TRANSCRIPT OF PROCEEDINGS
Fair Work Act 2009 1057782
JUSTICE ROSS, PRESIDENT
DEPUTY PRESIDENT MASSON
s.157 - FWC may vary etc. modern awards if necessary to achieve modern awards objective
Application by Australian Industry Group, The
Fast Food Industry Award 2010
2.02 PM, TUESDAY, 5 MAY 2020
JUSTICE ROSS: Good afternoon, it's the President. I have with me Deputy President Masson and Commissioner Lee. I understand we have on the line representing Ai Group Ms Bhatt and Mr Ferguson; is that right?
MR B FERGUSON: Yes, your Honour.
JUSTICE ROSS: For the SDA, Ms Burnley? Ms Burnley?
THE ASSOCIATE: I tried to connect it but it wasn't going through.
JUSTICE ROSS: All right. From the ACTU, Ms Ismail?
MS S ISMAIL: (Indistinct).
JUSTICE ROSS: We're just having a bit of trouble hearing you, Ms Ismail.
MS ISMAIL: Sorry, your Honour, is that better?
JUSTICE ROSS: Yes, that is, thank you. We'll endeavour to get Ms Burnley. Do you have a different number for her, Ms Ismail?
MS ISMAIL: I'm just looking at - the - she provided is (number supplied). I'm not sure if that (indistinct).
JUSTICE ROSS: And we have Mr Cullinan?
MR J CULLINAN: Yes with Michael (indistinct).
JUSTICE ROSS: Thank you, Mr Cullinan. And we have a journalist from the Financial Review, Mr Marin-Guzman; is that right?
MR D MARIN-GUZMAN: Yes, your Honour.
JUSTICE ROSS: We have to get the SDA on the line.
MS ISMAIL: Your Honour, that may have been the wrong number that (indistinct).
JUSTICE ROSS: All right. Thanks. Just bear with us for a moment, we'll send her an email.
MS ISMAIL: I sent the right number through, your Honour, so hopefully that fixes the problem.
JUSTICE ROSS: Thank you. We're just trying that number now. Ms Burnley? Ms Burnley?
MS BURNLEY: Yes, your Honour.
JUSTICE ROSS: Thank you. So if I can just run through - we're getting a bit of feedback from someone's phone. Can you be careful where you're putting the device? Can I just run through the material that we have before us? We have the application filed by Ai Group, which at attachment B sets out a submission in support of the proposed variation, we have a submission by the SDA, a short submission in support, Ai Group has filed earlier today an amendment to the claim which notes that the word "consent" was used twice in the second sentence of clause 89.3. It seems to be a minor drafting change of no substance.
We've received a submission from the NRA supporting the proposed variation, but they don't wish to be heard, and we've received a submission from the Retail and Fast Food Workers' Union opposing the proposed change for the reasons set out in the submission.
What I propose to do is go to Ai Group first and just ask - there are a number of questions about the material and the claim that we want to put, either Ms Bhatt or Mr Ferguson, and either you can deal with those or Ms Burnley can. And once we've concluded that and heard whatever those supporting the application wish to say we'll go to you, Mr Cullinan, and hear what you wish to say by way of supplementation of your written submission. And then the applicants will have an opportunity to say what they wish to say in reply.
So if I can go to Ai Group and the scope of the proposed schedule, and this is dealt with in proposed clauses (h)(i) through to (iv), and as I understand it - who is going to be talking for Ai Group?
MR FERGUSON: Mr Ferguson, your Honour.
JUSTICE ROSS: Okay. Mr Ferguson, it seems to be that the proposed schedule is framed in a way that the terms of the schedule will only operate if you don't fall within the ambit of the JobKeeper scheme; is that broadly the intent?
MR FERGUSON: That's the intention more or less. (Indistinct) and there'll be some employees that fall outside that legislative scheme.
JUSTICE ROSS: It's that issue, and of course Mr Cullinan's submission takes issue with you about the description of it being a regulatory gap, and I want to understand that in a bit more detail. What do you say is the gap? Because for most businesses if they have a reduction of 30 per cent in their revenue then they would qualify. Which group of businesses is this particular amendment targeted at?
MR FERGUSON: Well, that's right in that the legislative scheme provides for some flexibilities to employers qualifying in the sense that they could then meet) that 30 per cent threshold, but if one applies the context for larger businesses with a revenue of over $1,000,000 unless they meet the 50 per cent threshold in short terms. This is intended to cover employers, large employers, who we understand won't meet, or they can't meet that requirement for over a billion dollar turnover and afford some flexibilities in relation to their employees, and also employers who don't meet the 30 per cent threshold, but it would also apply in the context of employees who might not qualify themselves.
DEPUTY PRESIDENT MASSON: It's Deputy President Masson here. How many employers fall into that category of over a billion dollars?
MR FERGUSON: I can't say with certainty how many, but I can say there are very large employers such as McDonald's on my instructions that do not currently qualify as a corporate group, you know, on the basis of reaching the threshold but (indistinct). And also as I am instructed a very large number of franchisees won't meet the requirements of the JobKeeper, but I am not able to assist by telling you how many, and probably specifically ‑ ‑ ‑
DEPUTY PRESIDENT MASSON: So when you say the franchisees wouldn't meet the requirements of JobKeeper, is that because they wouldn't meet the 30 per cent threshold?
