FWA 9142
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 Employers and Industries
Health and welfare services
DEPUTY PRESIDENT HAMILTON
MELBOURNE, 16 NOVEMBER 2012
Modern Awards Review 2012 - application to vary the Fitness Industry Award 2010.
 This decision concerns separate applications by United Voice (UV) and the Australian Federation of Employers and Industries (AFEI) to vary the Fitness Industry Award 2010 (Award). The applications are made under Schedule 5, Item 6 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) as part of the review of all modern awards which Fair Work Australia is required to conduct after the first two years of all modern awards coming into effect (2012 Review).
 The applications were first listed for Mention and Directions on 27 June 2012. I directed that the parties provide submissions in support of their applications by 22 August 2012, and submissions in reply by 24 September 2012. The matter was listed for hearing on 8 October 2012.
 At the hearing on 8 October further conciliation and discussions took place. Those appearing reached in principle agreement. The matter was adjourned to enable them to develop an agreed draft determination to reflect the in principle agreement 1. I was provided with an agreed draft determination on 22 October2.
 Schedule 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).”
 Provisions of the Fair Work Act 2009 (the Act) are also applicable and relevant to the 2012 Review. Sections 134 and 138 provide 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.
When does the modern awards objective apply?
(2) The modern awards objective applies to the performance or exercise of FWA’s modern award powers, which are:
(a) FWA’s functions or powers under this Part; and
(b) FWA’s functions or powers under Part 2-6, so far as they relate to modern award minimum wages.
Note: FWA must also take into account the objects of this Act and any other applicable provisions. For example, if FWA is setting, varying or revoking modern award minimum wages, the minimum wages objective also applies (see section 284).
(1) Modern award minimum wages cannot be varied under this Part except as follows:
(a) modern award minimum wages can be varied if FWA is satisfied that the variation is justified by work value reasons (see subsections 156(3) and 157(2));
(b) modern award minimum wages can be varied under section 160 (which deals with variation to remove ambiguities or correct errors) or section 161 (which deals with variation on referral by the Australian Human Rights Commission).
Note 1: The main power to vary modern award minimum wages is in annual wage reviews under Part 2-6. Modern award minimum wages can also be set or revoked in annual wage reviews.
Note 2: For the meanings of modern award minimum wages, and setting and varying such wages, see section 284.
(2) In exercising its powers under this Part to set, vary or revoke modern award minimum wages, FWA must take into account the rate of the national minimum wage as currently set in a national minimum wage order.
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.
What is the minimum wages objective?
(1) FWA must establish and maintain a safety net of fair minimum wages, taking into account:
(a) the performance and competitiveness of the national economy, including productivity, business competitiveness and viability, inflation and employment growth; and
(b) promoting social inclusion through increased workforce participation; and
(c) relative living standards and the needs of the low paid; and
(d) the principle of equal remuneration for work of equal or comparable value; and
(e) providing a comprehensive range of fair minimum wages to junior employees, employees to whom training arrangements apply and employees with a disability.
This is the minimum wages objective.
When does the minimum wages objective apply?
(2) The minimum wages objective applies to the performance or exercise of:
(a) FWA’s functions or powers under this Part; and
(b) FWA’s functions or powers under Part 2-3, so far as they relate to setting, varying or revoking modern award minimum wages.
Note: FWA must also take into account the objects of this Act and any other applicable provisions. For example, if FWA is setting, varying or revoking modern award minimum wages, the modern awards objective also applies (see section 134).
Meaning of modern award minimum wages
(3) Modern award minimum wages are the rates of minimum wages in modern awards, including:
(a) wage rates for junior employees, employees to whom training arrangements apply and employees with a disability; and
(b) casual loadings; and
(c) piece rates.
Meaning of setting and varying modern award minimum wages
(4) Setting modern award minimum wages is the initial setting of one or more new modern award minimum wages in a modern award, either in the award as originally made or by a later variation of the award. Varying modern award minimum wages is varying the current rate of one or more modern award minimum wages.”
 In June 2012, the 2012 Review Full Bench handed down a decision 3 in relation to the 2012 Review. At paragraph 63 the Bench said:
“ Under sub item 6(3) of Schedule 5, the Tribunal has a broad discretion to vary any of the modern awards in any way that it considers necessary to remedy any issues identified in the Review. However, sub item 6(4) provides that in making such a variation the Tribunal must take into account the modern award objective in s.134 of the FW Act, and, if varying modern award and minimum wages, the minimum wages objective in s.284.”
