[2014] FWCFB 2228

FAIR WORK COMMISSION

REASONS FOR DECISION

Fair Work Act 2009
s.604—Appeal of decision

VICE PRESIDENT CATANZARITI SENIOR DEPUTY PRESIDENT ACTON COMMISSIONER BLAIR

SYDNEY, 3 APRIL 2014

Appeal against decision [[2013] FWC 5369] of Deputy President Smith at Melbourne on 30 September 2013 and Response to Full Bench Order [[2014] FWC 334] of Deputy President Smith at Melbourne on 24 January 2014 in matter number AM2012/132 and others, determination [PR539921] of Deputy President Smith at Melbourne on 1 October 2013 in matter number AM2012/179 and AM2012/240, and determination [PR541744] of Deputy President Smith at Melbourne on 1 October 2013 in matter number AM2012/172.

[1] This is an appeal by the Shop, Distributive and Allied Employees Association (the SDA) against the decision 1 and determinations2 of Deputy President Smith to vary the Fast Food Industry Award 2010 [MA000003] and the Hair and Beauty Industry Award 2010 [MA000005] to implement the decisions of the Full Bench of the Fair Work Commission (FWC) in the Modern Awards Review 2012.3

[2] On 18 March 2013 and 12 April 2013, a Full Bench issued decisions referring a number of applications to the Deputy President for determination. Amongst other matters, these applications related to the award provisions dealing with compensation for work performed on public holidays. The subject matter of this appeal has been limited to those aspects of the Deputy President’s decisions that relate to compensation for work performed on public holidays.

[3] After a hearing on 12 December 2013, this Full Bench issued an order 4 requiring the Deputy President to provide full reasons for his original decision [[2013] FWC 5369]. Following the publication of the full reasons for the decision, the SDA was given 21 days to press any or all grounds of its appeal or to make any necessary amendments to the Notice of Appeal. On 24 January 2014, the Deputy President published the full reasons for his decision,5 and on 14 February 2014 the SDA issued a further appeal application, pressing the bulk of its appeal points from its initial application.

[4] After a further hearing on 19 March 2014, this Full Bench informed the parties that we had decided to allow the appeal, and that the decision and orders of the Deputy President would be quashed, with the reasons for our decision to published in due course. These are the reasons for our decision.

The Decision at First Instance

[5] In his decision below, the Deputy President made the following finding in relation to the public holiday provisions of the Fast Food Industry Award 2010:

“[12] A matter which was not agreed related to the treatment of compensation for public holidays. Since this matter was before me Commissioner Hampton had an identical question in relation to the General Retail Industry Award [MA000004] [[2013] FWC 4949]. All parties were advised of this decision. In that matter the parties agreed to particular treatment for time off in lieu for public holidays.

[13] Commissioner Hampton included the following provision:

d) Public holidays

(i) Work on a public holiday must be compensated by payment at the rate of an additional 150%.

(ii) Provided that by mutual agreement of the employee and the employer, the employee (other than a casual) may be compensated for a particular public holiday by either:

(A) An equivalent day or equivalent time off instead without loss of pay. The time off must be taken within four weeks of the public holiday occurring, or it shall be paid out; or

(B) An additional day or equivalent time as annual leave.

(iii) The employee and employer are entitled to a fresh choice of payment or time off by agreement on each occasion work is performed on a public holiday.

(iv) If no agreement can be reached on the method of compensation, the default arrangement shall be as per clause 29.4(d)(i).

[14] The Commissioner decided that the variation would come into operation on and from 1 August 2013. He noted that the effect of the Act is that the determination will take effect in relation to employees at the start of each employee’s first full pay period that starts on or after that date.

[15] The SDA opposed any variation as it would significantly reduce the existing safety net.