MR FERGUSON: Yes. Yes, to provide context there might for example be franchisees that operate multiple stores and the stores are experiencing different levels of difficulty based on factors such as where they're located, whether they're a drive through or not, and it sometimes might mean that the particular store is suffering extremely adverse consequences from the current crisis but there's another store referred to in the same level and then that may mean that as a group, if you will, meets the 30 per cent requirement but that's no assistance to employees trying to deal with that at a particular store in which the employees work that has no work, or has very little work, if you will, depending on the circumstances and that's why we're trying to provide some sort of modest flexibility.
JUSTICE ROSS: Do I take it from your comments about franchisees that you're talking here about McDonalds operations?
MR FERGUSON: Yes, certainly there's the McDonald's operations is one employer for us, but, you know, any number of franchisees won't qualify, but are nonetheless ‑ ‑ ‑
JUSTICE ROSS: Well, are you representing any other business that has a turnover of over a billion in the fast food sector in these proceedings?
MR FERGUSON: We're representing a number of members in the fast food sector (indistinct) but I'm representing ‑ ‑ ‑
JUSTICE ROSS: No, but what I'm asking you is which of those other than McDonald's do you - are you representing any other members that have a turnover of over a billion a year in this sector?
MR FERGUSON: I can't confirm that, your Honour. I can get instructions but I can't confirm - I don't have the information to confirm.
JUSTICE ROSS: You don't know if Hungry Jack's is a member or that you're representing them?
MR FERGUSON: I don't know whether they have a - I don't know their turnover in terms of whether they (indistinct) the threshold. But I'm just (indistinct).
JUSTICE ROSS: One of the issues, speaking for myself, is that other than - and this is a point taken against you in the RAFFWU's submissions, that you've made a number of assertions about the impact in the fast food sector. You've indicated - I understand your submission, I think keeping it to McDonald's is the simplest way of dealing with the issue ‑ ‑ ‑
MR FERGUSON: Yes.
JUSTICE ROSS: ‑ ‑ ‑ and it's a dominant employer in the sector in terms of employees, et cetera, but there's no evidence before us that tells us whether they have suffered any loss in revenue at all. And you say they have, but that assertion is challenged, so it's not one we'll be relying on. So where's the evidentiary basis in support of the proposition that there are these large enterprises that have suffered a reduction in revenue, and it may be a significant reduction ‑ ‑ ‑
MR FERGUSON: Yes.
JUSTICE ROSS: ‑ ‑ ‑ but less 50 per cent, or there is the sort of patchwork problem that you described earlier, where there might be a - and I can recall from the evidence in the earlier fast food case, that there certainly were businesses that operated five or six different outlets and ‑ ‑ ‑
MR FERGUSON: Yes.
JUSTICE ROSS: ‑ ‑ ‑ look as a matter of logic I can accept at a general level that those outlets without a drive through may be more likely to suffer a reduction in revenue than outlets with a drive through, and if you've also - I can think of a McDonald's near the border of New South Wales and Victoria on the highway, and I imagine it's not doing a booming business at this point in time because people aren't travelling.
MR FERGUSON: No.
JUSTICE ROSS: The problem is we don't have any evidence about any of that.
MR FERGUSON: No, and I appreciate that and (indistinct) that point. Obviously we present this claim given the context of this crisis and we're seeking to take emergent relief, that necessity for urgency is (indistinct) the traditional significant evidentiary case that we would ordinarily provide because doing so would defeat the purpose we're trying to achieve providing emergent relief for employers (indistinct).
JUSTICE ROSS: Yes. No, from my part I don't accept that. Your assertions are opposed, and we can move - there's no impediment to the Commission moving quickly or sitting on weekends or doing anything like that. You've obviously been negotiating with the union for some time. The question is - and the evidence really would need to go to two things, it seems to me, one is demonstrating some impact in this group, given that the JobKeeper arrangements are intended to provide broad flexibility across the community that's impacted by the measures that have been put in place to deal with the pandemic.
So there's one issue, the impact. The second element of the evidentiary case that seems to me is, well, how are the proposed flexibilities going to assist in maintaining employment? Now, we see that there's the assertion made, and it's made again in the SDA's more recent submission, and I accept that you've got a shared objective to retain people in employment, but what I want to know is how do these changes facilitate that?
MR FERGUSON: Yes, so I'll come to the both points, which is in relation to the evidentiary points. What we would say that it's difficult to take into consideration, as your Honour has just pointed out in detailed the discussion between ourselves and the SDA (indistinct) industrial association.
We've had discussions and formed the collective view that there is a need for these sorts of reforms - variations because of the circumstances of (indistinct) industry. Now, what would be significant (indistinct) in that context (indistinct) provisions which are directed at the sort of flexibility that is necessary and tailored to the circumstances faced by employers.
And yet (indistinct) evidentiary case because again we hadn't known before 12 o'clock today that there would be any party that may be against us or contesting the factual proposition that employers in this sector are adversely affected because of the current crisis and government's initiatives to slow the transition (indistinct). We (indistinct) that would not be contested by the parties who have awareness of what is going on in the sector, but we don't provide (indistinct) of course to raise those arguments, but we say that that shouldn't lessen the weight that should be afforded to the consent from the major parties that has been reached and to be relied upon in the context of (indistinct) to justify the variation.
