[2014] FWCFB 379 |
FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
Social, community, home care and disability services | |
VICE PRESIDENT HATCHER |
SYDNEY, 4 MARCH 2014 |
Appeal against decision [[2013] FWC 4141] of Vice President Watson at Melbourne on 27 June 2013 in matter number AM2012/201.
Background
[1] Item 6(1) of Schedule 5 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) had the effect of requiring the Commission to conduct a review of all modern awards as soon as possible after 1 January 2012. In respect of the Social, Community, Home Care and Disability Services Industry Award 2010 (the SCHCDS Award), this review was initially conducted by Senior Deputy President Kaufman, and essentially involved the consideration of various applications to vary the SCHCDS Award. Apart from the application made by the Australian Municipal, Administrative, Clerical and Services Union (ASU), the other applications were either withdrawn or dealt with in a consent determination made by the Senior Deputy President on 21 November 2012. 1
[2] After the Senior Deputy President’s retirement, the outstanding ASU application was dealt with by Vice President Watson. The ASU’s application was the subject of hearings on 9 April and 17 May 2013. The parties also filed written submissions. On 27 June 2013 Vice President Watson issued his decision in the matter (Decision). 2 A determination varying the SCHCDS Award effective from the first full pay period to commence on or after 1 August 2013 was subsequently issued by his Honour on 31 July 2013 (Determination).3
[3] The ASU has appealed against the Decision and the Determination to the extent that they dealt with those aspects of its application concerning weekend penalty rates and overtime entitlements for casual employees. Clause 26.1 of the SCHCDS Award provides that employees who work ordinary hours on a Saturday or Sunday are to be paid a rate of time and a half on Saturday and double time on Sunday (provided that no shift loading was otherwise payable). However clause 26.2 as it was prior to the Determination coming into effect excluded casual employees from this entitlement. It provided:
“26.2 Casual employees who work less than 38 hours per week will not be entitled to payment in addition to any casual loading in respect of their employment between midnight on Friday and midnight on Sunday.”
[4] With respect to overtime, clause 28.1 made provision for penalty rates for the performance of overtime work for full-time and part-time employees (the quantum of the penalty rate for full-time employees for overtime on Mondays to Saturdays differed depending upon the type of duties performed), but made no provision at all for overtime rates for casual employees. As a result, for any hours worked during the week, even if in overtime or upon the weekend, casual employees received their ordinary time hourly rate - that is, 1/38th of the weekly rate appropriate to the employee’s classification, and in addition a loading of 25% of that rate “instead of the paid leave entitlements accrued by full-time employees” (clause 10.4(b)).
[5] The ASU’s application, relevantly, sought to change this situation. Firstly, it sought the deletion of clause 26.2, so that the weekend penalty rates prescribed by clause 26.1 would apply to casual as well as full-time and part-time employees. Secondly, it sought that clause 28.1 be deleted and replaced by the following new provision:
“28.1 Overtime rates
Employees will be paid the following payments for all work done in addition to their rostered ordinary hours on any day prescribed in Clause 25:
(a) disability services, home care and day care employees - for all authorised overtime on Monday to Saturday, payment will be made at the rate of time and a half for the first two hours and double time thereafter;
(b) social and community services and crisis accommodation employees - for all authorised overtime on Monday to Saturday, payment will be made at the rate of time and a half for the first three hours and double time thereafter;
(c) for all authorised overtime on a Sunday, payment will be made at the rate of double time;
(d) for all authorised overtime on a public holiday, payment will be made at the rate of double time and a half; and
(e) overtime rates under this clause will be in substitution for, and not cumulative upon, the shift premiums prescribed in Clause 29 - Shiftwork and Saturday and Sunday work premiums prescribed in Clause 26 - Saturday and Sunday work.”
[6] The effect of the proposed new clause 28.1 would be to apply the overtime penalty rates to which full-time employees were entitled equally to part-time employees and casuals.
The Decision and the Determination
[7] In respect of the ASU’s application to delete clause 26.2 and thus remove the exclusion of casual employees from weekend penalty rates, Vice President Watson said in the Decision:
“[31] The ASU submits that this provision has only recently become relevant because of the operation of the transitional provisions; it is an anomaly because it did not reflect the position in any previous award and it has its genesis in a draft provided by Jobs Australia with no explanation by the AIRC for its adoption.
[32] These submissions are contested by some employers who point to the history in some awards of weekend penalties in lieu of casual loadings for casual employees working on weekends. Jobs Australia submits that the provision was in the exposure draft of the award but concedes that the identical award provision in the Aged Care Award was subsequently amended to provide for a loading for weekend work performed by casuals.