 The Bench also said:
“ Two points about the historical context are particularly relevant. The first is that awards made as a result of the award modernisation process are now deemed to be modern awards for the purposes of the FW Act (see Item 4 of Schedule 5 of the Transitional Provisions Act). Implicit in this is a legislative acceptance that the terms of the existing modern awards are consistent with the modern awards objective. The second point to observe is that the considerations specified in the legislative test applied by the Tribunal in the Part 10A process is, in a number of important respects, identical or similar to the modern awards objective which now appears in s.136.
 Although the Tribunal is not, as a non-judicial body, bound by principles of stare decisis, as a matter of policy and sound administration it has generally followed previous Full Bench decisions relating to the issue to be determined, in the absence of cogent reasons for not doing so. In another context three members of the High Court observed in Nguyen v Nguyen:
‘When a court of appeal holds itself free to depart from an earlier decision it should do so cautiously and only when compelled to the conclusion that the earlier decision is wrong. The occasion upon which the departure from previous authority is warranted are infrequent and exceptional and pose no real threat to the doctrine of precedent and the predictability of the law: see Queensland v The Commonwealth (1977) 139 CLR 585 per Aickin J at 620 et seq.’
 While the Tribunal is not a court, the public interest considerations underlying these observations have been applied with similar, if not equal, force to appeal proceedings in the Tribunal. In Re Dalrymple Bay Coat Terminal Pty Ltd a Full Bench summarised the position in relation to single members sitting at first instance as follows:
‘There is not a developed system of stare decisis in this jurisdiction. However it is clearly desirable for members of the Commission sitting alone to adhere to Full Bench decisions which are relevant to the matter being determined. Such a policy aids consistent decision making which in turn provides the parties to Commission proceedings with greater certainty.’
 These policy considerations tell strongly against the proposition that the Review constitutes a ‘fresh assessment’ unencumbered by previous Tribunal authority.
 In circumstances where a party seeks a variation to a modern award in the Review and the substance of the variation sought has already been dealt with by the Tribunal in the Part 10A process, the applicant will have to show that there are cogent reasons for departing from the previous Full Bench decision, such as a significant change in circumstances, which warrant a different outcome.”
 In relation to the application of s.138 of the Act to the 2012 Review, the Bench said:
“ We are satisfied that s.138 is relevant to the Review. The section deals with the content of modern awards and for the reasons given at paragraph  of our decision it is a factor to be considered in any variation to a modern award arising from the Review. We also accept that the observations of Tracey J in SDAEA v NRA (No.2), as to the distinction between that which is ‘necessary’ and that which is merely desirable, albeit in a different context, are apposite to any consideration of s.138.
 While s.138 is relevant to the Review there is still the question of the extent of its impact and the circumstances in which it will have on an application to a variation determination. The supplementary submissions revealed a diversity of views about these issues. We are not persuaded that these issues have been the subject of sufficient debate at this stage. The precise impact of s.138 is a question best considered in the context of a particular application. We agree with the RCAV’s supplementary submission that ‘the nature of the evidence and the facts as found arising from that evidence will condition the exercise of power and the ultimate outcome required to be determined by the review.’”
 In a further statement the President indicated that:
“Parties interested in a modern award are encouraged to discuss the applications relating to that award with a view to arriving at a consent position, or at least narrowing the issues in dispute.” 4
History of the Award
It is necessary to deal with the history of the Award. The Award was made by the Award Modernisation Full Bench during the stage 4 award modernisation process. In a statement 5 on the award modernisation process handed down on 25 September 2009, the Full Bench stated:
“ We have decided to make an exposure draft called the Fitness Industry Award 2010. The draft award covers employers engaged in the operation or provision of fitness centres, fitness services or classes, group fitness organisations, weight loss/control centres, aquatic centres, aquatic services or classes, indoor sports centres, golf driving ranges, dance centres and martial arts centres and their employees in the classifications in the award. Given the coverage of the draft award, the Clerks—Private Sector Award 2010 (Clerks Modern Award) may need to be varied to provide that it does not cover employers and employees covered by the draft Fitness Industry Award 2010.
