[2010] FWAFB 3906 |
FAIR WORK AUSTRALIA |
DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 6, Item 4—Application to make a modern award to replace an enterprise instrument.
BANK OF QUEENSLAND AGENTS AWARD 2004
JUSTICE GIUDICE, PRESIDENT |
MELBOURNE, 25 MAY 2010 |
[1] This decision concerns an application to modernise the Bank of Queensland Agents Award 2004 (the agents award) pursuant to the provisions of Schedule 6 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act). The application is made by Molanka Pty Ltd; D.A. Management Pty Ltd; and Reiconn Pty Ltd (the applicants). The applicants own and operate franchises pursuant to agreements made with the Bank of Queensland. The applicants carry on franchises under the banner of Bank of Queensland in what are referred to as owner managed branches or OMBs and employ staff for that purpose. Submissions were made on behalf of the applicants and some 134 other entities which operate OMBs. For convenience we shall refer to the applicants and other OMB operators collectively as the agents.
[2] We were told that most of the agents are covered by the agents award and the remainder commenced operations more recently and have entered into collective workplace agreements that are virtually identical to the agents award.
[3] The agents submitted that the circumstances that led to the making of the agents award in 1988 and the maintenance of the award since then are recognition by the tribunal and its predecessors that the agents operate small businesses and the employees have a narrower range of duties than bank employees generally. They also submitted that the rates of pay in the Banking, Finance and Insurance Award 2010 1 (the BFI award), which will apply if the agents award is not modernised, are significantly higher than the rates in the agents award. It was contended that the rate in the agents award is a fair minimum rate of pay and if the rates in the BFI award are to apply the agents will experience significant cost increases which, although phased-in under the transitional arrangements in the BFI award, will still be “burdensome”. The agents not covered by the agents award but covered by collective agreements will be in a similar position.
[4] The application was initially dealt with by written submissions. On 24 February 2010 we published a decision on a preliminary issue and made directions providing for further written and oral submissions. 2 It is unnecessary to deal with that decision in detail but this decision should be read in conjunction with it. On 19 April 2010 we issued a statement in which we sought the provision of further information.3 After references to the criteria for the making and content of modern enterprise awards in item 4(5) of Schedule 6 to the Transitional Act and some other matters, the following passage appears in the statement:
“[16] We do not believe that we can determine whether to make an award in this matter and the content of any award unless there is more information concerning all of the criteria in item 4(5). Apart from information on the duties of employees mentioned above we presently have no information on the terms and conditions of employment applying in the industry in which the persons covered by the enterprise instrument operate such as to permit findings on the extent to which those terms and conditions are reflected in the enterprise instrument. We also have very little information on the extent to which the initial rationale for the making of this award remains relevant having regard to the current business strategy of the Bank of Queensland and its agents and the current context of the safety net of the National Employment Standards and modern awards.
[17] Further, although subject to some general evidence and submissions, we have very little information to enable us to assess the likely impact on the persons covered by the enterprise instrument, and the persons covered by the modern award, of a decision to make or not make the modern enterprise award.
[19] We propose to give all interested parties a further opportunity to produce material regarding these matters and the other criteria in item 4(5). Any party to the proceedings may file any further material in relation to these matters by 4 May 2010. We will list the application to enable the parties to make further oral submissions on 13 May 2010.”
The statutory framework
[5] Part 16A of the Workplace Relations Act 1996 and various provisions of the Transitional Act provide for the modernisation of awards in operation immediately prior to 1 January 2010. The modernisation of enterprise awards is dealt with in Schedule 6 of the Transitional Act. Item 4(1) of Schedule 6 provides:
“(1) The enterprise instrument modernisation process is the process of making modern awards under this Division to replace enterprise instruments.”
