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Fair Work Act 2009                                       1057714






s.158 - Application to vary or revoke a modern award


Application by Australian Hotels Association and United Workers Union


Hospitality Industry (General) Award 2010




4.07 PM, TUESDAY, 24 MARCH 2020


JUSTICE ROSS:  Thank you. I understand that we have by telephone Mr Ryan from the AHA?  Is that right?


MR P RYAN:  Yes, your Honour.  Appearing for the AHA.


JUSTICE ROSS:  Thank you.  Mr Redford from the United Workers Union?


MR B REDFORD:  If the Commission pleases, I appear for the United Workers Union.


JUSTICE ROSS:  Thank you, Mr Redford.  We have Mr Williams on behalf of the Commonwealth Attorney-General.


MR D WILLIAMS:  I appear on behalf of the Minister for Industrial Relations.


JUSTICE ROSS:  Thank you.  And we have Ms Kuzma(?) and Ms Zammit observing.  Is that correct?


MS ZAMMIT:  That's right.


JUSTICE ROSS:  All right.  I just want to touch on some of the procedural background before going to the application and calling on Mr Ryan and then Mr Redford and then Mr Williams.  The application was made - filed earlier this morning.  The application gives effect to an agreement between the AHA and the UWU.  The application utilised the Commission's COVID 19 web site portal and the parties have asked that the application be expedited.


The application was posted on the Commission's web site at 10.15 this morning and after consulting with the AHA and UWU the matter was listed for hearing at 4 pm today.  The notice of listing was sent to all subscribers to the Hospitality Award and posted on our web site at 11.30.


The notice of listing invited any party other than the AHA and UWU to notify the Commission in the event that they wished to be heard in relation to this application and we're hearing this matter in public in hearing room in Melbourne.  Other than the Minister, no other party has indicated a desire to be heard.


We are conscious that the notice provided to interested parties is much shorter than the Commission's standard practice, but while the Commission is no doubt bound to act judicially, which includes an obligation to afford parties procedural fairness, the application and content of the doctrine of procedural fairness is determined by the context.  In this regard, the relevant considerations are section 577(a) and (b) of the Act which require the Commission to perform its functions and exercise its powers in a manner which is fair and just and is quick, informal and avoids unnecessary technicalities.


The key context your considerations in the matters before us are the statutory framework, the consent of the key interested parties being the AHA and the UWU, the parties joint request for expedition and the need to respond quickly to a rapidly changing industrial environment.


In this instance, the consent of the key industrial parties is the central consideration.  In the event that the application was contested, then plainly different considerations would have been enlivened necessitating a more protected hearing process than the one that we have adopted in this matter.


If I go to the application, and I note, Mr Ryan, that you've filed a revised draft determination which clarifies a number of the matters of that were identified in your initial application, but at least on its face it doesn't appear to change the substance of what is sought.


Can I go - perhaps the most expeditious way of dealing with this is if I go to each of the elements of the application and test our understanding with you and then I will ask Mr Redford if he agrees once I concluded that.


So the intent is to include - to insert a new schedule, schedule L, award flexibility during the COVID 19 pandemic.  The schedule would operate from today's date until 30 June this year, though the period of operation can be extended on application.  During the period of operation, there are three key elements that you've agreed.  The first is under the heading classifications and duties, and this provides that as directed by their employer where necessary, employees will perform any duties that are within their skill and competence, regardless of their classification provided the duties are safe and the employees licensed and qualified to perform them.  And clause 25, higher duties, will continue to apply to those employees engaged on duties at a higher rate than their ordinary classification.


In relation to the hours of work provisions, the first in relation to full-time employees will permit an employer to direct a full-time employee to work between 22.8 ordinary hours and 38 ordinary hours per week.  The award currently provides that full-time employees can only be engaged on a 38-hour week.


Full-time employees who are directed to work less than 38 hours a week will be paid on a pro-rata basis and the arrangements for working ordinary hours in clause 29 will apply on a pro-rata basis.


Similar arrangements are proposed in relation to part-time employees that an employer may direct a part-time employee to work an average of between 60 and 100 per cent of their guaranteed hours per week.


