Fair Work Act 2009
s.284 – Annual wage review

Preliminary hearing for the Annual Wage Review 2016–17 – medium term target – review of transitional instruments – existing arrangements for employees with disability

1. Introduction

[1] In the Annual Wage Review 2015–16 decision (the 2015–16 Review decision), the Expert Panel (the Panel) proposed that two issues be the subject of a preliminary hearing for the 2016-17 Annual Wage Review (the 2016–17 Review) 1, namely:

(i) a review of the transitional instruments relevant to annual wage reviews and;
(ii) the existing arrangements for employees with disability.

[2] The Panel stated that ‘the review will consider the status and effect of transitional instruments, including whether they have been, or can be, terminated by the Commission’. 2 The Panel also referred to concerns raised by the Australian Council of Social Service (ACOSS) regarding ‘the complexity and level of minimum rates of pay for employees with disability3 and noted that these are ‘important and require careful consideration’.4

[3] Further, in their submission to the 2015–16 Review, United Voice proposed that the Panel conduct a separate process of submissions and hearings in relation to setting a medium-term target ‘to assist it in the performance of its annual obligations’. 5 United Voice stated that a separate process would ‘assist procedural convenience to the Panel and those making submissions and to ensure that the merits of the matter are considered aside from the specifics of an annual [wage] review’.6 During consultations in the 2015-16 Review, United Voice clarified that their proposal would be a matter for the Panel constituted for the 2016–17 Review.7 The Panel agreed and indicated that the proposal for the adoption of a medium-term target would form part of the preliminary hearing for the 2016–17 Review.8

[4] On 27 July 2016 interested parties were invited to comment on a draft timetable for the 2016–17 Review which proposed a preliminary hearing to deal with the 3 matters identified above, namely:

● a proposal for a medium-term target;
● a review of transitional instruments; and
● a review of existing arrangements for employees with disability. 9

[5] A Statement issued 24 August 2016 confirmed the draft timetable, adding an additional date for filing material in response to initial submissions made regarding these matters. 10

[6] The 2015–16 Review decision stated that a background paper providing information on transitional instruments would be published to assist parties to the preliminary hearing. 11 The 24 August 2016 Statement extended this proposal to all 3 matters to be considered at the preliminary hearing. Background papers prepared by staff of the Fair Work Commission (Commission) were released on 19 September 2016. Parties were invited to respond to questions put forward in each of the papers. Seventeen submissions and 5 reply submissions were received. A summary of submissions in respect of each of the 3 matters was published to the Commission’s website.

[7] The preliminary hearing was held on 24 October 2016. After the preliminary hearing, responses to questions on notice were received from the Australian Government and the Australian Council of Trade Unions (ACTU) 12 and a reply submission to questions on notice was received from Ai Group. All material related to the preliminary hearing was published on the consultations webpage. A list of the submissions received is set out at Attachment A.

[8] We now turn to the three preliminary issues.

2. A proposal for a medium-term target

2.1 Background

[9] As mentioned above, in the 2015–16 Review United Voice proposed that the Panel conduct a separate process of submissions and hearings in relation to setting a medium-term target as an ‘additional tool to assist it in the performance of its annual obligations’. 13 At that time, United Voice did not express a view on the target that should be adopted or the considerations for the Panel if one were adopted,14 but did advance the following submission:

‘By way of illustration only, we offer the following examples of how a target (or target band) might be set:

(a) A target or band defined by reference to the ‘bite’ (that is the NMW expressed as a percentage of median wages);

(b) A target or band set by reference to a goal in relation to a level of low-paid work (that is the NMW & other award wages set by reference to the OECD definition being less than two thirds of median wages);

(c) A target or band set in nominal dollars for the NMW; or

(d) A hybrid of these approaches.

In using the phrase ‘medium-term’ we indicate that we have under contemplation a period of around 5 years.’ 15

[10] On 19 September 2016, a background paper prepared by staff of the Commission was published to assist submissions for the hearing into the setting of a medium-term target for annual wage reviews. Parties were invited to address the following questions in their submissions:

1. Taking into consideration the powers of the Panel to set national minimum wages and modern award minimum wages under s.285(2) and the minimum wages and modern award objectives set out in ss 284 and 134 of the Fair Work Act 2009, does the legislative framework allow the Panel to adopt a medium-term target (or target range) for the NMW or modern award minimum wages?​
2. Should a medium-term target be set for the NMW or both the NMW and modern award minimum wages?
3. What are the reasons for or against setting a medium-term target?
4. For parties advocating a medium-term target:

• what criteria should be applied in setting a medium-term target?; and



• what target (or target range) should be proposed?

5. If a medium-term target is adopted, how should it be assessed or reviewed during subsequent annual wage reviews?
6. Would parties be assisted if the Panel decided on whether it ought to set a medium-term target prior to initial submissions made to the Annual Wage Review 2016–17?

[11] For reasons which will become apparent it is not necessary for us to set out the submissions received in respect of each of these questions.

2.2 Overview of the submissions

[12] Submissions in favour of a medium-term target were received from United Voice, the ACTU, ACOSS and the Australian Catholic Council for Employment Relations (ACCER).

[13] In summary terms, these submissions argued that a medium-term target was necessary to assist with consideration of the relative living standards and needs of the low paid by addressing inequality, particularly the minimum wage relative to median earnings. The submissions that proposed a medium-term target suggested that it be set at 60 per cent of median earnings in four years.

[14] United Voice submitted that setting a medium-term target would ‘assist the Panel to balance the various considerations it is required to take account of’ 16 and that ‘it would provide a strong analytical framework to assist the Panel in the performance of its annual obligations’.17 United Voice added that a medium-term target could provide ‘certainty and predictability’ to both employers and workers.18

[15] United Voice submitted that ‘the Panel can, as a matter of discretion, adopt a medium-term target’ 19 adding that a medium-term target ‘would play an appropriate role in anchoring expectations and direction’,20 ‘consistent with the Panel’s annual obligation to conduct a review’.21

[16] The ACTU supported the adoption of a medium term target of the type proposed by United Voice, adding that ‘[i]t is important to distinguish, as United Voice has, between a binding target and the setting of an expectation, or expression of support of the merits in favour of progressing toward a particular goal’. 22 Further, the ACTU argued:

‘While [the Commission] is specifically required to make annual determinations, its processes are more in the nature of an inquiry than an arbitration. It would be passing strange and an erroneously na�ve construction of the legislative purpose that led to a conclusion that the Commission was precluded from adopting, developing or reviewing policy positions that informed its evaluation of the highly variable and granular detail that it properly has regard to year to year.