[6] The term “enterprise instrument” and related terms are defined in items 1, 2 and 3 of the Schedule. In our decision of 24 February 2010 we found that the agents award is an enterprise instrument. 4 It is unnecessary to repeat the basis for that decision. Items 4(2) to 4(4) provide for the making of a modern enterprise award to replace an enterprise instrument on application made prior to 31 December 2013 by a person covered by the enterprise instrument. No issue arises in relation to those items. Item 4(5) sets out the matters to be taken in to account by Fair Work Australia in deciding whether or not to make a modern award and in determining the content of any such award. It is necessary to set that item out. It reads:
“(5) In deciding whether or not to make a modern enterprise award, and in determining the content of that award, FWA must take into account the following:
(a) the circumstances that led to the making of the enterprise instrument rather than an instrument of more general application;
(b) whether there is a modern award (other than the miscellaneous modern award) that would, but for the enterprise instrument, cover the persons who are covered by the instrument, or whether such a modern award is likely to be made in the Part 10A award modernisation process;
(c) the content, or likely content, of the modern award referred to in paragraph (b) (taking account of any variations of the modern award that are likely to be made in the Part 10A award modernisation process);
(d) the terms and conditions of employment applying in the industry in which the persons covered by the enterprise instrument operate, and the extent to which those terms and conditions are reflected in the instrument;
(e) the extent to which the enterprise instrument provides enterprise-specific terms and conditions of employment;
(f) the likely impact on the persons covered by the enterprise instrument, and the persons covered by the modern award referred to in paragraph (b), of a decision to make, or not make, the modern enterprise award, including any impact on the ongoing viability or competitiveness of any enterprise carried on by those persons;
(g) the views of the persons covered by the enterprise instrument;
(h) any other matter prescribed by the regulations.
Note: A variation referred to in paragraph (c) may, for example, be a variation to reflect the outcome of the AFPC’s final wage review under the WR Act, or to include transitional arrangements in the modern award.”
[7] In determining the application we are required to take the matters specified in item 4(5) into account and we shall do that, commencing with the circumstances that led to the making of the agents award.
[8] The agents award was made in 1988 by consent of the agents and the Australian Bank Employees Union (ABEU), as the Banking Agents Award (Queensland) 1988. 5 The then Federal Secretary of the ABEU, Mr L. Hingley, indicated that the conditions in the award reflected the fact that the agents differed from the banks in the scale of their operations and the range of banking activities. The transcript of the proceedings includes the following passage:
“The wages agreement…reached between the agents of the Bank of Queensland and the union, in this agreement the union recognises that the agents of the Bank of Queensland are small, operating business units, and have the difficulties and overheads associated with a small business unit. Additionally, it is recognised that the employees in these agencies do not perform anywhere near the full range of banking duties they would in any other bank. Consequently, the wages agreement specifies unique and limited wages due to these two factors.” 6
[9] The agents submitted in this case that Mr Hingley’s description of the agents’ operations was correct in 1988 and that the situation has not changed as to the size of the operation and the range of banking duties carried out by the employees. We shall return to this issue. It is appropriate to note that the number of OMBs has increased significantly since 1988. Although the evidence is not comprehensive as to the earlier years, there are indications that between 2001 and 2009 the number of branches, including OMBs, has grown from 93 within Queensland to around 270 branches in every State and Territory. In the same period the number of OMBs grew from 35 to around 200. While these figures were not confirmed, they are supported in publicly available documents of the Bank of Queensland and the statement of Mr Evans attached to the agents’ submissions of 11 December 2009. We have taken them to represent the order of magnitude of the increase in OMBs and their growing importance by comparison with branches operated by the Bank of Queensland itself.
[10] Dealing now with item 4(5)(b), there is a modern award which would apply but for the agents award, namely the BFI award. That award covers the industries of banking, finance and insurance throughout Australia. It is indicative of the coverage of that award that it replaces in whole or in part a significant number of federal and state awards.
[11] Pursuant to item 4(5)(c) it is necessary to consider the content of the BFI award. As provided for in the Fair Work Act, the BFI award, in conjunction with the National Employment Standards, provides a safety net of minimum wages and conditions for the employers and employees covered by it and also contains mandatory provisions including an enterprise flexibility provision. It is convenient at this point to note that the agents submitted that there are terms in the BFI award which are inappropriate for their businesses and which will lead to unjustifiable cost increases if that award were to apply. There are three main areas of concern. The first is wages, the second is the spread of ordinary hours and the third is overtime. We discuss each of these areas when dealing with item 4(5)(f).
[12] Pursuant to item 4(5)(d) we must have regard to the terms and conditions applying in the industry and the extent to which those terms are reflected in the agents award. The application of this criterion in the present case is not straightforward. First, we note that the BFI award applies to a broad range of businesses of which the banking industry is only a part. And, while it is true that the BFI award constitutes the safety net, almost all banks are presently covered by enterprise awards and in the case of many banks enterprise agreement instruments apply as well. We were not given any detailed information concerning the terms and conditions applying in the banking industry. A further complication is that it is not possible to say at this stage whether any of the relevant enterprise awards will be the subject of an application for a modern enterprise award before 31 December 2013 or what the outcome would be.