JUSTICE ROSS: Except in the other awards there was no opposition, and moreover the Minister supported the variations.
MR FERGUSON: Yes. I guess that's what - all we can say is that those are matters (indistinct) of the claim, but I understand your point. But coming back to the matters of logic, I mean, could the (indistinct) there are clearly stores operating in circumstances where there must be reduced traffic and reduced requirement for goods and services because of (indistinct) government issued measures to slow the economy - or not to slow the economy to slow (indistinct) but I want to raise some examples. You can obviously take, for example, the situation of (indistinct) where there's been (indistinct) a dramatic reduction in traffic. (Indistinct) as well, and of course there are less people travelling on roads because of the mandatory restrictions to travel.
Now, all of that we would say self-evidently (indistinct) the situation where there are very adverse (indistinct) circumstances for fast food employers (indistinct) threshold, all of those sorts of situations we say can't - or that (indistinct) can't be contested, although we accept that we haven't put forward any evidence about the actual financial impact on anyone other than that there are gaps in what (indistinct) environment and now (indistinct) are not eligible for JobKeeper. That's the reason why (indistinct) in our application for coverage. We were (indistinct) to those people who actually don't qualify, and so in other words (indistinct) for anyone who does (indistinct).
But moving on I suppose to that next point in how to achieve the variation (indistinct). Let us work through those one by one if I may, unless there any questions about what I just put?
JUSTICE ROSS: No.
MR FERGUSON: (Indistinct) - sorry.
JUSTICE ROSS: No, I was just making clear I didn't have any questions about what you had put.
MR FERGUSON: Good. Thank you, your Honour. In relation to annual leave the intent here is that we've got that additional leave - where you've got a permanent workforce that is not required because a slowdown in the operation, there is less staff (indistinct) and you're no longer operating (indistinct) as the (indistinct) restaurants in the sector do operate and they're not operating because of the Covid restrictions. It would provide them with that alternate (indistinct) services of other employees to take the drastic step of terminating their employment or making them redundant if you will. It was an option, and potentially putting them on a period of paid leave if they had approved annual leave whether (indistinct). And we had to be careful to build in protections that make sure that situation where you're requiring people to take annual leave for reasons triggered by the Covid pandemic will go the (indistinct) the provision of H.8.5. We have at this point ‑ ‑ ‑
JUSTICE ROSS: So here you're talking about the close down arrangement in H.9 is it?
MR FERGUSON: No, in annual leave H.8. So the ‑ ‑ ‑
JUSTICE ROSS: But that's - you're not requiring anyone to take annual leave in H.8.
MR FERGUSON: You're right, we don't require them, requesting with the obligation on the employee to (indistinct) the equipment.
JUSTICE ROSS: And what happens - how do you resolve any dispute about that?
MR FERGUSON: In the ordinary way under the award.
JUSTICE ROSS: And if there's no agreement?
MR FERGUSON: It would turn on whether the refusal was unreasonable.
JUSTICE ROSS: Except that how does the Commission determine that question?
MR FERGUSON: Well, ultimately it would be the usual resolution procedures in terms of having referred them to the conciliation and so forth.
JUSTICE ROSS: When conciliation, and when you say, "and so forth", that's it, isn't it? The Commission can make a recommendation but ‑ ‑ ‑
MR FERGUSON: No.
JUSTICE ROSS: ‑ ‑ ‑ it can't make a binding decision, it can't arbitrate a dispute about whether or not there's been an unreasonable refusal.
MR FERGUSON: Yes. No voluntary (indistinct) depend upon approach in that context. But we would accept of course it would unreasonably refuse (indistinct) in breach of award obligation. You either (indistinct) practical measures that, you know, in the current context (indistinct) that would result in significant disputation, even if there are significant safeguards - if more were included in previous award variations dealing with the crisis. We have (indistinct) and (indistinct) with additional protection. And there is of course a requirement that employees have two weeks as well.
Let's move on to close down. This applies where an employer closes down their operations, and this is in paragraph 9.2, should (indistinct) the close down for reasons (indistinct) will go (indistinct). So the (indistinct) where an employer (indistinct) makes the decision that it is going to close down and that employer puts someone on annual leave as part of that close down, and they haven't got sufficient leave to cover the duration of the close down to put them on unpaid leave.
JUSTICE ROSS: And what does closing down part of their operation mean? So in a McDonald's context, if they close down their restaurant ‑ ‑ ‑
MR FERGUSON: Yes.
JUSTICE ROSS: ‑ ‑ ‑ and keep their drive through open they could direct someone to take annual leave on 48 hours' notice?
MR FERGUSON: Yes, that's right. Or go to - I'll give the example where a franchisee operated multiple stores, and (indistinct) my understanding is (indistinct) some (indistinct) and some are looking at closing down or have closed down, and this would give some employers ability to avoid taking the more drastic steps of making people redundant which we say has benefits that flow to employers and employees (indistinct) affected but it did equally relieve employers for loss of the (indistinct) employers had work in (indistinct) and so forth in circumstances where, you know, it's obviously (indistinct) but (indistinct) return to normal (indistinct) put quite a tight timeframe around this at the moment in that this only applies where (indistinct) close down (indistinct) unpaid leave. You have to commit to a close down for three to four weeks (indistinct) and the unpaid leave has to not extend beyond eight weeks.