Indeed, the failure to adopt any such policy positions would essentially leave the Commission rudderless in navigating its task from year to year. Moreover, it would leave the Commission with no basis to satisfy itself that it had met the overarching requirement in both the minimum wages objective and the modern awards objective: that the outcome of it decision is fair.’ 23

[17] ACOSS argued that a medium-term target is ‘consistent with the view expressed in our minimum wage submissions that the setting of minimum wages should be informed by living standard ‘benchmarks’. 24 ACOSS added that without a medium-term target ‘there is a risk that these adequacy and work incentive goals will fade into the background as short term considerations take centre stage’.25

[18] Submissions from the Australian Government, the Australian Industry Group (Ai Group), Australian Business Industrial and New South Wales Business Chamber (ABI and NSWBC) and the Australian Federation of Employers and Industries (AFEI) did not support a medium-term target. 26 These submissions generally contended that a medium-term target was inconsistent with or not supported by the Fair Work Act 2009 (Cth) (the Act). The Australian Government submitted:

‘Adopting a medium term target or a predetermined formula for arriving at the NMW is inconsistent with this annualised review process.’ 27

[19] Ai Group added that the Act ‘makes no mention of a medium-term target. It requires an annual wage review’. 28 In response to the contention that a medium-term target would provide certainty and predictability, Ai Group submitted that such a target ‘would result in the FWC being heavily influenced by that target in each Annual Wage Review and, as a consequence, being diverted from its duty’ to take into account the minimum wages and modern awards objectives29 and would ‘make it more difficult’ to take into account major events such as the global financial crisis and extreme weather and changes to superannuation.30 Further, Ai Group argued that a medium-term target would ‘inhibit the [Panel] from taking any future changes in the broader social safety net into account.’31

[20] In commenting on the provisions in Part 2-6 of the Act, the Australian Chamber of Commerce and Industry (Australian Chamber) submitted:

‘These provisions prescribe processes that are structured in contemplation of an annual review of a nature that sits poorly with the notion of a medium term target extending beyond a single year. A medium term target would influence each annual wage review outcome on the basis of predetermined criteria sitting outside of the statutory criteria and there is no statutory mechanism for the setting of such a target under the Act’s provisions. The Australian Chamber submits that the important procedural fairness requirements prescribed by Act for the purposes of the annual wage review (as reflected in the provisions above) apply to each separate annual review and are at risk of being undermined should such a target be determined in advance of the annual wage review.’ 32

[21] ABI and NSWBC contended that the factors advanced in support of setting a medium-term target ‘are already addressed within the detailed statutory context’ 33 and that the provisions of the Act ‘present a binding statutory framework for the Fair Work Commission in conducting the AWR … a medium-term target sits outside these considerations and therefore is not appropriate’.34 ABI and NSWBC added that ‘[g]iven the requirement to conduct the AWR annually, a medium term target (even if permissible) is likely to have little to no effect’.35

[22] In its reply submission, ABI and NSWBC argued that a medium-term target ‘would serve to inappropriately influence the conduct of the AWR by requiring undue focus on a factor not prescribed by the statute’ 36 and that ‘it is merely submitted that a medium-term target cannot override the express provisions of the FW Act’.37 ABI and NSWBC contended that the ‘primary reason against setting a medium-term target’ is that it ‘is inconsistent with the current operation of the FW Act’.38

[23] AFEI contended that, as the annual wage review is not defined in s.12 of the Act, that it should be given its ordinary meaning and that ‘[t]he word annual … requires that the review occur once every year’ and that ‘[t]here is no statutory remit to have a goal in mind for the medium or long term’. 39 AFEI submitted:

‘Just as the idea of real wage maintenance cannot properly capture all of the considerations in play, the notion of a target or targets cannot be the aim of the wage setting process in a particular financial year because that is not a matter which applies the statutory considerations to the prevailing circumstances in the particular financial year. It instead elevates the basis on which the target is set as a consideration that is an overarching notion rather than the application of the relevant criteria in a balanced way. The legal or economic basis and the relevant assumptions on which a target would be set becomes the aim to be reached compared with a fair and balanced setting of the minimum and award wages having regard to the prevailing conditions examined by the Panel for a particular year.’ 40

‘The substantive effect of meeting United Voice’s request would in fact be to elevate the idea of inequality (posited as a ‘direction’) to a criterion that must be paid regard to above all other statutory considerations.’ 41

[24] AFEI argued that setting a target ‘requires that the foundation on which it is established, the amelioration of alleged inequality, becomes a goal towards which each minimum wage decision is directed’. 42 AFEI also commented that a medium-term target would be in some way binding on future Panels:

‘The other Panels would be required to agree that the basis of the target, an assessment of the minimum wage bite, was both valid as an economic consideration that guided its decision (a matter we dispute in detail below) and that it was a relevant factor that should bind other Panels, something not permitted by the statute. At the least, the ‘direction’ or ‘guidance’ established by the initiating Panel would have some meaning in that it would oblige other Panel’s to justify as an additional component of the considerations in play for that particular year why the target had or had not been reached and why the assumptions on which it had been set did or did not remain valid. That task is not part of the required statutory framework and, as we next argue, it should not be.’ 43

‘By implication the target requires each annual Panel to decide upon a national minimum wage outcome different from the outcome the Panel would have decided upon having regard to the existing statutory criteria. Hence, the FW Act would need to be amended to permit such a change.’ 44

[25] Parties who made submissions opposing the adoption of a medium-term target also argued that such a target would reduce the Panel’s flexibility to respond to changing economic conditions, that it failed to acknowledge a broad range of considerations that the Panel must take into account and that the approach adopted in the UK would be difficult to replicate within the Australian policy framework.

