DECISION

Fair Work Act 2009
s.318—Transfer of instrument

Bottega Veneta Australia Pty Ltd T/A Bottega Veneta
(AG2017/5687)

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

[1] Bottega Veneta Australia Pty Ltd (Bottega Veneta) has applied under s.318 of the Fair Work Act 2009 (the Act) for an order in relation to a transfer of business.

[2] The transferring employees the subject of this application,Mr Salvatore Ferraloro and Ms Xinjia (Elinor) Zhang,were employed by David Jones Limited (David Jones) in October 2015 and November 2015 respectively,and are covered by the David Jones Enterprise Agreement 2012 (DJs Agreement). They work at the Bottega Veneta concession (DJ concession) within the Bourke Street store of David Jones.

[3] Bottega Veneta negotiated for the operation of the DJ concession to transfer to it. With effect from 5 July 2017,the transferring employees agreed to transfer their employment from David Jones to Bottega Veneta. It was noted that this application is made after the commencement of the transferring employees’employment with Bottega Veneta because it was necessary that the transfer take place within a shorter time period than the making and determination of this application would have required.

[4] Bottega Veneta has employed other employees to work in the DJ concession who are covered by the General Retail Award 2010 (the Award). 1

[5] In addition to the Form F40 –Application,an affidavit of Ms Georgia Smith,HR Business Partner at Bottega Veneta,was filed.

The relevant legislation

[6] Part 2-8 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.

[7] Section 311(1) contains the definition of transfer of business:

“(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).”

[8] Sections 317 and 318 of the Act relevantly provide:

“317 FWC may make orders in relation to a transfer of business

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.

318 Orders relating to instruments covering new employer and 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 transferring employee because of paragraph 313(1)(a) does not,or will not,cover the new employer and the transferring employee;

(b) an order that an enterprise agreement or a named employer award that covers the new employer covers,or will cover,the transferring employee.

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 transferring employee,or an employee who is likely to be a transferring employee;

(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) 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 transferring employee before the later of the following:

(a) the time when the transferring employee becomes employed by the new employer;

(b) the day on which the order is made.”

Transferable Instrument

[9] The DJs Agreement is a transferable instrument pursuant to s.312(1)(a) of the Act. On the material before me,there has been a transfer of business within the meaning of s.311(1) of the Act. Section 313 of the Act provides that the DJs Agreement covers Bottega Veneta and the transferring employees,subject to any order of the Fair Work Commission under s.318(1) of the Act.

Who may apply for an order

[10] The application has been made by Bottega Veneta,the new employer. This meets the requirements of s.318(2) of the Act.

Matters that the FWC must take into account

Section 318(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

[11] Bottega Veneta,the new employer,has made the application and supports the making of the Order sought.

[12] Ms Smith,through her affidavit,said on 9 October 2017 she wrote to Mr Ferraloro and Ms Zhang to explain why Bottega Veneta would be making this application. Attached to the letters was a document summarising the differences between the DJs Agreement and the provisions that would apply to them if this application was granted. Ms Smith said on 24 October 2017,she spoke individually with Mr Ferraloro and Ms Zhang by telephone about her letter,the document attached to the letter and this application. She said both Mr Ferraloro and Ms Zhang indicated they felt the table was very clear,understood why Bottega Veneta wanted to undertake the process and did not have any concerns with Bottega Veneta moving forward with this application. Following their discussion,Ms Smith said she received signed copies of the letter from Mr Ferraloro and Ms Zhang,acknowledging their consent to Bottega Veneta’s application. A copy of the signed letters were appended to Ms Smith’s affidavit.

[13] I have formed the view that this factor weighs in favour of granting the Order.

Section 318(3)(b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment

[14] Bottega Veneta said it reviewed the monetary entitlements Mr Ferraloro and Ms Zhang received under the DJs Agreement before the transfer of their employment to Bottega Veneta. Based on this review,Bottega Veneta entered into Individual Flexibility Agreements with Mr Ferraloro and Ms Zhang by which they both receive an annual salary in satisfaction of all entitlements under the DJs Agreement. Under their employment contracts,Bottega Veneta said Mr Ferraloro and Ms Zhang each receive an annual salary which is at least 11% higher than the total payments they received in the previous 12 months under the DJs Agreement. At my request,Bottega Veneta provided copies of the employment contracts for Mr Ferraloro and Ms Zhang. I have reviewed the remuneration under each contract of employment and am satisfied the employees will not be disadvantaged by the Order in relation to their remuneration.

[15] Bottega Veneta said it will provide undertakings if this application is granted,that Mr Ferraloro and Ms Zhang’s severance pay entitlements will be no less favourable than those set out at Appendix B,clause B.3.6 of the DJs Agreement. It also provided undertakings that the Accident Make Up Pay entitlement in clause 26.3 of the DJs Agreement and Compassionate Leave entitlement in clause 11 of the DJs Agreement will each continue to apply to the two employees.