[33] I consider that the history of this provision indicates that it has not been subject to extensive submissions and consideration previously. I also consider that the approach taken by the Full Bench in modifying an identical provision in the aged care sector has much to commend it. It provided for the reverse of the current provision - the payment of penalties but no loading instead of loading and no penalties. I will adopt a similar approach for this award. I direct the ASU to prepare a draft variation. It will apply from 1 August 2013.”
[8] In respect of the ASU’s application to replace clause 28.1 and thereby provide casual employees with an entitlement to overtime penalty rates, the Decision said:
“[35] The ASU submits that the existing limitation of overtime provisions to full time employees is anomalous. It is related to the previous issue. The employers contest that the provision is truly anomalous.
[36] As I have determined that the approach of the Full Bench stated above in relation to casuals working on weekends should be adopted I will make variations to reflect this position but otherwise not vary the overtime clause.”
[9] In accordance with the direction in paragraph [33] of the Decision, the ASU subsequently filed a draft determination to give effect to his Honour’s conclusion in that paragraph. The variation it proposed was to replace the existing clause 26.2 with the following new provision:
“26.2 Casual employees will be paid in accordance with clause 26.1. The rates prescribed in clause 26.1 will be in substitution for and not cumulative upon the casual loading prescribed in clause 10.4(b).”
[10] The Determination that was ultimately made by his Honour differed from the ASU draft. The relevant variation effect by the Determination was as follows:
“A. Further to the decision issued on 27 June 2013, it is ordered that the Social, Community, Home Care and Disability Services Industry Award 2010 be varied as follows:
.....
3. By deleting clause 26.2 and inserting the following clause:
26.2 Casual employees who work less than 38 hours per week will be paid in respect of their employment between midnight on Friday and midnight on Sunday in accordance with clause 26.1. The rates prescribed in clause 26.1 will be in substitution for and not cumulative upon the casual loading prescribed in clause 10.4(b).”
[11] It can be seen that the substantive difference between the new clause 26.2 proposed by the ASU to give effect to paragraph [33] of the Decision and the new clause 26.2 actually ordered by Vice President Watson was that the latter confined the benefit of weekend penalty rates to “Casual employees who work less than 38 hours per week”. This meant under the new provision casual employees would receive a loading of 50% for ordinary hours worked on Saturdays and 100% for ordinary hours worked on Sundays, but only 25% (the general casual loading) for overtime hours worked on Saturdays or Sundays.
ASU’s appeal grounds and submission
[12] Paragraphs 2.3 and 2.4 of the ASU’s notice of appeal identified the following errors in the Decision:
“2.3 The decision is affected by the following errors:
a. It failed to remove anomalies arising from the modern award process;
b. It failed to give effect to the modern awards objective;
c. It failed to review the Award in its own right;
d. It failed to take into account the fact that the Award did not reflect the terms of the predecessor social and community services sector awards;
e. It failed to take into account the diminution in entitlements to employees created by the operation of the anomalous provisions of the Award.
2.4 The appellant was denied natural justice in that the variation made departed from the relief sought and was not the subject of submission.”
[13] In its written appeal submission, the ASU submitted that in the award modernisation process conducted under Part 10A of the Workplace Relations Act 1996, the Commission had generally taken the approach of adopting in modern awards the most common provisions appearing in pre-existing awards and instruments. The ASU referred in that connection to what the Full Bench said in Modern Awards Review 2012 - Penalty Rates 4:
“[32] In making modern awards the AIRC could not, save in limited circumstances, differentiate between States and had the task of balancing interests of employees and employers throughout Australia after examining both federal awards and NAPSAs. In relation to the penalty rates for Saturdays and Sundays and other conditions, the AIRC adopted a ‘swings and roundabouts’ approach where the most common provisions were seen as the most influential and were often adopted.”
[14] The ASU advanced a detailed analysis of the predecessor industrial instruments which, it submitted, demonstrated that the clauses 26.2 and 28.1 of the SCHCDS Award were anomalous in that they did not reflect the position that prevailed in the overwhelming majority of those instruments. That position, it submitted, was that the predecessor instruments generally provided for casual employees to receive weekend and overtime penalties in addition to the casual loading. The Decision, although improving the position of casual employees, had not resolved the anomalies in the SCHCDS Award in that although the Determination provided for weekend penalty rates for casual employees, it did so to the exclusion of the casual loading; further, the Determination did not in any way resolve the problem of the lack of any overtime entitlements for casuals. Because the Decision and the Determination did not resolve the anomalies which were evident in the SCHCDS Award, Vice President Watson had not, the ASU submitted, discharged his duties under item 6 of Schedule 5 of the Transitional Act.