It would be difficult to try and balance (indistinct) for employers with some very significant protection for employees to make sure you can't go off on an indefinite basis. Again, we say (indistinct) protection (indistinct) the Full Bench should be minded to make (indistinct) notwithstanding (indistinct) evidentiary case is that the changes are only very temporary in nature, if not, (indistinct) for long-term variation where we have (indistinct) on employees. And there are other safeguarding in the sense that (indistinct) and there's also an ability (indistinct) employee's request is (indistinct) refuse an employee working secondary employment or engaged in training (indistinct) obviously (indistinct) JobKeeper legislation.
JUSTICE ROSS: Yes, I know that. Under part 6.4C though a JobKeeper direction does not apply to an employee if the direction is unreasonable in all the circumstances. I think that's section 789GK. I don't see that protection here.
MR FERGUSON: Yes. I think what we have been trying to do is implement protections that we thought were meaningful in the context of the (indistinct) flexibilities and here we did think that when you look at the extent of the flexibility, for example, (indistinct) of unpaid leave, and so forth, and (indistinct) the reasons why you put people on leave when you close down, (indistinct) close down and general (indistinct) before, it did seem to us that it was necessary to put that sort of additional protection in. These terms are more significant, and additional protection and for the very (indistinct) that you should utilise these requirements that is by consent (indistinct) by the Fair Work Commission.
And the parties have (indistinct) for that additional protection was necessary, we've tried to (indistinct) in various sectors of (indistinct) legislation, but I accept that (indistinct) smaller sectors (indistinct).
JUSTICE ROSS: Yes. How do you say it complies with the requirements of section 93(3)?
MR FERGUSON: I'm just bringing that up.
JUSTICE ROSS: See, that permits us to include in a modern award a term allowing an employer to direct an employee to take paid annual leave but only if the requirement is reasonable. And, as you know, the authorities on that section say that, as does the explanatory memorandum, that a consideration of whether or not a requirement is reasonable involves taking into account the personal circumstances of the employee, which has also been a feature of some of the other Covid-19 scheduled variations.
MR FERGUSON: I'm not sure that, and I may (indistinct) that had been a feature of the close down provision in terms of the other awards, and we thought that we would ‑ ‑ ‑
JUSTICE ROSS: The other awards I think had a close down provision in them.
MR FERGUSON: Yes, I'm just (indistinct) made mention of that. From memory I'm not sure if that specific element was built in to the close down provision. I think the Commission (indistinct).
JUSTICE ROSS: But in any event, your submission doesn't address section 93(3) at all.
MR FERGUSON: Just one second. That was what we sought to do (indistinct) but we sought to have sufficient protection to say that they would be reasonable, the (indistinct) requirement would reasonable in terms of it only being applied where there is close down and it's (indistinct) agreement and there is notice that's required for all (indistinct) generally.
But I take your point that it could also, if the Commission was minded to include the provision in the award, include an additional (indistinct) requirement in relation to employees' personal circumstances. It doesn't include (indistinct) the annual leave provision of some of the other awards. I mean, that's something (indistinct) but we had formed the view that that was necessary when you have regard to all of the other protections and limitations on the circumstances in which it is operated. It would ultimately however be preferable that employees be put on annual leave in circumstances where they would otherwise have no work for them, they might be terminated and have their annual leave paid out, and lose their job.
But we do think that this variation ought be (indistinct) in terms of support.
JUSTICE ROSS: Yes. Can I take you to the flexible part-time employment provision?
MR FERGUSON: Yes, sure.
JUSTICE ROSS: And Mr Cullinan makes the point that - well, not to put too fine a point on it, that Ai Group had made an application in similar terms last year and it was rejected on the basis of a lack of merit. I understand what you say about the change in circumstances in your submission. But on my reading of it the provisions of page 7 differ from what was previously sought.
MR FERGUSON: Yes.
JUSTICE ROSS: At least insofar as - and there may be other differences, I'd invite you to take me to them, but clause 7.6F that an employee can refuse to work the additional hours when offered.
MR FERGUSON: Yes.
JUSTICE ROSS: Whereas before I think it was they would express their availability, they would have a guaranteed minimum number of hours, but they could be rostered and would be required to work up to or within the scope of their ability and in excess of their guaranteed hours, and they would do that at ordinary time.
MR FERGUSON: Yes. That's right, your Honour. We agreed with this different safeguarding and additional safeguarding and we say that (indistinct) consideration to what (indistinct) before (indistinct) employees (indistinct) without employers breaching the award, but you're right (indistinct) safeguard (indistinct) is entirely subject to agreement between employers and employees in the sense that an employee can just continue to operate under the current part-time arrangement unless they've agreed to this sort of arrangement.
JUSTICE ROSS: Yes.
MR FERGUSON: So that is (indistinct) protection. It is not that these new flexibilities can be utilised unilaterally to change people's arrangements.
