Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 6, Item 4 - Application to make a modern award to replace an enterprise instrument.

BANKING SERVICES - ANZ GROUP - AWARD 1998

Application by Finance Sector Union of Australia for a modern enterprise award for Banking Services - ANZ Group - Award 1998 - Factors to be considered when making a modern enterprise award - case for modern enterprise award not established - application dismissed - Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 - Schedule 6 Item 4, Schedule 6 Item 6, Schedule 6 Item 9 - Fair Work Act 2009, s. 134.

Introduction

[1] This decision relates to an application to make a modern enterprise award to replace the Banking Services - ANZ Group - Award 1998 (the ANZ Award). The application is made by the Finance Sector Union of Australia (FSU). It is opposed by the other party to the award, the Australia and New Zealand Banking Group Limited (ANZ).

The Legislative Task

[2] The role of the Commission in an application to make a modern enterprise award is governed by sub-item 4(5) of Schedule 6 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act) which provides:

“(5)       In deciding whether or not to make a modern enterprise award, and in determining the content of that award, the FWC must take into account the following:

(a)  the circumstances that led to the making of the enterprise instrument rather than an instrument of more general application;


(b)  whether there is a modern award (other than the miscellaneous modern award) that would, but for the enterprise instrument, cover the persons who are covered by the instrument, or whether such a modern award is likely to be made in the Part 10A award modernisation process;


(c)  the content, or likely content, of the modern award referred to in paragraph (b) (taking account of any variations of the modern award that are likely to be made in the Part 10A award modernisation process);


(d)  the terms and conditions of employment applying in the industry in which the persons covered by the enterprise instrument operate, and the extent to which those terms and conditions are reflected in the instrument;


(e)  the extent to which the enterprise instrument provides enterprise-specific terms and conditions of employment;


(f)  the likely impact on the persons covered by the enterprise instrument, and the persons covered by the modern award referred to in paragraph (b), of a decision to make, or not make, the modern enterprise award, including any impact on the ongoing viability or competitiveness of any enterprise carried on by those persons;


(g)  the views of the persons covered by the enterprise instrument;


(h)  any other matter prescribed by the regulations.”

[3] It is also necessary to consider the modern enterprise awards objective: Item 6 of Schedule 6 of the Transitional Act. This is a legislative requirement for the Commission to recognise, in the context of the modern awards objective and the minimum wage objective, that modern enterprise awards may provide terms and conditions tailored to reflect employment arrangements that have been developed in relation to the relevant enterprises. The modern awards objective, set out in s.134 of the Fair Work Act 2009 (the Act), is as follows:

“134 The modern awards objective

What is the modern awards objective?

(1) The FWC must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:

(a) relative living standards and the needs of the low paid; and

(b) the need to encourage collective bargaining; and

(c) the need to promote social inclusion through increased workforce participation; and

(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and

(da) the need to provide additional remuneration for:

(i) employees working overtime; or

(ii) employees working unsocial, irregular or unpredictable hours; or

(iii) employees working on weekends or public holidays; or

(iv) employees working shifts; and

(e) the principle of equal remuneration for work of equal or comparable value; and

(f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and

(g) the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards; and

(h) the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.

This is the modern awards objective.”

[4] We turn to consider these factors in relation to the circumstances of this case.

The circumstances that led to the making of the enterprise instrument rather than an instrument of more general application: Item 4(5)(a)

[5] The ANZ Award has its origins in the Bank Officials (Federal) 1963 Award (BOFA). Terms specific to the operations of ANZ arose when an appendix specific to the ANZ was made. The ANZ appendix later became the ANZ Group Award 1991. Subsequently award simplification proceedings resulted in the making of the Banking Services - ANZ Group - Award 1998.

[6] The 1991 ANZ Award was made by agreement between the ANZ and the Australian Bank Employees’ Union - the predecessor of the FSU. In the proceedings for the making of the award the ANZ stated that the most significant factor motivating the ANZ to move towards the group award was to remove a restriction on internal mobility arising from the operation of various awards applying to subsidiaries of the bank.