[15] The ASU also advanced an argument that it had been denied procedural fairness because, in respect of weekend penalty rates, Vice President Watson had adopted the approach taken by the Full Bench in Aged Care Award 2010 5, in which weekend penalty rates were applied to casuals but in substitution for the casual loading, without putting the ASU on notice that he was considering taking that approach and giving the ASU a fair opportunity to put a case as to why that approach should not be applied in respect of the SCHCDS Award.
[16] The ASU’s appeal and submissions were supported by the Health Services Union.
The respondents’ submissions
[17] Appearing as respondents in the proceedings and in opposition to the appeal were the Aged Care Employers 6, Jobs Australia, Australian Business Industrial (ABI), the Australian Federation of Employers and Industries (AFEI) and the Victorian Employers’ Chamber of Commerce and Industry (VECCI). In their respective written submissions filed before the hearing of the appeal in accordance with the Commission’s directions, the respondents submitted that there was no appellable error in either the Decision or the Determination, that the ASU had not been denied procedural fairness, and that there was no basis for permission to appeal to be granted or, in the event that such permission were granted, for the appeal to be upheld.
[18] However, there was some evolution in the respondents’ position during the course of the appeal proceedings. The appeal was first listed for hearing on 19 September 2013. At the hearing on that day, after a short period and in the course of argument, it became apparent that the parties were in agreement that there was a serious issue to be considered as to whether the variation to clause 26.2 made by Vice President Watson in the Determination was consistent with his Honour’s reasons and conclusions expressed in paragraphs [33] and [36] of the Decision. That being the case, we considered at that time that the appropriate course was for the hearing of the appeal to be adjourned, and that the matter should be the subject of a conference before a member of the Full Bench to explore whether agreement could be reached as to the disposition of the appeal.
[19] In accordance with that approach, Deputy President Smith conducted a conference of the parties on 8 October 2013. The parties were unable to reach an agreement, so the appeal was listed for a further hearing on 10 December 2013. At this further hearing, the Aged Care Employers, ABI, AFEI and VECCI advanced a common primary position that a variation to clause 26 different to that contained in the Determination was necessary to properly give effect to Vice President Watson’s reasons and conclusions appearing in paragraphs [33] and [36] of the Decision. The variation they proposed (with the differences to the SCHCDS Award as it currently stands marked up) was as follows:
“26. Saturday and Sunday work
26.1 Full-time and part-time employees whose ordinary working hours include work on a Saturday and/or Sunday, will be paid for ordinary hours worked between midnight on Friday and midnight on Saturday at the rate of time and a half, and for ordinary hours worked between midnight on Saturday and midnight on Sunday at the rate of double time. These extra rates will be in substitution for and not cumulative upon the shift premiums prescribed in clause 29 - Shiftwork.
26.2 Casual employees will be paid for hours worked between midnight on Friday and midnight on Saturday at the rate of time and a half, and for hours worked between midnight on Saturday and midnight on Sunday at the rate of double time. who work less than 38 hours per week will be paid in respect of their employment between midnight on Friday and midnight on Sunday in accordance with clause 26.1. These extra rates prescribed in clause 26.1 will be in substitution for and not cumulative upon the shift premiums prescribed in clause 29—Shiftwork and the casual loading prescribed in clause 10.4(b).”
[20] These respondents also, very helpfully, provided a further set of variations to the SCHCDS Award which would be necessary if the result of the appeal, contrary to the respondents’ primary position, was that the Full Bench determined that the SCHCDS Award should be varied both to correct the variation to clause 26.2 in the Determination and to apply overtime penalty rates to casual employees. These variations reflected the respondents’ position that any weekend and overtime penalty rates should be in substitution for and not cumulative upon the casual loading. These alternative variations were as follows:
“26. Saturday and Sunday work
26.1 Employees whose ordinary working hours include work on a Saturday and/or Sunday, will be paid for ordinary hours worked between midnight on Friday and midnight on Saturday at the rate of time and a half, and for ordinary hours worked between midnight on Saturday and midnight on Sunday at the rate of double time. These extra rates will be in substitution for and not cumulative upon the shift premiums prescribed in clause 29 - Shiftwork and the casual loading prescribed in clause 10.4(b).
26.2 Casual employees who work less than 38 hours per week will be paid in respect of their employment between midnight on Friday and midnight on Sunday in accordance with clause 26.1. The rates prescribed in clause 26.1 will be in substitution for and not cumulative upon the casual loading prescribed in clause 10.4(b).
