3rd Party Containers Pty Ltd [2024] FWC 1659

1 Fair Work Act 2009 s.319—Enterprise agreement 3rd Party Containers Pty Ltd (AG2024/2286) Storage services DEPUTY PRESIDENT CLANCY MELBOURNE, 27 JUNE 2024 Application for an order relating to instruments covering new employer and non-transferring employees. [1] 3rd Party Containers Pty Ltd (the Applicant) has made an application to the Fair Work Commission (the Commission) pursuant to s.319 of the Fair Work Act 2009 (the Act) for an order in relation to a transfer of business. [2] The Applicant seeks an Order for the Optimised People Projects Enterprise Agreement 2023 (the Agreement)1 to cover the Applicant and any non-transferring employees who perform, or are likely to perform, transferring work as employees of the Applicant and are employed in roles that fall within the classifications under the Agreement. [3] If the Order sought is not granted, new non-transferring employees, who are subsequently engaged by the Applicant in roles within classifications in the Agreement, will otherwise be covered by the Storage Services and Wholesale Award 2020 (the Award). [4] There are no employee organisations covered by the Agreement. The relevant legislation [5] Part 2-8 of Chapter 2 of the Act describes when a transfer of business occurs and s.312(1) of the Act provides for the transfer of enterprise agreements, certain modern awards and certain other instruments if there is a transfer of business from one employer to another employer. [6] Section 311 of the Act relevantly provides: “311 When does a transfer of business occur Meanings of transfer of business, old employer, new employer and transferring work [2024] FWC 1659 DECISION -- 1 of 10 -- [2024] FWC 1659 2 (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). Meaning of transferring employee (2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business. Transfer of assets from old employer to new employer (3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between: (a) the old employer or an associated entity of the old employer; and (b) the new employer or an associated entity of the new employer; the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible): (c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and (d) that relate to, or are used in connection with, the transferring work. … (6) There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employed by the new employer.” [7] Sections 317 and 319 of the Act relevantly provide: “317 FWC may make orders in relation to a transfer of business -- 2 of 10 -- [2024] FWC 1659 3 This Division provides for the FWC to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer. … 319 Orders relating to instruments covering new employer and non-transferring employees Orders that the FWC may make (1) The FWC may make the following orders: (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. Who may apply for an order (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). Matters that the FWC must take into account -- 3 of 10 -- [2024] FWC 1659 4 (3) In deciding whether to make the order, 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 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; (g) the public interest. 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; (b) the day on which the order is made.” Background [8] The Applicant is a specialist container management company which offers a range of services, including the supply of labour to support third party businesses with their container management needs. This labour is supplied through Optimised People Projects Pty Ltd (OPP). [9] The Applicant and OPP are part of the same corporate group (the Group) and are wholly owned subsidiaries of 3rd Party Holdings Pty Ltd. The majority of OPP employees are covered by the Agreement, which has a nominal expiry date of 5 December 2027. -- 4 of 10 -- [2024] FWC 1659 5 Transfer of business [10] The Group is consolidating its business structure. As part of this consolidation, it is intended (pursuant to a deed of transfer) that the Applicant will directly employ all current OPP employees (Transferring Employees). Relevantly, the Applicant has made offers of employment to all OPP employees on the same terms and conditions as their existing employment and which recognises their prior service for all purposes. Those offers are effective from 1 July 2024 (Transfer Date). [11] From the Transfer Date, the Applicant also intends to commence hiring new non- transferring employees in various roles to perform the same work, or substantially the same work, as that which is currently performed by the Transferring Employees. [12] I am satisfied that there there will be a transfer of business from OPP to the Applicant and that the Applicant is a “new employer” pursuant to s.311(1) of the Act, having regard to the material before me, because: • The employment of the transferring employees with OPP is set to terminate by 30 June 2024 (s.311(1)(a)); • The transferring employees will become employed by the Applicant from 1 July 2024 (i.e. within three months after the termination (s.311(1)(b)); • The work the transferring employees are performing for the Applicant will be the same, or substantially the same, as the work they performed for OPP (s.311(1)(c)); and • There being a connection between OPP and the Applicant (s.311(1)(d)), as described in s.311(6), in that the Applicant is an associate entity of OPP when the transferring employees will become employed by the Applicant. [13] As I am satisfied that the Applicant will be a “new employer”, as defined pursuant to s.311(1) of the Act, it may apply to