In National Tertiary Education Industry Union v Swinburne
University of Technology (No 2) [2015] FCA 1080, the Federal
Court of Australia ordered that Swinburne University pay a $14,000
penalty for contravening the Fair Work Act 2009 (the
"Act").
Factual Background. Swinburne University offered
pre-university programs that they delivered through an
organisational department known as Swinburne College
("SC"). A decision was made to transfer the functions and
operations of Swinburne College to a new independently accredited
and registered company Swinburne College Pty Limited
("SCPL"). It was intended that SCPL would employ new
staff so as to avoid triggering the "transfer of
business" provisions of the Act. New teaching staff would have
their employment conditions determined by the Educational Services
(Post-Secondary Education) Award 2010 instead of the Victorian TAFE
Teaching Staff Multi-Business Agreement 2009 (which applied to the
employees in their employment with Swinburne University). Based on
a comparative salary scale included in the proposal, significantly
lower salaries were to be paid to staff under the Post-Secondary
Award (in comparison with the enterprise agreement).
Legal Background. S 340(1)(a)(i) of the Act
prohibits an employer from taking or threatening to take adverse
action which prejudicially alters the position of an employee
because the employee is "entitled to the benefit of a
workplace instrument". In March 2015, the parties reached a
settlement whereby Swinburne admitted its conduct in making and
taking steps to establish SCPL and that transfer SC's
operations to SCPL amounted to a contravention of s 340(1)(i). The
threatened conduct constituted a breach on the basis that there was
an increased likelihood the employees' positions would be made
redundant, and a substantial and operative reason for the conduct
was that Swinburne College employees were entitled to the benefit
of an industrial instrument, namely the TAFE Multi-Business
Agreement, whose operation Swinburne did not wish to perpetuate in
the new SCPL.
Decision. In determining the penalty to be imposed
under s 546 of the Act, Justice Mortimer considered the nature and
seriousness of the conduct, noting firstly that the conduct
amounted to a threat to take adverse action, rather than the taking
of adverse action. Secondly, her honour acknowledged that in order
to avoid the protective transfer provisions of the Act, Swinburne
had adopted a carefully planned and considered plan involving
senior people to employ new people, with the intended effect that
employees who had been employed for long periods of time would lose
their employment. Thirdly, Justice Mortimer highlighted the fact
that Swinburne was a large institution, able to source experienced
legal and industrial advice and was used to working with unions.
Finally, her honour emphasised that given that Swinburne was
recently found to be in contravention of the Act, there was a need
for both specific and general deterrence. In particular, her honour
noted the need for higher educational institutions to be put on
notice of their obligations to employees when restructuring.
Lesson for Employers. While it was recognised that
implementing cost savings and creating a more favourable industrial
landscape was a motivating factor for Swinburne, the decision
demonstrates that employees must always carefully consider their
obligations under the Act when restructuring, ensuring that their
proposals do not adversely affect employees. Part of that process
will often require adopting a transparent environment whereby
employers consult and communicate such proposals to employees and
unions.
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