28. Overtime and penalty rates
28.1 Overtime rates
(b) Part-time employees and casual employees
(i) All time worked by part-time or casual employees in excess of 38 hours per week or 76 hours per fortnight will be paid for at the rate of time and a half for the first two hours and double time thereafter, except that on Sundays such overtime will be paid for at the rate of double time and on public holidays at the rate of double time and a half.
(ii) All time worked by part-time or casual employees which exceeds 10 hours per day, will be paid at the rate of time and a half for the first two hours and double time thereafter, except on Sundays when overtime will be paid for at the rate of double time, and on public holidays at the rate of double time and a half.
(iii) Time worked up to the hours prescribed in clause 28.1(b)(ii) will not be regarded as overtime but an extension of the contract hours for that day and will be paid for at the ordinary rate of pay.
(iv) Overtime rates under this clause will be in substitution for and not cumulative upon:
(a) the shift premiums prescribed in clause 26-Saturday and Sunday work;
(b) the shift premiums prescribed in clause 29—Shiftwork;
and
(c) the casual loading prescribed in clause 10.4(b).
28.2 Time off instead of payment for overtime
By mutual agreement, an full-time or a part-time employee may be compensated by way of time off instead of payment of overtime (time for time) on the following basis:
(a) Time off instead of payment for overtime must be taken at ordinary rates within three months of it being accrued.
(b) Where it is not possible for an employee to take the time off, instead of payment for overtime, within the three month period, it is to be paid out at the appropriate overtime rate based on the rates of pay applying at the time payment is made.
(c) An employee cannot be compelled to take time off instead of overtime.”
[21] The position of Jobs Australia was somewhat different. It maintained its position that there was no error in either the Decision or the Determination that required any correction on appeal and that no issue of the public interest otherwise justified the grant of permission to appeal. It submitted that its members were now paying the weekend penalty rates prescribed in clause 26.1 to casual employees in respect of all hours worked on weekends, whether those hours were ordinary or overtime hours - notwithstanding what the variation to clause 26.2 of the Determination actually said. In the alternative, Jobs Australia submitted that if the Full Bench determined that any further variation to clause 26.2 was required, it should be in accordance with the primary variation proposed by the other respondents.
Aged Care Award
[22] Because in paragraph [33] of the Decision Vice President Watson determined that the approach taken by the Full Bench in Aged Care Award 2010 7 should be followed, it is necessary to explain briefly the history of penalty rates provisions for casual employees in the Aged Care Award (AC Award).
[23] When the AC Award first came into effect on 1 January 2010, it provided for neither weekend nor overtime penalty rates for casual employees. In respect of Saturday and Sunday work, clause 23 of the AC Award provided:
“23.1 Employees whose ordinary working hours include work on a Saturday and/or Sunday, will be paid for ordinary hours worked between midnight on Friday and midnight on Saturday at the rate of time and a half, and for ordinary hours worked between midnight on Saturday and midnight on Sunday at the rate of time and three quarters. These extra rates will be in substitution for and not cumulative upon the shift premiums prescribed in clause 26 - Shiftwork.
23.2 Casual employees who work less than 38 hours per week will not be entitled to payment in addition to any casual loading in respect of their employment between midnight on Friday and midnight on Sunday.”
[24] In respect of overtime, clause 25 of the AC Award set out overtime penalty rate entitlements for full-time and part-time employees, but provided no such entitlement for casual employees.
[25] On 23 March 2010 a six-member Full Bench made an order 8 making further variations to that award. This was then the subject of a correction order issued on 31 March 2010.9 The existing clause 23.2 was replaced by the following new provision:
“23.2 Casual employees will be paid in accordance with clause 23.1. The rates prescribed in clause 23.1 will be in substitution for and not cumulative upon the casual loading prescribed in clause 10.4(b).”
[26] The overtime provisions in clause 25.1 were also varied to provide, in substance, that casual employees were to have the same entitlement to overtime penalty rates as part-time employees. This variation concerning overtime penalty rates for casuals was made by consent, so no detailed reasons for this variation appear in the Full Bench’s Aged Care Award 2010 decision 10, which was issued on the same date (23 March 2010) that the first variation order was made. The application for this variation was made by a group of South Australian aged care employers represented by EMA Consulting11, and was consented to by the LHMU. In paragraph [62] of the Full Bench’s decision it was simply noted in respect of this application that a number of matters were agreed, that the changes resulting from that agreement were appropriate, and that award variations would be made.