the Commission under s.319 of the Act for orders relating to a transferable instrument. Transferable instrument [14] As it is an enterprise agreement that was approved by the Commission on 6 December 2023, the Agreement is a transferable instrument pursuant to s.312(1)(a) of the Act. [15] Section 313 of the Act provides that the Agreement covers the Applicant and the transferring employees, subject to any order of the Commission under s.318(1) of the Act. [16] Section 314 of the Act provides that a transferable instrument covers the Applicant and any non-transferring employees who would not be otherwise covered by another enterprise agreement or award, subject to any order of the Commission under s.319(1) of the Act. In this matter, the Applicant has advised that it has no current non-transferring employees, but that the -- 5 of 10 -- [2024] FWC 1659 6 Applicant intends to commence hiring new non-transferring who, without orders being made under s.319, would be covered by the Award, thus not satisfying s.314(1)(d) of the Act. Who may apply for an order? [17] The application has been made by 3rd Party Containers Pty Ltd, the new employer. This meets the requirements of s.319(2) of the Act. [18] The Applicant seeks an Order that the Agreement covers it and any non-transferring employees pursuant to s.319(1)(b) of the Act. Matters that the FWC must take into account – Section 319(3) Section 319(3)(a) the views of the new employer or a person who is likely to be the new employer and the employees who would be affected by the order [19] The Applicant, the new employer, has made the application under s.319 of the Act and supports the making of the Order. [20] There are no current non-transferring employees from whom I can receive views in considering the application. [21] The continuing application of the Agreement to the Applicant and the Applicant's employees will ensure that operations are standardised. The Applicant submits that the application of the Agreement to new non-transferring employees will: a) give effect to its desire to ensure that all of its storeworker/wholesale employees are covered by a common set of terms and conditions of employment; b) ensure that the non-transferring employees can access the more beneficial conditions available under the Agreement. Moreover, the Applicant considers that the higher rates (including the opportunity to earn piecework rates) under the Agreement provides an advantage in attracting and retaining employees; c) remove inefficiencies and decrease the administrative burden associated with applying the terms of two different industrial instruments for employees performing the same sort of work side-by-side. It will also allow better integration across the business generally and promote industrial harmony. [22] The Applicant further submits that if the Order is not made and non-transferring employees are left on less beneficial terms and conditions of employment, this may have a negative impact on worker engagement and workplace productivity. Therefore, it is proffered that the making of the Order may help to minimise any actual or perceived inequity that results from inconsistent terms and conditions of employment applying to employees who undertake the same work side-by-side. [23] The Applicant also submits that the transferring employees agree to the making of the Order sought. The Applicant submits that on 18 and 19 June 2024, a letter was sent (by email) -- 6 of 10 -- [2024] FWC 1659 7 to all the transferring employees regarding the company restructure and transfer of business. The Applicant informed the transferring employees that the Agreement would transfer with them to the new employer (being the Applicant). Information was also provided regarding the application that would be made with respect to non-transferring employees. Employees were invited to raise any queries or concerns. On 21 June 2024, the Applicant also held a Teams meeting where the transferring employees were again provided an opportunity to raise any questions or concerns with regards to the company restructure and application that would be made. Outlining that no issues have been raised by the transferring employees, the Applicant submits that this may be taken as an indication that the transferring employees are generally in support of the application. [24] Having regard to the matters raised in relation to s.319(3)(a), I have formed the view that they weigh in favour of granting the Order. Section 319(3)(b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment [25] The Applicant submits that neither the transferring employees nor non-transferring employees (of which there are currently none) will be disadvantaged by the Order sought. [26] The Applicant further submits that any employees it employs in the future will, in fact, be better off overall because the Agreement provides terms and conditions that are more beneficial than the Award, including: a) rates that are 10 cents higher than the Award equivalent (and which increase in line with any increase to the Award, e.g. this year the rates will increase by 3.75% and remain 10 cents higher than the Award equivalent); b) team leader allowances (for employees with leadership responsibilities); c) a piece rate payment system (that is safeguarded to ensure that employees receive at least what they would have been paid had they instead been paid in accordance with the minimum pay clause set out in the Agreement for that week of work); d) casual annual leave entitlements (for eligible employees); e) paid parental leave; and f) higher redundancy entitlements for employees with