[26] The Australian Government argued that a medium-term target may not address uncertainty of future annual wage reviews as ‘a future Panel would be free to adopt an alternative medium-term target, or no target, or to make a decision inconsistent with the target that had been set’ and ‘the approach to each annual wage review process is a matter for the new Panel constituted in that year’. 45

[27] The Australian Government also submitted that ‘[a] narrow or ‘hard’ target reduces the flexibility to respond to changing economic conditions. Conversely, if the target is too broad it will not address some stakeholder concerns and reduce uncertainty for employers and employees.’ 46

[28] Ai Group argued that ‘United Voice has failed to establish any inadequacy in the FWC’s current approach to adjusting minimum wages’. 47 In reference to the examination of longer term trends, Ai Group submitted ‘[i]t is incorrect to suggest that the trend has not been subject to explicit decision or acknowledged policy when it is the product of a set of explicit decisions and clearly articulated policies.’48 Ai Group also explained that it was ‘customary’ for parties and the Panel to examine and take into account trend data in the annual wage review.49

[29] The nature and purpose of the proposed medium-term target was the subject of further comment and clarification during the course of oral submissions. We clarify below what is being sought before turning to our consideration of the proposal advanced.

2.3 The proposed ‘medium-term’ target

[30] In its written submission of 10 October 2016, United Voice proposed that a medium-term (4 year) target for the National Minimum Wage (NMW) be set at 60 per cent of median (adult) ordinary time earnings as an additional tool to assist the Panel in the performance of this annual obligations’. 50 It added that the measure of ordinary time earnings should be median weekly earnings for full-time workers published in the Australian Bureau of Statistics’ catalogue Characteristics of Employment (Catalogue No. 6333.0).51 The ACTU supported this target.52

[31] The proposed target applies to the NMW only. The quantum of any annual adjustment to modern award minimum wages would be a matter determined by the Panel in a Review and the effect of an adjustment in the NMW on the relativities and structure of modern award minimum wages are said to be matters ‘appropriately dealt with and most effectively dealt with as part of the annual case’. 53

[32] In support of the proposed target United Voice submits, among other things, that the target:

● has considerable international precedent;
● focuses on one of the most important factors in the minimum wages objective, being relative living standards and needs of the low paid;
● uses a measure that the Panel and parties have acknowledged is a ‘relevant consideration and statistical benchmark’; and
● is a prudent and responsible target. 54

[33] Based on stated assumptions regarding increases in the Consumer Price Index and real median wage growth, United Voice estimated that, to reach the target for the NMW of 60 per cent of median adult ordinary time weekly earnings by 2020, the NMW would have to increase by 6.5 per cent over each of the next four years, providing a total increase of $194. 55

[34] It became apparent during the course of oral argument that the ACTU and United Voice were not proposing a ‘hard’ (or immutable) medium-term target.

[35] In its reply submission, United Voice make it clear that it is not proposing ‘a binding target and inflexible mechanical approach’. 56 And in the course of oral argument, United Voice acknowledged that ‘it’s easy to imagine and perhaps likely … [that] where you had a four year target…there was not linear progress towards that target over each of the four years … consistent with macro-economic conditions and other things’.57

[36] In the end, it was common ground that the Panel could not (as a matter of power) or should not (as a matter of merit) adopt a ‘hard’ target. Of course this position simply begs the question—if it is not a ‘hard target’, what is the nature of the ‘target’ proposed?

[37] The ACTU explained it this way:

‘…although the target remains amenable to being adjusted and reviewed, that there is some broader benefit in setting a signal - in setting an expectation - that this is the trajectory that things are likely to take in future, not only in terms of this sort of rather remote point but complementary government policy’. 58

[38] United Voice put it slightly differently, namely that the target represented a ‘default position’ all other things being equal:

‘…there is common ground that the panel can't bind future panels, and therefore, as a result, the target we propose has a particular form… I might characterise that as being the panel determining that there is a rebuttable proposition that this will happen. All right. So indicating that all other things being equal and subject to review of available data at the time and submissions that might be put at the time, this is the intention, this is the intended direction.’ 59

[39] It seems to us that the nature and purpose of the medium-term target proposal is somewhat illusory. On the one hand, it is said to ‘signal’ the Panel’s future intentions or set some sort of rebuttable presumption so as to provide greater predictability to the outcome of the Panel’s deliberations in a Review, and on the other hand it is not a ‘hard target’ and can be varied year to year depending on the particular circumstances at the time. There appears to be an inherent contradiction in these propositions. During the course of oral argument United Voice sought to address this contradiction as follows:

‘…the exact value in respect of predictability will depend very much on the target that is adopted and the language the panel would choose to adopt in relation to its level of confidence in respect of that and the way the panel chooses to describe the function and operation of the target itself, so in essence what we'd say is the firmer the language in which the panel would express any target, the greater benefit it would have in respect of predictability. It would be conceivable to imagine a target expressed in such vague or uncertain terms that I think we would accept that the predictability benefits would be reduced, but that is not the sort of target we would urge on the panel. If it were to be adopted the firmness and strength of conviction that would go behind the criteria that's adopted and the specific obligation, if you like, or the specific target which is adopted would have the effect of increasing those predictability benefits.’ 60

[40] The point advanced is of little assistance—no real attempt is made to set out the ‘language … to describe the function and operation of the target’. Whilst we consider that this was a constructive attempt to fit the concept within the statutory context of the Review, in the end we are left with a proposal which is somewhat vague and imprecise, and with inherent contradictions.

[41] We now turn to our consideration of the proposal put.

2.4 Consideration

[42] We begin our consideration of the proposed medium-term target by examining the relevant statutory provisions.

[43] The Act requires that each financial year the Panel conduct and complete a review of the NMW and minimum wages in modern awards (the Annual Wage Review or the Review). The Panel is required to conduct and complete a Review in each financial year. In conducting a Review the Panel must review the NMW and modern award minimum wages and make a NMW order (NMWO). 61 The Panel’s task is set out in s.285(2) of the Act:

‘In an annual wage review, the FWC:

(a) must review:

(i) modern award minimum wages; and

(ii) the national minimum wage order; and

(b) may make one or more determinations varying modern awards to set, vary or revoke modern award minimum wages; and

(c) must make a national minimum wage order.’

[44] The Act requires the Panel to take into account a number of considerations in performing these functions. The relevant statutory considerations are set out in the object of the Act (in s.3), the modern awards objective (in s.134(1)) and the minimum wage objective (in s.284(1)). The Panel must conduct the Review within the legislative framework of the Act.

[45] It is clear, and uncontroversial, that in the context of a particular Review the Panel cannot ‘bind’ future panels in subsequent reviews. It follows that any attempt to adopt a ‘hard’ or binding medium term target for the NMW would be ineffective (even if it were accepted that the Panel had power to adopt such a target). The issue then becomes whether any useful and appropriate purpose would be served by adopting a more ‘flexible’ medium term target of the type described by the ACTU and United Voice. For the reasons that follow, we think not.

