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

4 yearly review of modern awards – substantive issues – coverage in relation to potential overlap between Timber and Building awards – refused; penalty for late payment of wages by EFT – refused; ordinary hours – clause 27 – varied in part; charred timber allowance re application of allowance – current term expresses allowance to be daily allowance – refused; leading hand allowance – insertion of “per week” adds clarity to operation of allowance as a weekly allowance; NES provides same effect as clause 36.4 – clause deleted; plywood scarfing machinist – current term uncertain and difficult to apply – clause varied; pulp and paper stream Level 6 – change would alter substance of term – refused; definitions in clause 3.1 – award varied by removing formatting and superfluous definitions and applying consistency in definitions in award.

[1] In a Statement on 13 August 2014, 1 the 4 Yearly Review Full Bench dealing with various Group 1 awards referred various issues raised in respect of the current Timber Industry Award 20102 (the Timber Award) to this Full Bench to hear and determine.3 Directions were made for the hearing and determination of the matters referred: clause 25—Payment of wages, proposed by the Construction, Forestry, Mining and Energy Union (Forestry and Furnishing Products Division) (CFMEU) (other than in respect of a legal argument based on Andrews and Others v Australia and New Zealand Banking Group Limited4 (Andrews Case) against the proposed new clauses 25.7 and 25.8 identified by Master Builders Australia Limited (MBA)) and the variation of clause 4—Coverage by inserting a new clause 4.6 as proposed by the Housing Industry Association (HIA) on 18 November 2014.

[2] In Amended Directions of 18 November 2014, the President directed this Full Bench to hear and determine further substantive issues raised during the 2014 4 yearly review of modern awards (the Review) with respect to the Timber Award. A full list of matters for determination by us was set out in Schedule F of the Amended Directions. Further directions were made by this Full Bench on 4 December 2014 to include the additional matters referred to us.

[3] Further, the 18 November 2014 Amended Directions constituted another Full Bench to hear and determine the legal argument raised by the CFMEU’s proposed variation in respect of the payment of overtime rates for late wages in clause 25 of the Timber Award, which the MBA contended affected up to 22 additional modern awards. That issue was heard and determined by the other Full Bench (the Andrews Full Bench) on 11 March 2015. 5

[4] The issues before us for determination are set out later in this decision.

Approach to the proposed variations

[5] A decision 6 in respect of the Textile, Clothing, Footwear and Associated Industries Award 20107 sets out an approach to proposed variations in the context of the Review,8 drawing on the Fair Work Act 2009 (the Act), the decision9 of the 4 Yearly Review of Modern Awards: Preliminary Jurisdictional Issues Full Bench (Preliminary Issues Full Bench) and a decision10 by the Security Services Industry Award 2010 4 Yearly Review Full Bench. We apply that approach in determining the current proposals to vary the Timber Award.

Issues for determination

[6] The issues that we have been directed to determine are set out in Schedule F to the President’s Amended Directions of 18 November 2014.

[7] They are:

1. HIA’s proposed variation of the coverage in clause 4 of the Timber Award (clause 3 of the exposure draft) – Coverage;

2. CFMEU’s proposed variation of clause 25 of the Timber Award (clause 15 of the exposure draft) – Payment of wages;

3. CFMEU’s proposed variation of clause 27.2 and raised in the Award Brief clause 30.1(a) of the Timber Award (clause 12.2 and 24.1(a) of the exposure draft) – Ordinary hours of work—day workers and Payment for working overtime;

4. CFMEU’s proposed variation of clause 21.3 of the Timber Award (clause 20.9 of the exposure draft) – Charred timber;

5. CFMEU’s proposed variation of clause 21.4 of the Timber Award (clause 20.4 of the exposure draft) – Leading hands;

6. CFMEU’s proposed variation of clauses 36.4(a), (b) and (c) of the Timber Award (clauses 28.5(a), (b) and (c) of the exposure draft) – Day off in lieu of holidays falling on a Saturday or Sunday;

7. CFMEU’s proposed variation of Schedule B.3.1(b)(iii) of the Timber Award (Schedule A.3.1(b)(iii) of the exposure draft) – plywood scarfing machinist;

8. CFMEU’s proposed variation of Schedule D.1.6 – 2nd dot point of the Timber Award (Schedule C.1.6 – 2nd dot point of the exposure draft) – Classification definitions – Pulp and paper stream – Level 6 (relativity 105%); and

9. Proposed variation of clause 3.1 of the Timber Award (Schedule K of the exposure draft) – Definitions and interpretation.

[8] Issues 3 – 9 inclusive arose from a briefing note, setting out any issues identified in the Timber Award (the Award Brief) prepared by staff of the Fair Work Commission (the Commission) and published on 6 June 2014.

DECISION

1. HIA’s proposed variation of the coverage in clause 4 of the Timber Award (clause 3 of the exposure draft) – Coverage

[9] The HIA proposes the insertion of the following new provision within clause 4—Coverage of the Timber Award:

“4.6 For the avoidance of doubt an employer, whose employees carry out works incidental to or, as a consequence of, the predominant business activity of that employer, does not affect the modern award coverage of that business under this award.”

[10] The variation is proposed by the HIA on the following basis:

“ The unique nature of the residential construction industry presents a set of circumstances that requires the Timber Award to contain additional provisions in relation to modern award coverage.

• During award modernisation the on and off-site construction industry awards were considered at different stages of the Part 10A process. As such ‘cross coverage’ issues across these awards were not properly considered.



• Despite indications by the AIRC to the contrary, coverage provisions were not reconsidered at the conclusion of the award modernisation process in light of finalised awards.



• The proposal does not seek to interfere with the proposition that more than one modern award may apply to an employer’s business, nor does it seek to reduce modern award coverage.



• . . . the proposed variation is directed at giving primacy to industry coverage in line with the intention expressed during award modernisation.



• To date the judicial approach to award coverage has given greater weight to the tasks of employees over and above consideration of the industry an employer operates. This tendency gives rise to uncertainty in relation to the appropriate award that should cover businesses engaged in a range of off and on-site construction related activities.”



• A survey conducted of HIA members (HIA Survey) demonstrates that “it is not clear on the face of the Timber Award how it might apply in circumstances of overlapping modern award coverage”.

[11] The unique set of circumstances in the residential construction industry relied on by the HIA were said to be found in:

• its importance as a component of the Australian economy, providing 2.3% of total employment, with an annualised value of dwelling construction equivalent to 5% of GDP;

• its importance is adding to Australia’s housing stock;

• a high level of award reliance by small businesses within the sector, according to the HIA Survey;

• the absence of dedicated human resource departments within businesses in the timber industry and the non-engagement of external consultants to manage employment compliance obligations;

• the “nature of the businesses that operate in the residential construction industry range from specialised trade contractor businesses . . . to new home and renovation builders, to those that both manufacture and install kitchens and bathrooms”;

• the broad range of activities carried out by businesses in order to adapt to market conditions; and

• the common occurrence of circumstances where workshop based employees may be required to undertake irregular and incidental work on a building site.

[12] In support of its application the HIA relied on comments from its members who participated in the HIA Survey, seeking a simpler award and contended that s.134(1)(g) of the Act which focuses on “the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards” is the “principal limb” of the modern awards objective of relevance to its proposed variation. It submitted that there is uncertainty as to award coverage of a business which carries out both on and off site work and in circumstances in which the work performed by the business manufactures in-built furniture and carries out shopfitting work.

[13] The HIA referred to its application (the 2012 variation) in the 2012 Review of modern awards to vary clause 4—Coverage of the Building and Construction General On-site Award 2010 11 (the Building Award) to include the Timber Award as a part of the list of exclusions under clause 4.2 of the Building Award. It also sought to vary clause 4.8 of the Building Award to amend the “Overlapping Coverage Clause” determined by the Award Modernisation Full Bench12 which focused on “the work performed by the employee and to the environment in which the employee normally performs the work”13 to read “considering the employer’s predominant work activities and environment in which the work is predominantly performed”14 and inserting a new provision in the Building Award that read:

“This award does not apply to employers whose predominant activities are the manufacture or fabrication of building products in an off-site or factory environment.” 15

[14] The HIA sought to distinguish that matter and the decision 16 in Master Builders Australia Limited (the 2012 Decision) arising from it on several bases, concluding that the decision should be given little weight in determining the current application.

[15] The HIA’s variation was supported by the MBA “because it would clarify that once a business is determined to fall within the timber industry sectors referenced at clause 4.2 of the [Building] Award, in the event of overlapping coverage, work carried out by an employee which is incidental or ancillary to the principal business of the employer will not change or make invalid coverage under the [Building] Award”. 17

[16] The Ai Group was supportive of the intent of HIA’s variation of seeking that employees covered by the Timber Award are not inappropriately subject to coverage claims in relation to the Building Award, but expressed concerns that the proposal advanced by the HIA would have unintended and inappropriate consequences where an employer might be covered by multiple awards.

[17] The HIA’s proposed variation was opposed by the Construction, Forestry, Mining and Energy Union (Construction and General Division) (CFMEU (Construction)) and The Australian Workers’ Union (AWU).

[18] The CFMEU (Construction) opposed the HIA variation on several bases:

• the issue of “overlapping award coverage was squarely before the Award Modernisation Full Bench” when it considered the making of the Timber Award;

• there is “no uncertainty as to coverage” of the Timber Award;

• the proposed HIA variation would “significantly alter the coverage” of the Timber Award and “lead to greater uncertainty”;

• the HIA’s proposed variation would “potentially reduce the existing safety net of employees currently covered by other awards”; and

• the “lack of probative evidence and cogent reasons supporting the HIA variation”.

[19] The CFMEU (Construction) submitted that the clear intent of the HIA, in putting forward its proposed variation, was to “significantly change award coverage so that the work performed by an employee and the environment in which the employee normally performs the work will no longer be a consideration in award coverage if the predominant activities of an employer” are covered by the Timber Award. It submitted that the HIA variation would “nullify the overlapping award coverage provision contained with clause 5.5” of the Timber Award.

[20] The CFMEU (Construction) submitted that:

“The practical effect of the HIA variation would mean that if a roof truss manufacturing company also had an on-site installation crew who were in the minority of employees, the Building and Construction General On-site Award 2010 would no longer apply to the workers installing on-site. The same scenario could also apply to companies manufacturing timber windows and timber doors. Another example would be a furniture manufacturer who also had a side activity in shopfitting, joinery work or manufacture of shower screens. The effect would be to remove coverage of the Joinery and Building Trades Award 2010 from the side activity.” 18

[21] The CFMEU (Construction) submitted that, if made, the variation would reduce employees’ conditions of employment where they are better under the Joinery and Building Trades Award 2010 19 (the Joinery Award) or the Building Award, reduce employment costs for employers covered by the Timber Award and give those employers a competitive advantage compared to employers who remain covered by the Joinery Award and/or Building Award.

[22] The CFMEU (Construction) also submitted that the issue of overlapping coverage between the Joinery Award and the Timber Award was “fully ventilated” before the Award Modernisation Full Bench which made the Timber Award. It submitted that there was no need for the Award Modernisation Full Bench to “consider the issue because it was well recognised by the major industry parties that there was no overlap between these awards”. Installation on-site was always covered by the building and construction awards.

[23] The CFMEU (Construction) further submitted that the 2012 Decision is relevant. It submitted that whilst the current Review may be wider in scope than the 2012 Review, the matters to be considered now are very similar to those dealt with in the 2012 Decision. It submitted that consistent with the Preliminary Issues Decision, in regard to “contested claims, cogent reasons and probative evidence would be required to justify any variation, and that the Commission should take into account previous decisions relevant to any contested issue”.

[24] The AWU submitted that the “proposed variation if accepted will displace the existing Award coverage arrangements for a large number of workers and will lead to changes in substantive terms and conditions of employment”. It submitted that, a change of this type “should not be made lightly”. It also submitted that the HIA variation should be rejected because:

• The “HIA submissions fail to adequately articulate the basis upon which the proposed variation meets the modern awards objective. 134(1) (a–h inclusive)”;

• The “HIA has not adduced probative evidence sufficient to demonstrate the facts supporting the proposed variation”;

• The “Commission has previously dealt with the matter and the relief sought is at odds” with the 2012 Decision; and

• The “HIA does not advance any ‘cogent reasons’” for not following the 2012 Decision.