over 9 years’ service. [27] Having considered all the material before me, I am persuaded that the non-transferring employees will not be disadvantaged by the Order in relation to their terms and conditions of employment and therefore, this factor weighs in favour of granting the Order sought. -- 7 of 10 -- [2024] FWC 1659 8 Section 319(3)(c) if the order relates to an enterprise agreement—the nominal expiry date of the agreement [28] The nominal expiry date of the Agreement is 5 December 2027. I do not consider that this weighs against the granting of the Order sought. Section 319(3)(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace [29] The Applicant submits that the transferable instrument will not negatively impact on the productivity of the Applicant’s workplace. Conversely, if the Order is not made and transferring and non-transferring employees are left on different terms and conditions of employment, the Applicant considers that this may have productivity impacts including: a) the additional administrative burden involved in applying two different industrial instruments, as well as the need to manage a potential atmosphere of discontent among employees due to the differences between the two instruments (e.g. different minimum engagements for casual employees undertaking inductions, additional flexibilities for part-time employees that enable them to earn additional income, superannuation and accrue more leave, along with the other benefits identified at paragraph 26 above). The Applicant submits that its administrative and operational procedures would run more efficiently if only one industrial instrument applied; and b) non-transferring employees feeling unfairly remunerated. The Applicant submits that pay inequity amongst co-workers performing the same work at the same worksite could have a negative impact on the worker’s engagement which may (in turn) negatively impact on their productivity/output. [30] I am persuaded by these submissions and have formed the view that these factors weigh in favour of granting the Order. Section 319(3)(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer [31] The Applicant submits that it would not incur significant economic disadvantage as a result of the Agreement covering it, noting that the Applicant and OPP are part of a Group and are wholly owned subsidiaries of the same parent company. Moreover, the benefits derived from having a single instrument apply to transferring and non-transferring employees is likely to result in some economic advantage, including by removing operational inefficiencies and decreasing the administrative burden associated with applying the different instruments (with respect to employees performing the same sort of work). In addition, the Group’s consolidation will enable it to reduce its administrative costs and overheads, including with respect to expenses (e.g. insurance) and accountancy costs, and therefore the Applicant would likely derive an economic advantage. In short, the Applicant submits that any economic disadvantage that might arise as a result of the transferable instrument covering the Applicant (such as the higher pay rates) will be ameliorated by the making of the Order (in combination with the other benefits of consolidating). -- 8 of 10 -- [2024] FWC 1659 9 [32] I am persuaded by these submissions and have formed the view that these factors weigh in favour of granting the Order. Section 319(3)(f) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer [33] The Applicant submits that the Agreement builds on the Award, with many of the terms contained in the Agreement mirroring the terms in the Award, such that there is some synergy between the instruments. However, there are also several key differences (as noted above). The Applicant submits that affording it a single framework of regulation will enhance the degree of synergy that exists and will avoid circumstances where employees performing the same work have different terms and conditions of employment because of the application of the Agreement and the Award. [34] I consider this factor weighs in favour of granting the Order sought. Section 318(3)(g) the public interest [35] The Applicant contends that there are no public interest grounds weighing against the Order being made, and further, that it is generally in the public interest that a business efficiently operate without unnecessary complications in its employment arrangements. The Applicant submits that granting the Order would be consistent with the objects of the Act, in that it would balance the protection of employees’ terms and conditions of employment with the Applicant’s interests in running an efficient enterprise. [36] Given the circumstances and having regard to the material before me, I am satisfied that there are not any public interest reasons weighing against the making of the Order sought. Conclusion [37] Having considered each of the matters set out in s.319(3) of the Act, I am satisfied that the following order should be made, with effect according to the terms of s.319(4): • The Optimised People Projects Enterprise Agreement 2023 will cover non- transferring employees who perform, or are likely to perform, transferring work for 3rd Party Containers Pty Ltd, and are employed in roles that fall within the classifications under the Optimised People Projects Enterprise Agreement 2023. [38] An Order2 to this effect will be issued along with this decision. -- 9 of 10 -- [2024] FWC 1659 10 DEPUTY PRESIDENT Printed by authority of the Commonwealth Government Printer <AE522612 PR776374> 1 AE522612. 2 PR776458. -- 10 of 10 --