[46] The Panel’s task is to consider the relevant statutory considerations in the context of the prevailing economic and social environment in arriving at its decision in a Review. The minimum wages objective applies to the exercise of functions and powers under Part 2—6 of the Act, which includes the Review. 62 The minimum wages objective is set out in s.284 of the Act:

‘284 The minimum wages objective

What is the minimum wages objective?

(1) The FWC must establish and maintain a safety net of fair minimum wages, taking into account:

(a) the performance and competitiveness of the national economy, including productivity, business competitiveness and viability, inflation and employment growth; and

(b) promoting social inclusion through increased workforce participation; and

(c) relative living standards and the needs of the low paid; and

(d) the principle of equal remuneration for work of equal or comparable value; and

(e) providing a comprehensive range of fair minimum wages to junior employees, employees to whom training arrangements apply and employees with a disability.

This is the minimum wages objective.’

[47] The modern awards objective applies to the performance or exercise of ‘modern award powers’, which are defined to include the variation of modern award minimum wages. The modern awards objective is set out in s.134 of the Act:

‘134 The modern awards objective

What is the modern awards objective?

(1) The FWC must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:

(a) relative living standards and the needs of the low paid; and

(b) the need to encourage collective bargaining; and

(c) the need to promote social inclusion through increased workforce participation; and

(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and

(da) the need to provide additional remuneration for:

(i) employees working overtime; or

(ii) employees working unsocial, irregular or unpredictable hours; or

(iii) employees working on weekends or public holidays; or

(iv) employees working shifts; and

(e) the principle of equal remuneration for work of equal or comparable value; and

(f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and

(g) the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards; and

(h) the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.

This is the modern awards objective.’

[48] The modern awards objective is that modern awards, together with the National Employment Standards (NES), provide a ‘fair and relevant minimum safety net of terms and conditions’, taking into account the particular considerations identified in s.134(1)(a)–(h). The modern awards objective is very broadly expressed and no particular primacy is attached to any of the considerations identified in s.134(1)(a)–(h). 63 The same observation can also be applied to the minimum wages objective in s.284 and the considerations in s.284(1)(a)–(e).

[49] Section 578(a) is also relevant. It provides that the Panel must take into account the object of the Act in performing its functions or exercising its powers in an AWR. 64 The object of the Act is set out in s.3, as follows:

‘3 Object of this Act

The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:

(a) providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations; and
(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and

(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and

(d) assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and

(e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and

(f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and
(g) acknowledging the special circumstances of small and medium-sized businesses.’

[50] Sections 134, 284 and 578 of the Act each direct the Panel to ‘take into account’ certain specified considerations in conducting and completing an AWR. A matter which the Panel is directed to ‘take into account’ is a relevant consideration in the Peko-Wallsend sense; 65 which is those matters which the decision maker is bound to take into account and treat as matters of significance in the decision making process.66 No particular primacy is attached to any of the considerations identified in the modern awards objective (s.134(1)(a)-(h)) or in the minimum wages objective (s.284(1)(a)(e)). For our part we would observe that the weight to be attributed to a particular statutory consideration may vary from year to year depending on the social and economic context in a particular Review.

[51] The general matters the Panel must take into account in performing its functions contain some common elements. In past Review decisions, the Panel has grouped the matters of direct relevance to the Review into three broad categories:

• economic; 67




• social; 68 and

• collective bargaining. 69

[52] In terms of the ‘social’ considerations, both the minimum wages objective and the modern awards objective require us to take into account relative living standards and the needs of the low paid when setting minimum rates. Those matters are different, but related, concepts 70 and must be considered, together with the other matters in ss.3, 134(1) and 284(1) of the Act, in the context of available data and research.

[53] The assessment of relative living standards requires a comparison of the living standards of workers reliant on the NMW and minimum award rates determined by the AWR with those of other groups that are deemed to be relevant.

[54] The assessment of relative living standards focuses on the comparison between award-reliant workers and other employed workers, especially non-managerial workers. 71 The relative position of award reliant workers has fallen over time. As noted in the 2015–16 Annual Wage Review decision:

‘There is no doubt that the low paid and award reliant have fallen behind wage earners and employee households generally over the past two decades, whether on the basis of wage income or household income.’ 72

[55] The assessment of the needs of the low paid requires an examination of the extent to which low-paid workers are able to purchase the essentials for a ‘decent standard of living’ and to engage in community life, assessed in the context of contemporary norms. In successive Annual Wage Reviews the Panel has concluded that a threshold of two-thirds of median full-time wages provides ‘a suitable and operational benchmark for identifying who is low paid’, within the meaning of s.134(1)(a). 73

[56] As the Panel has observed in previous Review decisions, there is often a degree of tension between the economic, social and other considerations which the Panel must take into account and, as we have mentioned, no particular primacy is attached to any of these considerations. 74

[57] While the statutory considerations referred to must be taken into account it is important to bear in mind that these considerations inform the modern awards objective and the minimum wages objective, but they do not themselves constitute the relevant statutory objectives. The modern awards objective is to ‘ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions.’ The minimum wages objective is to ‘establish and maintain a safety net of fair minimum wages.’ These objectives are very broadly expressed and the notion of fairness is at the heart of both statutory objectives. Fairness in this context is to be assessed from the perspective of the employees and employers covered by the NMW or the modern award in question. 75

[58] The range of competing considerations and the broadly expressed nature of these statutory objectives has led the Panel to reject a decision rule approach to wage fixation, such as the adoption of real wage maintenance. 76 The range of considerations we are required to take into account calls for the exercise of broad judgment rather than a mechanistic approach to fixing minimum wages. 77 Further, as the Panel said in its decision in the 2014–15 Review:

‘In taking into account available economic and social data, the Panel’s approach is broadly to assess the changes in these data from year to year and determine how they inform the statutory criteria. Put another way, and consistent with ACCI’s submission, if there were no change in the relevant considerations from one year to the next then, all other things being equal, a similar outcome would result.’ 78 

[59] Given the legislative context and the Panel’s approach to its statutory task it seems to us that a medium-term target in the form advanced by the ACTU and United Voice would be of little assistance.

[60] As we have mentioned, it is common ground that any target cannot be a ‘hard’ target as the Panel cannot bind future Panels. Such a target would also be inimical to the Panel’s obligation to consider the circumstances prevailing in each review in the context of the relevant statutory criteria. Furthermore, if the target is not a ‘hard’ target, then what utility does it serve?

