Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Item 4 Sch. 6—Modern enterprise award

Application to make a modern enterprise award to replace the Murray Irrigation Limited Consent Award 2004 [AN120355] - Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 sch. 6 items 4, 6 - Fair Work Act 2009 ss. 134, 284 - application dismissed - modern enterprise award not made - Murray Irrigation Limited Consent Award 2004 terminated.

[1] Murray Irrigation Limited (MIL) has applied for a modern enterprise award to be made to replace the Murray Irrigation Limited Consent Award 2004 1 (the 2004 Award). The application is made under item 4 of Schedule 6 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (the Transitional Act).

[2] MIL is the only employer respondent to the 2004 Award. The other parties bound are the AWU-FIME Amalgamated Union, New South Wales (AWU), the Transport Workers’ Union, New South Wales Branch, the Construction, Forestry, Mining and Energy Union of Australia, New South Wales Branch and the Public Service Association and Professional Officers’ Association Amalgamated Union of New South Wales (PSA). 2

[3] In the hearing before us, Mr Coyne appeared, with permission, for MIL. Ms Gherjestani appeared for the AWU. The PSA made written submissions, but did not appear at the hearing. Its submissions were in similar terms to those of the AWU. Additionally, the PSA advised it supported the submissions the AWU would make in the hearing. The AWU and PSA opposed the making of a modern enterprise award. There were no other appearances or written submissions filed by any other party. Unless we indicate otherwise, we will refer to the AWU and the PSA together as “the unions”.

[4] A significant period has elapsed between the filing and hearing of MIL’s application. Two adjournments for a lengthy period were sought by MIL in 2014 on the bases that many of its employees had been unavailable for consultation due to the seasonality of its work, that there had been changes in its senior management and that it desired to consider the outcome in another application made under item 4 of Schedule 6 of the Transitional Act, which was also before this Full Bench. Those adjournments were not opposed by the unions. A further adjournment was sought in early 2015 on the basis that MIL intended to file an application to vary the Water Industry Award 2010 3 (the Water Industry Award) as an alternative to pressing the present application. We were not persuaded to grant that adjournment and directions were subsequently issued so as to progress this application.

[5] We have decided not to make a modern enterprise award. These are our reasons for that decision.

The legislative task

[6] Other than modern enterprise awards made under Schedule 6 of the Transitional Act (Schedule 6), no new enterprise awards will be made. This is the effect of s.168C of the Fair Work Act 2009 (the Act). This section is contained within Part 2-3 of the Act, which is titled “Modern awards”. It provides that the Fair Work Commission (the Commission) must not, under that Part, make a modern enterprise award or vary an award so that it becomes a modern enterprise award. There is no other Part of the Act under which a modern enterprise award may be made.

[7] It was not in issue that the 2004 Award is an enterprise instrument for the purposes of item 2 of Schedule 6, and covers employees in a single enterprise as that term is defined in item 3 of Schedule 6. It is also not contested that MIL has standing to make this application.

[8] The approach to be taken by the Commission when deciding whether to make a modern enterprise award and, if so, the terms of that award, is governed by several items of Schedule 6. The first is item 4(5), which provides:

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

(a) the circumstances that led to the making of the enterprise instrument rather than an instrument of more general application;
(b) whether there is a modern award (other than the miscellaneous modern award) that would, but for the enterprise instrument, cover the persons who are covered by the instrument, or whether such a modern award is likely to be made in the Part 10A award modernisation process;
(c) the content, or likely content, of the modern award referred to in paragraph (b) (taking account of any variations of the modern award that are likely to be made in the Part 10A award modernisation process);
(d) the terms and conditions of employment applying in the industry in which the persons covered by the enterprise instrument operate, and the extent to which those terms and conditions are reflected in the instrument;
(e) the extent to which the enterprise instrument provides enterprise-specific terms and conditions of employment;
(f) the likely impact on the persons covered by the enterprise instrument, and the persons covered by the modern award referred to in paragraph (b), of a decision to make, or not make, the modern enterprise award, including any impact on the ongoing viability or competitiveness of any enterprise carried on by those persons;
(g) the views of the persons covered by the enterprise instrument;
(h) any other matter prescribed by the regulations.”

[9] Item 6(1) of Schedule 6 provides that the modern awards objective 4 and the minimum wages objective5 apply to the making of a modern enterprise award. We must also consider the modern enterprise awards objective, which is set out in item 6(2) of Schedule 6. That requires the Commission to “recognise that modern enterprise awards may provide terms and conditions tailored to reflect employment arrangements that have been developed in relation to the relevant enterprises”.