[16] I have decided that the clause inserted by Commissioner Hampton is appropriate to include in this award even against the background that it was achieved by consent. In doing so the safety net for an employee does not alter unless there is agreement to do by substituting another form of compensation. To access the alternative there must be mutual consent and employees cannot be pressured into agreeing as that would not constitute genuine consent. This is emphasised by the final sub-clause.” 6

[6] The Deputy President further found that the same outcome should apply to the Hair and Beauty Industry Award 2010.  7

[7] In his response to the Full Bench’s order, the Deputy President outlined the procedural history of the matter and then said:

“[9] It would be disingenuous to advise the Full Bench that the reasons for my decision travelled extensively beyond that given in my decision. I considered all the submissions. It would be inappropriate to take advantage of the benefit of hindsight even if memory permitted it and even if I got it wrong. I considered (although not put to the participants in the proceedings) that general retail and fast food were similar in that there were vulnerable employees for whom consent might be moot. However, in the circumstances I considered it was appropriate to give weight to the concept in the General Retail Industry Award 2010 [MA000004] and Commissioner Hampton’s approval of, what was in the end, an agreement varying the award involving the SDA. Such approval would have been consistent with the review process and appropriate in all the circumstances. The SDA’s position before Commissioner Hampton was without prejudice to other detailed arguments but it appeared to me at the time that two matters of principle were present:

● It was an appropriate flexibility amendment for the review, and

● The safety net was maintained as change could not occur without the existence of consent.

[10] It was against that background that the decision was made and I cannot take the matter further.”

(footnotes omitted)

The Appeal

[8] The SDA’s appeal points can be summarised as follows:

• The Deputy President erred in law by determining the matter without any substantive evidence to justify the variations.



• The Deputy President made an error of fact in his characterisation of Commissioner Hampton’s decision as addressing an “identical question” to the one before him and further mistook the facts in his response to the Full Bench order in characterising the Commissioner’s decision as being a “decision... which arose from the same Full Bench proceedings and dealt with the same subject matter.” The appellant submitted that the latter characterisation was “clearly made in hindsight” and should be viewed in light of the previous characterisation, that the Commissioner’s decision addressed an “identical question.”



• The Deputy President changed the rate of payment from 250% and 275% for casuals to “an additional 150%”, which was arguably a reduction for casual workers. This change was not sought by the parties nor justified in the Deputy President’s reasons for the original decision or in his response to the Full Bench order.



• The Deputy President’s decision was beyond the remit of the Full Bench’s referral, as it altered the rate of compensation for work performed on public holidays which gives rise to jurisdictional error.



• The Deputy President did not take into account the SDA’s submissions, but did take into account the submissions of the National Retail Association (the NRA) which were filed out of time.



• The Deputy President failed to alert the parties to the prospect of a variation to the rate of compensation, and thus the parties were not afforded an opportunity to be heard on this. The variation was not sought by any party.



• The Deputy President did not give adequate reasons, despite his response to the Full Bench order, as the SDA submitted extensive submissions that were not acknowledged in the Deputy President’s decision. The Deputy President had a duty to record in his decision his views about the SDA’s submissions. Further, the Deputy President’s decision incorrectly implies that only the NRA had responded to his draft orders.



• The Deputy President’s decision is manifestly unreasonable and unjust in that it relied on a clear error in relation to the decision of Hampton C, failed to have regard to the submissions of the SDA and was not supported by any evidence. These grounds were not remedied by the Deputy President’s response to the Full Bench order.

[9] The NRA’s submissions in reply can be summarised as follows:

• The Deputy President was under no obligation to admit substantive evidence in order to justify his decision. The Full Bench’s Modern Awards Review 2012 decision 8 made it clear that the FWC has a broad discretion to vary any modern award in any way necessary to remedy any issues identified in the review, so long as the modern award objective is taken into account.



• The Deputy President did not make a reduction to the safety net provided by the award, as casual employees are entitled to casual loading alongside the public holiday loading for all hours worked on the public holiday.



