Eco Ltd is a company that owns a large tourism resort on Tasmania's Wilderness Coast. Eco Ltd employs 200 people who work in the catering, cleaning and the hospitality outlets of the resort. The company and its employees have had a long history of industrial disputes involving wages and unsatisfactory work conditions.
After the most recent dispute in January 2018, Eco Ltd and its employees came to a contractual agreement, on 1 February 2018, under which it was agreed that all its employees were to be paid wages and receive improved work conditions that are more than other employees working in similar resorts in Australia.
One month after the agreement was made, in March 2018, a new company was incorporated which is a wholly owned subsidiary of Eco Ltd. The new company is called Greenery Ltd. It has four directors, all of whom are appointed from the Board of six directors of Eco Ltd. It is agreed that all the profits of Greenery Ltd will be distributed as a dividend to Eco Ltd.
The incorporation of Greenery Ltd was preceded by a meeting between the Board of directors and the senior managers of Eco Ltd where the reason for the creation of the new entity was discussed. The senior managers of Eco Ltd devised a strategic plan which called for a new corporate structure which will take into account that the catering and entertainment services of Eco Ltd has the potential to become a significant operation in its own right, both within and outside the resort.
The directors of Eco Ltd were genuinely impressed with the business plan and believed it was in the long-term interests of the company. They passed a board resolution that the management of Eco Ltd put into place matters that will allow Greenery Ltd to pursue this new strategic business objective.
The redevelopment of the current resort was central to the management plan approved by the board of Eco Ltd. This meant the closure of many of the restaurants within the resort and the redundancy of 100 employees. These 100 redundant employees were then offered new, but identical, positions working for their new employer, Greenery Ltd.
Faced with the choice of an uncertain future, all 100 of the redundant employees accepted the new job offer with Greenery Ltd. As a result, the redundant employees no longer work under the previous 1 February 2018 contract of employment they had while working for Eco Ltd. Instead, they now work under conditions and wages that are not as favourable as they had when they worked for Eco Ltd. However, their current wages and conditions of employment are comparable to people who work in similar industries.
The trade union, on behalf of the 100 employees now working for Greenery Ltd, is concerned about the practical effect of this corporate reorganization on employment conditions.
Assuming that the 1 February 2018 contractual agreement between Eco Ltd and its employees is valid and that Greenery Ltd has been validly incorporated, advise the trade union as to its chances of success in getting that contractual agreement to apply to all 200 employees as originally intended.
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