[13] The next criterion, in item 4(5)(e), is the extent to which the agents award provides enterprise specific terms and conditions of employment. The agents have identified a number of areas in which the conditions in the agents award can be regarded as enterprise specific. The principal areas, which we have identified earlier, are wage rates, spread of hours and overtime. There are a range of other conditions in the BFI award which are not included in the agents award which might also be relevant.
[14] The next criterion is that in item 4(5)(f). This criterion requires us to consider the effect of a decision to make or not to make a modern enterprise award from two distinct points of view. The first is the likely impact on the persons covered by the agents award, including any impact on the ongoing viability or competitiveness of any enterprise carried on by them. The second is the likely impact on persons covered by the BFI award, including any impact on the ongoing viability or competitiveness of any enterprise carried on by them. We deal first with the position of persons covered by the agents award. As we indicated earlier the agents’ case is based mainly on three areas – wages, spread of hours and overtime. It is convenient to deal with the submissions and material in relation to those matters now.
[15] Firstly, in relation to wages rates, the agents award contains one wage rate only. The BFI award has a six level classification structure. It is claimed that if employees of OMBs were classified under the BFI structure there would be increases of up to 30%. This aspect of the case has posed evidentiary problems. In our statement of 19 April 2010 we sought more information to enable us to properly assess the application. The agents filed a number of witness statements including one from a Ms Holt, who is employed by the Bank of Queensland in the role of Human Resource Advisor – Owner Manager Branches. Attached to Ms Holt’s statement is a table containing information from a sample of 13 OMBs. The table shows the employment category and wage rate of each employee. The table is Appendix A to this decision. The ordinary hourly rate under the agents award, derived by updating the relevant Australian Pay and Classification Scale, is $14.85. For comparison purposes we have included the hourly rates for each of the classification levels in the BFI award as Appendix B to this decision.
[16] The categories in Appendix A are customer service officer, lender, loan officer, lending support, senior customer service officer, customer service manager and branch manager. Further information was provided by way of witness statements about the role of customer service officers. Information was scant about the duties of other employees, although generalised statements were provided to the effect that the duties of OMB employees had not altered since 1988. The Finance Sector Union of Australia (FSU) sought to cross-examine the authors of two of the statements but they were not available for cross-examination.
[17] Based on the sample in Appendix A it appears that there are hierarchical structures in almost all OMBs based either solely on wage levels or on wage levels and functions. Furthermore the range of hourly rates indicates that overaward payments of some magnitude are common. A comparison with the rates in Appendix B suggests that if the classification structure in the BFI award were to be applied in all of the OMBs, except in the case of very few employees there would not be significant increases in the wages actually paid.
[18] Before leaving the issue of wage rates there is another matter that should be mentioned – the level of the casual loading. The agents award provides for a loading of 20% for casual employees. The BFI award, like all other modern awards, provides for a casual loading of 25%. We do not regard this as a major issue. If the BFI award were to apply the increase in the loading would be phased in pursuant to the transitional provisions. Under the provisions the loading would increase in 5 instalments of 1% over the period between 1 July 2010 and 1 July 2014. Furthermore, the information provided by Ms Holt suggests that casual employees are already receiving overaward payments. In the circumstances any increased costs arising from the casual loading would not be significant. We turn now to the next area, the spread of ordinary hours.
[19] Under the agents award the spread of hours within which ordinary hours may be worked is less restrictive than under the BFI award. On weekdays ordinary hours commence at 8 am. There is no time specified beyond which ordinary hours may not be worked. The spread of ordinary hours on weekdays under the BFI award is from 7 am to 7 pm, with provision for one night on which the spread may be extended to 9 pm. Under the agents award the spread of hours on Saturday is from 8.30 am to 12.30 pm. Under the BFI award the spread of hours on Saturday is from 8 am to 12 noon. The material concerning the trading hours of OMBs indicates that there is very little trading after 7 pm on weekdays or after 12 noon on Saturdays. The agents submitted that while OMBs may not open after noon on Saturdays, it is necessary to have employees stay on after closing time to attend to necessary administrative work.
[20] There is a broad range of financial operations covered by the BFI award. The OMBs should not be regulated differently in relation to hours of work unless there are reasons of substance relating to the nature of OMBs. While the provisions presently in the agents award arrangements should be given some weight, it should be borne in mind that many employers will have some change in the spread of ordinary hours as a result of being covered by modern awards. The material before us in relation to trading hours does not suggest that the change will be too onerous overall, although there may be some minor cost increase in some OMBs.