Decision in relation to the HIA’s proposed variation of clause 4—Coverage

[25] The variation to clause 4.6 of the Timber Award is brought by the HIA, which predominantly represents the residential building sector of the Australian economy. The application is brought on the basis that the potential overlap as between the Timber Award and the Building Award was not addressed in the making of the awards in the same way as it was in relation to the Joinery Award. 20

[26] The HIA submitted that its proposed variation would “‘clarify’ that once a business is determined to fall within the timber ‘industry’, . . . in the event of overlapping coverage works carried out by an employee” covered by another modern award that are incidental or ancillary to the principal business, that work would fall within the coverage of the Timber Award. 21 It submitted that the “variation does not seek to interfere with the proposition that more than one modern award may apply to an employer’s business nor does it seek to reduce modern award coverage”.22

[27] However, the variation, if made, would go beyond clarifying the existing coverage provision. The HIA’s submission is premised on the proposition that if most of the work 23 undertaken by a business falls within the timber industry, any work undertaken by it which falls within an award classification in the Timber Award is regarded as being within the timber industry,24 whereas clause 4.1 provides that the Timber Award covers employers in the timber industry in respect of the work and persons performing such work as listed in the classification structure in the Timber Award to the extent that it is work within the timber industry.

[28] Notwithstanding the HIA’s submission and its preliminary words – “For the avoidance of doubt”, the inclusion of the new clause 4.6 would alter the basis of Timber Award coverage under the timber industry, extending the industry to include work outside of the timber industry as currently defined in the Timber Award, within the timber industry where the predominant business activity of an employer is in the timber industry. The proposed new clause 4.6 would have a substantive effect by extending coverage of the Timber Award to include any work (for which there is a relevant classification) if the predominant business activity of the employer is within the timber industry and would have the effect of altering the current coverage arrangements in relation to the existing coverage by the Building Award of on-site construction industry workers, where the predominant activity of the business is not on-site construction.

[29] If, as the HIA contends, the new clause 4.6 proposed does not alter the coverage of the Timber Award in that it would not extend the coverage of the Timber Award to an employer covered by it to employees carrying out incidental work outside of the coverage of the timber industry then it has no purpose and it would confuse, rather than clarify coverage of the Timber Award.

[30] Whilst the HIA drew attention to a specific circumstance in which workshop based employees may be required to undertake irregular and incidental work on a building site, the variation sought by the HIA extends beyond that circumstance. The HIA’s proposed variation is not limited to that specific circumstance and no specific variation was proposed in relation to that specific circumstance and the HIA’s substantive case and evidence were not directed to it.

[31] The HIA’s variation which we are required to consider and determine proposes a significant change to the coverage provision. The approach of the Commission in relation to a significant change was set out by the Security Services Industry Award 2010 4 Yearly Review Full Bench 25 as follows:

“While this may be the first opportunity to seek significant changes to the terms of modern awards, a substantive case for change is nevertheless required. The more significant the change, in terms of impact or a lengthy history of particular award provisions, the more detailed the case must be. Variations to awards have rarely been made merely on the basis of bare requests or strongly contested submissions. In order to found a case for an award variation it is usually necessary to advance detailed evidence of the operation of the award, the impact of the current provisions on employers and employees covered by it and the likely impact of the proposed changes. Such evidence should be combined with sound and balanced reasoning supporting a change. Ultimately the Commission must assess the evidence and submissions against the statutory tests set out above, principally whether the award provides a fair and relevant minimum safety net of terms and conditions and whether the proposed variations are necessary to achieve the modern awards objective. These tests encompass many traditional merit considerations regarding proposed award variations.”

[32] The decision 26 in relation to the 2012 variation of the Building Award proposed by the HIA during the 2012 Review is relevant and must be taken into account.27  Although the 2012 variation proposed by the HIA approached the issue through a variation to clause 4.8 of the Building Award, the practical effect of what the HIA proposed in 2012 and now proposes by inserting a new clause 4.6 is of similar practical effect. The effect is to alter the award coverage applicable by reference to the employer’s predominant work activities and environment in which the work is predominantly performed, rather than the work performed by the employee and to the environment in which the employee normally performs the work.

[33] In our view, the following conclusions in the 2012 decision 28 apply equally to the current proposed variation:

“[153] The HIA variation is directed to providing that award coverage is to be determined by the employer’s predominant activities and avoiding the prospect of having to apply multiple modern awards for similar activities within the one workplace. The HIA variation seeks to remove any overlap or potential overlap by providing that where overlap would otherwise arise, coverage is determined by the ‘predominant activity’ of the employer, with the effect that employee’s undertaking work within the scope of the non-predominant activity would not be covered by the modern award which would apply under the terms of its coverage clause.

[154] Such an outcome is inconsistent with the clear terms of clause 4.8, as a mechanism applied generally across modern awards for deciding which modern award applies in the case of overlap or potential overlap. Further, in relation to the Building On-site Award, it is inconsistent with the clear distinction of the Award Modernisation Full Bench, between work undertaken in the context of the on-site building, engineering and civil construction industry and comparable work under classifications which is not undertaken in that on-site context. Such a distinction is clear in the decisions of the Award Modernisation Full Bench in relation to concrete batching, roadmaking and landscaping. The HIA proposal would fundamentally alter the effect of the provision and the position of the Award Modernisation Full Bench, considered both generally and in relation to potential overlap in respect of the Building On-site Award.

[155] Clause 4.8 was included in the Building On-site Award by the Award Modernisation Full Bench, in terms reflected generally within modern awards, to provide a basis for deciding which modern award applies in the case of overlap, having regard to the terms of the consolidated Award Modernisation Request and the submissions of interested parties. The variation proposed by the HIA fundamentally alters the intent and the effect of the provision formulated by the Award Modernisation Full Bench. The HIA’s case in support of the variation was directed to addressing confusion amongst its members in circumstances of potential overlap in coverage. However, the variation proposed by the HIA to the provision determined by the Award Modernisation Full Bench, to apply where an employer is covered by more than one modern award, significantly alters the effect of the clause, being directed to removing work from the coverage of the Building On-site Award, rather than providing a process to apply where overlap exists. No proper basis has been advanced for altering the focus within clause 4.8, from the work performed by the employee and to the environment in which the employee normally performs the work, to the employer’s predominant work activities. No basis has been established to support the inclusion of the HIA’s proposed clause 4.8(a) which is, in effect, a provision narrowing the coverage of the Building On-site Award and not, as it was intended to be, a basis for deciding which modern award applies in the case of overlap. The HIA has not made out a cogent reason for departing from the provision determined by the Award Modernisation Full Bench decision, generally or in the particular circumstances of the on-site building and construction industry. This element of the HIA application is refused.” [Citations omitted]

[34] The HIA contended that the variation is required to provide clarity as to coverage in relation to circumstances of employers within the “residential construction industry who carry out a variety of on and off site construction related work”. 29 In the event of potential overlapping coverage, clause 5.5 of the Timber Award provides that:

“Where an employer is covered by more than one award, an employee of that employer is covered by the award classification which is most appropriate to the work performed by the employee and to the environment in which the employee normally performs the work.”

[35] That overlapping coverage provision, determined by the Award Modernisation Full Bench is clear as to the approach to be taken in the event of overlapping coverage. The new clause 4.6 proposed would confuse, rather than clarify coverage of the Timber Award in circumstances of overlapping coverage by suggesting the application of a predominant business activity test.

[36] The HIA also submitted that “mixed industry” provisions in relevant pre-reform award coverage provisions at the time of the making of the Timber Award support the fact that it was “contemplated that employers may operate across different industries”. 30 That proposition is correct so far as it goes. However, the “mixed industries” provisions recognised not only that employers may operate across different industries but also that they may be subject to the application of multiple awards with different hours and leave prescriptions. Within a mixed business the “mixed industry” provisions is directed to the application of consistent hours of work and leave arrangements to a minority of employees within an enterprise for whom different hours and leave provisions apply through the application of a different award. The “mixed industry” provisions did not alter or override the award coverage applicable to the minority group of employees but simply allowed the employer to apply common hours and leave arrangements to them, reflecting the predominant award where multiple applicable awards prescribed different arrangements.

[37] We do not accept the HIA’s proposition that, in making the Timber Award, the Award Modernisation Full Bench failed to address a potential overlap between the Timber Award and the Building Award. The HIA 31 relied on a decision32 by the Award Modernisation Full Bench and the statement dealing with the Timber Award 2009 exposure draft,33 in publishing the draft, which recognised that some “refinement” of coverage clauses in other modern awards may be required so as to “clarify the award’s scope” and referring to the Joinery Award, submitting that the Award Modernisation Full Bench failed to address itself on this issue. However, the Award Modernisation Full Bench did consider submissions about the coverage clause proposed in the 2009 exposure draft, as detailed by the CFMEU (Construction)34 in determining the terms of the Timber Award. Whilst the issue of overlap between the Timber Award and the Joinery Award was addressed, no submissions were made in respect of the Building Award. No issue arose as to a potential overlap between the Timber Award and the Building Award.

[38] The HIA has not demonstrated unique characteristics of the residential construction industry which would justify the proposed variation. The factors relied upon as unique characteristics of the residential construction industry advanced by the HIA were:

• general observations about the economic and social contribution of the sector based, presumably on Australian Bureau Statistics (ABS) data;

• general observations as to the need for flexibility of businesses; and

• observations as to the activities undertaken in the timber industry, award dependence and business size, based on the results of the HIA Survey.

[39] As the CFMEU (Construction) observed, some of those considerations apply generally to the private sector construction industry as a whole. The first two matters are not unique to the residential construction industry and the HIA had not established how these factors, in any case, support the variation sought.

[40] Other factors relied on by the HIA were based on information from its members in the HIA Survey. The HIA Survey was responded to by 363 HIA members of the 4,832 HIA members (of the total members around 20,000) 35 who received the HIA Survey. The HIA Survey respondents were not confined to employers covered by the Timber Award but included builders, contractors, manufacturers/suppliers and developer/commercial builders. Indeed, only 1% of respondents “best classified” their business as the timber industry36 and only 14 of the 363 respondents to the HIA Survey selected the Timber Award as the modern award applying to them.37 Only two comments reported in the HIA Survey specifically refer to the Timber Award,38 one of which reported that the employer and its staff consider their work to be directly related to the construction industry and not the timber industry.39

[41] The HIA Survey was attended by an introduction stating:

“The Fair Work Commission is currently conducting a review of the modern awards. HIA will be putting forward views on behalf of the industry about how the modern awards have been operating since their commencement in 2010. To help HIA prepare its submission we have compiled a short survey for you to let us know about your experience with the modern awards and what you think should be done to improve them.” 40

[42] This introduction would seem to invite responses from those seeking a change based on their interests. The HIA Survey carries limited weight as it represents a small, self-selected sample of the HIA membership.

[43] In answer to the question “Do you think it is easy to determine which Modern Award applies to your business and your employees? What changes should be made to make the coverage of modern awards simpler and easier to understand” for which a comment could be recorded, 53% did so. 41 Whilst there were many complaints made and suggestions as to improvements to modern awards in relation to terms and conditions and ease of understanding, only a very small group of respondents provide a response relevant to the application of modern awards to them and even fewer responses relevant to potential overlap between modern awards. Of around 150 answers, 15 or so made a general complaint about determining which modern award applied, going to the difficulty of identifying and accessing the relevant modern award at all, rather than potential overlap between modern awards. About six respondents did identify specific coverage issues. Only three specifically referred to the Timber Award and only two referred to on-site construction work. Clerical employee issues were raised more often. These responses do not suggest a widespread issue of the nature relied on by the HIA in relation to the Timber Award, whatever the characteristics of the residential construction industry. To the extent that the HIA contends that the variation it proposes is directed to addressing a problem whereby employers who undertake work covered by the Timber Award are confused about whether or not the undertaking of work on-site is covered by the Building Award means the work covered by the Timber Award becomes work covered by the Building Award,42 the evidence brought does not support the existence of such confusion. The HIA Survey does not provide probative evidence of significant practical problems arising from any overlap between the Timber Award and other modern awards.

[44] We are not persuaded to vary the Timber Award as sought by the HIA.

