[2014] FWCFB 6986

The attached document replaces the document previously issued with the above code on 3 October 2014

The reference appearing in endnote 7 has been amended.

Associate to Justice Ross

18 November 2014

Fair Work Act 2009
s.156 - 4 yearly review of modern awards

4 yearly review of modern awards–additional transitional provisions–submissions.

[1] The focus of proceedings relating to the transitional/sunsetting provisions common issue is accident pay, redundancy and district allowances. This matter is being dealt with by a separate Full Bench in AM2014/190. The Commission is aware that there are a number of transitional provisions in awards which will not be dealt with as part of the transitional provisions common issue proceedings, and that some of these provisions are scheduled to cease operation on 31 December 2014. In the statement dated 13 August 2014 1, the Commission invited any party with an interest in an award containing an additional transitional issue who would like to have that issue heard and determined prior to the end of the transitional period, to notify the Commission by Friday 29 August 2014.

[2] The following submissions were received and can be accessed on the Common issues page of the Commission’s website.

[3] A brief outline setting out the background of the transitional provisions in the above awards is set out at Attachment A.

[4] Any party wishing to make submissions in relation to the three awards set out above should forward their submissions to amod@fwc.gov.au by 4 pm on 13 October 2014. Following this submission process if parties require the matter to be called on for mention they are to advise the Commission via amod@fwc.gov.au. It is likely that any mention will be listed on 17 October 2014.

[5] These issues will be dealt with at 9 am on 24 October 2014 (the second day of the sub-groups 1A and 1B hearings) and have been allocated two hours.

[6] There are a number of other transitional provisions in modern awards which have not been raised by any party. These provisions will be dealt with on an award by award basis during the group stages of the 4 yearly review.

Conclusion

[7] The Commission’s website will continue to be extensively used throughout the Review. Parties who have not already done so are encouraged to subscribe to the award matters notification service to be kept informed of the progress of this Review.

PRESIDENT

Attachment A

Transitional provisions in modern awards generally

[1] A number of modern awards contain transitional provisions which have the effect of preserving some entitlements contained in pre-reform awards, Notional agreement preserving state awards (NAPSAs) or state reference transitional awards for a period of five years. These entitlements are retained regardless of whether the instrument has been terminated as part of the award modernisation process.

[2] The Award Modernisation Full Bench made the following comments regarding the purpose of transitional provisions in modern awards 2:

“It is apparent that s.576T requires that modern awards not include terms which apply by reference to State or Territory boundaries or which do not apply in all States and Territories. It provides, however, that such terms may be included in modern awards for a period of up to five years. In its decision of 3 April 2009 the Commission made the following observations about s.576T:

[19] In its 23 January 2009 statement the Commission sought proposals and submissions as to the manner in which transitional issues should be dealt with. Most modern awards will contain terms which involve changes in minimum terms and conditions for many employees. That is because modern awards will replace a number, in some cases many, pre-reform awards and NAPSAs and establish a uniform safety net for employees and employers formerly covered by those pre-reform awards and NAPSAs. The effect of s.576T is that while modern awards must not include terms and conditions of employment that are determined by reference to State or Territory boundaries, a modern award may include such terms for an initial period of five years. It is no doubt the legislature’s intention to permit the Commission to include transitional provisions in modern awards to cushion the impact of changes in wages and other conditions. In the case of employees such provisions might deal with any reductions in their terms and conditions. In the case of employers the focus might be on increases in costs.

We confirm those observations. It is also important that we indicate our view that the Commission’s power to make transitional provisions is not limited to the removal of differences in the conditions applying in the various States and Territories. If necessary, the Commission can make transitional provisions relating to other conditions which are not appropriate for a modern award.”

[3] The background to the transitional provisions contained in the Real Estate Industry Award 2010, the Building and Construction General On-site Award 2010 and the Registered and Licensed Clubs Award 2010 is set out below.