[27] However the issue of weekend penalty rates for ordinary hours worked by casuals was the subject of a contest between the parties, and accordingly the reasons for the variation to clause 23.2 were set out in that decision as follows:
“[50] As we noted earlier, all three of the applications made by the LHMU seek to alter the operation of the modern award in relation to penalty payments for casual employees on weekends. Under the modern award casual employees in receipt of the casual loading are not entitled to penalty payments for any period of ordinary hours between midnight on Friday and midnight on Sunday. The LHMU seeks to vary the award to provide that casual employees should be entitled to the weekend penalties applying to weekly employees. Although a permanent change is sought through a variation of the provisions in the body of the modern award, there are also similar applications for transitional provisions relating to employees in Western Australia and South Australia to operate for the full five year period.
[51] The provision in the modern award is in the following terms:
“23.2 Casual employees who work less than 38 hours per week will not be entitled to payment in addition to any casual loading in respect of their employment between midnight on Friday and midnight on Sunday.”
[52] The LHMU submitted that casual employees should continue to receive weekend penalty rates in addition to the casual loading on the basis that the relevant award-based transitional instruments provide for such payments. It made available a survey of relevant awards to support its position. On the basis of this material the LHMU submitted that casual employees who work less than 38 hours per week will lose all penalty rates for Saturday and Sunday work. The impact varies between South Australia and Western Australia. It is argued that in South Australia the minimum decreases for casual employees are 30% on Saturday and 50% on Sunday.
[53] The LHMU submitted that if the modern award remains in its present form, casual employees will be preferred over part-time and full-time employees for weekend employment. It also contended that the casual loading was fixed to compensate for annual leave, sick leave and public holidays and was not intended to compensate for penalty rates.
[54] In an alternative to its claim, the LHMU submitted that casual employees who work less than 38 hours per week should be entitled to weekend penalty rates rather than the casual loading. The Australian Government made submissions in relation to WA and put that a variation to the transitional provisions should occur to ensure that award reliant employees in WA retain the provisions for a reasonable period of time in order to allow the parties to seek to negotiate enterprise agreements.
[55] The South Australian Minister for Industrial Relations, the Hon. P. Caica, supported the LHMU application and expressed concern in two other matters. The first matter concerns the fact that nurses covered by the Nurses Award 2010, who work side by side with employees covered by the modern award, receive weekend penalties in addition to the casual loading. Secondly, the current provisions could lead to a further casualisation of the workforce in the aged care sector in South Australia.
[56] Twelve employer groups in the aged care sector in South Australia (the Associations) opposed the application. They submitted that the impact of any changes will be cushioned by the operation of the transitional provisions and that take home pay orders are potentially available to any employee who is disadvantaged. In the alternative the Associations argue that the secondary position put by the LHMU could be adopted.
[57] Some 13 separate employers in South Australia did not oppose the LHMU’s alternative position. They submitted:
“The variation proposed by the LHMU in Appendix A2, would correct the unintended consequence that occurred during the drafting and subsequent finalisation of the AC award.”
[58] It was also noted that the approach in Appendix 2 would be consistent with the approach to the payment for public holiday in clause 29.1(c)(ii) of the modern award.
[59] Having regard to the weight of regulation in this area, in particular the incidence of some form of penalty payment to casuals for weekend work, we think the LHMU has made out a strong case for change. Nevertheless the position under the relevant award-based transitional instruments is by no means uniform. In particular we note that in many of those instruments the casual loading is lower than the loading in the modern award. In the circumstances we consider that it would be fair to adopt the LHMU’s alternative position, and make provision for casual employees to receive the relevant weekend penalty rates in substitution for the casual loading. We will vary the award accordingly in terms of the draft in Appendix A2 to the LHMU application. In light of this conclusion we reject the claim for special transitional provisions in South Australia and Western Australia.”
[28] Two matters may be noted in the Full Bench’s reasons and conclusions in the above decision. The first is that the Full Bench identified the “weight of regulation in this area” - that is, the predominant position in the awards and instruments which existed prior to the making of the AC Award - as an important consideration. Secondly, the Full Bench placed reliance upon the fact that in many cases the pre-existing awards and instruments had a lower casual loading than the AC Award as a reason why, in restoring weekend penalty rates for casual employees, those penalty rates should be in substitution for and not in addition to the casual loading.
Consideration
[29] In paragraph [33] of the Decision, it is reasonably apparent that Vice President Watson intended that that casual employees should be entitled to the weekend penalty rates for ordinary time work specified in clause 26.1, but that consistent with the approach taken by the Full Bench in paragraph [59] of the Aged Care Award 2010 decision, those weekend penalty rates should be in substitution for and not in addition to the casual loading. This meant that his Honour intended that the total loading for casual employees should be increased from 25% to 50% for Saturdays and from 25% to 100% for Sundays.