[10] In our decision in Coleambally Irrigation Co-operative Limited v The Australian Workers’ Union & Ors 6 (Coleambally), we referred to relevant extracts of Federal Court of Australia judgments in which the provisions of Schedule 6 were considered.7 They were a single-judge judgment and that of a Full Court on appeal. Both are titled Yum! Restaurants Australia Pty Ltd v Full Bench of Fair Work Australia (Yum Restaurants).8 We acknowledge that the extracts set out the approach we should take to the relevant items in Schedule 6. We also note the more recent Federal Court judgment in CSR Limited v CSR & Holcim Staff Association.9 The Full Court there also considered the provisions of Schedule 6. That judgment does not require us to revisit the correctness of the extracts taken from Yum Restaurants, but serves to remind us of the need to consider the modern awards objective in deciding whether to make an enterprise award and, if we do so, the terms of such an award.

[11] For present purposes, the only other item in Schedule 6 we need refer to is item 7(1). It relevantly provides that Division 3 of Part 2-3 of the Act applies to a modern enterprise award which may be made. Sections of the Act in that division deal with terms which either may, or must, be in modern awards.

Our decision in Coleambally

[12] Coleambally is a decision of this Full Bench in respect of an application made under item 4 of Schedule 6 for a modern enterprise award to replace the Coleambally Irrigation Consent Award 2004 10 (the Coleambally Award). As is apparent from the name of the award, the employer, Coleambally Irrigation Co-operative Limited (CICL), like MIL, is an irrigation company. It came into operation as a consequence of certain New South Wales state-owned corporations being privatised. Thereafter, it had enterprise-specific industrial regulation. We were not persuaded to make a modern enterprise award to replace the Coleambally Award.

[13] Many of the matters addressed in Coleambally are similar to, or the same as, those raised in respect of the present application. We refer in particular to:

● Our consideration of the terms of the Water Industry Award. This included detailed consideration of the circumstances in which this modern award was made during the Part 10A award modernisation process, including statements and reasons for decision issued by the Full Bench, the coverage clause of that award and the terms and conditions it contains.

● The terms and conditions of employment by irrigation companies both in New South Wales and throughout Australia.

● The fact that, other than CICL and MIL, no other irrigation companies have applied for a modern enterprise award. In those circumstances, those other companies would now be covered primarily, if not wholly, by the Water Industry Award.

● Our reference to other applications for a modern enterprise award. They were in respect of the South East Water Limited Senior Officers and Managers Award 2003 11 and Sydney Water Award 2004.12 We note that both of these applications were withdrawn. The respective employers and their employees are now covered primarily, if not wholly, by the Water Industry Award.

● Our general comments about the considerations raised in item 4(5)(e). We will return to those when we consider that item in the context of this matter.

● Our consideration of the modern awards objective and minimum wages objective, and submissions made by CICL to persuade us that the objectives would be met should a modern enterprise award be made.

The proposed award and the witness statements

[14] MIL filed a draft of the terms of the modern enterprise award it sought. The draft was amended shortly before the hearing. 13 We will refer to the amended draft as the proposed award. MIL also filed three affidavits. The deponents were not required by the unions for cross-examination. Additionally, prior to the hearing, we were informed that one deponent, Ms McLeod, would not be available to attend the hearing in any capacity and the others, Mr Taylor and Mr Barlow, would only be able to attend via a telephone link if required. On the morning of the hearing, we were informed that Ms McLeod was then available to participate by way of a telephone link if required.

[15] We have considered all of the matters addressed in each of the affidavits. A short summary follows.

Jennifer McLeod, Executive Manager, Customer and External Relations

● MIL is the largest private irrigation infrastructure operator in Australia. Its direct operational revenue is derived primarily from fees it charges its customers for access to the infrastructure MIL owns, operates and maintains. A water usage fee is also paid.

● MIL’s irrigation system allows water to be delivered across an area of approximately 758,000 hectares. The NSW Government allocates water in accordance with MIL’s licence. MIL in turn allocates the water to its customers.

● MIL obtains government funding for programs aimed at increasing the efficiency and productivity of the irrigation system, and better farm practices.

● MIL also operates a business called MILCast, which designs, manufactures and supplies precast concrete products for agricultural and other commercial uses. It accounted for 5% of MIL’s revenue in the 2014 financial year. MIL also provides a mobile crane hire service managed through MILCast.

● MIL operates the Murray Water Exchange, a brokerage facility which allows irrigators from Victoria, New South Wales and South Australia to trade in water allocations. Reference was made to other Commonwealth programs in which MIL participates.

● MIL is a major employer in the district, particularly in the smaller localities in which it operates.

Scott Barlow, Water Distribution Manager

● He is responsible for the delivery of water for irrigation across the MIL network and manages a staff of “approximately 40 Channel Attendants and Regional Planners”. 14

● State Water is the supplier of water. The water distribution division’s job is to deliver that water to farm businesses.

● The infrastructure and equipment owned, operated and maintained by MIL comprise mechanisms which open and shut gates allowing water to flow. They also include metering devices to ensure the correct amount of water is distributed in accordance with an order.

● The regional planners are office-based staff, who use remote controls to operate devices that ensure bulk water is available across the network to meet the day’s orders.