[45] The practical effect of the variation would be significant, altering coverage arrangements between the Timber Award and some other modern awards – most notably the Building Award and the Joinery Award – and substantially altering the terms of the “Overlapping Coverage Clause” and its operation in respect of the Timber Award. The variation was supported by little more than the proposition that it is necessary to (and would have the effect of) alleviating uncertainty as to coverage of the Timber Award amongst its members where it exists, a proposition which was not supported by evidence of practical problems arising from any overlap between the Timber Award and other modern awards. The HIA falls well short of establishing a cogent reason for varying the Timber Award in the manner proposed.

[46] The issue of the coverage of the Timber Award was addressed during the Award Modernisation Process. No cogent reason was advanced to justify the 2012 variation to the terms of clause 4.8 of the Building Award, which arose out of that process in relation to the Timber Award.

[47] The evidentiary case of the HIA does not support the variation. The HIA has not provided detailed evidence of the operation of the Timber Award, the impact of the current provisions on employers and employees covered by it and the likely impact of the proposed changes which would support the variation its proposes. The HIA has not established that the Timber Award, varied as it proposes in respect of the coverage clause, provides a fair and relevant minimum safety net of terms and conditions and that the proposed variation is necessary to achieve the modern awards objective.

[48] We decline to vary clause 4 of the Timber Award as sought by the HIA.

2. CFMEU’s proposed variation of clause 25 of the Timber Award (clause 15 of the exposure draft) – Payment of wages

[49] The Timber Award provides for a penalty for late payment if the employees are paid in cash. The CFMEU seeks to vary clause 25—Payment of wages of the Timber Award, to provide for a penalty to be payable if wages paid by Electronic Funds Transfer (EFT) are paid late. The CFMEU submitted that the variation is necessary given the predominance of payment by EFT.

[50] To give effect to its proposal, the CFMEU initially proposed on 5 June 2014 a variation which would:

1. Replace the current clause 25.5(b):

“(b) If an employee is paid wages by cash and is kept waiting for their wages on pay day after the usual time for ceasing work, the employee is to be paid at overtime rates for the period they are kept waiting.”

with:

“(b) Where wages are paid via electronic funds transfer (EFT) to the employee’s bank account, wages shall be made available for employee’s withdrawal no later than the close of business, from the nominated bank, on the day such wages are due”; and

2. Insert the following new clauses 25.7 and 25.8 immediately after the existing clause 25.6:

“25.7 Time of Payment

Wages shall be paid not later than two days following the expiration of the pay period and in any case not later than Friday.

25.8 Late payment

(a) Where an employee’s wages are paid by electronic funds transfer, cash or cheque and those wages are unpaid for more than 15 minutes after close of business on any pay day the employee shall be paid at overtime rates for three hours or until the hour of payment, whichever shall first occur if payment be made on the day of default.

(b) If payment is not made on the day wages are due the employee shall in addition be paid at overtime rates for all ordinary working hours between the end of the day of default, and the day of payment provided that payment for working ordinary hours at this penalty rate shall not exceed payment as for 38 hours.

(c) In the event that it can be shown that technical problems within the EFT system beyond the control of the employer prevent an employee from collecting his/her wages at the close of business at the nominated bank on the day such wages are due, the employer shall not be liable to pay the penalties prescribed above provided the employer takes immediate action to ensure such employee receives due payment or part payment by cash or, where agreed, by cheque and ensures that the employee receives due payment by 11.00AM the next day.”

[51] On 9 April 2015, the CFMEU filed an amended proposed variation, modifying its initial proposal to address a concern that an employer might be subject to the prescribed overtime rate, where wages are paid by EFT, if the delay in paying wages on time was due to the error or default of another, such as the employee’s financial institution. The CFMEU submitted that the intention of the amended variation is that an employer would not be liable to the overtime rate if it had done all that it needed to do to ensure that payment was made and, when advised that an employee had not been paid, to pay affected employees by cash (or, if agreed, by cheque) by, as the CFMEU currently provides, 11.00 a.m., on the next business day.

[52] Further, the CFMEU’s proposal, as varied, did not prescribe a day by which employees are to be paid wages, as had been reflected in the initially proposed clause 25.7. Instead, the trigger for the overtime rate is non-payment by an “employee’s usual pay day”.

[53] The effect of the amended proposed variation was to delete clause 25.5 of the Timber Award which provides:

“25.5 Wages to be paid during working hours

(a) Where an employee is paid wages by cash or cheque such wages are to be paid during ordinary working hours.

(b) If an employee is paid wages by cash and is kept waiting for their wages on pay day after the usual time for ceasing work, the employee is to be paid at overtime rates for the period they are kept waiting.”

and replace it with:

“25.5 Wages to be paid during working hours

(a) If an employee is paid wages by cash or cheque and the employee is kept waiting for their wages for more than 15 minutes after the usual time for ceasing work on their usual pay day, the employee shall be paid at overtime rates for the period the employee is kept waiting to be paid up to a maximum of 3 hours, if payment is made on that day. If payment is not made on that day, the employee shall, in addition, be paid at overtime rates for the number of ordinary working hours the employee is kept waiting to be paid, up to a maximum of 38 ordinary working hours.

(b) Subject to clause 25.5(c), if an employee is paid by electronic funds transfer and the employee’s wages are not available in the account of the employee’s nominated financial institution by close of business on the employee’s usual pay day, the employee shall be paid at overtime rates for the number of hours (or part thereof) the employee is kept waiting for their wages to become available, up to a maximum of 3 hours, if payment is made on that day. If payment is not made on that day, the employee shall, in addition, be paid at overtime rates for the number of ordinary working hours (or part thereof) the employee is kept waiting for their wages to become available, up to a maximum of 38 ordinary working hours.

(c) An employer is not liable to pay the overtime rate prescribed in clause 25.5(b) if, and only if:

(i) the payment delay was not due to the employer’s failure to take any step or perform any requirement within its control to ensure an employee receives his or her wages on the employee’s usual pay day; and

(ii) the employer paid the employee’s wages in cash (or if agreed by cheque) by 11am on the next business day (or such later time as may be agreed) after it was notified that the employee’s wages were not available in the employee’s nominated account.”

[54] The CFMEU submitted that the provision it seeks supports and buttresses the desirability about being paid on time by providing compensation of some degree for people who are affected, with the clause, as varied by its proposal, operating as a deterrent to employers that do not pay as the Timber Award requires.

[55] The CFMEU submitted that at present the Timber Award provides for payment of waiting time at penalty rates only when wages are payable in cash. It submitted that this cash only late payment provision fails to deal with the actual practice in relation to payment of wages in the timber industry whereby EFT is the dominant, if not universal, method of payment of wages.

[56] The CFMEU accepted that a similar variation to the Timber Award was considered, and rejected, by Deputy President Gooley during the 2012 Review. 43 However, the CFMEU submitted that the 2014 Review is broader in scope than the 2012 Review and the variation is supported by:

“a. The historical context applicable to each modern award

b. The need to provide a fair and relevant safety net of terms and conditions which takes into account the modern awards objectives set out in s.134 of the Act.

c. The necessity of a particular variation having regard to the modern award objectives.”

[57] The CFMEU submitted that the provision currently contained in the Timber Award was not sought by any party in submissions during the Award Modernisation Process, with clause 25.5 appearing to be based on the provision 44 now contained in clause 34.2 of the Manufacturing and Associated Industries and Occupations Award 201045 (the Manufacturing Award). It further submitted that there was no uniform approach to this issue across modern awards, with the MBA submission of 5 November 2014 identifying 13 awards with EFT late payment provisions. The CFMEU noted that the Racing Industry Ground Maintenance Award 201046 contains a provision which requires payment of a penalty at the level of “3.9% of the standard rate per week for each day on which the wages remain unpaid”47 including in circumstances where wages are paid by EFT.

[58] The CFMEU also relied on the inclusion in the Timber and Allied Industries Award 1999 48 (the 1999 Timber Industry Award) of the provision for late payment of wages by EFT. That provision was removed during the award simplification process in 1999 on the basis that the relevant clauses “go into unnecessary detail”,49 but reinserted by Commissioner Blair in 2007 on the basis that the term did not provide “anything additional [to] what had already existed prior to the award simplification process” and the removal of the provision “created uncertainty and ambiguity”.50

[59] The CFMEU submitted that the late payment provisions covering EFT payment were a “necessary feature of the safety net” in the majority of States and industries now covered by the Timber Award, including two federal common rule awards in the State of Victoria and one in the Australian Capital Territory and the relevant federal and State awards in both South Australia and Tasmania.

[60] In addition, it submitted, some but not all of the State awards in Queensland prescribed a payment at a penalty rate in respect of late payment by EFT.

[61] The CFMEU submitted that the proposed new clauses 25.7 and 25.8:

• will “encouraging enterprise bargaining on the issue of late payment of wages”; and

• will better meet the needs of low paid employees, having regard to the financial stress and social deprivation which can result from the failure by an employer to pay wages on time.

[62] The CFMEU submitted that its proposed variations to clause 25 of the Timber Award will not disadvantage employers as an employer will be able to avoid any additional cost by ensuring that its employees are paid on time. It submitted that an “employer will incur not one additional dollar of cost if they comply with the award and pay on time”. 51

[63] The CFMEU relied on the CFMEU FFPD Survey (the CFMEU Survey) a survey 52 of part of its membership which disclosed that 99% were paid by EFT, 24% of respondents reported that their wages had previously been paid late, 46% of whom said that this late payment had occurred since the commencement of the Timber Award in 2010, and 20% said that they had been paid late both before and after 2010.

[64] The AWU supported the variations proposed by the CFMEU.

[65] The Ai Group submitted that the Preliminary Issues Decision establishes the following key threshold principles:

“ A proposal to significantly vary a modern award must be accompanied by submissions addressing the relevant statutory requirements and probative evidence;

• The Commission will proceed on the basis that a modern award achieved the modern awards objective at the time that it was made;



• Relevant previous Full Bench decisions will be taken into account and generally followed, unless there are cogent reasons for not doing so; and



• The variation sought must be necessary to achieve the modern awards objective, and not one that is merely desirable.”

[66] The Ai Group submitted that the CFMEU’s proposed new clause 25.8 fails against these principles. It further submitted that the CFMEU had failed to establish that its proposed variation satisfies the requirement, within s.138 of the Act, that the relevant award includes terms only to the extent necessary to achieve the modern awards objective.

[67] The Ai Group also submitted that the third element of the new clause 25.8—Late payment – of the CFMEU’s proposed variation, does not meet the requirements of s.136(1) – “the clause is not one that is permitted or required by the Act” and relevantly, it is “not a term about any of the matters listed at ss.139(1)(a)–(j)” of the Act. It submitted that the proposed new clause 25.8 can “properly be characterised as the requirement to pay an employee at a particular rate (described as the ‘overtime rate’) for a specified period of time where an employer does not comply with clauses 25.5 and 25.7. It is a term about a penalty imposed on an employer for breaching clauses 25.5 and 25.7. The matters listed at s.139(1) do not include a reference to a term that is about a penalty”.

[68] The Ai Group submitted that s.139(1)(e) of the Act permits the inclusion of an award term about penalty rates but penalty rates are a higher rate of pay to which an employee is “entitled in compensation for the inconvenience or disabilities associated with performing work at a particular time”. It submitted that the proposed new clause 25.8 is not about such a rate.

[69] The Ai Group submitted that the re-inclusion of the late payment provision into the 1999 Timber Industry Award by Commissioner Blair in 2007 was “based upon an argument pertaining to ambiguity and uncertainty” and not on the merits and is of “little relevance to these proceedings”.

[70] The Ai Group also submitted that during the Award Modernisation Process, the Award Modernisation Full Bench published the 2009 exposure draft 53 of the Timber Award which contained a payment of wages provision at clause 25, which was materially identical to clause 25 as it currently appears in the Timber Award. The CFMEU filed submissions addressing the 2009 exposure draft in which it submitted that the late payment of wages it had proposed, required the payment of a penalty where employees are paid late their wages by EFT, should be included in the Timber Award. The Full Bench considered submissions about the consequences of adopting provisions from the Manufacturing Award and their relevance to the timber industry and amended a number of provisions in the 2009 exposure draft. It did not amend the payment of wages provision, notwithstanding the submissions of the CFMEU. The Ai Group submitted that the Award Modernisation Full Bench clearly had regard to this matter in determining whether the terms of the Timber Award would provide a fair and relevant minimum safety net.

