Ashurst Restructuring Roundup

Restructuring Corporate Groups: Transferring Employees under a Scheme

Intersnack Mid Co Pty Ltd (No. 2) [2024] NSWSC 9 ("Intersnack")

Restructuring or consolidating corporate groups may involve a new or different company in the group employing staff. In such a case an order can be made under s 413, Corporations Act ("CA") giving effect to that arrangement including where the staff are employed under an enterprise agreement.

Enterprise agreements are undertaken pursuant to the provisions of the Fair Work Act 2009 (Cth) ("FWA"). Section 53(3) of the FWA relevantly provides:

"an enterprise agreement will also cover the employee, employer or employer organisation if any of the following provides:

(c) an order of a court"

Whilst not reaching on a concluded view, the court in Bombardier Transportation Australia Pty Limited v Alstom Transport Australia Pty Limited (No. 2) [2022] FCA 880 ("Bombardier") held that the section supported the view that s 413(1), CA was a sufficient source of power for the court to order that the coverage of an enterprise agreement extend to a new or different company in a restructured group. That decision was followed in Intersnack.

In both Bombardier and Intersnack the enterprise agreement provided for consultation in relation to any major changes in or to production, programme, organisation structure or technology, the effect of the change on employees and the measures the employer is taking to mitigate the adverse effect of the change on employees.

The court was satisfied both that there had been consultation with the union representing the relevant employees and that the union as well as all employees had been given notice of the application to approve the scheme.

Additionally the court was satisfied that:

(a) the interested employees would not be adversely affected by the implementation of the schemes; and

(b) notice would be given to both the relevant unions and the employees of the proposed deregistration of the current employer of the employees giving them adequate notice to raise any concerns.

Author: Richard Fisher AM.