FWC decides first arbitrated case under Section 319February 22, 2018
Section 319 of the Fair Work Act, 2009 (the Act) allows for an application to be made to apply the Enterprise Agreement of the old employer to new employees following a transfer of employment.
The normal scheme of the Act, under section 314, provides that following a transfer of employment, the employees of the old employer retain their previous conditions as a “transferred instrument”, however any new employees engaged following the transfer even those who undertake the transferred work, are employed under an applicable Agreement of the new employer. An order under section 319 is therefore an exception to the usual operation of the Act.
In the first case arbitrated on this issue, the ANMF (Victoria) applied to the FWC for an order to apply the transferred instrument to new employees undertaking the transferred work, even though there was an Agreement of the new employer which would apply to such employees.
The new employer objected to the making of such an order as there was already an existing Agreement which would apply to new employees. The existing Enterprise Agreement was a National Agreement which could cover the new employees in Victoria. The employer was seeking to integrate the two businesses into the national business and therefore argued that the appropriate agreement for new employees was the National Agreement. It was argued that it would be inconsistent with the integration of the two businesses to perpetuate different terms and conditions in just one state. The transferred employees, of course, would continue to get the benefit of the transferred instrument.
The decision importantly recognised that it is not a disadvantage to new employees, to be covered by an existing Enterprise Agreement, even if that Agreement does not provide for terms and conditions as generous as that applying to the transferred employees. Although each case will, of course, be determined on its own facts, this decision makes it clear that there needs to be more than a desire by one of the parties to preserve more generous terms and conditions of employment for future staff, before a section 319 order will be made.
Employers should look at the options available to them where a transfer of work occurs and not merely assume that they must continue terms and conditions for new employees, which may no longer be commercially viable or which are inconsistent with the business needs and direction.
For full details of the case, please click here
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