[2013] FWC 5414 |
FAIR WORK COMMISSION |
DECISION |
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
VSHIPS Australia Pty Ltd; CSL Australia Pty Ltd
(AM2012/346)
Maritime industry | |
VICE PRESIDENT WATSON |
SYDNEY, 6 AUGUST 2013 |
Modern Awards Review 2012 - Application to vary the Seagoing Industry Award 2010 - Part B - aggregate annual salaries - temporary licenced ships.
Introduction
[1] This decision concerns applications by VSHIPS Australia Pty Ltd (VSHIPS) and CSL Australia Pty Ltd (CSL) to vary the Seagoing Industry Award 2010 (the Award) as part of the 2 year review of modern awards. Parts of the applications have already been determined by way of a decision 1 issued on 21 June 2013. This decision deals with the remaining elements of the applications by VSHIPS and CSL.
[2] The matter was listed for hearing on 3 July and 26 July 2013. At the hearing, Ms S Zeitz represented VSHIPS and CSL. Ms S Cerche appeared for the Australian Shipowners’ Association (ASA) and Shipping Australia Limited (SAL). Mr M Gibian, of counsel, appeared for The Australian Maritime Officers’ Union (AMOU), Mr N Niven appeared for The Australian Institute of Marine and Power Engineers (AIMPE) and Mr W McNally appeared for The Maritime Union of Australia (MUA).
[3] Each of these parties provided written submissions. Evidence was given for CSL and VSHIPS by Ms Stephanie Walley and Ms Emily Pointon. The National Bulk Commodities Group and Cement Industry Foundation provided written submissions but did not attend the hearings.
The variations sought
[4] The remaining variations sought but not dealt with in the previous decision relate to proposed aggregate salaries and daily rates of pay for employees covered by Part B of the Award. Part B covers employees employed on a temporary licence ship. The Award currently has weekly wage rates, allowances and an overtime provision. CSL and VSHIPS seek an alternative method of payment by way of an aggregate annual salary and a derived daily rate by the insertion of a new Clause 24 in Part B in the following terms. Existing clauses 24-30 would be renumbered 25-31:
“24. Payment of wages
24.1 During a period when an employee is covered by this Part B the employer may elect to pay employees in accordance clause 24.2. Clauses 25-28 inclusive and clause 31 of the Part B do not apply to an employee when paid in accordance with this clause 24.
24.2 An employee under this Part B, may be paid at the daily rate for each day worked to which this Part B applies in accordance with the aggregate salary table set out below prescribed in accordance with this clause appropriate to that employee’s classification. For the purposes of the following tables, 18 means vessels manned at 18 or below and AOV means All Other Vessels.
Classification |
Manning |
Minimum salary |
Aggregate overtime component |
Aggregate annual salary (Daily rate in parentheses) |
$ |
$ |
$ | ||
Master |
18 |
60,540 |
22,909 |
83,449 (229.26) |
AOV |
59,092 |
22,361 |
81,453 (223.77) | |
Chief engineer |
18 |
59,546 |
22,532 |
82,078 (225.49) |
AOV |
58,127 |
21,996 |
80,123 (220.12) | |
First mate/First engineer |
18 |
51,598 |
19,525 |
71,123 (195.39) |
AOV |
50,412 |
19,077 |
69,489 (190.90) | |
Second mate/Second engineer |
18 |
47,734 |
18,063 |
65,797 (180.76) |
AOV |
46,664 |
17,658 |
64,322 (176.71) | |
Third mate/Third engineer |
18 |
45,747 |
17,311 |
63,058 (173.24) |
AOV |
44,734 |
16,928 |
61,662 (169.40) | |
Chief integrated rating/Chief cook/Chief Steward |
18 |
43,264 |
16,371 |
59,635 (163.83) |
AOV |
42,323 |
16,015 |
58,338 (160.27) | |
Second cook |
All |
39,528 |
14,958 |
54,486 (149.69) |
Integrated rating/Assistant steward/Catering attendant |
18 |
39,402 |
14,909 |
54,311 (149.21) |
AOV |
38,563 |
14,592 |
53,155 (146.03) | |
All other crew members whose classification is recognised by or whose duties are substantially the same as a classification recognised under the TCC $638.40 per week (127.68) | ||||
This part B does not apply to persons who are not crew members. Schedule B of Part A of this Award applies to trainees working on ships covered by Part B.
24.3 The annual salaries have been fixed on an aggregate basis taking into account all aspects and conditions of employment. The aggregate salary rates are the same as provided in Part A and are payable as a pro rata daily rate for each day worked when Part B applies.”