• No party was denied procedural fairness as all parties were provided with an opportunity to be heard on the matter, and the SDA admits that it had filed extensive submissions on the matter.



• Given the context of the matter as a referral from the Full Bench, and the Deputy President’s noting of the legislative context of the review and the modern awards objective in his decision, the Deputy President provided adequate reasons for his decision.



• The Deputy President’s decision cannot be viewed as plainly unreasonable or unjust.

[10] The Australian Industry Group (AIG) was not a respondent to this appeal, but leave was given to the AIG to make submissions opposing the appeal as we were satisfied that the AIG had a sufficient interest in the matters the subject of the appeal beyond that of an ordinary member of the public. The submissions of the AIG, insofar as they differ from the submissions of the SDA, can be summarised as follows:

• The amendments made to the award did not require any substantive evidence, as the Full Bench had already determined that additional agreed flexibility as to how the compensation for public holidays should be treated would be consistent with the modern awards objective.



• When the Deputy President’s decision and response to the Full Bench order are read as a whole, it is clear that the Deputy President did not make a mistake of fact in his characterisation of Commissioner Hampton’s decision. Further, even if there was some inaccuracy in the words used by the Deputy President in his characterisation of Commissioner Hampton’s decision, this is not the type of error that should result in the Deputy President’s decision being reviewed or set aside.



• The Deputy President stated that he “considered all of the submissions” in his decision. The fact that the Deputy President did not refer to the SDA’s 17 September 2013 submissions does not mean that they were not considered, and there is nothing unreasonable or improper about the Deputy President having regard to the NRA’s submissions which were filed late.



• The Deputy President did not modify the rate of payment for work performed on a public holiday, as the variation specifies an “additional” 150%. Thus, the 25% casual loading provided for in the award must be factored into the calculation of public holiday pay rates, resulting in a total of 275%.



• As the Deputy President did not modify the rate of payment for public holiday work, the decision was in the remit of the Full Bench referral. Further, it was “inevitable” that a determination would have to be made about matters such as the rate at which any new entitlement to time off in lieu would be paid or accrued, and thus such matters squarely arise in the context of the matter before the Deputy President.

Consideration

[11] The FWC must grant permission to appeal if it is satisfied it is in the public interest to do so. 9 In GlaxoSmithKline Australia Pty Ltd v Colin Makin,10 a Full Bench summarised the concept of public interest in the following terms:

“Although the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters...”

[12] In this matter, we are satisfied that the SDA has demonstrated that it is in the public interest to grant permission to appeal. The Deputy President’s decision manifests an injustice for the reasons that follow.

[13] We accept that the Deputy President made a mistake in his characterisation of Commissioner Hampton’s decision. In his original decision, the Deputy President characterised the Commissioner’s decision as one dealing with an “identical question” to the one that was before him, albeit that the decision was “achieved by consent.” 11 In his response to this Full Bench’s order, the Deputy President referred to:

“The decision of Commissioner Hampton which arose from the same Full Bench proceedings and dealt with the same subject matter, although the context was different.” 12

[14] On either approach, the Deputy President misconceived the differences in the matter before him and the matter before Commissioner Hampton. The matter that was referred to the Deputy President related to various employer applications that:

“[sought] to vary the provisions of Fast Food and Hair and Beauty Awards by including additional means of compensating employees for work on public holidays. In particular, they seek to add the options of an equivalent day or time, or additional annual leave, in lieu of public holiday penalty payment.” 13

[15] In 2013 in referring the matter to Deputy President Smith, the Full Bench said the following:

“[158] The NRA contended that the variations sought would enable both employer and employees greater flexibility to manage rostering and financial pressures during public holiday periods.

[159] The SDA opposed the claim on the basis that no cogent reasons had been established to vary the existing provisions.

[160] The capacity for additional flexibility in relation to how the compensation for public holidays is treated in these particular awards was not a matter that was specifically considered in the award modernisation process.