[30] We do not consider that the ASU has succeeded in demonstrating any error in his Honour’s consideration of that part of its claim which concerned the working of ordinary hours by casual employees on weekends. Although in paragraphs [30]-[33] of the Decision his Honour did not make an explicit finding concerning the weight of regulation in pre-existing awards and instruments, we consider that it is implicit in his Honour’s reference to and reliance upon the approach taken in the Aged Care Award 2010 decision that he recognised the weight of the pre-existing position but considered that the increase in the casual loading should be regarded as an offsetting factor.
[31] We accept that the ASU was able to demonstrate convincingly that the predominant position in the pre-existing awards and instruments was that casual employees were entitled to penalty rates for working ordinary hours on weekends of the same quantum as those applying to full-time and part-time employees in addition to payment of a casual loading. To the extent that the respondents took issue with the ASU’s analysis in this respect, it was largely at the margins and did not serve to alter the main conclusion to be drawn from the analysis. However, it is equally clear that as a result of the adoption of a standard 25% loading for casual employees in modern awards, a large majority of casual employees will upon the completion of the operation of the SCHCDS Award’s transitional provisions have received an increase in their casual loading. In the majority of pre-existing awards and instruments, the casual loading had been 20% or less, so that many casual employees will receive a reasonably substantial increase in their ordinary rate of pay (leaving aside weekend penalties) under the SCHCDS Award. In rectifying the omission of weekend penalty rates, we consider that it was open to Vice President Watson, as it was to the Full Bench in the Aged Care Award 2010 decision, to take that matter into account and to award weekend penalty rates that operated to the exclusion of the casual loading. We do not consider that in taking this course, his Honour fell into error in any of the respects identified in paragraph 2.3 of the ASU’s appeal notice.
[32] Nor do we consider that Vice President Watson’s reliance upon the approach taken in the Aged Care Award 2010 decision resulted in any denial of procedural fairness to the ASU, for two reasons. Firstly, the outcome determined upon by his Honour was one that fell within the range of outcomes represented by the ASU’s claim on the one hand for weekend penalties to be paid to casual employees in addition to the casual loading, and the position of the employer organisations that there be no change to the existing position whereby casual employees only received the casual loading for hours worked on weekends. We consider that in industrial proceedings, that type of mid-point outcome is one that parties would from a practical point of view be able to envisage and address as a real possibility in the determination of the case without requiring their attention to be specifically drawn to it by the Commission. Secondly, the ASU specifically raised the Aged Care Award 2010 decision in support of its claim in its submissions. The transcript of the hearing before Vice President Watson discloses that the ASU’s advocate specifically took him to paragraph [59] of that decision and then submitted “we think that’s a completely analogous situation to the one confronting casual employees under this modern award and we would ask this Commission to take the same approach”. 12 The same decision was also referred to and relied upon in the grounds and reasons stated in the ASU’s award variation application, and also in its written submissions. That being the case, it could hardly be said that his Honour denied the ASU procedural fairness by determining this aspect of its claim in a manner consistent with its own submissions.
[33] The issue of overtime penalty rates for casual employees was determined in paragraph [36] of the Decision. We consider that that paragraph can only be read in one way: that Vice President Watson understood the conclusion of the Full Bench in paragraph [59] of the Aged Care Award 2010 decision as being applicable to overtime as well as ordinary hours worked on weekends, that the variation he had decided should be made in respect of weekend penalties in paragraph [33] of the Decision would apply to overtime as well as ordinary time hours, and that this was a sufficient response to the ASU’s application for a restoration of overtime penalty rates for casual employees. In short, on the basis of what he understood had happened in the Aged Care Award 2010 decision, Vice President Watson intended that, for overtime hours, the total loading for casual employees should be increased from 25% to 50% for Saturdays and from 25% to 100% for Sundays, but not otherwise increased. No party before us in the appeal suggested paragraph [36] of the Decision should be read in any other way. ABI for example described his Honour’s conclusion in paragraph [36] as “a way of killing two birds with one stone” 13 (the “two birds” being ordinary hours and overtime hours on weekends).
[34] The immediate difficulty with this paragraph is that it exhibits an erroneous understanding of what had occurred in respect of the AC Award. As earlier explained, paragraph [59] of the Aged Care Award 2010 decision only applied to the working of ordinary hours on weekends by casuals. A separate consent variation made by the Full Bench restored a penalty rate regime for the working of overtime by casual employees which operated independently of that for ordinary hours on weekends and applied on any day upon which overtime was worked, not just weekends. It is apparent from the transcript of the hearing that although the ASU, as earlier stated, took his Honour to paragraph [59] of the Aged Care Award 2010 decision in connection with “weekend penalties for casual employees” generally 14, it never identified the distinct position applying in the AC Award with respect to overtime penalty rates; nor did any other party appearing before his Honour. The proper context of paragraph [59] was therefore not made clear. We consider that it is likely that this was the cause of the misapprehension upon which paragraph [36] of the Decision proceeded. In any event, it is clear that the conclusion in paragraph [36] of the Decision was founded upon that misapprehension and was therefore attended by appellable error. This had the consequence, amounting to further error, that the ASU’s case that the departure from the predominant position concerning overtime for casual employees in pre-existing awards and instruments constituted an anomaly arising from the award modernisation was not considered by his Honour.
