DECISION

Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees

Nestlé Australia Limited T/A Nestlé
(AG2019/2994)

Application for orders relating to instrument covering new employer and transferring employee.

[1] Nestlé Australia Limited T/A Nestlé (Nestlé) has made an application under s.318 of the Fair Work Act 2009 (Cth) (Act). The application is made in respect of the prospective employment of Mr Wilfredo Alforque.

[2] Mr Alforque is a maintenance electrician currently employed by Programmed Industrial Maintenance Pty Limited (Programmed). The Skilled Group Ltd Labour Hire ETU Collective Agreement 2015 – 2017 1 (Skilled Agreement) covers and applies to Mr Alforque in his employment with Programmed.

[3] Nestlé has made Mr Alforque an offer of employment, conditional upon the Fair Work Commission (Commission) making the order that is sought by this application. The order sought is that the Skilled Agreement does not, or will not, cover Nestlé and Mr Alforque upon his transfer to Nestlé from Programmed.

[4] For the reasons that follow, I am satisfied that the order should be made. 

Context

[5] The maintenance function at Nestlé’s Campbellfield site is presently performed by a mixture of Nestlé employees and labour hire workers employed by Programmed. 2 The Nestlé employees at this site are employed under the Nestlé Australia Limited Victorian Confectionery Agreement 2018-20213 (Nestlé Agreement). Nestlé has decided to insource maintenance work at the site. In addition to this application concerning Mr Alforque, a concurrent application has been made seeking similar orders concerning four maintenance fitters currently employed by Programmed.

[6] Nestlé submits that if Mr Alforque ceases employment with Programmed and commences employment with Nestlé within three months after the termination of his employment with Programmed, as proposed, there will be a transfer of business within the meaning of s.311(1) of the Act. This is because:

(1) the work that Mr Alforque will perform with Nestlé will be the same or similar to the work he is currently performing for Programmed; 4 and

(2) there is a connection between Programmed and Nestlé, on account of the insourcing of maintenance work from Programmed to Nestlé. 5

[7] The Commission has the power to make certain orders if there is or is likely to be a transfer of business. 6 Nestlé seeks an order under s.318(1) that the Skilled Agreement does not, or will not, cover Nestlé and Mr Alforque in his employment with Nestlé. It seeks that his employment be covered by the Nestlé Agreement.

[8] The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (ETU), being an employee organisation that is covered by the Skilled Agreement, or has the right to represent the industrial interests of Mr Alforque at the workplace has not expressed any view to the Commission in respect of the application. It is said by Ms Carolyn Gray, Human Resources Business Partner for Nestlé in her statutory declaration that the ETU supports the application. 7

Consideration

[9] It is not in dispute, and I am satisfied on the basis of the application and accompanying material, that the Commission has the power to make an order under s.318(1) of the Act. In the circumstances described, there is, or is likely to be a transfer of business from Programmed to Nestlé. The Skilled Agreement is a transferable instrument that would, or would be likely to cover Nestlé and Mr Alforque because of s.313(1)(a) of the Act. 8

[10] Nestlé has standing to make the application because, pursuant to s.318(2)(a) of the Act, it is likely to be the new employer of Mr Alforque.

[11] In deciding whether to make an order, I must take into account the matters set out in s.318(3) of the Act. I consider these matters below.

The views of the new employer and the employee affected by the order (s.318(3)(a))

[12] As the applicant, Nestlé supports the making of the order. It submits that for its insourcing to be effective, employees must be engaged on equivalent terms and conditions of employment. 9 It wishes to employ Mr Alforque under the Nestlé Agreement and has consulted with him (and the ETU) regarding its application to the Commission.10

[13] Mr Alforque also supports the making of the order. His views are set out in a statutory declaration made by him in support of the application in which he states that:

“I understood that my employment with Nestlé was conditional upon the terms of the Nestlé Agreement applying and not the Skilled Agreement. I still want to be directly employed by Nestlé in a permanent role. I understand this might change the amount of money I am paid each week.” 11

[14] Mr Alforque said that he understands that direct employment with Nestlé will result in a change to his rate of pay, 12 a reduction in allowances,13 and that he will not receive an entitlement to income protection insurance, including contributions into the Protect redundancy fund.14

[15] The conditional offer of employment made by Nestlé to Mr Alforque is attached to the application. It has been signed by Mr Alforque and acknowledges that he:

(1) supports the making of the order;

(2) understands that the effect of the order will mean that his terms and conditions of employment will be different and that he will no longer be entitled to some of the benefits he currently receives and that his take home pay may be less;

(3) has had the opportunity to obtain advice about what the order would mean for him; and

(4) agrees to assist Nestlé with its application for the order.

[16] The views of Nestlé and Mr Alforque weigh in favour of the making of the order.

Whether any employees would be disadvantaged by the order (s.318(3)(b))

[17] The Skilled Agreement contains certain benefits that will not apply to Mr Alforque if the application is granted. This includes a travel allowance and income protection insurance, as acknowledged by Mr Alforque in his statutory declaration. Furthermore, the wage rate for the relevant classification is lower under the Nestlé Agreement. This is set out in a comparison table contained in an information sheet provided to Mr Alforque by Nestlé, and also acknowledged by Mr Alforque in his statutory declaration. Accordingly, if the order is made, it will likely result in a reduction to Mr Alforque’s take home pay.