[71] The Ai Group submitted that the CFMEU had re-agitated its support for the late payment of wages clause in virtually identical terms to the clause now proposed during the 2012 Review. It submitted that Deputy President Gooley refused the variation then sought on the basis that there was insufficient evidence before the Commission to indicate that late payment by EFT was a widespread problem and the Award Modernisation Full Bench had considered the proposed term arising out of the CFMEU’s submissions in relation to the 2009 exposure draft and declined adopt it.

[72] The Ai Group submitted that the CFMEU had overstated the existence of a late payment of wages provision in respect of EFT, of the type it now seeks, in the pre-modern awards in the timber industry.

[73] The Ai Group also submitted that the proposed variation does not reflect the historical basis of the late payment of wage provisions, to provide for compensation to be paid at overtime rates for the period an employee is kept waiting for his/her pay by the employer at the workplace after working hours. 54 It submitted that the CFMEU’s claim was at odds with the historical context of such provisions and its intended purpose.

[74] The Ai Group further submitted that the evidence called by the CFMEU falls well short of establishing that the variations proposed are necessary to achieve the modern awards objective. It submitted that of the nine witness statements filed, five simply referred to their witness statements that were relied upon by the CFMEU during the 2012 Review, which Deputy President Gooley found was insufficient in establishing the widespread non-compliance alleged by the CFMEU. The evidence, in any case, only established that the incidence of such late payment was low and did not distinguish between complaints made regarding late payments prior to or after the making of the modern award. It submitted that the four remaining witness statements identified isolated instances of late payment by EFT.

[75] The Ai Group also submitted that even if the CFMEU’s submissions about widespread late payment were accepted, it had not established that the variations proposed will effectively address such late payment. It submitted that the proposed variations would simply add an additional obligation on employers but not necessarily aid in addressing the non-compliance that the CFMEU alleges exists.

[76] The Ai Group submitted that the evidence in these proceedings did not establish that the Timber Award is not achieving the modern awards objective. It submitted that even if the CFMEU could establish that its proposed variation is consistent with s.134(1)(a), equal weight must be given to each of the relevant considerations that follow, which weigh against granting the CFMEU’s claim:

• The inclusion of the term proposed “would raise the floor and thus narrow the gap between the award and likely bargaining outcomes”, contrary to the modern awards objective (s.134(1)(b));

• To the extent that the proposed introduction of a “penalty and imposition of a significant regulatory burden deter employers from using this form of payment, the CFMEU’s claim cannot be reconciled” with s.134(1)(d);

• The imposition of a penalty introduces significant additional employment costs and imposes a regulatory burden on employers (s.134(1)(f));

• The need for a “stable modern awards system tells against the redetermination of this issue, which has been determined by this Commission twice in the past five years” (s.134(1)(g));

• To the extent that “matters arising under ss.134(1)(b), (d) and (f) impact upon employment growth, inflation and the national economy, this is also a relevant consideration that runs contrary to the CFMEU’s claim” (s.134(1)(h)); and

• Sections 134(1)(c), (da) and (e) are neutral considerations.

[77] The Australian Federation of Employers and Industries (AFEI) submitted that the proposed new clause 25.8 is not a modern award term “permitted or required” by the Act and the Commission has no jurisdiction to give effect to the CFMEU’s variation to the extent that it seeks inclusion of provisions that are not “permitted or required” by the provisions identified in ss.136(1)(a)–(d); or necessary to achieve the modern awards objective. AFEI submitted that the permissible term about a “penalty rate” in s.139(e) is different from a “penalty” and is associated with imposing sanctions on a party for breaching their statutory obligations, as sought by the CFMEU variation. It submitted that “penalty rate” in s.139(e) carries a distinct meaning in industrial law – it is a term providing a “higher rate of pay in compensation for the performance of work under special conditions of time, place or circumstance” and that the proposed new clause 25.8 is not a “penalty rate” for the purposes of s.139(e) of the Act.

[78] The argument put by the MBA that the Commission lacked power to make the variations proposed by the CFMEU on the basis of a principle that is derived from the decision in the Andrews Case, 55 a purported exercise of judicial power or the operation of the compliance framework established by the Act, was considered and rejected by the separately constituted Andrews Full Bench.56

[79] Beyond those arguments, the MBA submitted that the CFMEU had failed to show that the Timber Award was not achieving the modern awards objective as set out in s.134 of the Act. The MBA submitted that the CFMEU’s evidence disclosed partial payments to employees to assist them when their pay was not accessible due to EFT problems. It submitted that if the proposed variation to the Timber Award is made, “employers who made such partial wage payments would still be obliged to pay employees at overtime rates” and the “proposed variation would therefore act as a disincentive for employers to make similar payments in good faith in circumstances where a genuine failure to pay wages has occurred” and would “actively discourage employers from acting ‘fairly’ in accordance with the modern awards objective”. The MBA further submitted that the variation sought would impose excessive employment costs on employers, who would be required to pay a disproportionate amount as penalty for any failure to meet their award obligations, a failure for which they already face penalties under the Act and also increased the regulatory burden on employers.

[80] The MBA also submitted that the CFMEU’s survey does not “show any problematic, systemic issues” in relation to late payment of wages. It submitted that the “survey does nothing other than reinforce the fact that the CFMEU seeks to impose a penalty ‘to ensure that employees are paid on time.’ The consequences of the imposition of that penalty far exceed the problem identified particularly in respect of the survey”. The MBA also raised concerns about the technical integrity of the CFMEU Survey.

[81] The HIA submitted that the “proposed variation goes further than simply penalising an employer for such conduct by way of an award breach, the proposal imposes a separate and distinct penalty for such conduct” and “goes significantly further than other Modern Awards that may provide some form of penalty for the late payment of wages”.

[82] The HIA submitted that the variation is not necessary to meet the modern awards objective and that:

• the “claim that the proposed variation would encourage enterprise bargaining is a fallacy”;

• the CFMEU’s evidence does “not demonstrate systemic late payment of wages”; and

• the varied provision proposed is “punitive at best” and, in practical terms, “would act as a disincentive for employers to act in the best interests of their employees in circumstances of the late payment of wages”.

Decision in relation to the CFMEU’s proposed variation of clause 25—Payment of wages of the Timber Award

[83] The CFMEU proposal is to replace clause 25.5 of the Timber Award to introduce an obligation on employers to make additional payments to employees in the event of late payment of wages, for reasons beyond their control, or in the absence of remedial action in respect of late payment due to a third party, when payment is made by EFT.

[84] The CFMEU detailed the history of the provision for the late payment of wages in the 1999 Timber Industry Award and its predecessors, beginning with the consolidated award containing a late payment provision in 1947, 57 its retention in the Timber Workers Award 195058 and subsequent awards through to the Timber Industry Award 199059 in relation to waiting for payment by cash. The 1990 Award provision was retained in the Forest and Building Products, Manufacturing and Merchandising (General) Award 1996.60 It was renumbered during the Award Simplification Process and Commissioner Merriman intended that it be retained in the simplified award and apply to any of the payment methods then available under the award: cash, cheque or EFT. However that intention was not carried into the published simplified award – the 1999 Timber Industry Award. In that context Commissioner Blair corrected the oversight inserting a clause in similar terms to that now proposed by the CFMEU to remove ambiguity and uncertainty.61

[85] However, the late payment provision in clause 26.5 of the 1999 Timber Industry Award was not included in the Timber Award.

[86] The variation of clause 25 proposed by the CFMEU was sought to similar effect during the making of the Timber Award in the post exposure draft stage of the Award Modernisation Process 62 and during the 2012 Review.63

[87] During the Award Modernisation Process, the CFMEU filed a draft modern award, which contained a provision requiring the payment of a penalty for late payment of wages by any method. The Award Modernisation Full Bench published the 2009 exposure draft of the Timber Award on 22 May 2009 which contained a payment of wages provision at clause 25, in materially identical terms to the current clause 25 of the Timber Award. It did not require the payment of a penalty where employees are paid late their wages by EFT.

[88] In a statement accompanying the 2009 exposure draft, the Award Modernisation Full Bench stated:

“In relation to many conditions of employment we have adopted provisions from the Manufacturing Modern Award. In the absence of consensus we regard these conditions as constituting an appropriate safety net given their widespread application to similar industries.” 64

[89] On 12 June 2009, the CFMEU filed submissions addressing the 2009 exposure draft, in which it submitted that the late payment of wages it had proposed should be included in the modern award and relied on the 1999 Timber Industry Award provision and the variation by Commissioner Blair. 65

[90] The Award Modernisation Full Bench, having considered the submissions made in response to its 2009 exposure draft retained the payment of wages term in the form it appeared in the 2009 exposure draft. In its decision in relation to the making of the Stage 3 modern awards, the Full Bench said, in relation to the Timber award:

“A number of submissions were made dealing with the consequences of adopting provisions from the Manufacturing Modern Award and their relevance to the timber industry. As a result we have amended a number of provisions in the exposure draft particularly the clauses dealing with hours of work and related matters.” 66

[91] The final element of the award history concerns an application by the CFMEU to vary clause 25 to similar effect during the 2012 Review 67 before Deputy President Gooley.

[92] Deputy President Gooley refused the variation then sought on the basis that there was insufficient evidence before the Commission to indicate that late payment by EFT was a widespread problem:

“[106] Whilst I have sympathy for employees who do not receive their wages on time there is insufficient evidence before the Commission to indicate that this is a widespread problem.

[107] The CFMEU included a late payment penalty clause in its draft award provided to the award modernisation Full Bench. When the exposure draft was published by the award modernisation Full Bench, the CFMEU responded and specifically raised the issue of penalties for late payment of wages when wages were paid by EFT. These submissions were not adopted by the award modernisation Full Bench. In the context of this Review, I am not prepared to revisit this issue which was considered as part of the Part 10A award modernisation process as the CFMEU has not established that there are cogent reasons for doing so. It cannot be said that there has been a significant change in circumstances. The exclusion of the provision was not an error or oversight.” 68

[93] Whilst the CFMEU amended the currently proposed variation from that proposed before Deputy President Gooley to take into account some observations made by her in her decision and to simplify the provision, and further amended the variation sought on 9 April 2015, it accepts that there is a similarity in relation to both its submissions and witness evidence between the 2012 and 2014 Reviews. 69 We think this is an accurate observation.

[94] Consistent with the approach set out by the Preliminary Issues Full Bench we proceed on the basis that prima facie the Timber Award being reviewed achieved the modern awards objective at the time that it was made, 70 and that it is necessary to have regard to the historical context applicable to each modern award and previous decisions relevant to any contested issue (and their context) and previous Full Bench decisions should generally be followed, in the absence of cogent reasons for not doing so.71

[95] Applying that approach, given the making of the Timber Award with clause 25 in its current terms, in circumstances where the CFMEU’s case for a provision of similar effect to that currently proposed was ventilated, we proceed on the basis that, prima facie, clause 25 achieved the modern awards objective at the time that it was made and it is necessary for the CFMEU to establish cogent reasons for the proposed variation of clause 25. A significant change, such as the CFMEU proposes, “must be supported by a submission which addresses the relevant legislative provisions and be accompanied by probative evidence properly directed to demonstrating the facts supporting the proposed variation”. 72

[96] Deputy President Gooley was not satisfied that such a case had been established in the context of the 2012 Review. We accept, however, that additional evidence has been brought from CFMEU officials and members in the current proceedings and that the CFMEU has introduced and relied on a survey of its members and put additional submissions in its case for the proposed variation. It is now necessary to consider whether the additional submissions and evidence as whole brought by the CFMEU establish cogent reasons in support of the variation proposed.

[97] The Preliminary Issues Full Bench noted that any variation to a modern award arising from the 4 yearly review must comply with s.136 of the Act and the related provisions which deal with the content of modern awards (ss.136–155 of the Act). 73 For present purposes, the relevant provisions are s.139, which prescribes terms which “may” be included in a modern award and s.142 which deals with incidental and machinery terms. Section 138 provides that a “modern award may include terms that it is permitted to include, and must include terms that it is required to include, only to the extent necessary to achieve the modern awards objective and (to the extent applicable) the minimum wages objective”.