In both of those instances for full-time and part-time employees, the flexibility operates despite the requirements for notice in clause 30.2, dealing with rostering and despite the clauses, clause 11 full-time employment and clause 12.3(a), part-time employment.


There are important safeguard is provided for the flexibility.  You set those out at L2.2(c), (d) and (e).  In paragraph (c), prior to issuing any direction for the working of reduced hours, the employer must consult with the affected employees in accordance with clause 8(a) of the award and provide as much notice as is practicable.


Secondly, if the affected employees are members of the United Workers Union, the employer must notify the union of its intention to implement these arrangements.  Paragraphs (d) and (e) are additional protections.  Paragraph (d) provides that if a direction is given for the working of shorter hours, the employee concerned will continue to accrue their annual leave and personal leave and any other applicable accruals under the award, based on their ordinary hours of work prior to the commencement of schedule L.


So as I understand how that would work is if, for example, an employer directs a full-time employee to work, say, 24 hours per week, then despite the fact the employee will be working less than 38 hours per week, their annual leave and other accruals will continue to be based on a 38-hour week that they were working under prior to the commencement of schedule L.


Paragraph (e) provides that if a direction to work shorter hours - if that employee who was so directed takes a period of annual leave or personal leave, the payment for that leave will be based on their ordinary hours of work prior to the commencement of the schedule.  Again, to provide an example, if we have the full-time employee directed to work 24 hours a week, then directed to take one week's paid leave, then that one week's paid leave would be paid for a 38-hour week, being the rate - being the number of hours they worked prior to the commencement of the schedule.


The third area of flexibility is in relation to annual leave.  And that provides that despite the various clauses in the award which require agreement or the provision of notice an employer may subject to considering an employee's personal circumstances, direct the employee to take annual leave with 24 hours' notice.


The clause also notes that that does not prevent the employer and employee agreeing to take annual leave at any time and further that during the operation of this schedule an employer and an employee may agree to the employee taking twice as much annual leave at half the rate of pay for all or part of any period of annual leave, instead of taking paid leave at the rate required by section 90 of the Act. I will come back to that in a moment.


The final provision provides that any dispute regarding the operation of the schedule may be referred to the Commission in accordance with the dispute resolution mechanism and the parties asked that the variation determination come into effect from today's date.


Can I go to you firstly, Mr Ryan - sorry.  Can I raise one matter about - and this isn't substantive issue - the wording of L2.3(c).  That appears to be based on - bear with me for a moment - the terms of the note that appears - note 1 that appears under section 55(4).  That section deals with the interaction between the NES and a modern award.  The relevant note says that it would be an ancillary or incidental term permitted by section 55(4) and then to quote, it says:


Instead of taking annual leave at the rate of pay required by section 90, an employee may take twice as much annual leave at half the rate of pay.


All I was going to suggest is that the wording of (c) be slightly rearranged so it says:


During the period of operation of schedule L, instead of taking annual leave at the rate of pay required by section 90 of the Fair Work Act, an employer and an employee may agree to the employee taking twice as much annual leave at half the rate of pay for all or any period of leave.


It's just so that it more precisely aligns with the note and the note is plainly a legislative indication of what's permitted.


So if I can go to each of you now and ask whether you have any objection to the change I've just read to L2.3, paragraph (c), but also whether you agree with my characterisation of each element of the variation determination and if there's anything you wish to add about the intent of those clauses.


Can I go to you firstly, Mr Ryan, and the I will come to you Mr Redford?


MR RYAN:  Thank you, your Honour.  Your Honour, the Australian Hotels Association agrees with the characterisation by his Honour of the various clauses in the proposed schedule.  We also do not object to the amendment to clause L2.3(c) in relation to the taking of twice as much annual leave at half the rate of pay.


JUSTICE ROSS:  Thank you.


MR RYAN:  Your Honour, this application which is essentially a consent application by the parties has been made with the intention of trying to keep employees in as far as possible in employment or provide accessibility for the taking of leave to assist them in what is a very difficult period at this time.