● Channel attendants report for duty either to a depot or directly to a structure. They physically operate the equipment to open the gates to allow the water to flow. They may attend between 20 and 40 customer outlets and drive approximately 300 kilometres each day. They will undertake inspections of channels, read meters at least weekly and perform mechanical maintenance on regulators.

● The usual length of an employee’s day can vary. Sometimes the sequencing of work orders enables them to be filled more efficiently than on other days. High temperatures may affect the amount of water demand on a particular day. Regular finish times are “impossible to adhere to, or even set”. 15

● The cycle for water distribution is tied to the growing seasons of the farming community. For decades, channel attendants and regional planners have worked a rolling daytime roster. The current roster is nine days on, three days off, nine days on, six days off and has been in place for at least the last 19 years. Typically, the roster is developed and posted in August each year so that staff can plan a mid-winter break in the following year, during the lowest period of farming activity.

● Channel attendants work alone. They must be able to swim. They are provided with a vehicle, tools, clothing and other essential equipment.

Graham Taylor, Human Resources Manager

● MIL has a “workforce establishment average of 150 personnel”, 16 which includes senior management. The cycle for water distribution is divided into the “watering season” and the “non-watering season”. Typically, as much as one-third of the workforce will be on extended leave in the middle of the calendar year.

● MIL operates in five locations. Its head office is in Deniliquin. There are two other separate MIL premises in Deniliquin. It also has offices in Wakool and Finley.

● The water distribution division of MIL is responsible for the delivery of water to farms. This is the division in which channel attendants and regional planners are engaged.

● Reference was made to the activities of MILCast and the mobile crane hire service managed through that division, and the Murray Water Exchange. 17

● Employees are also engaged in geographical information system activities: compiling and maintaining a database of assets, channels, drains and maps etc. MIL also has two marketing and public relations employees and an agricultural economist.

● Observations were made about his view as to the differences between MIL and CICL in respect of the range of services undertaken, the number of staff, the manner in which they undertake water delivery and their response times.

● The roster for water distribution staff of nine days on, six days off, nine days on, three days off operates continuously and sequentially throughout the irrigation system. It is in effect a cycle of 27 days, with the rostered day off (due on the 28th day) being accumulated so as to allow staff to take a long mid-winter break.

● He said that he would be uncomfortable with a safety net award which only allowed a roster of eight consecutive days rather than nine consecutive days. The ability to accumulate rostered days off and take a long break in the middle of the year coincides with school holidays. He understood many staff had established their routines around that roster.

● He believed that the employees who are referred to at dot points four and five above would not be covered by the Water Industry Award.

[16] We now turn to consider each of the matters in item 4(5).

The circumstances that led to the making of the 2004 Award rather than an instrument of more general application: item 4(5)(a)

[17] An enterprise award (the predecessor to the 2004 Award) was made in 1996 by consent when the water distribution network MIL now operates was privatised. The network was previously the New South Wales government’s responsibility, but the public sector industrial instruments that regulated terms and conditions of employment could not be transferred to a private enterprise. MIL was the first irrigation infrastructure operator (IIO) created as a result of privatisation. A further consent award was made in April 2002 and then, following variations arising from an award review process in the Industrial Relations Commission of New South Wales, the 2004 Award came into operation in June 2004. MIL submits that there was no existing “industry” award in operation and also that since the types of crops grown in the areas the responsibility of the several IIOs were different to each other, a discrete award covering MIL was considered necessary. 18

[18] The unions agree with MIL’s submissions on the background to, and history of, the making of the 2004 Award. 19 However, they submit that we should place weight on the fact that the 2004 Award and its predecessors were made by consent. This may be contrasted with the current application, which the unions do not support.20

Whether there is a modern award (other than the miscellaneous modern award) that would, but for the 2004 Award, cover the persons who are covered by the 2004 Award, or whether such a modern award is likely to be made in the Part 10A award modernisation process: item 4(5)(b)

[19] We have earlier indicated that in our decision in Coleambally, we gave detailed consideration to the coverage clause (including the classification schedule) of the Water Industry Award. We also considered the construction to be given to this item; specifically, we considered whether it requires there to be a modern award which covers all of the persons covered by the instrument the subject of the application or requires consideration of the extent of coverage. We adopt paragraphs [21] to [37], [40] and [42] to [44] of our decision in Coleambally. This part of our decision should be read in conjunction with those extracts.

[20] We also observe that clause 4.9 of the Water Industry Award is relevant to the issue of the extent of coverage of that award to employees of MIL. That clause is in the following terms:

“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.”

[21] In our opinion, the documentation before us establishes that the core and primary business of MIL is the supply and delivery of irrigation water and water-related products and services. MIL is an employer within the “water industry” as defined in the Water Industry Award. The award is expressed to be an “industry award” and to cover “employers throughout Australia in the water industry and their employees in the classifications listed in Schedule B–Classifications to the exclusion of any other modern award”. 21 The classification structure is broad and defined by reference to generic “skill descriptors” rather than substantive duties or position titles.22 In our opinion, the Water Industry Award would cover all, or at least the overwhelming majority, of the employees covered by the 2004 Award.