 The classification structure for the draft award was largely agreed between the LHMU and Fitness Australia. With respect to the areas of disagreement we have decided to provide for an introductory level employee at level 1 and a level 7 employee who is engaged in supervising, training and co-ordinating other employees as proposed by the LHMU. Swimming teacher and coach classifications have also been incorporated into the classification structure. The minimum wage rates attached to the classification structure reflect those advanced by Fitness Australia. An annual leave loading has also been provided for in the draft award.”
 In its decision of 4 December 2009, 6 the Full Bench made the following remarks:
“ The coverage clause of the exposure draft of the Fitness Industry Award 2010 has been amended to include recreational camps. While YMCA Australia sought the inclusion of recreation services and centres, leisure services and centres and unlicensed child care facilities in the coverage clause, we consider these are already covered by the terms of the clause or by the modern Amusement, Events and Recreation Award 2010, (Amusement, Events and Recreation Award) as are contractors to local government running leisure and fitness centres. Further, we consider the classification structure sufficiently indicates the employees covered by the award. The award excludes employers or employees covered by the Amusement, Events and Recreation Award from its coverage. It may be appropriate to include a reciprocal exclusion in the Amusement, Events and Recreation Award.
 The types of employment largely remain as in the exposure draft and are capable of embracing seasonal and temporary employment. However, we have clarified the operation of the broken shift provisions of the award and also provided for Level 2 instructors to be engaged in casual employment for one hour. We are not persuaded the other changes sought in respect of the types of employment are warranted having regard to the prevailing underlying conditions in the relevant awards and NAPSAs.
 We have not been persuaded to make any of the other changes sought to the exposure draft given the prevailing terms of the relevant awards and NAPSAs and the availability of the award flexibility clause. The name of the award will remain as in the exposure draft to avoid confusion with other modern awards.”
 The Full Bench made comments of particular relevance to the UV application before me. In particular, UV advised me that Service Skills Australia in 2011 finalised the SIS10 Sport, Fitness and Recreation Training Package, and this package was now fully endorsed. This had not occurred at the time that the award was made:
“ The LHMU sought higher minimum wages than those in the exposure draft in anticipation of developments expected to occur in relevant training packages in 2010. We are not prepared to anticipate those developments, so the minimum wages reflect those prevailing in the underlying awards and NAPSAs. Nonetheless, we have adjusted the Level 3 rate to overcome an anomaly with the National Training Wage rates. That adjustment has necessitated some minor adjustments to the allowances which are based on the Level 3 minimum wage.” [emphasis added]
 The Award was further altered during 2010 in regards to the minimum wage, the Supported Wage System and choice of superannuation service providers. On 20 July 2010, the Award classification structure was varied by decision of Vice President Watson following applications by YMCA, Aquatics Down Under, Qualified limited, and Royal Life Saving Society - Queensland.
1. Agreed Variations (AM2012/28 - Application by UV; (AM2012/230 - Application by AFEI
 UV sought (AM2012/28) variations to the award clauses relating to minimum wages, and the classification structure of workers covered by the award (clauses 17.1 and Schedule B). AFEI sought variations relating to the definition of loadings and penalty rates in Schedule A. There was initially a considerable degree of disagreement. However, following conciliation those appearing agreed on a suggested draft determination, which involved a degree of compromise. Other variations were agreed.
 I congratulate UV, the AFEI and the others appearing for their work in developing an agreed draft determination.
 I am satisfied that the award should be varied in the terms agreed. These variations are consistent with the legislative requirements regarding this review. I am satisfied that the requirements of Schedule 5, Item 6(2)(a) and (b) and Schedule 5, Item 6(3)
) are met, as are the requirements relating specifically to minimum wages (Schedule 5, Item 6(4) and ss.135 and 238). I will make a determination as sought.
2. Application by AFEI (AM2012/230)
 In their application AFEI sought variations to Schedule A - Transitional Provisions. Variations to the transitional provisions will be dealt with in due course by a Full Bench 7.
N Swancott of United Voice
T Doyle and J Zadel of Australian Federation of Employers and Industries
D Wilkinson and K Barrett of Fitness Australia
Melbourne and Sydney
Final written submissions:
2 Email from Lewis Roper, Final Draft Determination - Fitness Award Review, 22 October 2012
3  FWAFB 5600.
4  FWA 5721, Justice Ross, Modern Awards Review 2012 - Timetable, 5 July 2012, paragraph 8.
5  AIRCFB 865
6  AIRCFB 945
7  FWA 5721
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