[16] Bottega Veneta submitted that Mr Ferraloro and Ms Zhang will be better off under the arrangements proposed in this application than under the DJs Agreement.

[17] I have noted that the comparison table demonstrates some entitlements are more beneficial under the DJs Agreement,such as public holiday pay and the laundry allowance,and some are more beneficial under the Award/Employment Contract,such as penalties and loadings and higher duties. Many of the entitlements would be of no change or there are provisions of a similar nature.

[18] Based on [14] and [15] above and having considered all the material before me,I am on balance satisfied that Mr Ferraloro and Ms Zhang will not be disadvantaged by the Order in relation to their terms and conditions of employment. This factor weighs in favour of granting the Order.

Section 318(3)(c) if the order relates to an enterprise agreement—the nominal expiry date of the agreement

[19] The nominal expiry date of the DJs Agreement was 3 June 2015. This is a neutral factor.

Section 318(3)(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace

[20] Bottega Veneta submitted the DJs Agreement contains a variety of provisions which are not relevant to Mr Ferraloro and Ms Zhang. It said the administration of those provisions would involve significant inconvenience to Bottega Veneta and to Mr Ferraloro and Ms Zhang as a result of:

a) Mr Ferraloro and Ms Zhang being on different terms and conditions of employment to those which apply to all equivalent employees employed by Bottega Veneta;

b) The administrative complexity of requiring Bottega Veneta to apply two different industrial instruments to employees doing the same or substantially similar work;and

c) The potential for confusion for Mr Ferraloro and Ms Zhang and Bottega Veneta staff about the continued application of the DJs Agreement despite Mr Ferraloro and Ms Zhang no longer being employed by David Jones.

[21] Of administering provisions solely in relation to Mr Ferraloro and Ms Zhang,Bottega Veneta said this will involve significant cost and complexity in:

a) Providing for arrangements within Bottega Veneta’s payroll systems specific to Mr Ferraloro and Ms Zhang;

b) Aligning arrangements specific to Mr Ferraloro and Ms Zhang with Bottega Veneta’s existing policies and procedures;and

c) Aligning arrangements specific to Mr Ferraloro and Ms Zhang with Bottega Veneta’s standardised employment processes and procedures.

[22] Bottega Veneta submitted the negative impacts above do not carry an equivalent benefit to Mr Ferraloro and Ms Zhang.

[23] I have formed the view that this factor weighs in favour of granting the Order.

Section 318(3)(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer

[24] Bottega Veneta said it does not assert it would incur ‘significant economic disadvantage.’ I find this is a neutral factor.

Section 318(3)(f) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer

[25] Bottega Veneta said it is not covered by any other Enterprise Agreement and that employees in the same or similar positions to the transferring employees are covered by the Award. Bottega Veneta submitted there is little business synergy between the DJs Agreement and the Award,meaning there is little business synergy between Bottega Veneta’s arrangements for its existing employees and the requirements set out in the DJs Agreement.

[26] Bottega Veneta submitted the preservation of the classification structures found in the DJs Agreement is not consistent with the classification structures used by Bottega Veneta under the Award. Bottega Veneta said the DJs Agreement is of little relevance to it or the transferring employees.

[27] I have formed the view that this factor weighs in favour of granting the Order.

Section 318(3)(g) the public interest

[28] Bottega Veneta submitted there are no public interest grounds against granting the Order. It said there is a public interest in ensuring that the business of Bottega Veneta is able to efficiently operate without unnecessary complications in its employment arrangements.

[29] Bottega Veneta submitted granting the Order is consistent with the objects of the Act,with particular reference to the balance between the protection of employees’terms and conditions of employment and the employer’s interests in running an efficient enterprise.

[30] Having regard to the material before me,I am not of the view there are any public interest reasons not to make the Order.

Conclusion

[31] Having considered each of the matters set out in s.318(3) of the Act,I am satisfied that four matters weigh towards granting the Order,with the balance being neutral considerations. I am therefore satisfied that the Order sought should be made.

[32] Within 14 days of the date of this decision and accompanying Order,Bottega Veneta should provide my chambers with a copy of the undertaking given to Mr Ferraloro and Ms Zhang which confirms in the event they receive severance pay,it will be in the amount no less favourable than that which provided for under the DJs Agreement;and that the Accident Make Up Pay entitlement in clause 26.3 of the DJs Agreement and Compassionate Leave entitlement in clause 11 of the DJs Agreement will continue to apply to each of Mr Ferraloro and Ms Zhang.

[33] An Order [PR598450] will be issued to this effect.

DEPUTY PRESIDENT

 1  MA000004.

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