[98] The Andrews Full Bench noted that, in answer to the MBA case, the CFMEU submitted that the Act specifically confers on the Commission the power to include terms about “penalty rates”. The CFMEU maintained that position before us as its primary contention, relying on s.142 as a secondary position. 74 Although not required to determine the correctness of that contention, the Andrews Full Bench expressed a view that:

“. . . the Proposed Term [clause 25.7 and 25.8, as varied] does not sit comfortably being described as a ‘penalty rate’. It seems to us more likely that the power to include the term contained in the CFMEU proposal must, if it exists, be found in s.142(1) of the FW Act.” 75

[99] We are required to reach a view on that contention. The contention that the Commission has power to include the proposed term as a “penalty rate” relates to s.139(e) of the Act, which includes terms which “may” be included in a modern award:

“(e) Penalty rates, including for any of the following:

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

(ii) employees working on weekends or public holidays;

(iii) shift workers;”

[100] In our view, the payment of wages provision in the elements of clause 25 as varied to give effect to the CFMEU’s proposal is not a “penalty rate” provision within the meaning of s.139(e) of the Act. Reflecting common industrial usage, “penalty rate”, for the purpose of s.139(e) of the Act is a higher rate of pay to which an employee is entitled in compensation for the inconvenience or disabilities associated with performing work at a particular time, consistent with the non-exhaustive examples within s.139(e). We are not persuaded that a provision of the character of clauses 25.7 and 25.8, as proposed by the CFMEU – a payment an employer is required to make to an employee as a penalty for the late payment of wages – is a “penalty rate” within the meaning of s.139(e) of the Act.

[101] In this regard, we do not think that the CFMEU’s characterisation of clause 25.5 is supported by the Judgement of the Full Court of the Commonwealth Court of Conciliation and Arbitration in the 1947 Penalty Rates Case. 76 Whilst Drake-Brockman ACJ and Sugerman J identified two elements of a penalty rate – an additional payment “where work is done under special conditions” and a “deterrent against calling upon employees to work” in such conditions, in both cases the payment related to working in particular circumstances. That is of a different character altogether to an obligation upon an employer to make additional payment to an employee in circumstances where they fail to meet their obligation to make payment for the relevant work on time. Such an obligation is properly characterised as a “penalty” rather than a “penalty rate” of the nature described by Drake-Brockman ACJ and Sugerman J – “additional amounts to be paid where work is done under special conditions of time, place or circumstance”77 [emphasis added]. That distinction accords with common industrial usage and the dictionary meaning relied on by the CFMEU of “an increased rate of pay for overtime or in recognition of abnormal conditions”,78 is itself referable to a rate of pay for work and the recognition of abnormal conditions in relation to that work.

[102] Accordingly, the power to include the term contained in the CFMEU’s proposal must, if it exists, be found in s.142(1) of the Act.

[103] Section 142 of the Act, which permits the inclusion in modern awards of incidental and machinery terms, provides:

“(1) A modern award may include terms that are:

(a) incidental to a term that is permitted or required to be in the modern award; and

(b) essential for the purpose of making a particular term operate in a practical way.”

[104] We accept that an award provision for the payment of wages is incidental to those elements of s.139 dealing with payments to employees: minimum wages, overtime rates, penalty rates and allowances. The issue which then arises is whether or not the terms resulting from the variation to clause 25 of the Timber Award proposed by the CFMEU are essential for the purpose of making the terms operate in a practical way and are the terms necessary to achieve the modern awards objective.

[105] The CFMEU drew our attention to the inclusion by the Award Modernisation Full Bench of late payment provisions relating to payment by EFT in seven other modern awards. 79 We accept that the Award Modernisation Full Bench was satisfied as to the power to include such a provision, although it is not clear whether that power was based on s.139 or s.142 of the Act. Given our conclusion above in relation to s.139, we think the power was based on the incidental power in s.142 and that the Award Modernisation Full Bench was satisfied that the terms were necessary to achieve the modern awards objective in the particular circumstances of those awards. It is necessary for us to consider whether a similar conclusion arises in relation to the case put by the CFMEU in relation to the Timber Award.

[106] In support of its proposed variation, the CFMEU relied on direct evidence of its officials and members and the CFMEU Survey of its membership to the effect that late payment is a significant practical problem within the timber industry and its proposed variation, effecting a penalty upon employers for late payment by EFT, is essential for the payment of wages term to operate in a practical way and is necessary to achieve the modern awards objective.

[107] The direct evidence of its officials and members goes to a proposition that payment by EFT is now the norm in the timber industry. This proposition was not contested and we accept it. We also accept that late payment can cause costs to employees, both in terms of default and other financial institution fees incurred and disruption to the family and social activities of employees and that many timber workers are award reliant 80 and low paid.

[108] Beyond that, the evidence goes to incidents of late payment in the timber industry. The evidence of five officials simply repeats and relies on the evidence of those officials in the 2012 Review. 81 Such evidence was found by Deputy President Gooley to provide insufficient proof to indicate that late payment was a widespread problem.82

[109] Additional evidence was given by:

• Mr R Cotroneo, an employee of a Melbourne firm, which recounted two occasions of late payment: in Easter 2014, after the making of the Timber Award and in 2009 prior to its making;

• Mr K Law, an employee of a Melbourne firm, which recounted late payment regularly between 2012 and 2013, but more regular payment following the intervention of the CFMEU in early 2013;

• Mr J Patti, a Victorian CFMEU official, who gave evidence that he encountered a situation of late payment about once a year, with a more serious late payment issue about every two years. He recounted one specific instance at Easter 2014, which was addressed on Sunday by the availability of partial cash payments.

• Ms Finnegan, a CFMEU delegate at the AKD Softwoods sawmill in Colac, who added to her evidence before Deputy President Gooley by recounting a later incident (on 22 April 2013) when pay was not available on the normal day, but the problem was rectified on the same day.

• Ms J Calvert, Divisional President of the CFMEU Forestry and Furnishing Products Division, which went to an assessment of relevant enterprise agreement provisions and the CFMEU Survey of its members. No additional instances of late payment were dealt with in her evidence.

[110] It may be noted that some of the evidence of the individuals identified the same incidences of late payment as in the 2012 Review. 83 Further, the individual evidence recounted incidences of late payment which occurred both prior to and after the Timber Award commenced operating on 1 January 2010.84

[111] Whilst there was additional evidence of some incidences of late payment, by EFT, both the evidence previously put to Deputy President Gooley and the additional evidence does not establish a significant incidence of late payment in the timber industry, which would make the variation sought necessary.

[112] In order to prepare its case the CFMEU commissioned the ACTU to conduct a telephone survey of its members, resulting in a report prepared by the ACTU Call Centre, dated June 2014. 85 The survey was conducted by telephone, with 1,338 calls made to CFMEU members with 433 members, or 32% of those called (the total survey population) completing the survey. The members who completed the survey were employed at 39 employer operations.

[113] The survey population was selected by the CFMEU on the basis of including members employed across a number of geographic locations and in firms of varying size (by employment). 86 This selection process necessarily referenced employer characteristics. The survey population was not randomly selected and there was no indication that the selection by reference to employer characteristic involved a stratified survey reflecting employer characteristics in the timber industry generally. It is difficult to compare the distribution of respondents to the survey by State to employment in the timber industry by State to ascertain if the survey respondents are representative of the timber industry due to the industry sectors within the Timber Award which are not conveniently reflected in ABS industry data. However, the survey was clearly not reflective of the timber industry as a whole given the absence of any CFMEU membership in Queensland87 and the high level (42%) of respondents in South Australia. Only members of the CFMEU were surveyed.

[114] Of the survey respondents, 102, or 24% reported that their wages had been paid late on at least one occasion, 69, or 66% were sure that late payment had occurred at a time after 1 January 2010 at least on some occasions when late payment was experienced. It is not clear from the survey results whether the reporting of late payment relates to payment of wages or late payment of some part of the entitlement. 88

[115] Around 20% of those experiencing late payment reported the imposition of bank fees and late payment fees and around 10% reported an inability to attend social events and to pay for family activities as a result of late payment.

[116] A document 89 provided by the CFMEU discloses that a majority of the respondent employees were employed by Carter Holt Harvey and almost 95% were employed by one of four companies at various sites (Carter Holt Harvey; Timberlink Australia, Boral Timber and AKD Softwoods). Carter Holt Harvey now has enterprise agreements made in 2014 which include provisions of the type sought by the CFMEU. Timberlink Australia also has 2014 Agreements with similar provisions, as did the predecessor agreements and so do AKD Softwoods. The instances of late payment in relation to Gunns Limited also resulted in enterprise agreement provisions in respect of late payment.90

[117] The evidence cannot be regarded as being representative of the timber industry as a whole being focussed, as it is, on four major employers at various sites. Those major companies aside, there is very little evidence in relation to late payment beyond the incidences of late payment in the witness evidence and the five additional instances raised by respondents in the CFMEU Survey in relation to other employers. Only 24 respondents were otherwise employed. Five of the 24 reported instances of late payment: once a year, all after 2010; once only after 2010; once in 12 months before 2010; three times in 14 years with the respondent uncertain as to when, and one a few times before 2010, with the CFMEU intervening to ensure remedial steps were taken. Only one, the last respondent, referred to reported adverse personal effects of the late payment. In relation to employees of both the four major employers and the 24 respondents employed by other employers, the evidence suggests that late payment has occurred from time to time, both during the operation of the 1999 Timber Industry Award and the Timber Award.

[118] It is clear that the CFMEU survey is not a survey constructed on a basis which provides a representative picture of late payment which can be extrapolated to the timber industry as a whole. Given the methodology employed in undertaking the survey, it does not provide an accurate statistical representation of the incidence of late payment. At best, it can be relied on only to the extent that it illustrates some continuing instances of late payment and the consequences of late payment in relation to those employees and employers included in the survey where a member responded to the survey. That seemed to be the purpose of the survey. 91 Whilst augmenting the illustrative examples given by witnesses (in cases, potentially reporting on the same circumstances), the survey does not establish the existence of a significant practical issue of late payment in the timber industry.

[119] The CFMEU submitted that the variation is necessary to ensure employers took their responsibility to pay wages on time under the Timber Award seriously and thereby enhance compliance with that obligation. However, it is not clear, given the penalties for non-compliance with an award in the Act why an additional incentive is necessary, nor, from the evidence as a whole, that the provision would enhance compliance. It is notable in that respect that the incidences of late payment occurred whilst the 1999 Timber Industry Award was in operation, with a late payment provision in respect of EFT payment, and since the making of the Timber Award. This suggests that late payment is a sporadic, unpredictable and unplanned event 92 in most instances, and has occurred and would occur on that basis whether or not there is a penalty for late payment in the Timber Award.

[120] Further, given the CFMEU witnesses and survey respondent’s report that the cause of late payment was, variously, an inadvertent error by an employee of the employer, information technology faults within the employer’s systems and/or bank error due to information technology or other reasons, the compliance argument is weakened. Whilst in the first instance, a further penalty for late payment may encourage an employer to introduce safeguards to minimise the possibility of late payment through human error, it is unclear how it would operate to avoid or reduce technological misadventure within an employer’s systems or how the imposition of a penalty on the employer would reduce technological or other issues within the employee’s nominated financial institution which caused the late payment.

[121] The CFMEU submitted that the inclusion in the Timber Award of the amended clause 25.5 it proposes would better meet the needs of the low paid, in light of the potential financial stresses of the late payment of wages. We think this misconstrues s.134(1)(a) of the Act in that it is the fair and relevant minimum safety net of terms and conditions which is fixed taking into account relative living standards and the needs of the low paid. The variation proposed does not fix the award component of the safety net. Rather it is directed to including a penalty for late payment to encourage compliance with the payment of wages required to be paid in accordance with the award safety net. Whilst we accept that non-compliance with the safety net will detract from the application of the safety net wages, we are not persuaded that the late payment provision is necessary for compliance with the payment of wages as a penalty for non-application of the requirements of the Timber Award in addition to the existing penalties for non-compliance within the Act. Nor, given the evidence as to the occurrence of late payment under both the pre-modern awards and the Timber Award and the evidence of late payment in some instances where enterprise agreements contained a provision of the type now sought by the CFMEU that the variation of clause 25.5 would prevent instances of late payment.

