Kmart employee transfer plan hits Target

Cases

Kmart employee transfer plan hits Target

An application to transfer employees from a Target store to a Kmart store has been given the green light.

An application to transfer employees from a Target store to a Kmart store has been approved as being in the interests of both the employer and employees.

Kmart and Target are related business entities and the decision provides some insight into how various factors are assessed when a transfer of employees to another business occurs.

Facts of case


Kmart and Target are retail store chains owned by Wesfarmers Limited. It decided to close the Target store in Forster NSW and offer employment at the Kmart store in Forster to any Target employees who were interested. Five employees expressed interest. 
 
They were employed under an enterprise agreement for Target employees but it was proposed to transfer them to coverage by the agreement covering Kmart employees. Kmart applied for an order to transfer the employees. 

The Fair Work Commission was required to take into account the views of both the employer and the transferring employees, whether the terms and conditions of the new arrangements would be less favourable to the employees, the nominal expiry dates of both agreements, whether there would be any significant economic disadvantage to the new employer, the degree of synergy between the two agreements, and the public interest.

Kmart’s application claimed that it would mean all Kmart employees would be employed on common terms and conditions, it would avoid having two separate payroll systems and duplicating other management systems, and it would remove any disincentive from offering employment at Kmart to Target employees. 

Decision


The FWC assessed the application using the criteria from the two paragraphs above and approved it, finding as follows:
  • The employer obviously favoured the proposal. Employees and their union were consulted and the same arrangements had been used previously elsewhere to transfer Target employees to Kmart. The employees had expressed their support for the Kmart agreement and the union stated that it had no objections to it.
  • Kmart had stated that it would preserve some more favourable terms of the Target agreement until a new Kmart agreement commenced. 
  • Both agreements were well past their nominal expiry dates.
  • Kmart would be advantaged by only requiring a single payroll system and other management systems, and there would be no significant economic disadvantage to it if the Target agreement was retained. It would avoid having employees working together but on different terms and conditions, thus providing greater business synergy.
The bottom line: Applications to transfer employees to a different enterprise agreement have more chance of approval if there has been consultation with employees and their union to gain their support and deal with any contentious issues, and if any more favourable terms in the old agreement are preserved at least until a new agreement covering all employees under the new employer commences.

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