[5] ASA and SAL support the application by CSL and VSHIPS in relation to the proposed clause 24. CSL and VSHIPS submit that aggregate rates are already established in Part A of the Award, and reflect the current working patterns of the seagoing industry. In their submission, adding the aggregate salaries set out in the proposed clause 24 would provide an alternative payment schedule that they say is more straightforward than the existing arrangements, and would be able to be more consistently and fairly applied.
[6] It is CSL and VHIPS’ submission that an aggregate salary would lead to the application of a consistent structure to the calculation and payment of salaries for seafarers regardless of whether they are employed on a vessel governed by a General Licence, Temporary Licence or the Australian International Shipping Register. In their submission, the changes would provide greater certainty for employers and employees.
[7] CSL and VSHIPS say the aggregate salary made up of 8 ordinary hours of duty plus guaranteed overtime is consistent with the 2012-2014 IBF Framework TCC Agreement (TCC Agreement). They cite the decision of the Full Bench in the Award Modernisation Decision, 2where the bench said:
“Notwithstanding the limitations of the material before us we have decided to include some basic conditions in Part B which we consider are consistent with some accepted standards in ITF agreements and which are capable of ready application to permit ships.” 3
[8] CSL and VSHIPS say the adoption of the approach taken in the TCC agreement is consistent with the views of the Full Bench.
[9] CSL and VSHIPS submit that it is important to note the practical difficulties in determining Award obligations for temporary licenced ships. It enters contracts with ship owners or charterers to conduct certain voyages on its behalf. A temporary licence applies to a voyage not to a ship and allows a voyage to be undertaken that would otherwise breach coastal trading law. The actual employer on the vessel has no relationship with CSL and VSHIPS and may not be known to them. CSL and VSHIPS led evidence of difficulties calculating Award entitlements and audits conducted by the Fair Work Ombudsman to determine whether Award wages were being paid for particular voyages on two vessels. The difficulties arise from these circumstances and the limited application of the Award to temporary licence voyages. The voyages obviously require the crew to be involved in loading, carriage and unloading. The weekly wage rate plus overtime basis of the Award is different to the standard payment system of aggregate wages in Part A of the Award and is not easily applied to the operation of an ocean-going ship. CSL and VSHIPS contend that the regulatory burden and ultimate wage costs of the Part B arrangement are a disincentive for the use of temporary licences and are undermining efficiency and competitiveness.
[10] The unions oppose the position of CSL and VSHIPS. In its submissions, the AMOU says the application to vary clause 24 should be dismissed as it confers absolute discretion on applicants for temporary licences to choose to pay either the aggregate annual salary, or the current Award wage and overtime entitlements without giving the employee a choice as to the calculation of their remuneration. The AMOU says that often the applicant for a temporary licence is not the employer, but the Award imposes the obligation to pay in accordance with the Award on the employer. Further, it submits that the aggregate annual salaries are substantially inferior to the existing rates contained in both Part A and Part B of the Award.
[11] The submissions of the MUA and the AIMPE deal with similar points to those put by the AMOU.
The nature of the award review
[12] 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).”
[13] Further provisions of the Act are also applicable and relevant to the 2012 Review. Section 134 provides as follows:
“134 The modern awards objective
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.
...
138 Achieving 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.”
[14] On the issue of the application of s.138 of the Act to the 2012 Review, the 2012 Review Full Bench stated: 4
“[33] 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 [25] 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.
[34] 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.”
[15] The variation sought needs to be considered against this legislative test.
Should the variation be made?
[16] I accept the submission that the provision for weekly wage rates in Part B of this award and the absence of aggregate salaries as provided in Part A is presenting practical compliance and enforcement issues for employers operating temporary licence voyages. In my view it is consistent with the test in this review that this situation be remedied by the establishment of an alternative payment system based on aggregate salaries. However I am unable to reconcile the competing submissions as to the particular aggregate salaries proposed in the revised application and the contention by the unions that these salaries represent a reduction in entitlements. In my view the weekly rates in Part B should be the basis for the calculations so that the aggregate wage alternative reflects an equivalent level of pay with the incorporation of allowances and penalties by way of an established methodology such as that underpinning Part A, adapted to the extent necessary. I direct the applicants to confer on this methodology with the unions with a view to obtaining an agreed position. The other changes to the classification structure deferred pending this application should be incorporated in a revised clause 24. I will relist the matter at the request of any interested party to assist in the finalisation of the matter.
VICE PRESIDENT WATSON
Appearances:
Ms S Zeitz for CSL and VSHIPS
Mr M Gibian, of counsel, for The Australian Maritime Officers’ Union
Mr N Niven for The Australian Institute of Marine and Power Engineers
Mr W McNally for The Maritime Union of Australia
Ms S Cerche for the Australian Shipowners’ Association and Shipping Australia Limited
Hearing details:
2013.
Sydney.
July.
3, 26.
2 [2009] AIRCFB 945
3 [2009] AIRFB 945 at [165]
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