That is the intention.  It really covers off three key areas being assignment to other duties within their competence, (indistinct) in relation to the change of hours and (indistinct) can be directed to take or be taken by employees at half full rate.  I will leave it at that point for the moment, but if there are any questions or further submissions required (indistinct) the modern awards objective, we can address that later, your Honour.


JUSTICE ROSS:  Thank you, Mr Ryan.  I will come back to the modern awards objective once I've heard from Mr Redford about the characterisation of the various elements of the application and the proposed slight change to L2.3(c).  Mr Redford?


MR REDFORD:  Thank you, your Honour.  Your Honour, the union does not object to the proposed changes to subclause 2.3(c).  We also agree with the characterisation of the proposed variation that your Honour has outlined.  The only point of clarification I wish to mention relates to subclause L2.2(d).




MR REDFORD:  I understand that the intention of the parties is that that subclause encompass accrued entitlement, including, for example, severance pay or redundancy pay.  Where, for example, a situation may occur through the operation of the variation that an employee is made redundant, that the calculation of that employee's severance pay, if applicable, would be based on the ordinary hours or work prior to the commencement of the schedule.


My understanding is that's what the parties intend by the wording of that clause.  That's the only additional thing I thought to mention, your Honour, in addition to the characterisation of the proposal in general.


JUSTICE ROSS:  All right.  Thank you.  Mr Ryan, is there anything you want to say about Mr Redford's observations regarding the intent behind L2.2(d)?


MR RYAN:  Your Honour, that is consistent with our understanding of the intention.


JUSTICE ROSS:  All right.  The intention of both parties is on the record.  We understand that and if we give effect to the variation determination, that will also reflect our intention in the event that there is any ambiguity or uncertainty subsequently, an application can be made to clarify that issue.


Can I take you, Mr Ryan, to the modern award objective?  As I understand it, you rely on (a) relative living standards and the needs of the low paid, (c) the need to promote social inclusion for increased workforce participation, (d) the need to provide flexible modern work practices and I would imagine that (f) as well, the likely impact of the exercise of modern award powers on business, including productivity, employment costs and the regulatory burden.


Do I take it that the parties - the view of the parties is that the other consideration be the need to encourage collective bargaining, the need to provide additional remuneration for employees working overtime, unsociable hours et cetera; the principle of equal remuneration for work of equal or comparable value in (e).  In paragraph (g), the need to ensure a simple, easy to understand stable and sustainable award system and avoiding unnecessary overlap of modern awards and (h) the likely impact of the exercise of powers on employment growth, inflation, sustainability and the performance and competitive of the national economy; that in relation to those matters you say that those paragraphs are not enlivened or of particular relevance to this matter.  Is that the case?


MR RYAN:  Your Honour, for the Australian Hotels Association, yes, we in our submission and as part of the application which was filed earlier today, at paragraph 6(?) we must declare that we think the things that are provided at (a), (c), (d) and (f) and we've highlighted that in the current circumstances.


JUSTICE ROSS:  Yes.  Can I go then to the considerations that - and I note what you say in your application about the impact of COVID 19 and I should indicate that we've caused to be published on the Commission web site two information notes.  One is on the government responses to the COVID 19 pandemic.  That sets out the government's guidelines on social distancing and the further guidelines that took effect from midday on 23 March which included restrictions on the opening of certain facilities, including a number which would be covered by this award and a summary of the package of measures the government has taken.


There is also an information note on the data on the hospitality industry which gives some profile of the employees who are covered by the award and the employers.  Having regard to those information notes, there doesn't seem to be any doubt that the measures taken in response to the COVID 19 pandemic will have an impact on the businesses covered by the Hospitality Award in relation to their opening hours and the activities that they can engage in.


Can I go, Mr Ryan, to the particular section 134 considerations upon which you rely, relative living standards and the needs of the low paid.  On the face of it, if employees are working reduced hours, then their needs would be adversely impacted, but I take it that you put the proposition that consistent with your general observations the intent of the measures is to retain people in employment.  In other words, to provide an option of some hours rather than no hours.  And you've also taken steps in the protections that you've agreed upon relating to the accrual of annual and other leave and the obligation to consult et cetera, that those matters are also intended to mitigate any impact on the earnings of low-paid employees.  Is that a fair characterisation of the position?


