[2009] AIRCFB 933 |
|
DECISION |
Workplace Relations Act 1996
s.576H—Commission may vary modern awards
Building Services Contractors Association of Australia
(AM2009/7)
Building Services Contractors Association of Australia (NSW Division)
(AM2009/15)
CLEANING SERVICES AWARD 2010
[MA000022]
JUSTICE GIUDICE, PRESIDENT |
MELBOURNE, 24 NOVEMBER 2009 |
[1] This decision concerns two applications to vary the Cleaning Services Award 2010 1 (the award). The first application has been made by the Building Services Contractors Association of Australia (BSCAA). The second application has been made by the Building Services Contractors Association of Australia, NSW Division (BSCAA NSW). Both applications deal with redundancy and are designed to limit the operation of the redundancy pay provisions in s.119 of the Fair Work Act 2009 (the Fair Work Act) in circumstances where there is a change of cleaning contractor.
[2] In the consultations which preceded the making of the award the BSCAA and the Liquor, Hospitality and Miscellaneous Union (LHMU) put forward provisions regulating change of contract situations. The effect of the proposal was twofold. Firstly, it would impose particular obligations in relation to consultation on an outgoing cleaning contractor. Secondly, it would relieve the outgoing contractor of the obligation to make redundancy payments contained at that time in the National Employment Standards (NES), provided the outgoing contractor met certain conditions. In its statement of 23 January 2009 2 the Commission accepted that part of the proposal which related to consultation. That matter is now reflected in cl.9 of the award. However the Commission rejected the part of the proposal which related to the removal of the obligation to make redundancy payments. The statement of 23 January 2009 contains the following passage:
“[61] The major parties proposed that the award make provision for an outgoing contractor to be exempt from making severance payments provided for by the NES under certain circumstances. We are of the view that such a provision would be contrary to the terms of the consolidated request in particular cl.30 and we have therefore not included it in the exposure draft.”
[3] The reference to the consolidated request is a reference to the award modernisation request made by the Minister for Employment and Workplace Relations (the Minister) on 28 March 2008 as subsequently varied. It can be seen that the Full Bench relied on the prohibition in cl.30 of the consolidated request. That clause is:
“30. A modern award cannot exclude the NES or any provision of the NES. However, a modern award can provide ancillary or incidental detail in relation to the operation of an entitlement under the NES but only to the extent that the term is not detrimental in any respect, when compared to the NES.”
[4] On 2 May 2009 the Minister varied the consolidated request in a number of respects. For present purposes it is only necessary to refer to cl.33AAA. It reads:
“33AAA Where an industry has developed specific arrangements for termination and redundancy to reflect the way the industry operates, the Commission may specify in a modern award that s.119 of the NES does not apply in those circumstances.”
[5] The relevant terms of the NES have now been incorporated into the Fair Work Act and are contained in ss.119 to 122. The reference in cl.33AAA to s.119 of the NES is to s.119 of the Fair Work Act. It is apparent that the Commission declined to include a provision in the award exempting an outgoing contractor from the obligation to make redundancy payments because of the prohibition in cl.30. Clause 33AAA removes that prohibition. It is also relevant that s.121 of the Fair Work Act provides that a modern award may include a term specifying situations in which s.119 does not apply.
[6] The two applications before us were filed after cl.33AAA was included in the consolidated request. We deal now with the terms of the applications.
[7] The variation sought by the BSCAA is as follows:
“14.5 Change of Contract
(a) This clause applies in addition to clause 9 of this award and section 120(1)(b)(i) of the NES, and applies on the change of a cleaning contract from one cleaning contractor (the outgoing contractor) to another (the incoming contractor).
(b) Section 119 of the NES does not apply to an employee of the outgoing contractor where:
(i) the employee of the outgoing contractor agrees to other acceptable employment with the incoming contractor; and
(ii) the outgoing contractor has paid to the employee all of the employee’s accrued statutory and award entitlements on termination of the employee’s employment.
(c) To avoid doubt, section 119 of the NES does apply to an employee of an outgoing contractor where the employee is not offered acceptable employment with either the outgoing contractor or the incoming contractor.”
[8] The proposal is essentially the same as that contained in the draft awards submitted by the BSCAA and the LHMU during the consultations which preceded the making of the award. The industry estimates that each year there are in the vicinity of 3,000 changes in cleaning contracts involving the termination of the contract between the client and outgoing contractor and the making of a new contract between the client and the incoming contractor. These changes do not involve a transfer of business. Section 122 of the Fair Work Act, which provides that in certain circumstances the redundancy payments in s.119 are not applicable on a transfer of business, therefore has no application. It is nonetheless common for employees of the outgoing contractor to be given work by the incoming contractor.
[9] Awards having application in Victoria, Queensland and South Australia have traditionally exempted the outgoing contractor from the obligation to make redundancy payments to an employee who is engaged by the incoming contractor, although there was some variation between the award provisions. Provisions similar to those in the proposed clause are also a feature of the industry “Clean Start” agreement.
[10] It was submitted that the application should be granted because without such provisions the outgoing contractor would be required to make an application for exemption from the obligation, even when its employees are engaged by the incoming contractor on the same conditions and hours as previously applied. Such an application might involve considerable time and expense, and the cooperation of the incoming contractor, even where there is no opposition to the exemption being granted, would be required.
[11] We note that the provisions proposed by the BSCAA provide a number of protections for the employee. First, the outgoing contractor must comply with the obligations in cl.9 in relation to consultation and the provision of suitable alternative employment. Secondly, the employee must agree to accept the employment. And finally, the employee must be paid all of their accrued statutory and award entitlements. If these conditions are not met, the provisions of ss.119 to 122 continue to apply.
[12] The LHMU supports the application as does Commerce Queensland.
[13] Turning to the second application before us, the variation sought by the BSCAA NSW is as follows:
“14.5 Situations in which section 119 of the Fair Work Act does not apply to the termination of an employee’s employment.
(a) Section 119 of the Fair Work Act does not apply to the termination of an employee’s employment by an employer if any one of the following situations applies:
(i) the termination was due to the employer losing a contract and the employer has obtained other acceptable employment for the employee; or
(ii) the termination was due to the employer losing a contract and the employer has offered or obtained an offer of other acceptable employment for the employee that was not accepted by the employee.
(b) For the purpose of clause 14.5(a) other acceptable employment is employment that is on terms and conditions similar to the terms and conditions the employee was engaged on immediately before the termination.”
[14] The BSCAA NSW did not make any submissions in support of its application, which was opposed by the LHMU. There were no submissions in support of it.
[15] If granted, the application would completely remove the outgoing contractor’s obligation to make redundancy payments to an employee who does not accept an offer of employment on terms and conditions similar to those provided by the outgoing contractor. There may be circumstances where this is not appropriate. We point out that s.120 of the Fair Work Act provides for a reduction in the obligation to make redundancy payments in certain circumstances. That section will remain available to employers.
[16] We have decided to grant the BSCAA application. It has widespread support and contains appropriate protections for employees. The order necessary to give effect to this decision will be settled by Commissioner Whelan.
BY THE COMMISSION:
PRESIDENT
Final written submissions:
2009.
September, 25.
1 MA000022.
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