Real Estate Industry Award 2010

[4] This award was based almost entirely on NAPSAs as there were no applicable pre-reform awards. Other than the Victorian minimum wage order made for the property and business services sector, there had been no federal real estate specific regulation. There was however an Australian Pay and Classification Scale for real estate agents paid on a commission only basis (the commission only pay scale). The Australian Capital Territory, Northern Territory, Victoria and Western Australia were described as award free prior to the making of the modern award.

[5] The draft award during the Award Modernisation process was prepared by the parties largely on a consent basis. The Full Bench explained this as follows 3:

“[168] The real estate parties draft contained numerous provisions said to be tailored to the needs of the real estate industry. It is, in several respects, different to other modern awards. Clearly the draft reflects the provisions in the existing NAPSAs. They contain, in the case of sales and property management employees, several classifications paid at the federal minimum wage or slightly above, limited overtime and almost no penalties rates.

[169] We have made a judgement as to those provisions we think are appropriate for this industry award. This exercise has been informed by the provisions of the existing awards and the fact that in the two Territories and in two States the employers and employees have been award free. We acknowledge the draft filed by the real estate parties reflects a consent position of associations representing a significant part of the industry and is the outcome of lengthy consultations (albeit, consultations about which others complain of not being asked to participate).”

[6] Further explanation for the numerous transitional provisions was set out in the decision dated 4 December 2009 4:

“[175] We have adopted the parties agreed definition of full rate of pay and it is now contained in cl.17.5(d). We turn to the model transitional provisions. As the exposure draft reflected numerous transitional provisions in the body of the award which the parties had agreed we asked if they also wanted the model phasing provisions. We were advised that they do; they are now in Schedule A to the award. “

Building and Construction General On-site Award 2010

[7] This award was drafted to encompass the areas covered by the National Building and Construction Industry Award 2000 (NBCI Award), the Australian Workers’ Union Construction and Maintenance Award 2002 (AWU Award), the National Metal and Engineering On-site Construction Industry Award 2002 and associated awards and NAPSAs. The award also sought to cover other activities currently subject to separate award regulation—for example, landscaping, joinery work, mobile crane work and geomembrane and geotextile installation where undertaken in the building and construction industry.

[8] During the Award Modernisation process the parties sought the inclusion of a number of transitional provisions in the award. In the statement of 2 September 2009, the Award Modernisation Full Bench rejected the submissions as follows:

“[116] While a number of submissions were made relating to transitional provisions, other submissions went to the substance of the award. One submission of the latter kind related to two year residential apprenticeships available in Western Australia. As we have indicated previously, such matters should be addressed through an application to vary the award.

[117] The CFMEU submitted that where an employer had an obligation to pay employees higher wages or conditions than those contained in the modern award or the NES, the transitional provisions should require the employer to maintain the more beneficial wages and conditions for both existing and new employees. The AWU made a similar submission, at least with respect to existing employees. The conditions which the unions sought to preserve on a transitional basis were mainly drawn from NAPSAs and fall into several categories:

(a) specific site or location based allowances, site conditions from appendices of Western Australian NAPSAs and other State or site specific conditions;

(b) conditions which are now regulated by the NES but at a less beneficial level than in other instruments; and

(c) provisions for the automatic conversion of casuals after six weeks and the detailed piecework provisions currently in the National Building and Construction Industry Award 2000.

[118] With respect to the matters in (a), when making the modern award such matters were not appropriate for a safety net award to operate nationally. They relate to specific sites which are generally regulated by enterprise agreements. We do not think it necessary to preserve such conditions, even on a transitional basis. Take-home pay orders may be sought in the unlikely event that employees suffer a significant reduction in take-home pay. With respect to the matters in (b), the modern award provisions dealing with NES matters were made in a considered way, and generally apply to all modern awards. Although there is a case for supplementation in some areas, none of the matters raised justifies further supplementation, even on a transitional basis. Finally, with respect to the matters in (c), the modern award provisions relating to casual conversion and the simplified piecework provision were included as appropriate to a modern safety net award and should not be amended even on a transitional basis.