MR RYAN:  Yes, your Honour.


JUSTICE ROSS:  And in relation to (c), the need to promote social inclusion through increased workforce participation, as you would be aware, that consideration is directed at employment and again my understanding from what you've put in your opening submission is that these measures are directed at seeking to retain as many people in employment as practicable during the various measures that have been put in place to respond to the COVID 19 pandemic.  Is that the position?


MR RYAN:  Yes, your Honour.


JUSTICE ROSS:  And I think the provision in relation to (d) and (f) are relatively self-explanatory.  The measures that you've agreed upon will provide for greater flexibility at the workplace level and for a reduction in the regulatory burden on employers.


Was there anything you wanted to add in relation to the modern awards objective, Mr Ryan.


MR RYAN:  Nothing further, your Honour.


JUSTICE ROSS:  All right.  Thank you.  Mr Redford, do you take issue with anything that I've just been discussing with Mr Ryan in relation to the modern awards objective and is there anything further you wish to say?


MR REDFORD:  No, your Honour.  I don't.  Although if the Commission pleases, I might just make a couple of (indistinct) points - - -


JUSTICE ROSS:  Certainly.


MR REDFORD:  - - - on behalf of the union, because we do support the application in terms of it being a short-term variation to the award to deal with the current crisis, because we agree it is a measured and appropriate modification to deal with the crisis.


There are a couple of matters that we wish to specifically note.  Firstly, the proposed variation is intended to be a short-term variation.




MR REDFORD:  Justified only by the untimely event and unprecedented nature of the crisis (indistinct).  For this reason the variation is (indistinct) to 30 June.  The draft determination contemplates that the variation could be exceeded.  That discussions between the union and the Australian Hotels Association (indistinct) that extension would only occur, however, for another limited period of time, say three months and also only if the circumstances of the COVID 19 crisis which exist - if they continue to exist at the time, justify it.  And also only with the consent of both the union and the AHA.


In other words, I think it is just appropriate to note on behalf of the union that the extension to these arrangements beyond 30 June is (indistinct) in a couple of months time, the union and our members reserve our rights to agree to or to oppose such a cause of action when the time comes.


(Indistinct) we just want to note that the proposed variation provides that if the flexible work arrangements contained (indistinct) implemented with consultation with affected employees must first occur and where appropriate the consultation also occur with the Union.  And thirdly, and it's been mentioned by my learned friend Mr Ryan, (indistinct) the proposed variation and the intention of the parties would be to ensure that employees throughout (indistinct) are not disadvantaged when it comes to leave entitlements, both in terms of their accumulation and their payment and that it is the further intent of the parties that when the crisis is over that these temporary arrangements cease and that workers stand in the same place they would have been had this all not been necessary.  And it's just with those specific things in mind that we wish to raise in particular that we confirm that we will consent to this application and support the orders contemplated in in it.


JUSTICE ROSS:  Thank you, Mr Redford.  Having heard from the AHA and the UWU, I will now go to the Minister's representative.  Mr Williams, do you have anything you wish to say?


MR WILLIAMS:  Yes.  Thank you, your Honour.  As you'd expect, we'll be brief (indistinct).  The Minister would like to congratulate the parties on their (indistinct) collaboration which has ultimately (indistinct) in bringing us where we are today.  A very clear (indistinct) it's a very important issue.  The Minister also thanks your Honour and the Full Bench in the Fair Work Commission (indistinct) to respond in such (indistinct) timing and (indistinct).  Of course, the Minister supports the application as made.


Your Honour, I'd like to make one brief submission in relation to the modern awards objective and then I will provide the statistics in support of that submission.


The Minister would agree that the application is supported by those parts of the modern awards objectives which has been discussed so far and on the basis of which the application is made.