Whether there is a modern award that would, but for the enterprise instrument, cover the persons who are covered by the instrument: Item 4(5)(b)

[7] The Banking, Finance and Insurance Award 2010 would cover the operations of the ANZ Bank if the enterprise award is terminated. The only question is whether there will be some senior employees not covered by the classifications in that award that might lose award coverage if the award is terminated. The FSU submits that the employees concerned will lose award coverage and unfair dismissal rights as the enterprise agreement does not extend to them either. The coverage of the industry award was considered by Deputy President Smith as part of the 2012 review of the award. The Deputy President concluded: 1

“[22] I find that there is a technicality which requires attention together with uncertainty in the application of the Award. My focus is of course on those covered by the Award but I am not unmindful of the position put forward by the Banks. It may be that the current interaction with the enterprise awards and the modern award creates additional obligations. The possibility of multiple coverage problems is to be avoided. It is clear that some further definition is required so that mere nomenclature is not a determinate of the coverage of the Award but indeed the nature of the work and level of seniority with an institution.

[23] I propose to vary the definition of level 6 to provide:

This level covers those who perform a middle managerial role primarily to control the conduct of a part of the employer’s business and in which decisions are regularly made and responsibility accepted on matters relating to the administration and conduct of the part of the business. Those responsible for managing more than 10 people must be classified at this level provided that this level 6 classification does not cover classes of employees:

(a) who, because of the nature or seniority of their role, were not traditionally covered at all by awards; or

(b) who perform work that is not of a similar nature to work that has previously been regulated by at all by awards.

Indicative job list—branch manager, human resources or fraudulent relations manager, financial planners, information technology specialists, relationship manager, senior analyst, subject matter manager, divisional manager.

[24] By adopting this course the Award will not apply to those, who because of their seniority of their role, were not covered by awards. It does no more that recognise the statutory injunction contained in s.143(7). In taking this course I am satisfied that in a very real sense the variation will not remove employees from coverage as those employees should not have been covered in the first place. It would not be appropriate in a review to make a variation which would remove coverage and this connection. I am concerned to ensure that those employees, who have coverage, even in a limited way, do not lose that coverage. To avoid doubt this variation should not disturb award coverage of those employees to whom some sections of awards previously applied. This is why I have included reference to “at all”. It should not be forgotten that this is a minimum safety net. In not altering the indicative job list I have decided that it is important to concentrate on seniority and coverage rather than providing that a job title could impact upon the coverage of an award. I will provide the parties to the proceedings with 14 days to comment upon the proposed terms of the variation to ensure that unintended consequences do not arise from the decision made.”

[8] The ANZ submits that insofar as there is a limitation on coverage, it is entirely reasonable. The employees concerned are graded as Groups 1 to 3 in the ANZ hierarchy and constitute the top approximately 2,000 employees out of approximately 23,000 employees in Australia. The ANZ contends that the absence of unfair dismissal rights and award coverage is entirely appropriate and is consistent with the provisions of the Act.

The content of the modern awards referred to in paragraph (b): Item 4(5)(c)

[9] The FSU produced a comparative table indicating substantial differences between the ANZ Award and the industry award. The ANZ places importance on the making of the industry award by a six member Full Bench in 2009 and associated statements of an intended comprehensive application of a fair and flexible safety net.

The terms and conditions of employment applying in the industry: Item 4(5)(d)

[10] At the present time it appears that enterprise agreements cover each of the four major banks and the employees of those banks are a majority of employees in the industry. There is little information on the terms and conditions of other employees. It is likely that there will be a diverse range of terms and conditions contained in enterprise agreements and less formal arrangements operating in conjunction with the industry award. The FSU submits that the pattern of agreement coverage of the four major banks and their underpinning by enterprise awards dominate the banking and finance sector.

The extent to which the ANZ Award provides enterprise-specific terms and conditions of employment: Item 4(5)(e)

[11] Mr Geoff Derrick, the National Assistant Secretary of the FSU gave evidence in which he contends that enterprise specific terms of the ANZ Award include part-time work arrangements, coverage of senior employees, provisions regarding the engagement of casuals, higher duties allowances, allowances that are higher in some cases and lower in others, a shorter span of hours, longer meal breaks and a higher loading for shift work on weekends.