[61] It is apparent from their submissions that a major reason for the proposal of a medium-term target by United Voice and supported by the ACTU is to address the decline in the minimum wage bite. United Voice submitted that ‘over the medium and longer term there has been a steady, inexorable erosion of the relative living standards of low paid workers’ 79 and that ‘as the minimum wage bite has fallen, Australia has seen a rise in inequality and a growth in the incidence of low-pay’.80

[62] The ACTU also argued that addressing relative living standards and needs of the low paid over time is ‘difficult’ through annual increases. 81 The ACTU added that ‘[i]ncreasing the NMW over time through a medium term target would help address the widening inequality in Australian incomes and restore the relative living standards of the low paid’ while an annual approach is ‘less able to restore and preserve living standards over time’.82

[63] The ACTU claimed that the NMW has been below 60 per cent of median earnings since 1999 83 and that ‘wage inequality has widened in Australia over the last three decades’ reflected by ‘movements in the NMW’.84

[64] Those supporting a medium-term target for the NMW do so principally for the reason that they believe a target would increase the weight given to the requirements for the Panel to set rates that ‘establish and maintain a safety net of fair, relevant and enforceable minimum wages’; and to consider the relative living standards and the needs of the low paid’ as the Panel considers the full range of matters that it is required to take into account. Those who oppose a medium-term target share this view, that such a target would give greater weight to these criteria, and oppose it on those grounds (among others).

[65] United Voice offered the idea that a medium term target would be a useful ‘analytical tool’. We do not find this to be a helpful characterization, since there is nothing particularly analytical about having a number to aim at. We do recognize, however, that a series of independent annual Review decisions might have a cumulative impact that was not explicitly intended. It is for this reason that the Panel routinely considers (and publishes in its statistical report) the evolution of economic and social data over the past 10 years, as well as over the more immediate time frame.

[66] As we have mentioned, no particular primacy is attached to any of the considerations identified in the modern awards objective (s.134(1)(a)–(h)) or in the minimum wages objective (s.284(1)(a)(e)). The adoption of the proposed target would, in our view, have the effect of elevating one statutory consideration (‘relative living standards and the needs of the low paid’) above all others on an ongoing basis, rather than requiring consideration of that matter in the social and economic context of each review and weighting it accordingly relative to the other considerations. As we have mentioned while the relevant statutory considerations must be taken into account it is important to bear in mind that they inform the modern awards objective and the minimum wages objective, but they do not themselves constitute the relevant statutory objectives.

[67] We also note that the Panel already considers measures of both earnings and disposable incomes when taking into account the relative living standards of those on the NMW and those on modern award minimum wages.

[68] Chart 1 below, presented in the Statistical report for this Review, shows the decline in the minimum wage bite over the 15 years to 2015, although it has stabilised in recent years. 85

Chart 1: C14 rate relative to median weekly earnings of full-time employees in main job, 2000 to 2015

Note: Median earnings are measured in August of each year. Following the amendments to the Workplace Relations Act 1996 (Cth) taking effect in 2006, the Federal Minimum Wage (FMW) was set at $12.75 per hour, equivalent to $484.50 per week.

Source: ABS, Characteristics of Employment, Australia, various, Catalogue No. 6333.0; ABS, Employee Earnings, Benefits and Trade Union Membership, Australia, various, Catalogue No. 6310.0; Metal, Engineering and Associated Industries Award 1998; Manufacturing and Associated Industries and Occupations Award 2010 (from 1 January 2010).

[69] We acknowledge that the minimum wage bite is an important indicator of relative living standards and wage inequality.

[70] We also acknowledge that information about low-paid and award-reliant employees at risk of poverty is also relevant in assessing relative living standards, given poverty measures typically involve benchmarks of community incomes or expenditure standards. 86 The Panel already considers a number of indicators for the relative living standards and needs of the low paid and can be expected to do so in future Reviews.

[71] United Voice argued that focusing on one-year periods ‘unnecessarily obscures the broader considerations about the direction of minimum wages that the Panel can and should take into account’ 87 and, in contrast, ‘a medium-term target operating in conjunction with annual decisions, allows proper ventilation of issues associated with longer term trends, is an aid to discipline in decision making, and gives the NMW an indicative direction’.88

[72] United Voice added that the issues the Panel must consider ‘are not … issues which can be fully considered in respect of a single 12 month period’ and are instead long-term indicators. 89 The ACTU agreed and argued that ‘longer term trends are difficult to discern from the point of view of separate annual changes’.90 ACCER added:

‘There is nothing in the legislation that would support the view that annual wage reviews are meant to be a series of disconnected decisions with no connection to past and future wage reviews.’ 91

[73] We acknowledge the need to periodically assess the medium and long term consequences of successive Review decisions and have recognised that these decisions have both an immediate and cumulative impact. But the adoption of a ‘target’ is not the only way of addressing the issue raised. A chart on the minimum wage bite over the last 10 years is now included in the Statistical report. Parties can make submissions on the level and trends in the minimum wage bite in each annual wage review and the Panel can consider these submissions at that time. As outlined earlier, the Panel also tracks changes in other relevant indicators over time, including factors such as productivity, living costs and inflation, employment and financial stress. It is also appropriate that medium and longer term trends in these factors are considered as part of each Review.

[74] For completeness we note that the various international and domestic precedents cited in support of the adoption of a target are unpersuasive, given the marked differences in the relevant statutory context. We also reject United Voice’s contention that the Annual Wage Review 2009–10 decision that increased the casual loading for award/agreement free employees from 20 per cent to 25 per cent through instalments of 1 per cent per year as ‘analogous’ to its proposal. 92 We agree with ABI and NSWBC that the decision relied on ‘relates to a determination by the Panel that a particular rate was appropriate, and the imposition of a transitional arrangement to phase that rate in’,93 whereby a medium-term target ‘is of a different nature’ and ‘not described as a determination of an existing appropriate rate to be phased in, but rather a non-binding and flexible analytical tool to assist the Panel in its annual function’.94

[75] There is one final matter which we wish to mention.