[35] Consistent with the submissions of all the parties appearing in the appeal except Jobs Australia, we consider that it is necessary to find that the variation to clause 26.2 of the SCHCDS Award was also attended by appellable error. That variation limited the application of penalty rates to casual employees on weekends to those casual employees “who work less than 38 hours per week”. The effect of the use of that expression is that ordinary hours worked by casual employees on weekends attract penalty rates (in substitution for the casual loading), but overtime hours do not (and only receive the casual loading). The consequence is that the rate of pay for a casual employee working on the weekend actually reduces once the casual exceeds 38 hours worked in the week. For example, a casual who has worked 34 hours up until midnight on Saturday in a particular week and is required to work an eight-hour shift on Sunday of the same work will, under the variation, receive a 100% loading for the first four hours of the shift, and only a 25% loading for the second four hours of the shift. That is self-evidently a highly anomalous result. It is not consistent with Vice President Watson’s intention as stated in paragraph [36] of the Decision. Nor is it consistent with the outcome which pertained in the AC Award after the Aged Care Award 2010 decision.
[36] As a consequence of the errors we have identified in the Decision and the Determination, we grant the ASU permission to appeal and we quash paragraphs [34] to [36] of the Decision and variation A3 in the Determination. That means that it will be necessary for the ASU’s claim in respect of overtime for casual employees to be re-determined. We have decided that the fairest and most efficient course in all the circumstances is for us to re-determine that claim rather than remit it to a single member of the Commission to deal with. We will do so based on the evidence adduced at first instance, and the further material admitted in the appeal concerning the provisions of the pre-existing awards and instruments which were replaced by the SCHCDS Award.
Re-determination of the ASU’s overtime claim
[37] We consider that the case for an award provision for overtime for casual employees is a strong one. The analyses advanced by the parties concerning the position pertaining in the pre-existing awards and instruments which were replaced by the SCHCDS Award firmly establish that, predominantly, casual employees were entitled to overtime penalty rates for any overtime worked, regardless of when it was worked. Applying the approach generally taken by the award modernisation Full Bench, whereby the most common provisions to be found in the pre-existing awards and instruments were usually adopted unless there was some good reason to the contrary, this should have led to a result whereby the SCHCDS Award contained an overtime penalty rates regime for casual employees as well as full-time and part-time employees. 15
[38] This did not occur. The Full Bench award modernisation decision which led to the making of the SCHCDS Award 16 did not give any consideration to the pre-existing position with respect to overtime penalty rates for casual employees, did not state any rationale for a departure from that pre-existing position, and indeed did not deal with the issue at all.17 Therefore we can only conclude that the absence of overtime provisions applicable to casual employees in the SCHCDS Award was an oversight.
[39] We do not consider that there is any sound rationale for casual employees to be excluded from overtime penalty rates in circumstances where they apply to full-time and part-time employees. No such rationale was advanced by any party before us. The result of this exclusion is or will be twofold. Firstly, it will result in a reduction in the rate of pay for those casual employees who regularly perform overtime work, without any apparent industrial justification for this occurring. Secondly, it means that it will be cheaper to utilise casual employees to perform overtime work rather than full-time or part-time employees. No party was able to advance any reason why the SCHCDS Award should contain a bias in favour of casual employment and against full-time and part-time employment.
[40] There is nothing in the evidence which suggests that the award of overtime penalty rates for casual employees would represent a significant cost issue for employers. The respondents’ submissions were at best equivocal about this. For example, when the potential cost of overtime penalty rates for casual employees was raised in the course of argument with the advocate for Jobs Australia, his response included the following:
“We try to encourage our members purely to use casuals when they have no alternative, to do it in the interpretation of casual, which is short-term irregular and intermittent, but, I don't know, it may have no effect at all.” 18
[41] The result of the omission of overtime penalty rates for casual employees, we find, is that the SCHCDS Award does not achieve the modern awards objective in s.134 because it does not provide a fair and relevant minimum safety net of terms and conditions for casual employees, and that the SCHCDS Award suffers from an anomaly arising from the award modernisation process conducted under Part XA of the Workplace Relations Act 1996 and is thereby not operating effectively. It will be necessary therefore to remedy this by varying the SCHCDS Award to provide for overtime penalty rates for casual employees whenever overtime is worked.