[22] MIL listed several modern awards which it submitted “would potentially” cover employees covered by the 2004 Award. 23 In our opinion, this submission somewhat exaggerates the possible modern award coverage of the relevant employees of MIL. Assuming that another modern award or awards may also cover relevant employees, this is a consideration to be taken into account in the exercise of our discretion whether to make a modern enterprise award. In doing so we would weigh, for example, the fact that the mobile crane hire activity of MIL’s business currently does not engage any full-time employees and that there is only one employee engaged to deliver MILCast’s products to its customers.24 In making its submissions about this item, we think MIL gives little weight to the breadth of the Water Industry Award coverage clause, the wide scope of positions and jobs encompassed by the classification structure and the effect of clause 4.9. There is a strong argument in favour of finding that the classifications in the Water Industry Award are most appropriate to the work performed by the employees and the environment in which they perform that work.

The content, or likely content, of the modern award referred to in paragraph (b)…: item 4(5)(c)

[23] The content of the Water Industry Award was dealt with in some detail in our decision in Coleambally. We adopt, but do not reproduce, paragraphs [50] to [60] of that decision. We later refer to submissions made in this matter about clause 25.3 of the Water Industry Award. That clause concerns shift work. We note that subsequent to our decision in Coleambally, there have been adjustments to the minimum weekly rates in the Water Industry Award as a consequence of the 2013-14 and 2014-15 Annual Wage Reviews.

[24] Although the consideration at this stage is directed to the content of the Water Industry Award, this is a convenient place to identify wage rates in both that award and in the proposed award. In doing so, we should indicate that the wage rates in the proposed award are not the wage rates in the 2004 Award. Those rates have not been adjusted since March 2006. We were not given any detail on the methodology used to arrive at the rates in the proposed award. We have produced a table, relying on the alignment identified by MIL as to the wage levels in the two instruments. These have been adjusted to reflect increases as a result of Annual Wage Reviews, up to the first pay period commencing on or after 1 July 2015. It can be seen that, other than for the base level, the rates in the proposed award are higher than those in the Water Industry Award. However, we note that trade and technical employees may also be classified at levels 5 and 6 of the Water Industry Award. Employees at levels 5 and 6 are paid a higher amount and accordingly, the differential would be reduced.

[25] There have also been some other variations to the Water Industry Award since our decision in Coleambally. It is adequate for the purposes of this decision to indicate that those variations related to the addition of named default super funds, 25 the adjustment of expense-related allowances,26 the removal of the “sunset” provisions in the award’s redundancy clause and the clauses relating to district allowances and accident pay,27 the addition of certain entitlements for apprentices,28 the introduction of an annualised salary clause29 and a variation to the clause addressing a shift worker’s accrual of annual leave to bring it into line with the National Employment Standards (NES).30

[26] In our consideration of this item, we have also taken into account the terms of other modern awards MIL submits may potentially cover the relevant employees. 31

The terms and conditions of employment applying in the industry in which the persons covered by the 2004 Award operate, and the extent to which those terms and conditions are reflected in the 2004 Award: item 4(5)(d)

[27] The Water Industry Award is the principal modern award regulating the terms and conditions applying in the industry in which persons covered by the 2004 Award operate. We have referred to those terms earlier in this decision and we will refer to some of the terms of the 2004 Award in the next item. To some extent, the considerations in this item and those in the next overlap, and the comments we make in respect of each item should be read together.

[28] We were not taken to the terms and conditions of persons in the industry in so far as they are contained in enterprise agreements or in common law contracts. Accordingly, we cannot say much about whether the terms in these instruments are similar to those in the 2004 Award. We observe that a perusal of the list of enterprise agreements made under the Act shows that a large number of employers and employees in the industry are covered by enterprise agreements in respect of which the better off overall test has been applied by reference to the Water Industry Award.

[29] Although we are not directly required by this item to consider the terms and conditions of employment at MIL other than those in the 2004 Award, we do note that there have been numerous enterprise agreements which have covered MIL and its employees. It is convenient for us to refer to them here.

[30] MIL and its employees have been parties to enterprise agreements from the time MIL came into existence. We refer first to a number which were made under the Industrial Relations Act 1996 (NSW). In this respect we note that agreements, all of which are titled “Murray Irrigation Limited Enterprise Agreement” were entered into in 1998, 32 2001,33 200334 and 2005.35 From the first agreement onwards, the employees covered were defined by reference to classifications within the groups identified as “construction workers”, “construction/maintenance etc”, “Water Distribution” and “Administration”. Other than there now being only one category of “construction/maintenance etc”, these are the same categories as in the 2004 Award. The agreements were comprehensive in the sense they prescribed terms and conditions of employment that would otherwise be regulated by the 2004 Award. Each was expressed to supersede any applicable award. Each agreement had a schedule that dealt with the arrangements for channel attendants. The ordinary hours of work for these employees were expressed as either eight hours per day or an average of eight hours per day. In each agreement, the ordinary full-time working week was defined as a 38-hour week.