The Minister would also point to subparagraph (h) and in particular the sustainability of performance and competitiveness or the national economy.  And then, briefly, (indistinct) industry would be affected - has been affected more immediately and more deeply than others and the application obviously reflects on (indistinct) industry.  The award clearly (indistinct) in the hospitality sector that comes with travel bans and social distancing and the like.  And (indistinct) these two sectors contribute around $120 billion to the Australian economy per year and they collectively support nearly two million employees.  The accommodation and food service industry employs more than 811,000 employees which represents some 17.5 per cent of all Australian employees.  And also relevantly, more than two-thirds of those are employed under awards which (indistinct) arrangements.


These industries are also disproportionately represented by young people and (indistinct) small businesses and these employees (indistinct) are particularly vulnerable to the effects of the current crisis.  Over half of the employees in the accommodation and food services industry are between 15 and 24 years and small businesses make up (indistinct) per cent (indistinct) industry.


These are the Australian Bureau of Statistics - we draw from the Australia Bureau of Statistics reports (indistinct) have been placed on (indistinct)


The Minister supports the application.  Any circumstances - or in these circumstances any measure which assists employers to maintain employment must be supported.  We strongly support (indistinct) the application and the Minister (indistinct) perhaps a temporary but certainly a necessary response to the current extraordinary situation.  And for the reasons predominantly put by the parties (indistinct) my submission (indistinct) under section 134 of the Fair Work Act.  May it please (indistinct) we support the application.


JUSTICE ROSS:  Thank you, Mr Williams.  Can I just clarify my understanding of your submission in respect of section 134(1)(h) and is it that given that the sector covered by this award is a significant part of the economy as a whole, the measures will have a beneficial effect on sustaining or on the sustainability performance and competitiveness of the national economy.  Is that the essence of that proposition?


MR WILLIAMS:  Yes, your Honour (indistinct)


JUSTICE ROSS:  Thank you very much.  Is there anything else any other party wishes to say?


MR RYAN:  Nothing further from the AHA.


JUSTICE ROSS:  Thank you, Mr Ryan.


MR REDFORD:  Nothing further from the union, your Honour.


JUSTICE ROSS:  Thanks, Mr Redford.  If you can bear with us for a moment, we will adjourn for five minutes or so.  If you can stay on the line then we will return and give you our decision in respect of the matter.  Thank you.

SHORT ADJOURNMENT                                                                    [4.39 PM]

RESUMED                                                                                               [4.42 PM]


JUSTICE ROSS:  We propose to give a short ex tempore decision to be followed by our reasons as soon as practicable.  As a general observation, we note at the outset that the variations proposed are directed at providing targeted flexibilities in relation to the range of duties employees can be required to perform.  The hours of work of full-time and part-time employees and the taking of annual leave.


The measures proposed strike an appropriate balance between the provision of additional flexibility and treating the affected employees fairly.  As Mr Redford put it, it is a short-term variation to deal with the current crisis and is a measured and appropriate response to the unique circumstances facing us.  We note that the proposed variations are supported by the Minister.


We are satisfied that the variation proposed is necessary to achieve the modern award objective as required by section 157.  Further, once varied, the Hospitality Award will only include terms to the extent necessary to achieve the modern awards objective as required by section 138.


In deciding that the variation proposed is necessary to achieve the modern awards objective, we have taken into account the considerations in sections 134(1)(a) to (h) insofar as they are relevant to the matters before us.


We will make the variation determination sought.  The determination will come into operation today.  As required by section 165(3), the determination does not take effect in relation to a particular employee until the start of the employee's first full pay period on or after the day the determination comes into operation.  That is today's date.  We have no discretion to depart from that requirement.


Can we conclude by commending the parties on the balanced nature of the agreed package?  As demonstrated by the actions of the AHA and the United Workers Union this is a time for cooperation and not conflict.  We commend you on the steps you've taken to address the very difficult circumstances facing your sector.


We will publish the variation determination this evening and we will publish our reasons for decision as soon as possible.  Thank you for your submissions.  We will now adjourn the proceeding.

ADJOURNED INDEFINITELY                                                           [4.45 PM]