[161] Given the absence of substantive evidence on this matter, we would not be prepared to make a variation that fundamentally altered existing rights and obligations as part of this Transitional Review. However, we think there is merit in providing some additional agreed flexibility as to how the compensation for public holidays is treated in these modern awards. Such an approach would [be] consistent with the modern awards objective.

[162] In our view these proposals warrant further consideration, provided that any additional options operate by agreement with the employee and employer concerned.

[163] These elements of the claims will be referred to Deputy President Smith to convene discussions with the relevant parties and to make the final determination having regard to this decision.” 14

[16] Thus, the Deputy President’s task was to consider the issue of “providing some additional agreed flexibility as to how the compensation for public holidays is treated in these modern awards.”

[17] By contrast, the matter before Commissioner Hampton related to the General Retail Industry Award [MA000004], which already provided the options of an equivalent day or time, or additional annual leave, in lieu of public holiday penalty payment. Instead of determining whether such options should be inserted into the awards, Commissioner Hampton’s task was explained by the Full Bench as follows: 15

“[175] There is not prioritisation of the compensation options in clause 29.4(d) and there is no express provision as to how the election is made. We do not consider that the approach of the SDA to rely solely on employee election for the “alternative” forms of compensation is appropriate as part of this review. However, we accept that some clarification as to how the provision is to be applied in practice may be appropriate. Given that this aspect received very little attention in the submission of the parties, this element of the claim will be referred to Commissioner Hampton to determine in accordance with this decision with recourse to the Full Bench if appropriate.”

[18] It is clear that while the Deputy President was tasked with determining whether or not alternative forms of compensation should be made available to workers performing work on public holidays, Commissioner Hampton was tasked with determining how employers and employees should be able to choose between the different options that were already available under the General Retail Industry Award. In contrast to the Deputy President’s characterisation, the two matters were therefore concerned with different questions and different, albeit related, subject matter.

[19] This error of the Deputy President in misapprehending the nature of Commissioner Hampton’s decision and relying on it in coming to his own decision is significant. It suggests that the Deputy President misapprehended the task before him.

[20] In addition to this error, we find that there were issues with the process undertaken by the Deputy President in coming to his decision. Between May and June 2013, the parties engaged in discussions and had, for the most part, come to an agreement as to how the award should be varied. However, the parties were unable to agree on whether time in lieu in respect of a public holiday worked should be provided at the public holiday rate equivalent (the SDA’s position) or whether it should be taken at a 1:1 ratio of time worked (‘time for time,’ the NRA and AIG’s position).

[21] On 25 June 2013, the SDA informed the Deputy President of the outstanding issue that remained to be resolved, and all parties confirmed that an oral hearing would not be required and that the matter could be determined on the basis of written submissions. The Deputy President set down a time period of two weeks for written submissions to be filed. The SDA was the only party to file its submissions within that two week time period.

[22] On 3 September 2013, the NRA wrote to the Deputy President, submitting the award provisions should mirror those introduced by Hampton C in the General Retail Industry Award. This correspondence was not sent to the SDA, nor was it published to the FWC website until 20 September 2013.

[23] On 12 September 2013, the Deputy President’s associate wrote to the parties advising that the Deputy President had prepared a draft decision and orders and that unless the parties wished to be heard further, he proposed to hand down the decision and orders on 18 September 2013. On 17 September 2013 the SDA filed further submissions in response to the Deputy President’s draft decision and orders, and AIG filed submissions requesting amendments to the draft decision and orders that are not presently relevant. On 24 September 2013, the NRA made submissions on the Deputy President’s draft decision and orders, six days after the date on which the parties were told the decision would be made. These submissions were published on the Fair Work Commission website on 25 September 2013. Five days after this, on 30 September 2013, the Deputy President published his decision.