[122] Nor are we persuaded that the variation would encourage collective bargaining. Whilst the inclusion of clauses 25.7 and 25.8 in the Timber Award might increase the incidence of the same or a similar provision made in agreements, whether by incorporation or by specific agreement clauses dealing with late payment, and may make it easier for employees to negotiate such a provision in enterprise agreements any effect will be on the content on the agreement made, rather than the encouragement of collective bargaining.

[123] Against those considerations, the variation sought would increase employment costs and an increased regulatory burden through the added payments required in the event of late payment, in some circumstances where an employer has done all that they can to ensure that payment will be accessible to employees when they are due. Even where the payment obligation did not arise as a result of the proposed clause 25.8(c), an employer would nonetheless be obliged to make some payment and undertake the administrative actions necessary to do so, even in circumstances in which late payment occurred for reasons beyond the employer’s control.

[124] Further, as a matter of merit, we think that the prescription of payment in respect of time spent by an employee waiting for a late payment by cash or cheque, in respect of the delayed departure of an employee from their place of employment because their wages are not paid on time 93 is qualitatively different from the imposition of a penalty in respect of late payment by EFT.

[125] We accept that payment by EFT is now the norm in the timber industry. We also accept that late payment can cause costs and disruption to family and social activities of employees and that many timber workers are award reliant and low paid.

[126] We also accept that employers are required by law to pay their employees for their work, on time. Quite apart from their legal entitlement to be paid on time, employees, who make financial and family arrangements on the basis that they will be paid on time, are entitled to expect that they can access their wages when they are due. Employers should, to meet their legal obligations and out of respect for their employee’s entitlement to be paid on time, ensure that payroll arrangements are in place with safeguards to avoid late payment through inadvertence and which reflect the practical requirements for the transmission of wages through to the nominated accounts of their employees by the due time, having regard to the transmission processes and the effect of public holidays or extended absences (for example at Christmas and Easter) from work.

[127] However, we are not satisfied that the CFMEU’s case, and the evidence which supports it, establishes a practical problem in relation to the current payment of wages provision which makes the variation it proposes necessary to meet the modern awards objective. Whilst there was evidence of some incidences of late payment, it falls short of establishing a incidence of late payment in the timber industry of a frequency which would make the variation sought necessary. In this regard, the CFMEU’s survey of its members cannot be relied on as being representative of industry circumstances. Further, we are not satisfied, on the evidence, that the inclusion in the Timber Award of the varied clause proposed would materially affect late payment in the timber industry.

[128] We are not satisfied that the CFMEU has established that its proposed amended clause 25.5 is essential for the purpose of making clause 25 operate in a practical way and can be included in the Timber Award having regard to s.142 of the Act. We are not persuaded that the amended variation to clause 25.5 of the Timber Award is necessary to ensure that the Timber Award, together with the National Employment Standards (NES), provides a fair and relevant minimum safety net of terms and conditions having regard to the s.134 matters. Nor are we satisfied that the CFMEU has established the case for the variation it proposes, having regard to the modern awards objective. We are not satisfied that there are cogent reasons for departing from the position determined by the Award Modernisation Full Bench.

[129] We are not persuaded to vary clause 25.5 of the Timber Award.

3. CFMEU’s proposed variation of clause 27.2 and raised in the Award Brief clause 30.1(a) of the Timber Award (clause 12.2 and 24.1(a) of the exposure draft) – Ordinary hours of work—day workers and Payment for working overtime

[130] This issue was raised in the Award Brief as follows:

“Clause 30.1 [of the existing award] states that overtime is payable when an employee works outside the spread of hours or in excess of the ordinary daily number of hours in clause 27 [of the existing award]. The absence of a definition of daily ordinary hours and/or a method for determining such hours in clause 27 makes it difficult to determine the calculation of overtime in accordance with clause 30.1.” 94

[131] Clause 30.1—Payment for working overtime – of the Timber Award provides:

“(a) All time worked by employees outside the spread of hours prescribed in clause 27—Hours of work, or in excess of the ordinary daily number of hours prescribed in clause 27, will be paid for at the rate of time and a half for the first two hours and double time thereafter.”

[132] Clause 27.2—Ordinary hours of work – day workers of the Timber Award provides:

“(a) Ordinary hours of work will be worked between the hours of 6.30 am and 6.00 pm Monday to Friday in one of the following manners:

(i) 38 hours within a work cycle of one week;

(ii) 76 hours within a work cycle of two weeks;

(iii) 114 hours within a work cycle of three weeks; or

(iv) 152 hours within a work cycle of four weeks.

Different methods of implementation of a 38 hour week may apply to various groups or sections of employees in the establishment concerned.

(b) Where agreement exists the ordinary hours of work can be worked on any day of the week, Saturday and Sunday inclusive.”

[133] Clause 27.2(a) of the Timber Award clearly identifies the spread of ordinary hours. However, whilst clause 30.1 states that overtime is payable when an employee works in excess of the ordinary daily number of hours, the Timber Award does not otherwise specify a method of determining the ordinary daily number of hours.

[134] In order to identify when an employee works in excess of the ordinary daily number of hours, the CFMEU initially proposed two changes to clause 27.2, which are highlighted below:

“27.2 Ordinary hours of work—day workers

(a) Ordinary hours of work shall be an average of 38 per week and will be worked between the hours of 6.30 am and 6.00 pm Monday to Friday in one of the following manners:

(i) 38 hours within a work cycle of one week;

(ii) 76 hours within a work cycle of two weeks;

(iii) 114 hours within a work cycle of three weeks; or

(iv) 152 hours within a work cycle of four weeks.

(b) Different methods of implementation of a 38 hour week may apply to various groups or sections of employees in the establishment concerned.

(c) Unless otherwise agreed, the ordinary daily number of hours shall be the number of ordinary hours in the work cycle divided by the number of days on which ordinary hours are rostered to be worked in that work cycle.

(d) Where agreement exists the ordinary hours of work can be worked on any day of the week, Saturday and Sunday inclusive.” 95

[135] The submissions of employer organisations 96 and discussion within the hearing on 16 March 2015 identified an issue with the new clause 27.2 as initially proposed by the CFMEU. It would, as the Ai Group submitted, introduce a new provision, requiring agreement as to the arrangement of ordinary hours of work, failing which, a default method of arranging ordinary hours of work (of 7.6 ordinary hours per day Monday to Friday) will be deemed to be applicable. Clause 29.1.1 of the 1999 Timber Industry Award did not contain such a provision; it simply facilitated agreement about the pattern of ordinary hours worked.

[136] The CFMEU in its submissions on 16 March 2015 indicated that, in proposing the new clause 27.2(c), it did not intend to introduce a requirement for agreement as to the working of ordinary hours. 97 Rather the intention was to prescribe the daily ordinary hours to fill the void identified by the Award Brief caused by the absence of a definition of daily ordinary hours and/or a method for determining such hours in clause 27, which makes it difficult to determine the calculation of overtime, in respect of daily hours, in accordance with clause 30.1 of the Timber Award.

[137] As a result, on 9 April 2015, the CFMEU filed an amended proposed new clause 27.2(c) as follows:

“The ordinary daily number of hours for the purposes of clause 30.1 shall be the ordinary daily number of hours within a work cycle divided by the number of days on which ordinary hours are rostered to be worked in that work cycle, unless otherwise agreed.”

[138] The CFMEU submitted that the intention of the amended clause 27.2(c) is not to qualify what is permitted by 27.2(a) and (b) – in relation to the arrangement of ordinary hours – but instead to establish a default method for ascertaining the ordinary daily number of hours, for the purposes of the payment of overtime, in accordance with clause 30.1 of the Timber Award. The CFMEU submitted that the amended proposed clause 27.2(c) would overcome the absence of a definition of daily ordinary hours raised in the Award Brief and allow the calculation of overtime in accordance with clause 30.1 of the Timber Award without affecting current award provisions in respect of the arrangement of ordinary hours.

[139] The amended CFMEU variation of 9 April 2015 was opposed by the employer organisations (through the Ai Group) on the basis of potential unintended or unforeseen consequences. Ai Group proposed instead, informally between hearings, a variation of clause 30.1 of the Timber Award to replace the current clause 30.1(a) with:

“All time worked by an employee outside of the ordinary hours of work as determined in accordance with the award will be overtime and will be paid for at the rate of time and a half for the first two hours and double time thereafter.”

[140] The CFMEU opposed the variation proposed by the employer organisations on the basis of potential unintended or unforeseen consequences.

[141] Given the absence of any disagreement as to the purpose of a relevant variation, we issued advice to the parties, in which we proposed an alternate variation:

“30.1 Payment for working overtime

(a) All time worked by employees outside the spread of hours prescribed in clause 27—Hours of work, or in excess of the ordinary daily number of hours determined in accordance with clause 27 (subject to variation of the application of clause 27 pursuant to clause 8), will be paid for at the rate of time and a half for the first two hours and double time thereafter. [Addition emphasised]

[142] We invited the views of any interested party on the alternate variation.

[143] The HIA and MBA supported the variation suggested by this Full Bench, save for the removal of the reference to clause 8 – the flexibility term, whilst Ai Group preferred it to the CFMEU proposed variation. The CFMEU opposed the variation in the proposed terms on the basis that, as with the employer organisations’ proposal, the proposed variation leaves unresolved the identification of the “ordinary daily number of hours”.

Decision in relation to clause 27.2 and 30.1(a) of the Timber Award

[144] No submission was put against the inclusion of a specification of the average of 38 ordinary hours per week in respect of the various means of working ordinary hours of work set out in clause 27. In our view, this element of the variation of clause 27 to this effect is necessary to provide clarity as to the average ordinary hours and should be made.

[145] We will vary clause 27.2(a) to read:

“27.2 Ordinary hours of work—day workers

(a) Ordinary hours of work shall be an average of 38 per week and will be worked between the hours of 6.30 am and 6.00 pm Monday to Friday in one of the following manners:

(i) 38 hours within a work cycle of one week;

(ii) 76 hours within a work cycle of two weeks;

(iii) 114 hours within a work cycle of three weeks; or

(iv) 152 hours within a work cycle of four weeks.” [Additions emphasised]

[146] The new clause 27.2(c) initially proposed by the CFMEU was problematic in that it would have altered the provisions in respect of the arrangement of ordinary hours in the Timber Award.

[147] The amended new clause 27.2(c) proposed by the CFMEU on 9 April 2015 and an alternative variation (to clause 30.1(a)) proposed by the employer organisations were opposed on the basis of unintended consequences and, in the case of the latter proposal, its failure to specify daily ordinary hours.

[148] The issue in contention – concerning proposals to define “ordinary daily number of hours” – arose from the Award Brief observation that, whilst, clause 30.1 of the Timber Award “states that overtime is payable when an employee works outside the spread of hours or in excess of the ordinary daily number of hours in clause 27” (of the Timber Award), but does not define daily ordinary hours in clause 27.

[149] However, there was no agreement as to whether the terms of any of the variations proposed (including the variation raised by us) provided the necessary specification and whether the proposed variations were attended by unintended substantive changes in the overtime provision.

[150] We accept that neither the employer organisations’ proposal nor the proposal we advanced specified the “ordinary daily number of hours”.

[151] The CFMEU’s amended variation does, but it does so by specifying the ordinary daily number of hours as the ordinary daily number of hours within a work cycle divided by the number of days on which ordinary hours are rostered, resulting in a common number of “ordinary daily hours” on any day on which ordinary hours are rostered, “unless otherwise agreed”. Absent such agreement, the CFMEU formulation does not contemplate or accommodate a variation in ordinary daily hours, for the purpose of calculating overtime hours, within a roster which complies with clause 27.2 of the Timber Award. Whilst, clause 27.9 provides for agreement to establish a system of rostered days, the Timber Award does not otherwise require agreement for the rostering of different daily ordinary hours between days within a roster which complies with clause 27.2 of the Timber Award. The CFMEU proposal introduces such a requirement. It would effect a substantive variation to clause 27 which has not been supported by evidence or argument.