[31] MIL and its employees subsequently entered into enterprise agreements approved under the Act. The first is the Murray Irrigation Collective Agreement 2009 36 (2009 Agreement). The AWU, being a bargaining representative for that agreement, is also covered by it. We note that the 2009 Agreement is a comprehensive one. We now refer to some of its provisions.

[32] Clause 9 deals with skills and classifications. The agreement also contains an appendix titled “Appendix A. – Staff Banding Classification & Salary Rates”. There are three categories of employees: administrative, construction and maintenance and water distribution. In the case of administration there are four grades; there are 12 grades contained within the 2004 Award. In the case of construction and maintenance, there are also four grades and the classifications and job titles bear no resemblance to the multitude of classifications and job titles in the 2004 Award. In the case of water distribution employees, there are three grades. Other than the job title “channel attendant”, none of the other job titles in the 2009 Agreement is the same as those in the 2004 Award.

[33] The “ordinary hours” clause 37 provides that work patterns “as far as practicable” will be tailored to the needs of customers. It provides that the hours will be an average of 38 per week and that “normally” those hours would be worked between 6am and 6pm. The clause also provides that “generally” only water distribution staff will be expected to work outside weekdays. Employees required to work on a Saturday, Sunday or public holiday not rostered as part of their normal working arrangements would be paid overtime rates. Although the agreement suggests there is some special provision for channel attendants, none is contained in it.38

[34] Clause 38 deals with redundancy and contains severance pay provisions that are the same as those in the 2004 Award. They are more beneficial than the comparable provisions in the NES.

[35] We next refer to the Murray Irrigation Limited Enterprise Agreement 2013 39 (the 2013 Agreement). The AWU is also covered by this agreement. It remains in operation, having a nominal expiry date in December 2015. It is a comprehensive agreement dealing with a broad range of employee terms and conditions. We refer to some of its provisions only.

[36] The agreement defines a “roster worker” as an employee who performs work “as and when required irrespective of the time of day, day of week and / or day of the year”. 40 Those workers are entitled to a 15% loading on their rate of pay in respect of their ordinary hours.

[37] The skills and classifications clause 41 is similar to that in the 2009 Agreement. However, Schedule A to the 2013 Agreement is significantly different to Appendix A of the 2009 Agreement. It contains five classification levels. The descriptors for the levels are a combination of general and generic descriptions and the identification of particular qualifications or tasks of employees. A number of those tasks are peculiar to those undertaken by employees of a water supply and distribution employer. In each level there are two categories of employees: “Administration”, and “Water Distribution, Maintenance, Construction, Monitoring and Testing”.

[38] Clause 14 deals with ordinary hours. It is largely in the same terms as the comparable clause in the 2009 Agreement. However, we note there is an additional provision, clause 14.1.2, which provides that the overtime rates to be paid on a Saturday, Sunday and public holidays do not apply to “roster workers as defined”.

[39] Annual leave is dealt with in clause 21. Clause 21.4.1 provides that all such leave “shall be taken only at such times as MIL, for operational purposes, shall deem convenient, and in the absence of agreement on the taking of leave, it shall be taken at a time determined by MIL. MIL will endeavour to accommodate the needs of the employees.” We note that an undertaking was required in respect of this clause. It provides that MIL would not unreasonably refuse a request by an employee to take paid annual leave. Reference was made to s.93 of the Act (which allows for an enterprise agreement to include terms about taking paid annual leave), and provides that, pursuant to that section, MIL may require employees to take annual leave in the non-watering season or at such other times for operational purposes as are necessary to avoid underutilisation of staff.

[40] Clause 38 deals with redundancy and contains severance pay provisions superior to those in the NES. The clause also deals with the circumstances in which employees may be required to take leave as a consequence of a particular district served by MIL being declared drought or disaster-stricken. That particular clause was the subject of another undertaking, which provides that, in lieu of an employee being required to take drought/disaster leave, the employee may apply for such leave.

The extent to which the 2004 Award provides enterprise-specific terms and conditions of employment: item 4(5)(e)

[41] Before we consider the submissions made by reference to this item, we refer to and adopt the comments we made in Coleambally at paragraphs [68] to [72]. They should be read in conjunction with our following comments.

[42] MIL submits that the terms and conditions of employment in the 2004 Award have been “tailored to reflect employment arrangements that had been developed in relation to MIL”, 42 and that these arrangements have “developed over decades of operation”.43 In both its written submissions44 and at the hearing, MIL highlighted various clauses of the 2004 Award that it says are enterprise-specific and will be lost in the event a modern enterprise award was not made. We have considered all those submissions and will now refer to some of them. We observe that despite MIL’s submission that a number of the provisions of the 2004 Award are enterprise-specific and tailored to its needs, it has not sought to retain all of them in the proposed award.