[24] The SDA tendered an affidavit of Sue-Anne Burnley, which established that Ms Burnley, the SDA’s Industrial Officer responsible for coordinating the SDA’s work in this matter, did not see the NRA’s submissions of 24 September 2013 until 26 September 2013, as notification of them was received after close of business on Wednesday, 25 September 2013. As a result of this, the SDA had only three business days to respond to the NRA’s submissions of 24 September 2013 before the Deputy President published his decision.

[25] While the SDA was given an opportunity to make submissions on the Deputy President’s draft decision, the draft decision was not in identical terms to the final decision that was published. Further, the Deputy President expressly relies on the fact that no further submissions were made following the NRA’s submissions:

“[7] Arising from [the NRA’s 24 September 2013] submission, which I understood was then known to all relevant persons, no further submissions were received. After reviewing:

● The decision of Commissioner Hampton which arose from the same Full Bench proceedings and dealt with the same subject matter, although the context was different. (See: [2013] FWCFB 2168 at paragraphs [154] and [155]); and

● The submissions of the NRA and the fact that no additional submission from interested persons, who were notified of the existence of the submission, was received,

I was persuaded to alter the draft forwarded to the parties in favour of the submission made by the NRA.” 16

[26] Thus, the Deputy President’s reliance on the absence of further submissions from interested persons who were notified of the existence of the NRA’s 24 September 2013 submissions cannot be justified in circumstances where those parties were given only three working days’ notice of the NRA’s submissions, and in any event were not expecting further submissions to be filed as the date by which the Deputy President had asserted he intended to publish the decision had passed. These circumstances were exacerbated by the fact that interested persons were not made aware of the NRA’s original submissions of 3 September 2013 until 20 September 2013.

[27] The Deputy President, therefore, relied on the decision of Commissioner Hampton, about which he has made an error as established above, and the fact that no further submissions were made following the NRA’s submissions of 24 September 2013, despite the limited opportunity afforded to other parties to respond to these submissions.

[28] As a result, the Deputy President’s decision and determinations were affected by a denial of procedural fairness. Further, the decision and determinations of the Deputy President were guided by an erroneous characterisation of a decision of Commissioner Hampton. Either of these bases reveal appealable error and are sufficient for us to quash the decision and determinations relevant to this matter.

Conclusion

[29] In the circumstances, we grant permission to appeal and quash the decision and determinations of the Deputy President, insofar as they relate to the subject matter of this appeal. Given the timing of this matter, we are of the view that the matter that is the subject of this appeal is best dealt with as part of the Four Yearly Review of Modern Awards, which is currently ongoing. Orders to this effect will be issued with this decision.

VICE PRESIDENT

Appearances:

D Langmead of Counsel for the Shop, Distributive and Allied Employees Association.

S Elliffe for the National Retail Association.

B Ferguson for the Australian Industry Group (intervening).

Hearing details:

2014.

Melbourne:

March 19.

 1   Australian Nursing and Midwifery Federation and others [2013] FWC 5369. See also Response to Full Bench Order [2014] FWC 334.

 2   PR539921 and PR541744.

 3   Modern Awards Review 2012—Penalty Rates [2013] FWCFB 1635 and Modern Awards Review 2012 - Public Holidays [2013] FWCFB 2168.

 4   PR545733.

 5   Response to Full Bench Order [2014] FWC 334.

 6   Australian Nursing and Midwifery Federation and others [2013] FWC 5369, [12]-[16].

 7   Ibid [18].

 8   Modern Awards Review [2012] FWAFB 5600.

 9   Fair Work Act 2009, s.604(2).

 10   [2010] FWAFB 5343 at [27].

 11   Australian Nursing and Midwifery Federation and others [2013] FWC 5369, [12]-[16].

 12   Response to Full Bench Order [2014] FWC 334, [7].

 13   Modern Awards Review 2012 - Public Holidays [2013] FWCFB 2168, [154].

 14   Ibid [158]-[163].

 15   Ibid [175].

 16   Ibid.

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