[76] In the course of its submission, the Australian Chamber submits that the Panel is required to set a ‘safety net’ and claims that the requirements to consider the relative living standards and needs of the low paid provide ‘no basis for these statutory considerations to be applied in pursuit of income distribution’ 95 and that it would be improper to see the Annual Wage Review ‘as a tool for wage distribution instead of a tool for maintaining a ‘safety net’ having regard to the full range of considerations reflected in the statutory framework.’96

[77] Contrary to the view expressed by the Australian Chamber a safety net of fair and relevant minimum wages that takes into account relative living standards and the needs of the low paid (amongst other statutory considerations) may also affect wage and or income distribution. The effect of a fair and relevant safety net is to raise the wages received by the low paid above those that they would receive in the absence of enforceable minimum wages. It follows that these higher rates of pay do affect the wage distribution – that necessarily follows if they have any effect at all. In affecting the wage distribution, they will also affect the income distribution, although exactly how is not straight forward to assess.

[78] We intend to conduct the 2016-17 Review in accordance with the principles set out above.

3. Transitional instruments

3.1 Background

[79] In the Annual Wage Review 2015-16 Decision the Panel proposed that a review be conducted of transitional instruments that arose for consideration in the Annual Wage Review process in the following year’s review. The decision said:

‘[584] While it will be a matter for the Panel constituted to conduct the 2016–17 Review, we would propose that a review be undertaken of the transitional instruments that must be dealt with as part of AWRs. The review will consider the status and effect of transitional instruments, including whether they have been, or can be, terminated by the Commission. A background paper providing information on transitional instruments will be published later this year. Interested parties will be given an opportunity to make submissions on any issues arising out of the review of the transitional instruments.’ 97

[80] On 19 September 2016 the Commission released, among other things, a background paper traversing issues and materials relevant to a review of transitional instruments. The Statement issued by the Expert Panel on the same day 98 invited interested parties to respond to questions put forward in that background paper.

[81] Transitional instruments are those which were created by the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) (Work Choices Act) and State industrial relations systems and preserved in operation, transitionally or otherwise, by the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act). Appendix 1 of the background paper contained an indicative list of the transitional instruments which remained in effect as at 15 September 2016. Attachment A identified that these transitional instruments fell into the following categories:

(i) Division 2B State awards: These are instruments established by Schedule 3A to the Transitional Act to incorporate the terms and conditions contained in State awards covering employers in New South Wales, Tasmania, South Australia and Queensland who were not in the federal system prior to 1 January 2010 and came into the federal system pursuant to referral powers. Most non-enterprise Division 2B State awards terminated 12 months after the referral commencement date.

(ii) Notional agreements preserving State awards (NAPSAs): NAPSAs were notional instruments created by the Work Choices Act to preserve the terms and conditions of State awards covering employees who came into the federal system on 27 March 2006 as a result of the Work Choices Act. The wages elements of these State awards were preserved in separate deemed instruments called Australian Pay and Classifications Scales (APCSs). NAPSAs were continued in operation by Schedule 3 to the Transitional Act as award-based transitional instruments (ABTIs). NAPSAs other than enterprise-based instruments terminated on 1 January 2014 unless the regulations to the Transitional Act prescribed a later date (subject to one matter which is discussed below).

(iii) Pre-Fair Work Act awards: Federal awards in existence before 27 March 2006 became new instruments under the Work Choices Act. Awards within the scope of the corporations power became as pre-reform awards, with their wage components contained in separate APCSs. A number of these continue to operate.

(iv) Continuing schedule 6 instruments: These instruments were initially established as ‘transitional awards’ under the Work Choices Act, and preserved federal awards that were in existence before 27 March 2006 in respect of their application to employers that were not in the scope of the corporations power. Transitional awards relevant to referring states became either Division 2A State reference transitional awards or Division 2B State reference transitional awards. Other transitional awards, mainly applicable to Western Australia, were preserved as continuing Schedule 6 instruments by the Transitional Act, but ceased operating on 27 March 2011 whereupon those employers and employees covered reverted to their State industrial relations system.

(v) Division 2A State reference transitional awards: These are common rule, enterprise and public sector transitional awards applying in Victoria only (which referred its industrial relations powers prior to 27 March 2006) which were preserved as transitional awards under the Work Choices Act. They became Division 2A State reference transitional awards on 1 July 2009, and continued to operate as a category of ABTIs under the Transitional Act. Some of them continue to operate.

(vi) Division 2B State reference transitional awards: These originate in federal awards made before 27 March 2006 that applied to employers not within the scope of the corporations power which were preserved as transitional awards under the Work Choices Act. They were created on 1 January 2010 and relate to Division 2B referring states: New South Wales, Tasmania, South Australia and Queensland. Division 2B State reference transitional awards include enterprise awards, public sector transitional awards and common rules. These instruments continued in operation by the Transitional Act as ABTIs. Some of these awards continue to operate.

(vii) Schedule 9 instruments: These include transitional APCSs and State minimum wage instruments. As earlier stated, APCSs were notional instruments originating under the Work Choices Act effective from 27 March 2006 and included the classifications and pay scales from minimum rates instruments including pre-reform awards, state awards, and other state industrial tribunal decision and instruments (including minimum wage orders for Victoria). State minimum wage instruments were created by the Transitional Act 99 and operate where orders, decisions or rulings of a state industrial body made before 1 January 2010 had the effect of providing a higher minimum rate than the national minimum wage order or transitional national minimum wage order.100 State minimum wages instruments continue to operate where rates for juniors, employees subject to training arrangements or people with disabilities provide for higher wage rates than the national minimum wage order.

(viii) Transitional Pay Equity Orders: These are instruments of the Transitional Act which are taken to have been created by the Commission to preserve the effect of equal pay orders issued by the Queensland Industrial Relations Commission (QIRC) in relation to the social and community services industry in that state. Two transitional pay equity orders currently operate and relate to Division 2B State awards 101 and Division 2B State reference transitional awards.102

(ix) Copied State awards: A Copied State award is the continued operation of certain State awards when a transfer of business occurs in relation to employees of non-national system State public sector employers who transfer their employment to a national system employer. 103 Copied State awards are not technically transitional instruments. However in previous Annual Wage Review decisions they are dealt with under the transitional instruments chapter.104

[82] The Background Paper posed the following questions for the consideration of interested parties:

Instruments of general application

1. Given the operation of s.113 of the Fair Work Act, can the long service leave awards be terminated?

Outstanding issues

2. The parties are directed to review the list of existing transitional instruments at Appendix 1 and indicate whether there are instruments on the list in which they have an interest and that they consider need to remain current.

3. Do the parties agree that when the modernisation processes have been completed, the modernisable instruments in Appendix 1 should be terminated by the Commission?

