Gambling with transfer of business under the Fair Work Act

Prior to the enactment of the Fair Work Act 2009 (FW Act), an enterprise agreement (EA) could only transmit from the employer who made it, to bind another employer, where all or part of the ‘business’ of the first employer had transferred to the second.

Despite the fact that Part 2-8 of the FW Act is titled ‘Transfer of business’, this is a misnomer. That is because  an EA now transfers to a new employer where there has been a ‘transfer of work’ – so long as the work being performed after the change is ‘the same, or substantially the same’ as before the change.

For this reason, since 2009 the provisions have had a much broader field of operation than was formerly the case. This is borne out by the fact that they are a factor that needs to be taken into account in the context of many kinds of corporate transactions and also in all manner of restructuring and reorganisations – including where employees move between associated entities within a corporate group.

In the recent decision in Crown Sydney Gaming Pty Limited v United Workers’ Union[1] (Crown) the Federal Court found that work performed by employees who transferred from Crown subsidiaries in Melbourne and Perth to another subsidiary in Sydney was not ‘the same, or substantially the same’ as they had performed in Melbourne and Perth. Accordingly the EA applying at the Melbourne and Perth casinos did not transfer to the operator of the Sydney casino.

The decision is significant because:

• the approach taken to applying the same or substantially the same test is novel. It places significant weight on geography and other organisational matters not previously considered to be relevant to whether work is ‘the same, or substantially the same’ after a change; and
  
  
• applying to the Court for a declaration removed the need for the second operator to apply to the Fair Work Commission (Commission) for orders stopping the Melbourne and Perth EAs transferring. This enabled conditional offers of employment to be utilised, so the second operator had certainty that the EA would not transfer with the employees, before they were actually employed by the Sydney entity.   

In light of these considerations, the decision could clearly be of assistance to businesses that find themselves in potential transfer of business situations, and as such merits further consideration. To that end, below we provide a brief overview of the legislation before outlining the facts of Crown in greater detail and the reasoning of the Court. We then explore some of the potential implications of the Court’s decision for Australian business.

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