DEPUTY PRESIDENT MASSON: Mr Ferguson, it's Deputy President Masson.
MR FERGUSON: Yes.
DEPUTY PRESIDENT MASSON: But that inability to unilaterally change wouldn't apply in circumstances of a new employee being employed, would it?
MR FERGUSON: No.
DEPUTY PRESIDENT MASSON: They would be able to be employed subject to the flexible part-time arrangements in (h), wouldn't they?
MR FERGUSON: Provided there was an agreement in accordance with (indistinct).
DEPUTY PRESIDENT MASSON: Yes, but presumably from an employer's viewpoint employing somebody during the pandemic would be conditional upon entering into such an agreement I would imagine.
MR FERGUSON: They may. We don't (indistinct) through this course, your Honour. That's right, (indistinct). In fact (indistinct). It is - (indistinct) application, or intention (indistinct), and of course there's inevitably speculation is that (indistinct) employers some (indistinct) flexibility in how they (indistinct), or (indistinct), because given - mostly (indistinct) is a very changed (indistinct) environment.
It is very hard to make prediction about what level of demand will be in the months ahead, and as such to make clear (indistinct) about precisely what level of work or (indistinct) times (indistinct) people, very difficult to predict, in our submission, and (indistinct) submission, but difficulty (indistinct), and they can't just rely on (indistinct). Part of the intention is to enable employers to make that decision to bring somebody on, and (indistinct) to guarantee a particularly large number of hours, but if we're (indistinct) to come out of this lockdown and demand starts to grow that they're also not providing (indistinct) hours to those staff (indistinct) and so forth. But of course the other (indistinct) this (indistinct) for three months. At that time the ordinary part-time provisions that the award (indistinct) - - -
DEPUTY PRESIDENT MASSON: But not in the case of - on my reading of the provision not in the case of part-time employees who have commenced during the period of the operation of this clause, because I understand they would revert to casual employment at the end of that period. Is that correct?
MR FERGUSON: (Indistinct), to allow people to work on a part-time basis beyond that point, but the reality is if someone is - these provisions are (indistinct) for three months. At the end of these provisions the only relevant award that would govern part-time employment are the (indistinct) part-time provision. In terms of working - for those who apply and working (indistinct) going to need to agree on certain things. I don't think (indistinct) in my submission regulate and mandate the agreement. So what we have tried to put at (indistinct) is a transitional arrangement that will therefore govern the type of employment beyond that date in the absence of agreement.
So if you're brought in in the next three months and the employers don't agree (indistinct) beyond that period and you don't (indistinct) agreement (indistinct), well you just continue as a casual. So what we were dealing with there was (indistinct) where (indistinct) employment (indistinct), or that they just sort of fall into a gap whereby there's no (indistinct) regulation of the arrangement. So it is a temporary measure, but the difficulty (indistinct) if nothing else is agreed then they would be casual.
We tried to - well, a mechanism to deal with this, because it is difficult for employers who needed to know what (indistinct), but (indistinct) to offer people work. It also of course enables (indistinct) to be agreed between the parties where there's mutual (indistinct) that that's going to the (indistinct), and it is (indistinct) in the context of this crisis that is useful, and it's likely to be used by some employers who recognise the challenges (indistinct) in relation to whether it's (indistinct).
But, Deputy President, yes, that's right, it would continue as casual afterwards, but you can (indistinct).
DEPUTY PRESIDENT MASSON: All right. Thank you.
MR FERGUSON: And of course the other point we would make is that (indistinct) that there is (indistinct), and obviously not the current provision. Are there any final questions about that from the Bench?
DEPUTY PRESIDENT MASSON: No.
MR FERGUSON: I just (indistinct) in terms of the (indistinct) any additional requirement (indistinct). (indistinct) whether or not put that (indistinct) before. In terms of the (indistinct) provisions (indistinct). We concede and (indistinct) this provision is fashioned on a significant (indistinct) to providing (indistinct), which in the view of the major industrial (indistinct) provides some (indistinct) in the basis of these claims, but which do include very significant (indistinct) around their operation about which we would think (indistinct) appropriate, and (indistinct) in the context of (indistinct) and the very significant adverse trading (indistinct) at the moment, and we say that the (indistinct) detail (indistinct) for employers in the sector. (indistinct) our submission (indistinct) in our materials unless there are any further questions.
JUSTICE ROSS: All right. Thank you. Ms Burnley or Ms Ismail, was there anything you wanted to add?
MS BURNLEY: Your Honour, Ms Burnley. Just a few comments regarding these processes we have been undertaking (indistinct) in regard to (indistinct) provision for (indistinct) and (indistinct) situation (indistinct). With regard to (indistinct) we have had (indistinct) discussions and (indistinct) and (indistinct). We don't know the (indistinct) that there has been (indistinct). It can be within (indistinct) such as the CBD (indistinct) those restaurants have closed (indistinct). The operation of most of those (indistinct). Shopping centres have also faced the same issues about they don't (indistinct) patronage in the shopping centres. They're the key areas where there have been quite difficult (indistinct).