[21] The third matter relates to the overtime provisions. Under the agents award the ordinary working hours are 38 with time worked in excess of up to and including 40 hours being paid at the single time rate. Subject to that provision overtime pay is ordinary time plus 50% for the first three hours and double time thereafter. It was not suggested that significant amounts of overtime are in fact worked. It was not suggested that there is anything in the nature of OMB operations which would make it appropriate that there be a regime of payments for overtime lower than that which applies under the BFI award.
[22] The agents submitted that the application of the BFI award would damage the operational flexibility and viability of the OMBs by imposing an unsuitable and less flexible classification structure, reduced flexibility in hours and a possible need to increase staff and that potential benefits to existing employees would be reduced. We have already discussed the relevant BFI award provisions and expressed some conclusions in relation to them. It is appropriate to say something in addition concerning the arguments of potential inflexibility and increased costs resulting from the application of the BFI award. The agents submitted that the six level structure in the BFI award is not geared to their operations. We understand that because they have been operating with one award classification and with a wage rate set at a relatively low level, most OMBs have been able to develop their own wage structures. The wage structure in the BFI award now serves as a safety net for a broad range of businesses. In the absence of good reasons to the contrary based on the needs of the enterprise, we think it should also apply as a safety net to the OMBs.
[23] As we observed earlier, the sample information in Appendix A suggests that there is already a hierarchical structure with overaward payments in almost all OMBs. This information, as far as it goes, suggests that the estimated increases in wage rates of up to 30% contained in the agents’ outline of submissions are highly unlikely to be realised. After absorption of award increases into overaward payments the increases are not likely to be substantial for customer service officers. In relation to employees at higher levels, there seems to be scope for the adoption of the BFI classification structure in almost all OMBs without major cost issues arising. It is important to point out also that any actual increases in wages can be phased in under the transitional provisions in the BFI award.
[24] For reasons given earlier the BFI conditions relating to the spread of hours and overtime are unlikely to have a major impact although we cannot rule out some cost increase in some OMBs. We have concluded that while the application of the BFI award might have some impact, the main conditions highlighted by the agents in their submissions would not cause major cost or operational problems or impact in any significant way on the ongoing viability of OMBs or their competitiveness.
[25] We are also required by item 4(5)(f) to consider the potential impact of our decision on persons covered by the BFI award. We think we should give weight to the industry award modernisation process and the safety net established by it. The fact that the BFI award now constitutes the safety net for the industry of which the OMBs are a part is a relevant consideration, although the position of employees in the banking industry is at this stage unclear because of the prevalence of enterprise awards. Viewed from the perspective of employees covered by the BFI award, the maintenance of conditions in modern enterprise awards which are inferior to the conditions in the relevant industry modern award would tend to weaken the safety net and be inconsistent with the modern awards objective. Viewed from the perspective of employers covered by the BFI award, the maintenance of a lower safety net in a modern enterprise award might provide an unfair advantage for the business covered by that award. In this case, of course, what is sought is an enterprise award covering some hundreds of separate businesses, all agents of the one bank. The making of a modern enterprise award in the terms sought might amount to a significant competitive advantage for those businesses and for that bank.
[26] It is clear that the legislative scheme contemplates departures from the safety net in modern enterprise awards. Subject to the other considerations specified in item 4(5), departures from the safety net should be limited to cases in which cogent reasons are advanced based on the history of coverage and the needs of the employers and employees in the enterprise concerned. Although in this case we are concerned with conditions which are below the safety net, similar considerations would be likely to apply in relation to conditions which are above the safety net.
[27] The final matter to which our consideration is directed by item 4(5) is the one in paragraph (g), the views of the persons covered by the agents award. We accept that the only evidence before us is that the employers in OMBs and a number of their employees support the application for a modern enterprise award.
[28] Like any applicant, the agents bear the onus of making a case for the modernisation of the agents award. The application must be decided in a context in which the outcome will determine whether a modernised award or the BFI award will apply. This is underlined by the terms of item 9(3) of Schedule 6 to the Transitional Act. That item provides that if Fair Work Australia decides not to make a modern enterprise award to replace an enterprise instrument, the instrument terminates when that decision comes into operation. While the agents award has a significant history, it must now be considered against the terms of a modern industry award that covers a wide range of businesses, large and small, in the banking, finance and insurance industry. The departures from the BFI award sought in the amended application are small in number. The evidence and material relating to the operations of the OMBs do not support a conclusion that the conditions sought should apply instead of the industry safety net provisions. Having considered the reasons advanced by the agents in the context of the matters which must be taken into account under item 4(5) we have concluded that a modern enterprise award should not be made to cover the OMBs. The agents award should not be modernised. The application is dismissed.
PRESIDENT
Appearances:
J. Murdoch SC for Molanka Pty Ltd; D.A Management Pty Ltd; Reiconn Pty Ltd and others.
M. Mead for the Australian Industry Group.
D. Mammone for the Australian Chamber of Commerce and Industry.
T. McDonald, solicitor, for Yum Restaurants Australia Pty Ltd.
C. Bowtell with E. McCoy for the Australian Council of Trade Unions.
E. White of counsel with P. Gardiner, solicitor, for the Finance Sector Union of Australia.
S-A. Burnley for the Shop, Distributive and Allied Employees Association.
Hearing details:
2010.
Melbourne.
April, 7.
May, 13.
Appendix A to the Full Bench decision of 25 May 2010
BOQ1
Hobart |
TAS |
Owner Manager Loan Officer Snr CSO Loans/CSO |
$ |
32.89 21.00 23.78 |
Full Time Full Time Full Time Full Time |
Applecross |
WA |
Owner Manager CSO CSO CSO CSO Lending Support |
$ |
15.53 17.01 25.00 25.00 |
Full Time Full Time Full Time Casual Part Time Full Time |
New Farm |
Qld |
Owner Manager Branch Manager CSM Loan CSO CSO CSO |
$ |
37.15 23.21 23.21 13.23 13.23 18.00 |
Full Time Full Time Full Time Full Time Full Time Full Time Part Time |
Grafton |
NSW |
Owner Manager Loan CSO CSO |
$ |
28.00 21.30 21.30 |
Full Time Part Time Full Time Part Time |
Mt Sheridan |
Qld |
Owner Manager CSM/Loan CSO CSO (18yrs old) |
$ |
16.30 14.80 11.68 |
Full Time Part Time Full Time Full Time |
Earlville |
Qld |
Owner Manager CSM CSO CSO |
$ |
$27 $23 $23 |
Full Time Full Time Full Time Full Time |
Mt Gravatt |
Qld |
Owner Manager CSM Loan CSO CSO CSO |
$ |
22.37 22.27 18.22 16.70 16.47 |
Full Time Full Time Full Time Full Time Full Time Full Time |
Kingscliff |
NSW |
Owner Manager Loan CSM CSO CSO |
$ |
22.50 21.00 18.00 20.00 |
Full Time Full Time Full Time Full Time Casual |
Tweed Heads South |
Qld |
Owner Manager Snr CSO (18 years old Branch Mgr Loan CSO CSO |
$ |
13.81 29.94 27.32 20.67 20.00 |
Full Time Full Time Full Time Full Time Part Time Casual |
Floreat |
WA |
Owner Manager CSM CSO CSO CSO lender Lender lender |
$ |
30.36 19.98 19.98 19.98 35.42 27.83 35.42 |
Full Time Full Time Full Time Part Time Part Time Full Time Part Time Part Time |
Biloela |
Qld |
Owner Manager CSO CSO CSO CSO |
$ |
20.00 20.00 20.00 20.00 |
Casual Casual Casual Casual |
Warner |
Qld |
Owner Manager Owner Manager CSO CSO |
$ |
19.50 19.50 |
Full Time Full Time Full Time Part Time |
Redbank Plaza |
Qld |
Owner Manager CSO CSO CSO CSO CSO CSO |
$ |
18.20 18.20 19.35 20.00 20.00 19.35 |
Full Time Full Time Full Time Casual Casual Casual Casual |
Appendix B to the Full Bench decision of 25 May 2010
Hourly rates from Banking, Finance and Insurance Award 2010
Level |
Minimum weekly rate |
Minimum hourly rate |
$ |
$ | |
Level 1 |
580.00 |
15.26 |
Level 2 |
637.60 |
16.78 |
Level 3 |
675.00 |
17.76 |
Level 4 |
710.00 |
18.68 |
Level 5 |
740.00 |
19.47 |
Level 6 |
832.00 |
21.89 |
Note: Minimum weekly rates from Banking, Finance and Insurance Award 2010 have been divided by 38 to convert to hourly rates.
1 MA000019.
4 [2010] FWAFB 1543 at paras 3 to 10.
5 AW769480.
6 C No. 31257 of 1988, Transcript of 28 June 1988 at p.21.
Printed by authority of the Commonwealth Government Printer
<Price code C, AP836609, PR997379>