[43] Clause 6 of the 2004 Award refers to new positions “created by the changing requirements of the organisation”. It provides that such positions will be appropriately classified in accordance with the award. A similar clause is in the proposed award. 45 MIL submits that there is no comparable clause in the Water Industry Award. We do not place much weight on this submission. If no modern enterprise award is made, then, in the event new positions are created by MIL, they will be classified in accordance with the broad classification structure within the Water Industry Award.

[44] MIL refers to the requirement in the 2004 Award that employees who work in or near the water distribution system must have documentary evidence to prove their ability to swim. We acknowledge there is no equivalent provision in the Water Industry Award. There is no reason, however, why MIL could not impose this as a condition on which employment is offered to any relevant employees. We also note that a clause in similar terms has long been in the enterprise agreements to which MIL is a party.

[45] MIL submits that the provisions relating to channel attendants in the 2004 Award are tailored to its particular needs. In this respect, it refers to the particular provisions relating to channel attendants in clause 50 - Schedule A of the 2004 Award. Whilst MIL’s submission may be correct, the relevance of it is difficult to grasp. MIL does not seek to retain these provisions in the proposed award. Other than references to some channel attendant duties in the classification structure, the proposed award contains no specific provisions relating to channel attendants.

[46] Similarly, we note, but do not place much weight on, MIL’s submission that special overtime provisions for channel attendants are contained in the 2004 Award. The proposed award contains no special terms or conditions dealing expressly with channel attendants’ overtime entitlements. The overtime provisions in the proposed award are applicable to all employees, with a slight modification for “roster workers as defined”. 46 Employees who are not roster workers and who are required to work on a Saturday, Sunday or public holiday are to be paid overtime. There is no definition of “roster worker” in the 2004 Award. It is likely that what is intended by the relevant clauses of the proposed award is that primarily, if not exclusively, channel attendants will be the “roster workers as defined”. In exchange for the payment of a 15% loading during their ordinary hours,47 those workers are denied the overtime rates for work performed on weekends or public holidays that non-roster-worker employees would receive, unless that work continues for at least a quarter of an hour and is in excess of an average of 38 hours per week.48

[47] We also note that MIL refers to the “ordinary hours” clause in the 2004 Award 49 as being tailored to its needs. Despite that, it has not reproduced the clause in the proposed award. In fact, the proposed award’s “ordinary hours” clause50 is significantly less beneficial to employees than that in the 2004 Award. In this respect we note that, unlike the 2004 Award, the proposed award contains no span of ordinary hours. It simply provides that ordinary hours may be worked on any day of the week with a maximum of 10 hours per day or, by agreement, 12 hours per day. Unlike the 2004 Award, the clause allows for hours to be averaged over an indeterminate period. It provides one arrangement, but only as an example: “eg 152 hours over a four week period”.

[48] Next, the classification structure in the 2004 Award is referred to as being enterprise-specific. Whilst that might be so, no part of it is to be contained in the proposed award. The classification structure in the proposed award is completely different. In fact, the structure in the proposed award bears greater resemblance to that in the Water Industry Award than that in the 2004 Award. However, we do note that the structure in the proposed award contains some indicative tasks that are undertaken by MIL employees.

[49] MIL submits that for its employees directly involved in water distribution, 51 the “nine days on, three days off, nine days on, six days off” roster that operates during the watering season is a longstanding arrangement.52 In the hearing before us, MIL contended that the primary obstacles to implementing its preferred roster pattern under the Water Industry Award were that, under that award:

● ordinary hours may not be worked in more than eight shifts in a nine-day period, 53 whereas water distribution employees currently work nine days straight;54 and

● the roster cycle may not extend over more than eight weeks, 55 whereas MIL’s roster operates through eight or nine months of the year.56

[50] We have taken these submissions into account. We acknowledge that channel attendants have for some years worked a particular roster which allows them to work nine days straight. MIL submits this would need to be reconsidered if the Water Industry Award were to cover these employees. It would not be prepared to pay those employees at overtime rates for the ninth day.

[51] We next refer to the quantum of severance pay in the redundancy provisions of the 2004 Award. We have earlier noted that they are more generous than the NES. Although referred to as enterprise-specific, MIL does not propose to retain the superior entitlements in the proposed award. The proposed severance pay provisions are instead aligned with those in the NES. 57 In this respect, the proposed award is the same as the Water Industry Award. We also note that the proposed award contains an exclusion of employees terminated “as a consequence of conduct that justifies dismissal”. That exclusion goes further than the exclusion in the 2004 Award which applied in the case of “instant dismissal”. Further, in light of the terms of s.123 of the Act, it is unlikely the exclusion sought by MIL would be appropriate to place in a modern enterprise award.