[42] There remains the question of what form that variation should take. The critical question here is whether any overtime penalty rates for casual employees should be in addition to or in substitution for the casual loading. This is a difficult question to resolve. The position which applied in the pre-existing awards and instruments in this respect was somewhat mixed. No clearly predominant position emerges. The question of whether there is a proper basis for the payment of the casual loading in addition to overtime penalty rates was not argued at the level of general principle in this case, and in any event the confined interests of the parties which appeared and made submissions in this appeal means that it is not an appropriate vehicle to decide this issue on a general basis.
[43] We initially considered that the issue should be determined in a manner consistent with the variations to the AC Award effected by the Full Bench in the Aged Care Award 2010 decision. However, upon a perusal of the relevant provisions of the AC Award, it is not entirely clear whether, under the terms of that award, overtime penalty rates are to be paid in addition to or in substitution for the casual loading. We invited the parties to provide us with written submissions on this issue. The appellant submitted that under the AC Award overtime was payable in addition to the casual loading. The respondents made submissions to the contrary. We do not consider that in this appeal concerning the SCHCDS Award we should determine an important and contested question of interpretation concerning the AC Award. Accordingly, contrary to our initial inclination, we will not decide the issue on the basis of the AC Award provisions.
[44] In all the circumstances we think a conservative approach is called for. We have decided to vary the SCHCDS Award to provide for a regime for overtime penalty rates which operates in substitution for the payment of the casual loading. The variation we will make will accordingly largely reflect the alternative award variation advanced by the respondents. The provision of overtime penalty rates for casual employees, even without the addition of the casual loading, will be a significant benefit for those casuals who work overtime, and will equalise the overtime cost of full-time, part-time and casual employees. The variation is, we consider, appropriate to remedy the issue of casual employees not being entitled to overtime rates which this review of the SCHCDS Award has identified, having regard to the modern award objective in s.134.
[45] We emphasise that nothing in this decision is intended to foreclose further consideration in the four yearly review process to be conducted under s.156 of the Fair Work Act as to whether, under the SCHCDS Award, the casual loading should be payable in addition to weekend and overtime penalty rates. The four yearly review process, which will involve the review of all modern awards, may result in general and authoritative consideration of this issue at the level of industrial principle. If so, that would provide a sound basis to revisit the issue in relation to the SCHCDS Award.
Orders
[46] We order as follows:
(1) Permission to appeal is granted.
(2) The appeal is upheld in part.
(3) Paragraphs [34]-[36] of the Decision are quashed.
(4) Variation A3 of the Determination is quashed.
(5) The SCHCDS Award is varied in accordance with the accompanying determination (PR546788).
VICE PRESIDENT
Appearances:
A. Slevin of counsel with J. Wright for the Australian Municipal, Administrative Clerical and Services Union
L. Svendsen for the Health Services Union
G. Boyce of counsel for the Aged Care Employers
S. Hayne for Australian Business Industrial
S. Forster for the Australian Federation of Employers and Industries
K. Godfrey for Jobs Australia
N. Barkatsas for Victorian Employers’ Chamber of Commerce and Industry
Hearing details:
2013.
Melbourne:
19 September.
Sydney:
10 December.
3 PR539625 - The determination issued on 31 July 2013 was corrected in a further determination (PR539803) issued on 5 August 2013, but the correction did not affect the variation to clause 26.2 which is relevant to this appeal.
6 Consisting of: Aged & Community Services Australia; Aged & Community Services Association of NSW & ACT Inc; Aged & Community Services South Australia & Northern Territory Inc; Aged & Community Services Tasmania; Aged & Community Services Australia - Western Australia; Leading Age Services Australia; Leading Age Services Australia - NSW-ACT; Leading Age Services Australia - Queensland; Leading Age Services Australia - South Australia; Leading Age Services Australia - Tasmania; Leading Age Services Australia - Victoria; Leading Age Services Australia - Western Australia.
11 AM2009/164
12 Transcript 9 April 2013 PNs 740-742
13 Appeal Transcript 10 December 2013 PN 422
14 Transcript 9 April 2013 PNs 738-742
15 See Modern Awards Review 2012 - Penalty Rates [2013] FWCFB 1635 at [32]
16 Re Award Modernisation [2009] AIRCFB 865
17 Ibid at [99]-[115]
18 Appeal Transcript 10 December 2013 PN 647
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