I understand there's been (indistinct) shutting for restaurants (indistinct) relying on the drive-through and walk through and walk in counter to pick up (indistinct) food, but there has been decline in (indistinct) industry in (indistinct) which we believe (indistinct), and (indistinct) situation which (indistinct) or being stood down (indistinct) and not getting a job if you're a casual, (indistinct) available for (indistinct).
On the issue of the development of the schedule (indistinct) payment doesn't (indistinct) for a little while and we had the - at the start of the discussions around the previous decisions which were issued by the Commission which were made (indistinct) variations which were made prior to the JobKeeper registration being (indistinct) approved by the parliament, so there's been a missed - and to how and what has been included into the clauses and what we have tried to provide in the schedule is a close alignment with protections (indistinct) provided in the JobKeeper legislation.
In respect to the issue of the annual leave regarding (indistinct) Covid-19 (indistinct) we have had to set up and (indistinct) complete new schedules that have been approved by the Commission. It was initially one of our staff that we had proposed would (indistinct) but eventually it was moved because (indistinct) they were moved out to the schedule with that being required because of (indistinct) 93.3 (indistinct) we didn't have the employer to (indistinct) put that provision in there that (indistinct) requests to take annual leave.
On the issue of training the arbitration of the JobKeeper is only available if a direction is issued and directions in JobKeeper (indistinct) provisions doesn't have directions in relation to whether (indistinct) somewhere else, a different location; a direction as to what duties you can undertake; and directions regarding to stand-down. Anyone (indistinct) JobKeeper doesn't have a right to arbitration. So therefore the other conditions regarding annual leave, et cetera, relies on only the Commission to (indistinct) when there is a dispute to mediate and conciliate, which is unfortunate because (indistinct) arbitration (indistinct) will be plenty who have to settle any disputes that they have which haven't been able to be met other than at the highest level (indistinct). So we say that the arbitration that has been (indistinct) to align with the JobKeeper legislation, and (indistinct) what level of (indistinct) shutdown (indistinct).
We also note, as the Ai Group has noted that there are very strict restrictions regarding stand-down or the annual leave and we also note that (indistinct) where he might be included, might to be included, but we hope that are (indistinct) where we've come to and we (indistinct) to improve. So there are some very tight restrictions on employers being able to access some of that provision, so that the company (indistinct) improves (indistinct) to shut down (indistinct) emergency (indistinct) pretty much till now (indistinct) those provisions that (indistinct).
Your Honour, (indistinct) also noted in (indistinct) requests to be able to do part-time (indistinct) cover (indistinct) changes between what we've provided previously that the Commission (indistinct) in regard to the part-time provision and that (indistinct) operating in conjunction with their current part-time employer, and it may have (indistinct) with an agreement (indistinct) part-time if they are (indistinct) employees (indistinct) have to achieve (indistinct) schedule (indistinct) employment. There's often lots of conditions of employment so (indistinct) the job, which is unfortunate but (indistinct) see how the system operates currently. We think that it is very important that the (indistinct) did note the adjustment at (f), which was that an employee hadn't incurred any additional hours at any time, which is (indistinct) agreement (indistinct) prepared previously.
Your Honour, I think I've (indistinct) now unless there was are any other specific questions that I haven't addressed.
JUSTICE ROSS: Thank you, Ms Burnley. Anything from you, Ms Ismail?
MS ISMAIL: Nothing further, no.
JUSTICE ROSS: All right.
MR CORNTHWAITE: Your Honour, before we (indistinct) something further in relation to 933(?), the questions raised in the - - -
JUSTICE ROSS: Yes.
MR CORNTHWAITE: In relation to the annual leave element I would just note that there are (indistinct) regarding the (indistinct) towards (indistinct) alignment. Firstly, in (h).8.1 the request can only be made subject to the employer (indistinct) employee's (indistinct) circumstances and you - - -
JUSTICE ROSS: I'm not really going to the annual leave request because that's not a power to direct. I'm going to the close-down.
MR CORNTHWAITE: Yes. Well, (indistinct) I was going to (indistinct) otherwise (indistinct) that point. In relation to close-down we object if there's not a (indistinct) this provision not be (indistinct) but if I could just make the point that it does only operate in the context of where the (indistinct) operate - operate in such, we say, (indistinct) circumstance that it would be reasonable. But to pick up on the point that was raised by Ms Burnley, if the Full Bench was of the view that (indistinct) necessary if the Bench are concerned then we wouldn't oppose that it brought it a requirement to be reasonable (indistinct) but the Commission (indistinct) it isn't necessary in our respectful submission.
JUSTICE ROSS: All right, thanks. Mr Cullinan, we've had the opportunity to read your written material and we have taken Ai Group to some of the matters that you've identified. Is there anything you wish to say by way of oral argument to supplement your written material?
MR CULLINAN: Thank you, President. So (indistinct) should it arise from what we've put already. We should note that FDA(?) permission hasn't been published, I don't think, on the website - - -
JUSTICE ROSS: Right.
MR CULLINAN: Because our - so we haven't actually (indistinct) but we understand that it is short and we have shared our submission about (indistinct) with Ai G and the (indistinct) and the ETU. In terms of the issues that have been placed already there's a few matters that we would want to raise. I think there was some discussion about the scope and (indistinct). We feel that the (indistinct) we don't deal with those employers that have agreements applying to them. Your Honour made mention of Hungry Jacks and we understand, just at least at the moment, Hungry Jacks and the KFC franchise or entity, and major entities have explained the reasons applying to them. But we understand this is (indistinct) affecting McDonald's Australia Limited and Domino's Pizzas Enterprise Limited as the two major entities which (indistinct) thresholds have.