[18] The information sheet provided to Mr Alforque by Nestlé contains a comparison between other entitlements in the respective instruments. It specifies that the Nestlé Agreement contains a reduction in overtime penalties from double time for all overtime hours worked under the Skilled Agreement, to time a half for the first three hours, and double time thereafter under the Nestlé Agreement. The Nestlé Agreement also has a less beneficial meal allowance.

[19] Mr Alforque’s leave balances (if any) will not be carried over to Nestlé, with the exception of personal leave accrued pursuant to the Act, which will be transferred to Nestlé.

[20] To be weighed against these reductions in entitlements is the value that Mr Alforque appears to place on permanent employment with Nestlé. Mr Alforque gave evidence that he voluntarily applied for an advertised vacancy. 15 He has expressed a preference for direct employment with Nestlé rather than continuing as a contractor with Programmed, despite the effect upon his take home pay. He does not appear to consider that he would be disadvantaged by the order sought in relation to his terms and conditions of employment. On the contrary, he wishes to accept employment with Nestlé on the understanding that the Nestlé Agreement would apply to his employment and he would obtain job security. In any case, I note that the rate of pay under the Nestlé Agreement is well in excess of the legislative safety net.

[21] Having regard to the above matters, I am of the view that the reductions in entitlements does not weigh heavily against the application being granted.

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

[22] The nominal expiry date of the Skilled Agreement is 1 July 2017. The last wage increase pursuant to the Skilled Agreement was effective on 1 January 2017 and the agreement provides for no further wage increases.

[23] The Nestlé Agreement has a nominal expiry date of 24 November 2021. It provides for further wage increases in November 2019 and November 2020.

[24] The fact that the Nestlé Agreement is currently in operation while the Skilled Agreement is not weighs in favour of making the order.

Whether the Skilled Agreement would have a negative impact on productivity at Nestlé (s.318(3)(d))

[25] Nestlé contends that should the Skilled Agreement apply to Mr Alforque in his employment with Nestlé, it would require Nestlé to maintain two distinct employment systems, which will give rise to operational inefficiencies. There are also administrative issues that would arise as a consequence of compliance with the Skilled Agreement for Mr Alforque. In particular, Nestlé notes that the instruments differ in a number of key respects, including in relation to weekly hours, rest breaks and leave accruals. 16 I note Nestlé’s submission that these issues are such that the conditional employment of Mr Alforque would not proceed in the absence of the order sought.

[26] I accept that the ongoing application of the Skilled Agreement would impose administrative and productivity burdens upon Nestlé, noting that the Skilled Agreement runs to approximately 130 pages. I also accept that the potential for differential treatment arises in such circumstances and this may negatively affect employee productivity. However, given Nestlé’s submission that the conditional employment will not proceed in the absence of the order sought, I cannot be satisfied that the Skilled Agreement would have any relevant negative impact upon productivity. Accordingly, this factor is a neutral factor in my consideration.

Whether Nestlé would incur significant economic disadvantage by coverage of the Skilled Agreement (s.318(3)(e))

[27] Nestlé submits this is a neutral consideration, and in absence of any contrary submissions, I consider it to be so.

Degree of business synergy between the Skilled Agreement and any workplace instrument covering Nestlé (s.318(3)(f))

[28] There is little business synergy between the Skilled Agreement and the Nestlé Agreement. The Skilled Agreement is an industry agreement and the Nestlé Agreement contains terms and conditions specific to the identified Nestlé sites. 17 This factor weighs in favour of making the order.

The public interest (s.318(3)(g))

[29] Nestlé submits that it would not be contrary to the public interest to make the order sought. It says that facilitating the insourcing of Mr Alforque will benefit its business and therefore contribute to the economy. There were no other submissions concerning the public interest before me.

[30] The notion of public interest refers to matters that might affect the public as a whole. 18 Having regard to those matters, there are no public interest considerations that would militate against making the order sought. This weighs in favour of the order being made.

Conclusion

[31] Taking into account all of the above matters, I am satisfied that the order sought by Nestlé ought to be made.

[32] I will make an order that the Skilled Agreement will not cover Nestlé and Mr Alforque in relation to his employment with Nestlé, and that the Nestlé Agreement will cover Mr Alforque.

[33] For the purposes of s.318(4) of the Act, the order will come into operation on the date that Mr Alforque becomes employed by Nestlé.

[34] An order giving effect to this decision will be issued separately in PR713598.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<AE416989  PR713597>

 1   AE416989.

 2   Statutory declaration of Carolyn Gray dated 25 July 2019 (Gray declaration) at [2].

 3   AE504063.

 4   Section 311(1)(c) of the Act.

 5   Section 311(1)(d) and s.311(5) of the Act.

 6   Section 317 of the Act.

 7   Gray declaration at [12].

 8   The Skilled Agreement is an enterprise agreement approved by the Commission on 8 December 2015.

 9   Form F40, Q.2 at [9].

 10   Gray declaration at [10]-[11]; Statutory Declaration of Wilfredo Alforque dated 25 July 2019 (Alforque declaration) at [5]-[6] and [13].

 11   Alforque declaration at [8].

 12   Ibid at [9] and [11].

 13   Ibid at [10] and [12].

 14   Ibid at [12].

 15   Ibid at [14].

 16   Form F40, Q.2 at [23].

 17   Clause 3.2 of the Nestlé Agreement.

 18   See Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (2005) 139 IR 34 at [23].