[152] We accept the point in the Award Brief that “ordinary daily number of hours” is not specified for the purpose of determining overtime payable when an employee works in excess of their ordinary daily hours. However, none of the proposals satisfactorily resolves that deficiency without risk of unintended substantive effects. Each proposal put has been advanced in an abstract way, without evidence as to the history of the overtime provision and the working of daily ordinary hours of work in the timber industry, evidence of the practice or practices in respect of the working of daily ordinary hours of work in the timber industry or evidence as to any practical problems arising from the Timber Award terms.

[153] In those circumstances, we do not propose to vary clause 27 or clause 30 of the Timber Award, other than to add the reference to ordinary hours of an average of 38 per week in clause 27.2(a).

[154] Any interested party is at liberty to make a further application to address the issue raised by the Award Brief. Such an application would need to be supported by evidence of the history of the relevant provisions, the practical application of the provision and any practical problems arising in respect of the application of the provision, and a proposed variation which effectively addresses the issues. Such evidence would assist in the formulation of such a variation.

4. CFMEU’s proposed variation of clause 21.3 of the Timber Award (clause 20.9 of the exposure draft) – Charred timber

[155] In respect of this matter, the Award Brief noted that:

“For some of the wage-related allowances it is not clear how the allowance is applied. For example, clause 21.3 states that an employee will be paid 0.7% of the standard rate (which is a weekly) but it is not clear if this is paid per hour or per week.

Further, it is to be paid when handling or cutting such timber are unusually dirty or objectionable which may be hard to measure.” 98

[156] Clause 21.3 of the Timber Award states:

“21.3 Charred timber

Employees handling or cutting charred timber will be paid a daily allowance of 0.7% of the standard rate in addition to their ordinary rate of pay when the disabilities associated with handling or cutting such timber are unusually dirty or objectionable.”

[157] The CFMEU submitted that no interested party had sought clarification in relation to the circumstances in which the charred timber allowance is payable and it was not aware of any practical issue arising in relation to determining when the charred timber allowance is payable. The Ai Group supported the CFMEU in this submission.

[158] The CFMEU did, however, support the inclusion in the clause of a statement that the allowance is a daily allowance, by adding “, per day”, after “0.7% of the standard rate” in the term. The Ai Group submitted that this was unnecessary because clause 21.3, as currently drafted, already states that eligible employees “are to be paid a daily allowance” as prescribed.

[159] In the absence of any evidence in relation to a difficulty of timber industry employers or employees applying the charred timber allowance provision, we are not satisfied that the provision should be varied in relation to the application of the allowance, having regard to the modern awards objective. Further, the current term expresses the allowance to be a daily allowance and no variation to the term is required in that respect.

5. CFMEU’s proposed variation of clause 21.4 of the Timber Award (clause 20.4 of the exposure draft) – Leading hands

[160] In respect of this matter, the Award Brief noted that:

“Clause 21.4 does not expressly state whether the leading hand allowance is payable on overtime hours.

The clause makes provisions for a leading hand allowance of ‘3.3% of the standard rate’ and ‘5.1% of the standard rate’ depending on the number of employees supervised. This clause does not state whether the amount is per hour, per day or week. Should this be included?” 99

[161] The CFMEU supported a variation to clause 21.4 of the Timber Award by inserting “per week” to clarify that the allowance is paid as a flat rate once per week. The proposed amended clause 21.4 would read:

“21.4 Leading hands

In addition to the rates prescribed in clause 17—Minimum wages, a leading hand supervising two to six employees will be paid 3.3% of the standard rate and for more than six employees 5.1% of the standard rate, per week in addition to their ordinary rate of pay.” [Additions emphasised]

[162] The CFMEU submitted that the leading hand allowance is based on clause 22.3 of the 1999 Timber Industry Award, in that the percentage amounts included in the Timber Award “directly reflect the rates included in the pre-modern Award” and that the amount of this allowance under the 1999 Timber Industry Award “did not vary with hours worked and no additional amount was paid on overtime”.

[163] The CFMEU submitted that it is “not necessary for the clause to state whether the allowance is payable on overtime hours, and that the only clarification which is required” is to insert the words “per week”.

[164] Ai Group did not oppose the amendment sought by the CFMEU, submitting that the addition proposed by the CFMEU is consistent with the current definition of the standard rate as the “minimum weekly wage” for a Level 5 employee.

[165] We agree that the insertion of “per week”, as suggested by the CFMEU, adds clarity to the operation of the allowance as a weekly allowance and we will vary clause 21.4 to that extent. It is unnecessary to otherwise vary the provision as the Timber Award does not provide for an additional allowance payable on overtime hours.

[166] We will vary clause 21.4 of the Timber Award to read as follows:

“21.4 Leading hands

In addition to the rates prescribed in clause 17—Minimum wages, a leading hand supervising two to six employees will be paid 3.3% of the standard rate and for more than six employees 5.1% of the standard rate, per week in addition to their ordinary rate of pay.”

6. CFMEU’s proposed variation of clauses 36.4(a), (b) and (c) of the Timber Award (clauses 28.5(a), (b) and (c) of the exposure draft) – Day off in lieu of holidays falling on a Saturday or Sunday

[167] The Award Brief stated:

“Clauses 36.4(a), (b) and (c) contain the phrase ‘a holiday instead of will be observed’. Should this be ‘a holiday will be observed’.” 100

[168] The CFMEU, whilst acknowledging “some lack of clarity in that the clause does not specify what the holiday is intended to be ‘instead of’”, submitted that it is “necessary to retain the reference to the public holiday being ‘instead’ in order to avoid any suggestion that the clause creates an additional holiday”. The CFMEU proposed a varied clause identifying by “date the relevant days which each holiday is said to be ‘instead of’” to provide clarity.

[169] Clause 36.4 of the Timber Award, as proposed by the CFMEU would read:

“36.4 Day off in lieu of holiday falling on a Saturday or Sunday

(a) When Christmas Day (25 December) is a Saturday or a Sunday, a holiday instead of 25 December will be observed on 27 December.

(b) When Boxing Day (26 December) is a Saturday or a Sunday, a holiday instead of 26 December will be observed on 28 December.

(c) When New Year’s Day (1 January) or Australia Day (26 January) is a Saturday or Sunday, a holiday instead of 1 January, or instead of 26 January, will be observed on the next Monday.” [Additions emphasised]

[170] Ai Group, whilst accepting that the current provision is unclear, expressed concern that the CFMEU’s proposal “creates a new definition of Christmas, Boxing Day, New Years’ Day and Australia Day, which may deviate from that in the NES”, in which s.115(1)(a) of the Act “defines public holidays as those that fall on the dates there prescribed” and ss.115(2) and (3), “allow for the alteration of that date by virtue of State or Territory laws or under a modern award term (such as clause 36.2 of the Timber Award)”.

[171] Ai Group suggested that the variation be refused or, alternatively, the Commission could simply delete the provisions of clause 36.4 of the Timber Award, “leaving the rules around the substitution of public holidays to the combined operation of the NES and State and Territory laws, where relevant”, as a Full Bench did in respect of the Manufacturing Award. 101

[172] In this respect the Full Bench: 102

• noted a provision of the type in clause 44.2 of the Manufacturing Award appeared in only four other of the 122 modern awards created, one of which was clause 36.4 of the Timber Award;

• noted that in including a clause identical to clause 44.2 of the Manufacturing Award in the Textile, Clothing, Footwear and Associated Industries Award 2010, 103 the Award Modernisation Full Bench stated104 that the “NES would more than likely cover the position” but was “prepared to include a substitution provision”; and

• found that “clause 44.2 is meant to do no more than that which the NES on public holidays effectively provide”.

[173] The Full Bench concluded:

“[37] In the circumstances, we consider it is desirable to remove the ambiguity or uncertainty associated with the current clause 44.2 in the modern manufacturing Award and that the most appropriate way of doing so is by deleting clause 44.2 from the modern Manufacturing Award. That would make the modern Manufacturing Award consistent with the vast majority of modern awards which do not contain such a clause.”

[174] We think the current provision is unclear. In the context of the operation of clause 36—Public holidays, as a whole of the Timber Award, and clause 36.1 in particular, which states that public holiday entitlements are provided for in the NES, clause 36.4 does no more than set out the substitution arrangements in the NES in s.115(2) of the Act which provides that:

“(2) If, under (or in accordance with a procedure under) a law of a State or Territory, a day or part-day is substituted for a day or part-day that would otherwise be a public holiday because of subsection (1), then the substituted day or part-day is the public holiday.”

[175] Given the operation of the NES, which provides for substitution to the same effect of clause 36.4 of the Timber Award and the similarity of the now deleted Manufacturing Award provision, we think the lack of clarity of the current clause 36.4 is best resolved by deleting clause 36.4 from the Timber Award. This will avoid any potential inconsistency between the NES substitution provision in s.115(2) and clause 36.4.

7. CFMEU’s proposed variation of Schedule B.3.1(b)(iii) of the Timber Award (Schedule A.3.1(b)(iii) of the exposure draft) – plywood scarfing machinist

[176] The Award Brief identified as “Complex wording/ambiguous wording/clauses with unclear meaning” the terms of clause B.3.1(b)(iii) of the Timber Award, which sets out indicative tasks for a plywood scarfing machinist at Level 3 in the Panel products sector in respect of the 6th dot point beginning with “plywood scarfing machinist” which are described as “where the machinist has not been required to grind the knives and cutters, but is at any time required to grind the knives and cutters”. The Award Brief noted that it is not clear whether an employee at this level is required to grind the knives or cutters and suggested clarification. 105

[177] In order to clarify the term, the CFMEU seeks to vary the existing 6th dot point in clause B.3.1(b)(iii) of the Timber Award by inserting:

“ plywood scarfing machinist where the machinist has not been required to grind the knives and cutters, but is at any time required to set up the machine and then only from such time as the employee is required so to act;”

[178] The variation proposed strikes out the underlined words in clause B.3.1(b)(iii) of the Timber Award:

“ plywood scarfing machinist where the machinist has not been required to grind the knives and cutters, but is at any time required to grind the knives and cutters, but is at any time required to set up the machine and then only from such time as the employee is required so to act;”

[179] In support of the change, the CFMEU submitted that it “addresses the obvious contradiction contained in the existing clause which refers both to machinists not being required to grind knives and cutters and also to being required to do the same”.

[180] The CFMEU further submitted that the effect of its proposed resolution would be that the award “operates so that there is a logical progression between the classification levels” as follows:

• “At level 2 the plywood scarfing machinist is never required to set up the machine or grind the knives cutters”;

• “At level 3 the plywood scarfing machinist is required to set up the machine BUT not to grind the knives and cutters”; and

• “At level 4 the plywood scarfing machinist is required to set up the machine AND grind the knives and cutters”.

[181] The Ai Group raised a concern that the variation proposed “alters the meaning of existing terms” of the award in that the current wording appears to “contemplate a circumstance where a relevant machinist has not previously been required to undertake the relevant grinding work, but may be required to in the future”.

[182] The current term is uncertain and difficult to apply. We are satisfied that clarification is required and that the variation proposed is consistent, in the context of the classification structure as a whole, with a logical progression of the requirements of the plywood scarfing machinist within the classification structure.

[183] We will vary the Timber Award in the terms proposed by the CFMEU.

8. CFMEU’s proposed variation of Schedule D.1.6 – 2nd dot point of the Timber Award (Schedule C.1.6 – 2nd dot point of the exposure draft) – Classification Definitions – Pulp and Paper Stream – Level 6 (relativity 105%)

[184] The Award Brief suggested a change to part of the definition of the Level 6 classification in Schedule D.1.6 of the Timber Award from “Able to communicate at production senior level to an acceptable standard and undertakes group decision making processes and dynamics” to “Is able to communicate at a level appropriate to facilitate group decision making processes and dynamics both at a production and senior level”.¹⁰⁶

[185] The CFMEU does not agree to the suggested rewording, submitting that it significantly alters the substantive effect of the clause. The Ai Group agreed that the suggested change “alters the substance of the provision” by attaching a different standard to the level at which an employee is able to communicate and by removing the “express requirement that the employee be able to undertake group decision making processes and dynamics”.

[186] We agree that the suggested change would alter the substance of the term. Absent any basis advanced for doing so, we will not vary the Timber Award in this respect.