There was several points made about the (indistinct) at one store and then (indistinct) to that potentially (indistinct) adversity or possibly even benefit other stores which offsets that, which means that the stores meet the 30 per cent test. We think that those are unlikely. Our members report to us that (indistinct) the franchise (indistinct) - they do have scenarios like those described by the AiG and that is where they've got members in that (indistinct) group where there is no (indistinct) and that store has suffered a substantial decline. Though that group of stores have met the 30 per threshold so its workers are on JobKeeper and receiving JobKeeper directions. There was a few of the points made about airports and road (indistinct) and (indistinct) stores. With respect, we would suggest that all of those types of arrangements are manifested by (indistinct) to meet the 30 per cent client revenue test and be on JobKeeper.
JUSTICE ROSS: But wouldn't the problem arise, Mr Cullinan, if they were - if we stick with the McDonald's example, if an airport McDonald's operation was one of the company operations, then it might be suffering a significant decline in revenue. It may have no revenue, but for the purpose of JobKeeper, all of the operations would be aggregated.
MR CULLINAN: Yes, and we'd say that the federal government dealt with this in the (indistinct) and in the statement it made, that those very large (indistinct) are able to deal with those types of arrangements, and in terms (indistinct) where an airport fast food outlet is shut, then section 524 would apply, and as per our other submissions, workers can agree right now to annual leave arrangements, but casual or part‑time work does nothing for those airport employees.
I think it needs to be reiterated that McDonald's and very many other employers in the fast-food sector all rely heavily on casual employment, and so the actual application of these provisions (indistinct) in circumstances where there's substantial decline in customer traffic at some stores would ordinarily be offset by a reduction in casual hours, and certainly in the order of above 30 per cent. In smaller declines in revenue one would ordinarily expect the contractual arrangements, just like the rest of the economy where part-time and full-time staff are maintained.
In terms of some of the other points that were made, I think there was a point made that the leave requests will turn on whether the refusal is unreasonable. Our submissions deal with these issues. We say that there is no problem to actually be fixed here. There's no example of a single situation where a worker has refused to commence a period of annual leave, and the flexibility that's being applied for as part of this application, it doesn't try - or resolve any actual problem being placed in the workplace.
In relation to the close‑down discussion, we have been discussing this issue with members this morning. We are deeply concerned by the example that was discussed in this hearing earlier of a part of a store potentially being shut and the rest of the store running, and that part of the business entitles the employer to stand down or close down its workers that would otherwise be working (indistinct) without pay.
And that's (indistinct) like McDonald's where we have around 110,000 workers, 90,000 of whom are crew members. They're not crew members drive‑through, they're not crew member front counter, they're not crew member restaurant or burger‑maker. They are employed as crew members.
We could very well have a situation where the workers find themselves rostered into the restaurant area, having worked regularly in other parts of the business, but workers that are on (indistinct), workers that are (indistinct) find themselves closed down and without work, without pay, and other workers, casual workers, potentially 15-year-olds, (indistinct) less than half the adult rate, are engaged to do work in other parts of the store, that structure bringing about a new close-down regime in the sector is of substantial (indistinct) to the union and we deal with that as well in our submission.
In relation to H7, and the SDA raises the point that was exercised by your Honour around employees being told to refuse to agree to additional hours, we say, with respect, (indistinct) that theme of H7.6 replicates the earlier application, and that then finishes by saying that an employee may work those additional hours. We say that they were always entitled under the old structure to refuse to agree to work additional hours, and so we say that that is not different from the previous application.
One of the features that it appears to arise in the discussion today in terms of the submissions from the other side is that it now appears to us that the structure of part‑time employment is intended to be used for casual employees, to confer casual employees into a form of employment where they can be arranged while other part-time employees are potentially stood down or put on annual leave, and of course that raises the spectre of the issue, in our submission, about the engagement of casual employees and rates of pay that don't include a casual loading.
We know that in February, for the first time in a decade, McDonald's commenced paying penalty rates on week nights and on weekends, and that this would have a veneer of enabling the employer to make a cost‑saving by the conversion of that casual employee workforce into this new form of part‑time employment in circumstances where other workers may be dislocated from their employment through the other measures which are being sought.
JUSTICE ROSS: But I just don't follow why they would do that. If you're suggesting that they put an existing part‑time employee, well, what would they do to them, direct them to take annual leave, or something of that nature?
MR CULLINAN: Or potentially shut down part of their business, such as the restaurant, the restaurant seated section, and say, "These shifts that we had intended to put you on for the next two weeks, where - the counter‑plating or restaurant, ordinary restaurant shifts, and because that part of our business is going to be closed for a period" - we had not foreseen that close‑down structure was intended to be used - and to be fair to Mr Ferguson, and he did say it again, that that part of the scheme would only apply where a store was not run, but he did earlier answer your query by agreeing that it would be a part of the store close-down.