[12] ANZ contends that the ANZ enterprise award is outdated and largely irrelevant, the classifications have not been relevant for many years and the span of hours does not accommodate Saturday trading. Agreements have been the vehicle whereby changes are made and recognised in industrial instruments.

The likely impact on the persons covered by the ANZ Award, and the persons covered by the modern awards referred to in paragraph (b), of a decision to make, or not make, the modern enterprise award: Item 4(5)(f)

[13] The FSU is fearful that the ANZ will seek to renegotiate terms of its enterprise agreement that are not contained in the industry award. It submits that senior employees will lose coverage and the ongoing application of an enterprise award will have no impact on profitability.

[14] On the other side of the equation the ANZ submits that there will be no actual loss of any entitlements by employees and that the submission about loss of award coverage presupposes that coverage is appropriate in the first place. The ANZ submits that a large number of industry award provisions are more generous to employees than the enterprise award so that application of the better off overall test is unlikely to be subject to a lower safety net.

[15] Having regard to the submissions of the ANZ, we do not consider that there will be any significant change in actual circumstances if the enterprise award is terminated or if it is retained. The likely impact of termination is minor.

The views of the persons covered by the enterprise instrument: Item 4(5)(g)

[16] The FSU obviously supports the retention of the enterprise instrument. It submits that employees also support the application on the basis of a survey it commissioned. The survey of 516 respondents found that 24 per cent identified the ANZ Award as more beneficial to them, three per cent considered in the industry award more beneficial and 65 per cent did not know.

[17] ANZ submits that this evidence could not be more underwhelming. It uploaded explanatory information on its intranet advising of the circumstances of this application. It invited employees to submit comments or questions in relation to the application. There were 759 visits to the intranet web page but no questions, feedback or comments from any of its employees.

Any other matter prescribed by the regulations: Item 4(5)(h)

[18] There are no prescribed matters.

Should a modern enterprise award be made?

[19] We are mindful of the conclusion of the Full Bench in the Bank of Queensland decision in which the Full Bench said: 2

“[28] Like any applicant, the agents bear the onus of making a case for the modernisation of the agents award. The application must be decided in a context in which the outcome will determine whether a modernised award or the BFI award will apply. This is underlined by the terms of item 9(3) of Schedule 6 to the Transitional Act. That item provides that if Fair Work Australia decides not to make a modern enterprise award to replace an enterprise instrument, the instrument terminates when that decision comes into operation. While the agents award has a significant history, it must now be considered against the terms of a modern industry award that covers a wide range of businesses, large and small, in the banking, finance and insurance industry. The departures from the BFI award sought in the amended application are small in number. The evidence and material relating to the operations of the OMBs do not support a conclusion that the conditions sought should apply instead of the industry safety net provisions. Having considered the reasons advanced by the agents in the context of the matters which must be taken into account under item 4(5) we have concluded that a modern enterprise award should not be made to cover the OMBs. The agents award should not be modernised. The application is dismissed.”

[20] We have reached a similar conclusion in the circumstances of the ANZ Award. The enterprise award was established and had relevance for a short period in the early 1990s prior to the establishment of enterprise agreements. It has since failed to remain relevant and constitute a fair and relevant safety net. It contains some benefits to employees greater than those in the industry award but also some less beneficial entitlements. The industry award was made with the benefit of a consideration of all terms and conditions in awards in the industry. There is much to be said for a single instrument applying to all employers.

[21] As we do not consider that there will be any detriment to any party by the termination of the enterprise award and the FSU has not established any real benefit or purpose to its retention we consider that a modern enterprise award should not be made.

Conclusions

[22] The application to make a modern enterprise award applying to ANZ is dismissed. Pursuant to Item 9 (3) of schedule 6 to the Transitional Act the Award terminates as at the date of this decision.

VICE PRESIDENT WATSON

Appearances:

Mr J McKenna of counsel for the FSU.

Mr M Tamvakologos of counsel for the ANZ.

Hearing details:

2014.

Melbourne.

24 July.

Final written submissions:

FSU submissions in reply on 11 September 2014.

ANZ further submissions on 19 September 2014.

 1   [2013] FWC 5482.

 2   [2010] FWAFB 3906.

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