9. Proposed variation of clause 3.1 of the Timber Award (Schedule K of the exposure draft) – Definitions and interpretation

[187] The Award Brief identified a number of “Definitions expressed differently in the text of award”, which involved issues of formatting, superfluous and inconsistent definitions. 107

[188] Only one of the definitions raised any issue between the timber industry parties: the definition of “Millwright—mechanical tradesperson—special class” which is defined but elsewhere appears to be referred to as a “Timber tradesperson millwright—special class”.

[189] The CFMEU submitted that the description “Timber tradesperson millwright—special class” should replace “Millwright—mechanical tradesperson—special class”. Ai Group urged caution in affecting the variation because it may result in unforeseen consequences, although it could not immediately identify any.

[190] We think the definition refers to “Timber tradesperson millwright—special class”, which term is found in the Timber Award and the change should be made to correct an error in the description of the term defined.

[191] We will vary clause 3.1 of the Timber Award in relation to each of the following matters:

• to remove bolding from bracketed text in relation to “examiner (Timber tradesperson—Level 5 or above)”, “inspector (Timber tradesperson—Level 6 or above)”, “machinist A grade (Timber tradesperson—Level 5)”;

• to delete reference to “first class” in “glazier—first class”;

• To delete the definitions of “greaser or oiler—first class” and “mixed industry” which do not otherwise appear in the award;

• to change the term defined “millwright—mechanical tradesperson—special class” to “timber tradesperson millwright—special class”; and

• in relation to “sawbench” alter instances of “saw bench” and “saw benches” to read “sawbench” or “sawbenches”.

CONCLUSION

[192] For the reasons stated above, the Timber Award will be varied as follows:

Clause 27.2 of the Timber Award

[193] We will vary clause 27.2(a) of the Timber Award to read as follows:

“27.2 Ordinary hours of work—day workers

(a) Ordinary hours of work shall be an average of 38 per week and will be worked between the hours of 6.30 am and 6.00 pm Monday to Friday in one of the following manners:

(i) 38 hours within a work cycle of one week;

(ii) 76 hours within a work cycle of two weeks;

(iii) 114 hours within a work cycle of three weeks; or

(iv) 152 hours within a work cycle of four weeks.”

Clause 21.4 of the Timber Award

[194] Clause 21.4 of the Timber Award will be varied to read as follows:

“21.4 Leading hands

In addition to the rates prescribed in clause 17—Minimum wages, a leading hand supervising two to six employees will be paid 3.3% of the standard rate and for more than six employees 5.1% of the standard rate, per week in addition to their ordinary rate of pay.”

Clauses 36.4(a), (b) and (c) of the Timber Award

[195] Clause 36.4 will be deleted in its entirety from the Timber Award.

Schedule B.3.1(b)(iii) of the Timber Award

[196] Dot point 6 of the indicative tasks for a plywood scarfing machinist at level 3 in the Panel products sector will be varied to read as follows:

“ plywood scarfing machinist where the machinist has not been required to grind the knives and cutters, but is at any time required to set up the machine and then only from such time as the employee is required so to act;”

Clause 3.1 of the Timber Award

[197] Clause 3.1 of the Timber Award is varied as follows:

• to remove bolding from bracketed text in relation to “examiner (Timber tradesperson—Level 5 or above)”, “inspector (Timber tradesperson—Level 6 or above)”, “machinist A grade (Timber tradesperson—Level 5)”;

• to delete reference to “first class” in “glazier—first class”;

• To delete the definitions of “greaser or oiler—first class” and “mixed industry” which do not otherwise appear in the award;

• to change the term defined “millwright—mechanical tradesperson—special class” to read “timber tradesperson millwright—special class”; and

• in relation to “sawbench” alter instances of “saw bench” and “saw benches” to read “sawbench” or “saw benches”.

[198] The Determination, 108 giving effect to each of the proposed consent variations, will be to the effect set out above, implemented in a manner which reflects any variations to the Timber Award arising from any other 4 yearly review outcomes in relation to the Timber Award at the time the Determination takes effect.

SENIOR DEPUTY PRESIDENT

Appearances:

M Harding for the Construction, Forestry, Mining and Energy Union (Forestry and Furnishing Products Division).

S Maxwell for of the Construction, Forestry, Mining and Energy Union (Construction and General Division).

M Adler for the Housing Industry Association.

L Izzo for the New South Wales Business Chamber and Australian Business Industrial.

R Calver for the Master Builders Australia Limited.

E Watt for The Timber Merchants’ Association (Victoria).

G Moriarty for the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU).

J Gherjestani for The Australian Workers’ Union.

B Ferguson with Ms Clarke for The Australian Industry Group.

J Light for the Australian Federation of Employers and Industries.

Hearing details:

2015.

Melbourne and Sydney (via video):

March 16;

April 13.

 1   [2014] FWCFB 5537.

 2   MA000071.

 3   [2014] FWCFB 5537, at para 8.

 4   (2012) 247 CLR 205.

 5   [2015] FWCFB 1549.

 6   [2015] FWCFB 2831.

 7   MA000017.

 8   [2015] FWCFB 2831, at paras 3–13.

 9   [2014] FWCFB 1788.

 10   [2015] FWCFB 620.

 11   AM2012/48 and others.

 12   Making of Priority Awards Full Bench [2008] AIRCFB 1000, at paras 28–30.

 13   [2008] AIRCFB 1000, at para 30.

 14   Master Builders Australia Limited, [2013] FWC 4576, at para 140.

 15   Master Builders Australia Limited, [2013] FWC 4576, at para 140.

 16   Master Builders Australia Limited, [2013] FWC 4576.

 17   Master Builders Australia Limited submission of 6 February 2015, at para 4.1.

 18   CFMEU written submissions of 6 February 2015, at para 17.

 19   MA000029.

 20   HIA submission of 19 December 2014, para 4.2.9.

 21   HIA submission of 19 December 2014, para 5.1.26.

 22   Transcript, at para 155.

 23   Transcript, at para 46.

 24   Transcript, at paras 45–46.

 25   [2015] FWCFB 620, at para 8.

 26   [2013] FWC 4576.

 27   Preliminary Issues Full Bench, [2014] FWCFB 1788, at para 60.3.

 28   Master Builders Australia Limited, [2013] FWC 4576, at paras 153–155.

 29   HIA submission of 19 December 2014, para 5.1.14 and Transcript, at paras 45–46 and 288.

 30   Transcript, at para 73.

 31   HIA submission of 19 December 2014, para 4.2.6.

 32   [2009] AIRCFB 345, at para 112.

 33   [2009] AIRCFB 450.

 34   Construction, Forestry, Mining and Energy Union (Construction and General Division) submission of 6 February 2015, at paras 29–33.

 35   Transcript, at paras 109–120.

 36   HIA submission of 19 December 2014, Attachment A at Annexure C, at p. 40 and Transcript at paras 137–142.

 37   HIA submission of 19 December 2014, Attachment A at Annexure C, at p. 35.

 38   HIA submission of 19 December 2014, Attachment A, extracted at p.13 of the HIA submission and Transcript, at para 128.

 39   HIA submission of 19 December 2014, extracted at p.13.

 40  HIA submission of 19 December 2014, Attachment A at Annexure B.

 41   HIA submission of 19 December 2014, Attachment A at Annexure D, at pp. 46–61.

 42   Transcript, at para 288.

 43   [2013] FWC 6114.

 44   [2009] AIRCFB 450, 22 May 2009, at para 211.

 45   MA000010.

 46   MA000014.

 47   Ibid., clause 19.3.

 48   Print R5055, AW800937CRV.

 49   Print R4683, at para 22.

 50   [2007] AIRC 186, at paras 10–11.

 51   Transcript, at para 530.

 52   Exhibit CFMEU 1 at Attachment B – CFMEU FFPD Survey 2014.

 53   Exposure draft, May 2009.

 54   Re Clerks (Domestic Airlines) Award 1980 Print H1382 and Re Milling Industry Award 1978 Print J2154.

 55   (2012) 247 CLR 205.

 56   [2015] FWCFB 1549, at para 6.

 57   (1947) 59 CAR 1309.

 58   (1950) 67 CAR 489.

 59   Print J2380.

 60   Print P2917.

 61   Timber and Allied Industries Award 1999, AW800937 PR973230, at paras 64–66.

 62   Clause 27.5 of the 19 June 2009 CFMEU amended draft award and 12 June 2009 CFMEU submission, at paras 28–34.

 63   AM2012/64, decided in [2013] FWC 6114, at paras 80–107.

 64   [2009] AIRCFB 450, at para 211.

 65   Construction, Forestry, Mining and Energy Union submission of 12 June 2009 at paras 28–34.

 66   [2009] AIRCFB 826, at para 257.

 67   AM2012/64.

 68   [2013] FWC 6114, at paras 106–107 re AM2012/64.

 69   CFMEU written submissions of 19 December 2014, at para 47.

 70   [2014] FWCFB 1788, at para 25.

 71   [2014] FWCFB 1788, at para 60.

 72   [2014] FWCFB 1788, at para 23.

 73   [2014] FWCFB 1788, at para 40.

 74   Transcript, at para 531.

 75   [2015] FWCFB 1549, at para 29.

 76   (1947) 58 CAR 610.

 77   Ibid, at p. 615.

 78   Construction, Forestry, Mining and Energy Union submission of 13 April 2015; Exhibit CFMEU 11, at para 31.

 79   Exhibit CFMEU 11, Annexure A, at pp. 7–11.

 80   The evidence of the CFMEU witnesses to this effect is consistent with unpublished ABS data from its Employee Earnings and Hours, Australia, May 2014 (Cat No. 6306) which indicates that 28.2% of labourers in the “Farm, forestry and garden workers” occupational sub-group were award reliant in May 2014, compared with 18.8% for all employees, as reported in the ACTU submission to the Annual Wage Review 2014-15.

 81   Witness statements of Ms J Calvert, Mr B Coates, Mr T Lawson, Ms G Finnegan and Mr S McLean in the 2012 Review.

 82   [2013] FWC 6114, at para 106.

 83   Mr J Patti and Mr R Cotroneo and Mr R Coates and Ms G Finnegan.

 84   For example Attachment A of Mr B Coates’ witness statement – evidence related an incident at a Gunns Limited establishment in December 2009 and another at a Carter Holt and Harvey Mill in 2004, whilst the evidence of Mr McLean in Transcript, at paras 1188 and 1192 –1193 recounted incidences of late payment at Gunns Limited in 2009 and White’s Saw Mill in 2008.

 85   Exhibit CFMEU 1, Attachment B.

 86   Transcript, at paras 644, 646 and 655.

 87   Transcript, at para 659.

 88   For example, Attachment C of CFMEU 1 – one respondent, member 227, complains of late payment of overtime.

 89   Exhibit CFMEU 14.

 90   Evidence of Mr B Coates, Transcript, at para 1400.

 91   Transcript, at paras 644 and 701.

 92   Transcript, at para 1481 and evidence of Mr McLean, Transcript, at para 1212.

 93   (1989) 27 IR 375 Re Darling Harbour Development Project Industrial Agreement, Connor CC.

 94   Timber Industry Award 2010 [MA000071] Award Brief, p. 1/8.

 95   CFMEU Draft Determination dated 25 June 2014.

 96   Ai Group submission of 13 March 2015, item 2 and HIA submission of 6 February 2015, item 2.

 97   Transcript, at paras 304–306 and 324.

 98   Timber Industry Award 2010 [MA000071] Award Brief, at p. 2/8.

 99   Timber Industry Award 2010 [MA000071] Award Brief, at p. 2/8.

 100   Timber Industry Award 2010 [MA000071] Award Brief, at p. 5/8.

 101   Australian Nursing Federation and others, [2010] FWAFB 9290.

 102   Australian Nursing Federation and others, [2010] FWAFB 9290, at paras 34–36.

 103   MA000017.

 104   [2010] FWAFB 1811, at paras 23–26.

 105   Timber Industry Award 2010 [MA000071] brief, at p. 6/8.

¹⁰⁶ Timber Industry Award 2010 [MA000071] brief, at p. 6/8.

 107   Timber Industry Award 2010 [MA000071] brief, at pp. 3/8 and 4/8.

 108   PR567883.

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