Apprentices and trainees for whom competency-based wage arrangements apply

4. Are there any other transitional instruments not listed above that are preserved by the Transitional regulations for the purposes of providing for competency-based arrangements and provision of tools?

5. Do parties agree that, regardless of the termination and modernisation of other transitional instruments, there will be an on-going requirement for the Commission to review Division 2B State awards, award-based transitional instruments and related APCSs as part of the annual wage review?

6. Given the limitations under s.154, can instruments be made under the Fair Work Act to replace these instruments?

The Social and Community Sector Pay Equity Order

7. Given the 2012 ERO preserves the operation of transitional provisions and the Fair Work Act obliges Commission to terminate transitional instruments, is there any reason why the Commission should not terminate the remaining transitional instruments related to the SACS modern award?

Transitional Pay Equity Orders

8. Given these instruments continue to operate until 1 December 2020, should they remain as transitional instruments or can these entitlements be preserved for the affected employees in another Fair Work Act instrument?

The Annual Wage Review and Transitional Instruments

9. Do the parties have any views about the on-going process of review for transitional instruments as part of the annual wage reviews?

3.2 Overview of submissions

[83] A number of interested parties lodged written submissions in relation to the above issues. The respective positions of those parties is summarised below.

Question 1

[84] The Australian Government submitted that long service leave (LSL) awards could be terminated because s.113 of the Act had the effect of preserving LSL entitlements in pre-modernised awards:

‘Unless an exception in subsection 113(2) applies, subsection 113(1) provides that if there are applicable award-derived long service leave terms in relation to an employee, the employee has a long service leave entitlement in accordance with those terms. The terms refer to those provided for under an award, or State reference transitional award, that would have applied at the ‘test time’ based on the employee’s current employment circumstances. Subsection 113(3A) provides that the ‘test time’ is immediately before commencement of the National Employment Standards (NES) in that jurisdiction.

Accordingly, section 113 of the Fair Work Act preserves the effect of long service leave terms in pre-modernised awards (i.e. awards in place before commencement of the NES). The long service leave terms apply to existing employees as at the transition time, as well as new employees. This formulation means that even if the awards are terminated at a later time, an employee can receive the benefits of long service leave entitlements if he or she would have been entitled to such terms as at the “test time”.

Given the effect of section 113, even if such awards were terminated, employees will still be able to derive the benefits of applicable award-derived long service leave terms if they would have had an entitlement as at the commencement of the NES, based on their current employment circumstances.’ 105

[85] The Australian Government submitted that, as the modern award objective requires a ‘simple, easy to understand … award system consideration may need to be given to making sure those covered by award-derived instruments understand their rights and obligations.’ 106 It also indicated that it did not regard the development of a uniform national LSL standard in the NES as a priority.107

[86] The Ai Group took a similar position, and further contended that the existence of s.113 indicated that it was not the intention of Parliament that pre-modern LSL awards be maintained. 108

[87] The ACTU submitted that the Commission should be cautious in its approach to terminating LSL awards because termination could have the effect of extinguishing existing LSL entitlements. This submission was advanced on the basis that it was arguable that if a LSL award was terminated, there were no award provisions upon which s.113 could operate. 109 The ACTU also submitted that:

● it was not clear that the Commission had the power to terminate LSL awards; 110

● the Commission’s obligation was to terminate pre-modern awards and State reference transitional awards as soon as practicable after modern awards have come into operation, and it was not practicable to do so in circumstances where the Commission was unable to include LSL provisions in modern awards and where a federal LSL scheme was yet to be developed; 111

● the Full Bench’s 2010 Award Modernisation - Termination of Modernisable Instruments decision had established that it was not practicable to terminate a modernisable instrument if it would deprive employees of award coverage or impose unreasonable obligations on employees; 112 and

● the position with respect to NAPSAs and Division 2B State Awards was different, since they were subject to sunsetting provisions and therefore no action was required to terminate them. 113

[88] The CFMEU generally supported the ACTU’s position, but did not oppose the termination of LSL instruments they identified as relevant to their industries. 114 The TCFUA submitted that it did not oppose the termination of the Footwear – Manufacturing and Component Industry (Long Service Leave) Award 1977 because it had limited application and its provisions were less beneficial than applicable provisions in State LSL legislation.115

[89] The MTA identified three awards containing LSL provisions applicable to its members, namely the Vehicle Industry Repair Services and Retail (Long Service Leave) Award; the Vehicle Industry (Long Service Leave) Award 1977 and the Vehicle Industry Award 2000. 116 It submitted that s.113 preserved LSL entitlements even where the award had been terminated, but that the awards should not be terminated until a federal LSL standard was established.117 The MTA submitted:

‘To terminate these transitional instruments prior to establishing a new LSL standard would amount to LSL conditions essentially being governed by State legislation which would be impractical and also impose unreasonable cost obligations on employers who were bound by these preserved federal awards.’ 118

[90] The MTA also submitted that employees who are covered under the Vehicle Manufacturing, Repair, Services and Retail Award 2010 have their LSL conditions governed by the above Federal LSL awards. The MTA submitted that s.113(1) of the Act entitles such employees to LSL coverage under these awards, as such employees fall within the ‘test time’ specified in s.113(3)(a). 119 The MTA also made reference to the Federal Court decision in Maughan Thiem Auto Sales Pty Ltd v Cooper120 which, it submitted, confirmed the standing of the Vehicle Industry Repair Services and Retail (Long Service Leave) Award as an award whose entitlements are preserved by s.113:121

‘… it is our understanding that until such time as the Australian Government in consultation with state Governments and major employer and employee representatives develop a new LSL standard, existing LSL terms and entitlements are to be preserved.

Given the above, the federal LSL awards referred to above cannot be terminated until such time as a new LSL standard is established and fully implemented.’ 122

[91] The MTA also submitted that, in considering any change to the existing LSL arrangements as set out in s.113, it is also important to raise the flow-on impact on the existing redundancy pay provisions as contained in s.119(2) of the Act. 123

[92] In submissions in reply the ACTU submitted that the MTA’s view on the operation of the Act was inconsistent:

‘At paragraph (ii) they state that section “...has the effect of preserving long service leave terms in a pre reform (or state reference transitional) award, regardless of whether that award has been terminated - a view also embraced by the Australian Government. Yet at paragraph (x) they state that “…the LSL awards referred to above cannot be terminated until such time as a new LSL standard is established and fully implemented.’ 124

[93] ABI and NSWBC submitted that LSL entitlements would be unaffected if the Commission terminated the transitional instruments that contain LSL terms. ABI and NSWBC submitted that the events enabling preservation of entitlements by s.113 (that is, the commencement of the operation of the NES or the referral of industrial relation powers) have passed in all states except for Western Australia, and would not result in altering any employee’s entitlements derived under this section. 125 In relation to Western Australia, ABI and NSWBC submitted s.113 could not apply in relation to employees in Western Australia for the following reasons (at [4.5]–[4.6]):

‘ There are two categories of employees in Western Australia:

(a) employees already in the national system, who are employed by corporations; and

(b) employees who remain in the State system, as Western Australia has not referred its industrial relations powers to the Federal Government.