[119] There is no reason to include additional transitional provisions in this award. We will vary the award to include the model transitional provisions, including the phasing schedule.”

[9] The Award Modernisation Full Bench made the following statements about rates of pay for two year apprenticeships 5:

“[19] In respect of nominated residential apprenticeships in Western Australia, the MBA submitted that cl.19.7(b) does not contain rates of pay for the permitted two year term of nominated residential apprenticeships available in Western Australia and the subclause should be modified so that the 55% and then the 75% rate may continue to apply to ensure continuity of engagement for the relevant apprentices.

[20] We will include a new transitional provision, as follows, to regulate wages for those apprentices undertaking two year residential apprenticeships in Western Australia. We will make the variation as a transitional provision, to allow application to be made to vary the award substantively, in the context of the setting aside of the Western Australian NAPSA or some later time, if there exists a continuing need to accommodate such apprenticeships in the award.

[21] The transitional provision will be inserted in the award as a new cl.19.7(d), with subsequent renumbering, in the following terms:

“19.7(d) Transitional provisions—Two year residential apprenticeships in Western Australia

(i) An apprenticed employee undertaking a two year residential apprenticeship in Western Australia will be paid the percentage of the standard rate, as follows:

Nominated residential apprenticeships in Western Australia
Two year apprenticeship	% of the standard rate
First year	55
Second year	75

(ii) Clause 19.7(d) ceases to operate on 31 December 2014.”

[10] In relation to the issue of airfares to Christmas Island the Award Modernisation Full Bench said as follows 6:

“[36] We note that in 1993 the Commission created a nexus between the district allowance in the Christmas Island building and construction industry and the locality allowance paid to persons permanently domiciled on the island. No reason has been shown to disturb that nexus and we will maintain it. In the recent past the amount of the allowance has been assessed and adjusted periodically by the Department of Employment and Workplace Relations and, more recently, the Department of Education, Employment and Workplace Relations (DEEWR). We will fix the amount as it currently stands subject to automatic adjustment in accordance with the periodic assessments issued by DEEWR or any other relevant successor authority. The designated modern awards will include the following Christmas Island specific provisions:

“Airfares

Where an employee is domiciled in the Territory, that employee is entitled to an annual airfare for herself/himself and her/his dependent spouse after 12 months continuous service.

The return airfare payable is the equivalent of an economy airfare from Christmas Island to Perth.

Where an employee completes less than 12 months service with an employer, the employee shall be paid the entitlement on a pro rata basis.

District Allowance

For each employee other than a casual employee domiciled in the Territory, the employer shall pay a district allowance at the rate of:

	$ per annum	$ per week
Employees with dependants	8,430.00	162.115
Single employee	5,210.00	100.192

Dependant means the spouse, child or parent of an employee who ordinarily lives with the employee and who is wholly or substantially dependent upon the employee.

If an employee is engaged for a period of less than 38 ordinary hours i.e. a part-time employee, then the amount of district allowance will be that portion of the appropriate weekly allowance as the ordinary hours worked are a portion of 38 ordinary hours as the full week.

“Territory” means the territory of Christmas Island.

Adjustment of district allowance

The rates of district allowance will be increased in accordance with the periodic changes notified by the Department of Education, Employment and Workplace Relations for District Allowance Grade D of the schedule of Remote Locality Allowances Annual Adjustments. The operative date of the increases shall be 1 July each year.”

Registered and Licensed Clubs Award 2010

[11] In the decision of 4 September 2009 the Award Modernisation Full Bench made the following statement about the part-time transitional provisions 7:

“[132] The major issue which arose in the post-exposure draft consultations related to part-time provisions. Both prior to the publication of the exposure draft and in subsequent consultations, the LHMU supported the inclusion of the part-time employment provision in Victorian clubs award. That provision is in the same terms as part-time provisions contained in most modern awards.

