that is more beneficial to employees under the AEMO Agreement relates to redundancy. VicGrid have provided an undertaking to Transferring Employees that it will continue to apply Clause 16 - Redundancy of the AEMO Agreement to Transferring Employees. I have taken the undertaking into consideration in concluding that employees would not be disadvantaged in relation to their terms and conditions of employment by the orders sought. The undertaking is appended to this decision.

• [14] The AEMO Agreement covers the Australian Services Union (ASU) and the Association of Professional Engineers, Scientists and Managers, Australia (APESMA). My directions also required VicGrid to serve its application on the ASU and APESMA, and they were also provided with an opportunity to express their views. Both the ASU and APESMA expressed views relevant to this matter in their Forms F21 to the VicGrid Agreement approval matter. The ASU's views included that the terms and conditions of the VicGrid Agreement were comparable in overall terms to employees of AEMO who would transfer to VicGrid. APESMA raised a concern about the public interest, which I deal with below.

• [15] The VicGrid Agreement was made with and covers the Community and Public Sector Union (CPSU), who were also provided with an opportunity to express their views. The CPSU support the making of the order.

• [16] Having considered the above matters, I am satisfied that employees will not be disadvantaged by the making of the order and that these 2 factors weigh in favour of making the order.

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

• [17] The AEMO Agreement has a nominal expiry date of 30 June 2026; the VicGrid Agreement has a nominal expiry date of 31 October 2027. This factor neither weighs in favour nor against making the order.

318(3)(d) - Whether the transferable instrument will have a negative impact on productivity of the new employer's workplace

• [18] VicGrid submit that if the orders are not made, 2 agreements could apply to its workforce with differing entitlements, which could contribute to a divided workforce with cultural disparity. There may also be operational disruptions and risks. While this factor is necessarily speculative, I am persuaded by VicGrid's submissions and consider that this factor weighs in favour of making the order.

• [19] VicGrid submit that there would be significant costs if it is required to administer the AEMO Agreement in addition to the VicGrid Agreement. This includes a higher administrative burden in administering separate payroll and leave systems. Further, the AEMO Agreement contains a bonus framework that is incompatible with VicGrid's operations, including because the bonus would be inconsistent with the Victorian Government's Wages Policy. VicGrid further submit that it may not be able to configure a payroll system to apply the AEMO Agreement in time for its intended commencement of 1 November 2025, which could affect whether it does commence. Not being able to commence operations at the intended time would be a significant economic disadvantage. VicGrid also say that doing so would involve substantial cost, although it has not yet quantified that cost, but would, at a minimum, include the need to employ additional staff.

• [20] I accept VicGrid's submissions and consider that this factor weighs in favour of making the order.

• [21] I have outlined above some of the differences between the 2 agreements that may result in a lack of business synergy. VicGrid further submit that there would be a need for separate policies and procedures to address differing leave entitlements, and regarding performance improvement and disciplinary procedures. I accept VicGrid's submissions and consider that this factor weighs in favour of making the order.

• [22] VicGrid did not make any submissions in relation to the public interest.

• [23] In its Form F21 to the application for approval of the VicGrid Agreement, APESMA APESMA raised a concern about the public interest which appeared to relate more to this application. However, VicGrid submits that, while it intends to make offers of employment to AEMO's engineering employees (who are eligible to be members of APESMA), those employees are not Transferring Employees and so would not be affected by this order. Those employees are not Transferring Employees as the AEMO Agreement does not cover and apply to them.

• [24] The Full Bench's decision in GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 at [26]- [27] identifies that determining whether a matter raises the public interest is a discretionary value judgment, and that considering whether a matter raises issues of importance and general application may engage the public interest. I am not persuaded that there is any relevant public interest that relates to this application and consider that this factor neither weighs in favour nor against making the order.

• [25] I have considered each of the matters under s 318 and am satisfied that I should make the order sought. An order will issue separately.

[1] Victoria, Victorian Government Gazette, No. S 183, 15 April 2025

[5] [2024] FWCA 2178

[6] [2025] FWCA 2775

Printed by authority of the Commonwealth Government Printer