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In this matter the new employer was required to make a formal application to the Fair Work commission seeking “orders relating to instrument covering new employer and transferring employee”. This is a legal requirement under the Fair Work Act.
In this matter the company wished to bring maintenance services “in-house” and employee directly a worker who was employed by an external contractor.
The company made the contractor’s employee an offer of employment, conditional upon the Fair Work Commission making the order that the incoming employee will be covered by its agreement (and not that of the labour-hire company).
The company was required to make this request because where the employee ceases employment with the contractor and commences employment with the new employer within three months after the termination of his employment with the contractor, there will be a transfer of business within the meaning of s.311(1) of the Act. This is because:
(1) the work that the employee will perform with the company will be the same or similar to the work he is currently performing for the contractor; and
(2) there is a connection between the contractor and the company, on account of the insourcing of maintenance work from the contractor to the company.
This is not as simple as it sounds, the Commission is required to consider that agreement to the new arrangement was agreed by:
- The company who argued that for its insourcing to be effective, employees must be engaged on equivalent terms and conditions of employment.
- There had been consultation with the employee and his union, even though the change will result in a reduction in his pay.
The upside for the employee is permanent employment; with the employee providing evidence that he voluntarily applied for the position because of the opportunity of ongoing employment, despite taking home less money. The Commissioner also noting that on top of job security, the rate of pay offered by the company “is well in excess of the legislative safety net”.
The Commissioner also noted that the contractor’s enterprise agreement had nominally expired in 2017 and that there were not provision for further pay increases, whilst the company’s enterprise agreement provides for further annual pay increases for the next two years. This would also mean that, if the application was not granted, the company would be forced to operate two employment systems, leading to operational inefficiencies.
Significant economic disadvantage by coverage of the contractor’s enterprise agreement was another required consideration. This was determined to be a neutral factor in this matter.
Degree of business synergy between the contractor and the company
The Commission found there to be little business synergy between the contractor and the company.
The public interest
The notion of public interest refers to matters that might affect the public as a whole. Having regard to those matters, there are no public interest considerations that would militate against making the order sought.
The contractor’s employee was able to accept the employment with his new employer and everybody lived happily ever after.
Warning: highly prejudicial statement ahead. What have we come to where an employee and an employing company is required to make a formal application to the Fair Work Commission to go from a somewhat insecure employment to having the ongoing security of a well-established company?
Not referencing this decision in particular, but for too long companies have used labour-hire companies to diminish the economic standing of workers. I believe this to be both immoral and socially unacceptable. In my world, companies should employee a core of ongoing (sometimes called “permanent”) employees, and “top-up” with casual labour when required. Good casual workers, if the possibility arose, could then transition to permanent or ongoing employment with said company.
The rorting of labour-hire workers by the labour-hire industry has caused the state government to introduce regulations and a whole new department to keep them in check.