[133] The LHMU submitted that the New South Wales provision undermines the character of part-time employment, removing essential protections for employees that the part-time provisions were designed to provide and that alternate arrangements can be made by enterprise agreement, subject to the better off overall test.

[134] Clubs Australia and other employer organisations proposed a provision in the terms of cl.10 of the NSW clubs award. Clubs Australia submitted that the exposure draft entails, for New South Wales, a loss of flexibility through preventing additional hours other than as overtime and an administrative burden associated with written consent for a change in rostered hours. It submitted that the provision was introduced by consent, has prevented disputes about hours and has led to a significant conversion form casual to part-time employment. It relied on several statements from clubs, which addressed the impact of the exposure draft provision on current arrangements.

[135] In assessing the competing positions in relation to what are very different provisions, it is necessary to more closely consider the current regulation of part-time work against the full range of existing federal awards and NAPSAs, the weight of that regulation and the substantive terms of the competing provisions.

[136] The current pre-reform awards – the Victorian clubs award, the ACT club managers award, the Liquor and Accommodation Industry – Licensed Clubs - Managers and Secretaries – Award 2002, the ACT clubs award and the Queensland NAPSA, the Clerks’ Award – Hotels and Registered Clubs – State 2003 – all contain a regular part-time employment provision in the terms found in the exposure draft and generally contained in modern awards already made. As the LHMU noted, the provision was crafted as a safety net provision in respect of part-time employment by a Full Bench in the award simplification decision in 1998, after hearing evidence from employees in the hospitality industry and on submissions from relevant parties. The provision characterises a regular part-time employee as an employee who works less than full-time hours of 38 per week, has reasonably predictable hours of work and receives, on a pro rata basis, equivalent pay and conditions to those of full-time employees who do the same kind of work. It requires a written agreement on a regular pattern of work, specifying at least the hours worked each day, which days of the week the employee will work and the actual starting and finishing times each day, with variation in writing being permissible. All time worked in excess of mutually arranged hours is overtime.

[137] The NSW clubs award prescribes two sets of conditions for part-time employees. The first applies to employees employed as at 2 July 1999. The Restaurant and Catering Australia submitted that this provision has little, if any, continuing relevance, a proposition which was not disputed during the consultations. It provided for a loading of 15% in addition to the ordinary hourly rate of pay for all ordinary hours worked on Mondays to Fridays, in addition to an entitlement to annual leave, bereavement leave, blood donors leave, make up pay in respect of jury service, family care leave, repatriation leave, sick leave and unpaid parental leave.

[138] The second, and presently operative, set of conditions is in the terms Clubs Australia proposes for the modern award. It prescribes a minimum of 32 hours and a maximum of 148 hours in any four week period, to be worked over no more than 20 days in a four week period, together with a minimum three hours (other than for clubs who employ fewer than 10 employees) and maximum 10 hours per shift. It provides for a roster showing starting and ceasing times for ordinary hours of duty together with meal periods for part-time employees, to be posted two weeks in advance and not be changed except by mutual consent. When such a change is necessary because of absences or shortages of staff 12 hours notice is required. Change for any other reason requires seven days notice. There is a limitation of three part-time employees for each full-time employee, other than for clubs who employ fewer than 10 employees.

[139] Several NAPSAs provide flexible part-time provisions. The Club Managers' (State) Award 2006 (NSW) provides for minimum (three) and maximum (37) weekly hours, to be worked as rostered, with at least 7 days notice. The Clerks (Clubs, Hotels and Motels) Award (SA) has limited part-time provisions, prescribing only the basis of payment, pro-rata access to personal and annual leave and a three hour daily minimum engagement.