In respect of these groups of employees:

(a) there can be no State reference transitional award, as such awards only exist in States which referred their industrial relations powers; and

(b) any Federal awards that applied on a transitional basis under Schedule 6 of the Workplace Relations Act 1996 ceased operation on 27 March 2011.

Accordingly, it was submitted that there were no awards capable of attracting the operation of section 113 of the FW Act in Western Australia.’ 126

Question 2

[94] The ACTU submitted that it agreed, as a general proposition, that instruments correctly characterised as modernisable instruments should be terminated when the modernisation process was concluded, but that it was continuing to consult with their affiliates as to the proper characterisation of the instruments listed in Appendix 1. 127 Accordingly, the ACTU submitted they were ‘unable to offer a concluded view at present’ but would ‘ensure that the Commission is notified of any concerns as soon as possible.’128

[95] The CFMEU, Construction and General Division (CFMEU C&G), submitted a list of current transitional instruments (reproduced below) in which it had an interest, but did not submit whether it supported the continuation of these instruments. However, it also submitted that, if the decision of the Commission (Spencer C) in All Trades Queensland Pty Limited 129 (All trades) was affirmed on appeal, then the majority of NAPSAs and Award Based Transitional Instruments in this list have already been terminated.130

● Building and Construction Industry (State) Award:
● Building Construction Industry Award - State 2003:
● Building Employees Mixed Industries (State) Award:
● Building Products, Manufacture and Minor Maintenance Award - State 2003:
● Building Trades (Construction) Award 1987:
● Building Trades (Government) Award 1968:
● Carpenters & Joiners (General) Award 1993:
● Civil Construction, Operations and Maintenance General Award - State 2003:
● Concrete Products Factories (A.C.T.) Award 1999:
● Engine Drivers and Firemen - General - Award 1998:
● General Construction and Maintenance, Civil and Mechanical Engineering, &c. (State) Award:
● Glass Workers (State) Award:
● Joiners (State) Award:
● Metal, Engineering and Associated Industries (Accident Pay, Victoria) Award 1998:
● Metal, Engineering and Associated Industries (State) Award:
● Metal, Engineering and Associated Industries Award 1998:
● Mobile Crane Hiring Award 2002:
● National Building and Construction Industry Award 2000:
● National Joinery and Building Trades Products Award 2002:
● National Training Wage Award 2000:
● Order – Apprentices’ and Trainees’ Wages and Conditions (Excluding Certain Queensland Government Entities) 2003:
● Order - Apprentices’ and Trainees’ Wages and Conditions (Queensland Government Departments and Certain Government Entities):
● Order – Supply of Tools to Apprentices (Qld):
● Plant, &c., Operators on Construction (State) Award:
● Quarries, &c (State) Award:
● Railways Metal Trades Grades Award 2002: and
● Training Wage Award - State 2003.

[96] The CFMEU Forestry, Furnishing, Building Products and Manufacturing Division (CFMEU FFPD) also identified an interest in the following transitional instruments, but did not state whether they supported the continuation of these instruments: 131

● Timber and Allied Industry (Long Service Leave) Award 1999:
● Glass Industry – Glass Production (Long Service Leave) – Award 1999: and
● Furnishing Industry National Award 2003.

[97] The CPSU submitted that the transitional Government Administration Industry Sector - Minimum Wage Order-– Victoria 1998 referenced in Note 2 of the Background Paper had been superseded by AT841792 and AT825011. 132

[98] The TCFUA identified an interest in the following transitional instruments but did not say if it supported their continuation: 133

● Clothing Trades Award 1999:
● Textile Industry Award 2000: and
● Textile Industry (State) Award (NSW).

[99] The MTA expressed an interest in three awards earlier referred to in its submissions, and also identified that the Clerks (Vehicle Industry – Repair, Services and Retail) Award 2003, which was not included in Appendix 1, provided in clause 37 for LSL in accordance with the Vehicle Industry - Repair Services and Retail (Long Service Leave) Award. 134

[100] Ai Group submitted that the Metal, Engineering and Associated Industries Award 1998 and the Graphic Arts - General - Award 2000 should not be terminated ‘if there is any doubt about the ongoing operation of the ‘applicable award-derived long service leave terms’ which were derived from these awards.’ 135

[101] ABI and NSWBC submitted that they did not consider ‘any particular need to maintain the currency of the transitional instruments identified in Appendix 1.’ 136 ABI and NSWBC noted that, to the extent that any modern award covered the same employees covered by the transitional award, the transitional award can no longer apply in relation to such employees.137

Question 3

[102] The Australian Government submitted that some of the instruments in Appendix 1 may continue to be preserved as Division 2B Awards, 138 but did not specify which instruments.

[103] The ACTU noted that one issue that could conceivably arise from the termination of particular instruments related to those which were incorporated by reference in enterprise agreements, as permitted by s.257 of the Act. 139 The ACTU submitted that ‘where an ambulatory interpretation is provided for’, the termination of such instruments might have the practical effect of removing content from such enterprise agreements.140 They submitted that this was an unfair outcome to be avoided, and that the Commission should:

‘… issue specific directions in the process to encourage parties to whom enterprise agreements apply to come forward and identify the modernisable instruments that have been so incorporated, in order that the terminations of these instruments either be deferred until such applications have been made where necessary or the relevant agreements have been replaced.’ 141

[104] The TCFUA expressed support of the ACTU’s views on this specific issue. 142

[105] The CFMEU reiterated that if the Commission’s decision in All Trades 143 was affirmed on appeal, then the majority of NAPSAs and ABTIs had already been terminated.144

[106] The CPSU noted that there were at least 3 modern awards that now applied to the employees who may have been covered by the Minimum Wage Order: