FWA 9112
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 5, Item 6 - Review of all modern awards (other than modern enterprise and State PS awards) after first 2 years
Australian Federation of Air Pilots
VICE PRESIDENT WATSON
SYDNEY, 1 NOVEMBER 2012
 This decision, edited from the transcript of 19 October 2012, concerns an application by the Australian Federation of Air Pilots (AFAP) to vary the Air Pilots Award 2010 1(the Award). The application is made under Sch. 5, Item 6 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act) as part of the review of all modern awards of which Fair Work Australia is required to conduct after the first two years of all modern awards coming into effect (the 2012 Review).
 The matter was listed for mention and programming on 20 June 2012. Directions were issued requiring the AFAP to file submissions in support of the application by 13 September 2012, with other interested parties to file submissions in reply by 11 October 2012. The matter was set down for hearing on 19 October 2012.
The relevant legislation
 Sch. 5, Item 6 of the Transitional Act provides:
“(1) As soon as practicable after the second anniversary of the FW (safety net provisions) commencement day, FWA must conduct a review of all modern awards, other than modern enterprise awards and State reference public sector modern awards.
(2) In the review, FWA must consider whether the modern awards:
(a) achieve the modern awards objective; and
(b) are operating effectively, without anomalies or technical problems arising from the Part 10A award modernisation process.
(2A) The review must be such that each modern award is reviewed in its own right. However, this does not prevent FWA from reviewing 2 or more modern awards at the same time.
(3) FWA may make a determination varying any of the modern awards in any way that FWA considers appropriate to remedy any issues identified in the review.
(4) The modern awards objective applies to FWA making a variation under this item, and the minimum wages objective also applies if the variation relates to modern award minimum wages.
(5) FWA may advise persons or bodies about the review in any way FWA considers appropriate.
(6) Section 625 of the FW Act (which deals with delegation by the President of functions and powers of FWA) has effect as if subsection (2) of that section included a reference to FWA’s powers under subitem (5).”
 Further provisions of the Act are also applicable and relevant to the 2012 Review. Section 134 provides as follows:
What is the modern awards objective?
(1) FWA must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:
(a) relative living standards and the needs of the low paid; and
(b) the need to encourage collective bargaining; and
(c) the need to promote social inclusion through increased workforce participation; and
(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and
(e) the principle of equal remuneration for work of equal or comparable value; and
(f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and
(g) the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards; and
(h) the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.
This is the modern awards objective.
A modern award may include terms that it is permitted to include, and must include terms that it is required to include, only to the extent necessary to achieve the modern awards objective and (to the extent applicable) the minimum wages objective.”
 In its initial application dated 8 March 2012, the AFAP sought to vary the following clauses of the Award:
 In its written submissions dated 17 September 2012, the AFAP withdrew its application to vary clause 24.6. I consider the two remaining matters in turn.
Loss of Licence Insurance
 Clause 19.4 currently reads:
“In addition to all other remuneration prescribed by this award the employer will pay each pilot on permanent hire an annual allowance of up to $1547.00 to assist the pilot to hold adequate insurance against loss of licence. Payment of the allowance will be made on the last date for payment of salary in April of each year on production by the pilot of proof of payment.”
 The AFAP submits that as pilots can elect to take out insurance at any time of the year, where an employer chooses to reimburse a pilot in accordance with the plain words of clause 19.4, pilots may have to wait up to a period of 12 months before they can obtain the reimbursement. The potential for such a long waiting period may result in financial hardship for some pilots or adversely affect a pilot’s decision to take out insurance.
 The AFAP submits that the clause should be varied to allow for payment of the allowance to be made on the first date of payment of salary after production by the pilot of proof of payment. No party opposed the variation.
 This proposed variation relates to the time of reimbursement of the costs of insurance against loss of licence. I consider that the variation is a more equitable manner of dealing with the reimbursement of the expense of insurance and makes the current provision operate more effectively and fairly. It is not opposed. I will make a determination varying the award in accordance with the application.
Taking of Annual leave
 Clause 27.4(d) currently reads:
“Annual leave must be taken at a time fixed by the employer.”
 The AFAP submits that the clause is ambiguous and appears to be inconsistent with s.88(2) of the Fair Work Act 2009 2 (the Act) and that clarification can be sought by deletion of the clause.
 Submissions in reply to the application were received from Qantas Group, the Australian International Pilots Association (AIPA) and the Australian Industry Group (AIG). Qantas Group neither support nor oppose the variation. AIPA supports the application and the AIG opposes the variation.
 The application is based on a concern that the operation of the National Employment Standards in conjunction with the Award has given rise to an anomaly and potential confusion as to whether there is a right for employers to direct employees to take leave. The AIG contends that the clause in question provides no such right and was not intended to provide such a right. Rather, AIG submits that the clause simply operates in conjunction with the provisions of the Act - in particular, s.88 - to provide and confirm that annual leave cannot be taken at a time unilaterally sought by the employee, but at a time agreed to by the employer and fixed by the employer to that extent.
 In my view it is clear that the terms of the Award operate in conjunction with the provisions of the Act. The scheme of the provisions establish, first, an entitlement to leave (s.87) secondly, the taking of leave for a period agreed between the employer and the employee (s.88), and thirdly, the time of taking leave (clause 27.4 of the Award).
 In my view clause 27 does not contain a power for an employer to direct the employee to take leave where the employee does not seek the leave or desire it to be taken. Should there be a dispute about such matters, it is likely that the dispute would be resolved in that manner. The decision in this matter indeed might provide some guidance as to the operation, or intended operation, of the various provisions.
 I nevertheless consider that clause 27.4(d) does have a meaningful role and should not be deleted. Indeed, the deletion of it may in turn create some confusion and may give rise to a perception that the employer has a limited ability to disagree with the time at which leave is proposed to be taken. In my view such a result would clearly not be the intention of the above provisions operating in conjunction with each other. For those reasons, I am not persuaded that it is appropriate to delete clause 27.4(d) and I would not propose to make the determination sought in that respect.
 For the above reasons I will make the variation sought to clause 19.4. The application to delete clause 26.4(d) is dismissed. The determination published with this decision is PR530654.
VICE PRESIDENT WATSON
A. Molnar with D Stephens for The Australian Federation of Air Pilots
R. Bernasconi for Qantas Group
F. Rodriguez with M. Mead for the Australian Industry Group
2 Section 88(2) of the Fair Work ct 2009 provides that “the employer must not unreasonably refuse to agree to a request by the employee to take a paid annual leave.”
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