[140] A number of other NAPSAs provide for two classes of part-time employees: those who work specified hours and those who do not. We note in particular that the Club Employees' Award - State (Excluding South-East Queensland) 2003 provides daily and weekly minimum and maximum hours and a limitation to working on five days of each week. A loading of 10% applies and is applied for the payment of annual leave, sick leave, long service leave, overtime and public holidays. It should be noted that the New South Wales NAPSA provided a loaded rate for part-time employees before 1999, and the provision continues to apply to employees engaged before 1999.

[141] The Western Australian NAPSAs contain a concept of regular work for part-time employees. 

[142] A review of current federal awards and NAPSAs discloses three types of provision. First there is the provision in the Victorian clubs award, common to most modern awards, providing a high degree of certainty and regularity of working patterns for part-time employees and payment at overtime rates for work beyond agreed regular hours. Secondly there is the New South Wales provision which does not provide certainty and regularity of working patterns, although the statements provided by Clubs Australia suggest a proportion of employees are provided with regular times. Third, a number of NAPSAs applying in other states which provide for two types of part-time employees, those with specified hours and those without. A loading is paid to those without specific hours to compensate for the absence of regularity and certainty of work. In one case there is a single category of part-time employee with flexible hours and a loading.

[143] In terms of the significance of those diverse forms of regulation of part-time employment, Clubs Australia submitted that the majority of clubs are in New South Wales, as is the majority of employment by clubs. This point was conceded by the LHMU and is supported by Australian Bureau of Statistics data, which shows:

• New South Wales accounts for just under half of all hospitality clubs (49.4%), while Queensland accounts for 22.4% and Victoria accounts for 13.5%;

• employment in New South Wales comprises 61.5% of all employment, while Queensland has 20.4% of all employment and Victoria has 10.2% of all employment.

[144] The weight of current regulation supports the adoption of the New South Wales NAPSA provision. However, that provision removes the essential characteristics of part-time employment of some degree of regularity and certainty of employment. It does not reflect a conventional concept of part-time employment as was conceded by Clubs Australia in submitting that “it is perhaps time to look at part-time in a different light and not with the conventional outlook of what is part-time.” The New South Wales provisions for part-time employees provide a bare guaranteed minimum of 32 hours over a four week period, no certainty beyond the roster as to when work is to be done and a capacity to alter the roster with 12 hours notice in cases of absences or shortages of staff. These part-time provisions give little predictability to part-time employees and do not appear to be consistent with “the essential integrity of part-time employment which should be akin to full time employment in all respects except that the average weekly ordinary hours are fewer than 38.” The concerns we expressed about variation of hours by consent in relation to the awards in the health and welfare services industry apply equally in this context.

[145] Having regard to the significant departure from the conventional characteristics of part-time employment in the New South Wales provision and the diversity of current prescriptions, we are not prepared to apply the New South Wales provision across the licensed clubs industry, notwithstanding the predominance of club employment under the New South Wales NAPSA, without a fuller consideration of the issues raised through a more traditional arbitration, in advance of or as part of the two year review of modern awards, required by the Transitional Act.

[146] We have decided to maintain the part-time provision in the exposure draft, subject to the inclusion of a transitional provision for New South Wales, Queensland, South Australia, Western Australia and Tasmania, which will maintain the current arrangements for three years into the transitional period. This should accommodate the completion of the two year review. The transitional provision is in the following terms:

“Transitional Provision – New South Wales, Queensland, South Australia, Western Australia and Tasmania

An employer subject a NAPSA that applied in New South Wales, Queensland, South Australia, Western Australia or Tasmania immediately prior to 1 January 2010 which prescribed part-time employment provisions different from those in cl.10.4(a), may continue to apply those provisions. This transitional provision ceases to operate on 31 December 2012.”

[12] The above provision was varied during the Transitional Review of Modern Awards by deleting the final sentence 8 meaning that the transitional provision continued past 31 December 2012.

 1   [2014] FWCFB 5537

 2   [2009] AIRCFB 345

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[2009] AIRCFB 865

 4   [2009] AIRCFB 945

 5   [2009] AIRCFB 989

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 7   [2009] AIRCFB 826

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