[52] The annual leave provisions of the 2004 Award are said to be enterprise-specific. MIL submits they give it “complete control over the timing of annual leave”. 58 The 2004 Award contains a provision allowing for leave to be taken at times which are convenient for operational purposes, provided that MIL was to endeavour to comply with the needs of employees.59 The proposed clause is not the same as that in the 2004 Award. It significantly constrains the opportunity for an employee to take leave at a time suitable to him or her. The annual leave clause in the 2004 Award also provided for “additional leave” associated with the roster arrangements for channel attendants.60 No such comparable clause is contained in the proposed award. The clause that is proposed is in these terms:

“MIL may require employees to take annual leave in the non-watering season, or at such other times that, for operational purposes, are necessary to avoid underutilisation of staff, e.g. during a drought.” 61

[53] This is a surprising clause for MIL to include within its proposed award. We have earlier indicated that the annual leave clause in the 2013 Agreement provided that annual leave was to be taken only at such times as MIL deemed convenient for operational purposes and, in the absence of agreement, was to be taken at a time determined by MIL. The clause was not acceptable to the Commissioner who approved the agreement and an undertaking in relation to it was given. We have referred to the terms of that undertaking at paragraph [39] above. It seems to us that the undertaking was sought as the clause was not consistent with the annual leave provisions contained within the NES. An employer is not to unreasonably refuse a request by an employee to take paid annual leave. 62 Had we decided to make an enterprise award, we would need to have been persuaded that the clause sought was consistent with ss.88 and 93(3) of the Act. Finally, we note that the Water Industry Award provides scope for employers to direct employees to take annual leave during a close-down of the business, provided adequate notice is given.63

[54] MIL also wishes to be able to pay a sum equivalent to 1.3% of annual salary in lieu of annual leave loading. 64 A similar provision is in the 2004 Award. This amount appears to be marginally inferior to the annual leave loading prescribed in the Water Industry Award.65 We also note that the Water Industry Award already gives the employer considerable discretion as to how and when annual leave loading is paid.66

The likely impact on the persons covered by the 2004 Award, and the persons covered by the modern award referred to in paragraph (b), of a decision to make, or not make, the modern enterprise award, including any impact on the ongoing viability or competitiveness of any enterprise carried on by those persons: item 4(5)(f)

[55] MIL conceded that enterprises whose primary business is similar to its own operate under the Water Industry Award, but sought to distinguish itself by contending that its activities have diversified since it was first established. 67 In the event we were not to make a modern enterprise award, we think it likely that the overwhelming majority of the relevant employees would be covered by the Water Industry Award. For the time being, however, that would have no impact, as the 2013 Agreement applies to those employees. The evidence and submissions also suggest it is likely that enterprise agreements will continue to be the principal source of employees’ terms and conditions of employment in the longer term.

[56] MIL considers the terms of the proposed award would be beneficial to its business. On balance, we think employees’ terms and conditions would be better overall if they were covered by the Water Industry Award rather than the proposed award. If we were to make an enterprise award in the terms sought, then, other than securing updated minimum wages, we do not think the employees would be better off than if they were covered by the Water Industry Award.

[57] If we were not to make an enterprise award, it is likely there would be no impact on persons covered by the Water Industry Award one way or the other. If we were to make an enterprise award, it is unclear what impact that may have on persons covered by the Water Industry Award. It is likely the impact would be a neutral consideration.

[58] We are not persuaded that there will be any negative impact on the ongoing viability or competitiveness of MIL in the event we made a modern enterprise award or in the event we did not.

The views of the persons covered by the 2004 Award: item 4(5)(g)

[59] MIL submits that its employees’ view, as gauged from a consultation process undertaken in November 2013 before making this application, is that “the staff’s best interests would be served by attempting to update the Consent Award”, describing this as their “preferred option”. 68 No employee who would be covered by the proposed award was called to give evidence.

[60] Neither of the unions supports MIL’s application. 69 We note that the AWU in particular has long been the bargaining agent for employees in enterprise agreements. The unions’ opposition is primarily founded on their view that the proposed award provides entitlements inferior to those in the Water Industry Award.70 On balance, we are persuaded this submission is correct.

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

[61] The only regulations made under this item relate to take-home pay orders which may be made in the context of making a modern enterprise award. They are not relevant to this application.

Modern awards objective and modern enterprise awards objective

[62] As we have earlier noted, the modern awards objective applies to our consideration of whether to make a modern enterprise award. In considering that objective, we are also required to recognise that a modern enterprise award may provide terms tailored to reflect arrangements that have been developed at MIL. We turn to the provisions of s.134(1) of the Act.

Relative living standards and the needs of the low paid: s.134(1)(a)

[63] The only submission directed to this section is that MIL asserts that the rates of pay proposed are generally superior to other modern awards. We have commented on the proposed rates at paragraph [24]. In our opinion, the penalty and overtime provisions in the proposed award are likely to result in employees receiving less than if the Water Industry Award applied. This is also likely to be so if other modern awards to which MIL referred were to apply.

