STATEMENT

Fair Work Act 2009
s.160—Variation of modern award

Variation on the Commission’s own motion – Hospitality Industry (General) Award 2020 and Restaurant Industry Award 2020
(AM2022/13)

JUSTICE ROSS, PRESIDENT

MELBOURNE, 2 MAY 2022

Section 160 Fair Work Act 2009 – variation on the Commission’s own motion – changes to the Superannuation Guarantee (Administration) Act 1992 – ambiguity or uncertainty.

Introduction

[1] On 22 February 2022, the Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Act 2022 (the Amending Act) received royal assent.

[2] Amongst other changes, the Amending Act removes the monthly minimum threshold for salary or wages to count towards the superannuation guarantee (repealing s27(2) of the Superannuation Guarantee (Administration) Act 1992 (the Superannuation Act)). 1

[3] The amendment applies in relation to a calendar month that is in a quarter beginning on or after 1 July 2022. 2

[4] The soon to be repealed s27(2) of the Superannuation Act provides:

‘27 Salary or wages: general exclusions

(1) The following salary or wages are not to be taken into account for the purpose of making a calculation under section 19:

(b) salary or wages paid to an employee who is not a resident of Australia for work done outside Australia (except to the extent that the salary or wages relate to employment covered by a certificate under section 15C);

(c) salary or wages paid by an employer who is not a resident of Australia to an employee who is a resident of Australia for work done outside Australia;

(ca) salary or wages paid by an employer to an employee who is not a resident of Australia for work done in the Joint Petroleum Development Area (within the meaning of the Petroleum (Timor Sea Treaty) Act 2003);

(d) salary or wages paid to an employee who is a prescribed employee for the purposes of this paragraph;

(e) salary or wages prescribed for the purposes of this paragraph.

(2) If:

(a) an employer pays an employee salary or wages in a calendar month; and

(b) the portion of those salary or wages that is not covered by subsection (1) is less than $450;

that portion of those salary or wages is not to be taken into account for the purpose of making a calculation, in relation to the employer and the employee, under section 19.’

[5] The Hospitality Industry (General) Award 2020 (the Hospitality Award) and the Restaurant Industry Award 2020 (the Restaurant Award) both provide a lower threshold for salary or wages to be taken into account for the purposes of the superannuation guarantee than the $450 currently provided for in s27(2) of the Superannuation Act. These are the only two modern awards with such a provision.

[6] The Hospitality Award currently provides:

“27.2 Employer contributions

(a) An employer must make such superannuation contributions to a superannuation fund for the benefit of an employee as will avoid the employer being required to pay the superannuation guarantee charge under superannuation legislation with respect to that employee.

(b) The employer must make contributions for each employee for such month where the employee earns $350.00 or more in a calendar month.”

[7] The Restaurant Award currently provides:

“22.2 Employer contributions

(b) The employer must make contributions for each employee for such month where the employee earns $350.00 or more in a calendar month.”

Statutory framework

[8] Section 160 of the Fair Work Act 2009 (Cth) (the Act) allows the Commission to make a determination varying a modern award to remove an ambiguity or uncertainty or to correct an error. It provides:

‘Variation of modern award to remove ambiguity or uncertainty or correct error

(1) The FWC may make a determination varying a modern award to remove an ambiguity or uncertainty or to correct an error.

(2) The FWC may make the determination:

(a) on its own initiative; or

(b) on application by an employer, employee, organisation or outworker entity that is covered by the modern award; or

(c) on application by an organisation that is entitled to represent the industrial interests of one or more employers or employees that are covered by the modern award; or

(d) if the modern award includes outworker terms--on application by an organisation that is entitled to represent the industrial interests of one or more outworkers to whom the outworker terms relate.’

Consideration

[9] The principles applicable to the interpretation and application of s.160 were set out by Asbury C (as she then was) in Property Sales Association of Queensland, Union of Employees re Real Estate Industry Award 2010 3 as follows (footnote omitted):

‘[14] The power in s.160 of the Act to vary a modern award is discretionary. The exercise of the power first requires consideration of whether there is an ambiguity, uncertainty or error in an award. If it is established that this is the case, further consideration is required as to whether the discretion should be exercised. Where there is no ambiguity or uncertainty, or where the Tribunal is not satisfied that there is an error in the terms of an award, there is no jurisdiction to vary a modern award under s.160 of the Act. This is consistent with the clear intention of the legislature to limit the circumstances under which modern awards can be varied outside 4 yearly and annual wage reviews.’

[10] The current $450 monthly minimum threshold under the Superannuation Act for salary or wages to count for the purposes of the superannuation guarantee means that an employer who complies with clause 27.2(b) of the Hospitality Award or clause 22.2(b) of the Restaurant Award by making superannuation contributions to employees earning $350 or more a month also complies with clauses 27.2(a) and 22.2(a) of those awards, respectively. Once the minimum monthly salary or wages threshold is removed from the Superannuation Act, that Act will require an employer to make superannuation contributions (or become liable to the superannuation guarantee charge) regardless of how much its employees earn each month. Clauses 27.2(b) of the Hospitality Award and 22.2(b) of the Restaurant Award may then create the false impression that a minimum earning threshold of $350.00 must still be met before superannuation contributions are to be made.

[11] My provisional view is that from 1 July 2022, clause 27.2(b) of the Hospitality Award and clause 22.2(b) of the Restaurant Award will create uncertainty as to when superannuation contributions are to be made, and that this constitutes an ‘uncertainty’ for the purposes of s.160 of the Act.

[12] My provisional view is that clause 27.2(b) of the Hospitality Award and clause 22.2(b) of the Restaurant Award should be deleted from the awards operative 1 July 2022, on the initiative of the Commission.

Next steps

[13] Any submissions opposing my provisional view should be lodged by 4pm (AEST) on 16 May 2022. Submissions should be sent to amod@fwc.gov.au.

[14] If any submissions lodged oppose my provisional view, a hearing will be scheduled.

[15] If there are no submissions lodged opposing my provisional view then a variation determination deleting the relevant clauses will be issued.

Other issues

[16] Changes may need to be made to most if not all modern award superannuation clauses to reflect the legislative changes in relation to stapled funds and underperforming funds. A further Statement will be issued in relation to these issues in the coming weeks.

PRESIDENT

Printed by authority of the Commonwealth Government Printer

1 Schedule 1, item 1, Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Act 2022

2 Schedule 1, item 2, Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Act 2022

3 [2012] FWA 10134 at [14]