So in circumstances where a structure would enable the employer to stand down current part‑time employees and roster casual employees converted into this part‑time arrangement for the next three months, that could make substantial (indistinct) for the employer, because those casual employees are likely to be - (1) they'd be paid a lower rate of pay, and it's not - also (indistinct) more than three months their personal leave accruals will be deleted, and so we're - in terms of this structure plays out (indistinct) ‑ ‑ ‑
JUSTICE ROSS: Just go back. Just take me through that. When you say at the end of the three months their personal leave accruals would be deleted, which part of the application are you going to there?
MR CULLINAN: That they will be converted to casual employment at the end of the three months.
JUSTICE ROSS: Yes, but the personal leave that they've accrued - I see, the personal leave. Yes, all right. The annual leave that they've accrued during that period would be paid out though.
MR CULLINAN: It often is. We're not sure that that's actually the entitlement of all, but it is often, but one would think that they'd have to maintain that accrual ‑ ‑ ‑
JUSTICE ROSS: I don't see how else it would work. They accrue an entitlement to annual leave on a continuing basis under the NES, so at the end of - if their employment as a part‑time employee ceases and they're re‑engaged as a casual, effectively, well, they would be paid out that money.
MR CULLINAN: Yes, but they ‑ ‑ ‑
JUSTICE ROSS: But they wouldn't lose it. Either way, they either retain an entitlement or they're paid it out, but they - I can't see under any circumstance whereby they'd simply forego the accrued entitlement to annual leave.
MR CULLINAN: Yes, we agree (indistinct) that's right. But otherwise we rely on our submissions we've already made.
JUSTICE ROSS: All right. Thank you, Mr Cullinan. Look, what we propose to do is, we're proposing to take an adjournment for ten minutes or so, once everyone has said what they want to say, so if I can just put you on notice about that. I'd ask that you all stay on the line while we're adjourned and then we'll come back and let you known what we propose to do. Before we do that is there anything that either Ai Group, the SDA or the ACTU wish to say in response to what Mr Cullinan has put?
MR FERGUSON: Two small points from Ai Group, your Honour. If I understood what (indistinct) Commission correctly, it doesn't seem to be the case that they are necessarily challenging the (indistinct) that there are (indistinct) that are acting (indistinct) and as a consequence of the Covid-19 crisis and (indistinct) point given the issue of (indistinct) on the issue (indistinct) competitive. The opposition seems to be more directed as an opposition that, well, there might be a (indistinct) understood that is coming to accommodate that for that loss of revenue. And so it wasn't (indistinct) without (indistinct) environment. That doesn't really give necessarily any merit on the (indistinct) has work to do for this (indistinct) and that (indistinct) of which we might fall, that included (indistinct) logically going to then put people (indistinct) work, you know, just because somebody was (indistinct) and that (indistinct) pressure off. In fact that's the issue we're trying to deal with. Given employers and employees don't (indistinct) to them, (indistinct) or terminating their employees, potentially (indistinct) not to engage them. And that's really what we're aiming at here.
The second point I would make is that I don't think the unions are agreeable (indistinct) that the employer group will likely misuse this (indistinct) provision as a way of putting - you know, insisting people on (indistinct) of unpaid leave, (indistinct) purpose to fill those hours. And part of that (indistinct) the structure of the close-down provision is that people can first (indistinct) and it just - it's difficult for (indistinct) provision of training operator or people in (indistinct) operations and that sort of (indistinct), putting people on annual leave during those (indistinct) and then going off (indistinct) other people to work (indistinct). I think it's incredibly (indistinct) and there's no (indistinct) might happen, but in any event it makes (indistinct). There's just that proposal. It's not a permanent change we are ultimately seeking. There's nothing further, your Honour.
JUSTICE ROSS: All right, thank you, Mr Ferguson. Anything from anybody else? No? All right, well, if you could bear with us we'll adjourn for ten minutes or so, just to discuss the future direction in the matter.
SHORT ADJOURNMENT [3.10 PM]
RESUMED [3.20 PM]
JUSTICE ROSS: Mr Ferguson, the position we have arrived at is that we're not prepared to grant the application on the material presently before us. We are prepared to give you an opportunity to file some evidentiary material going to two issues from the perspective of your clients, those that are award reliant, that is, the impact of the measures that have been put in place in response to the Covid-19 pandemic on their business and perhaps more importantly, how the measures that are being proposed will assist in meeting what is said to be the parties' shared objective of retaining as many people in employment as possible, or in connection with their employment as possible during this period.
Now the issue is, do you wish to take that opportunity and if so, when would you be in a position to file that material?
MR FERGUSON: I'll need to take some instructions from those members.
JUSTICE ROSS: All right.
MR FERGUSON: And we're obviously keen to (indistinct) as soon as possible but it is dependent on their (indistinct) and then their availability. If - - -
JUSTICE ROSS: Perhaps if you can advise my chambers and I'll ensure that all the other parties are informed of the position. And once we receive advice from you we'll issue revised directions in respect of the matter.
MR FERGUSON: Yes. Thank you, your Honour.
JUSTICE ROSS: All right, thanks, very much. We'll adjourn on that basis.
MR FERGUSON: Thank you, your Honour.
ADJOURNED INDEFINITELY [3.22 PM]