The need to encourage collective bargaining: s.134(1)(b)

[64] MIL submits the making of a modern enterprise award will encourage collective bargaining, whereas not making such an award will discourage collective bargaining. We disagree. We believe that not making the proposed award will meet the need to encourage collective bargaining, to address those particular matters MIL asserts are needed to accommodate its operational needs.

The need to promote social inclusion through increased workforce participation: s.134(1)(c)

[65] MIL believes its proposed award recognises the unique circumstances of its business. It submits the proposed award would maintain the flexibilities in respect of working hours which have worked satisfactorily for decades. It further submits the retention of the current working system is directly connected to its desire to retain experienced staff, bearing in mind the location of the workplaces and the very limited employment opportunities in the area.

[66] We accept the desirability of employment levels and opportunities being maintained, together with the retention of experienced staff. However, we are not persuaded these considerations would be negatively impacted if the proposed award were not made. There was no basis made out on which to allow a finding that additional employees would be engaged if the proposed award was made, nor that fewer would be if it was not made and the Water Industry Award therefore covered the relevant employees.

The need to promote flexible modern work practices and the efficient and productive performance of work: s.134(1)(d)

[67] MIL submitted the proposed award supports the work practices and efficient and productive performance of work that have been established, purpose-designed and preserved in workplace instruments covering this enterprise for 20 years. We have taken this submission into account. The Water Industry Award would also allow for flexibility with respect to hours, although we accept some modification would need to be made to the practice of channel attendants working nine days straight. A number of the provisions in the proposed award which MIL categorises as flexibilities are not in the 2004 Award, so it is not correct to say the proposed award reflects work practices that have grown up over many years. There is no reason to expect that the preservation of such work practices in enterprise agreements will not continue as an option for MIL and its employees.

The need to provide additional remuneration for employees working overtime, or employees working unsocial, irregular or unpredictable hours, or employees working on weekends or public holidays, or employees working shifts: s.134(1)(da)

[68] MIL submits the terms and conditions of the proposed award meet these criteria in the various relevant clauses, e.g. overtime, roster workers allowance. The proposed award places some new constraints on the entitlement to be paid additional amounts for penalty and overtime hours, compared to those payable in the 2004 Award. The Water Industry Award contains provisions for the payment of additional remuneration for working on the occasions mentioned in this section of the Act.

The principle of equal remuneration for work of equal or comparable value: s.134(1)(e)

[69] MIL submits this is a neutral consideration and it is not necessary we say more about it.

The likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden: s.134(1)(f)

[70] MIL submits this is a neutral consideration in the event a modern enterprise award is made. Conversely, it submits, a decision not to make a modern enterprise award will likely increase employment costs and the regulatory burden of having to deal with multiple awards for the first time in the company’s history.

[71] As we have earlier found, it is not likely MIL will have to deal with multiple modern awards covering its relevant employees. We are not persuaded that a decision to not make a modern enterprise award will negatively impact productivity, employment or introduce any measurable regulatory burden.

The need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards: s.134(1)(g)

[72] MIL asserts the retention of an enterprise award will meet this criterion squarely. It submits the proposed award is simple, easy to understand and retains terms and conditions with which management and staff are deeply familiar. The alternative would create an unnecessary overlap of awards applying in one workplace and therefore be directly at odds with the modern enterprise awards objective.

[73] We accept the proposed award may be easy for MIL and its employees to understand. However, we also believe the Water Industry Award can be similarly described. We doubt there will be an unnecessary overlap of awards in the terms described by MIL.

The likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy: s.134(1)(h)

[74] MIL submits its operations are central to the viability and sustainability of agriculture markets. Its customers’ output is valued (farm gate prices) in excess of $500 million, representing 1% of Australia’s total agricultural production. The Murray Irrigation Area produces half of Australia’s rice crop, which in turn supports the largest rice mill in the country. Other significant milk and food production and processing is carried on in the area.

[75] Accepting the submissions of MIL, there was no suggestion that not making the proposed award would have any negative impact on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.

The minimum wages objective: s.284(1) of the Act

[76] We note that a number of the matters referred to in this objective, although directed to fair minimum wages only, are the same or similar to the matters in the modern awards objective.

[77] MIL believes the minimum rates of pay in the proposed award meet the various criteria in s.284(1). We note that the proposed award does not contain a separate rate of pay for junior employees. About this, MIL submits it has not previously had junior rates as part of its workplace regulation.

[78] The minimum wage rate for a base level employee in the proposed award is described by MIL as comparing favourably with the current federal minimum wage. This may be so; however, as we have earlier noted, the base wage for level 1 in the proposed award is less than for the comparable level in the Water Industry Award. Subject to the observations we made at paragraph [24], we accept that the wage rates in the proposed award are consistent with the minimum wages objective.

Conclusion

[79] We are not persuaded a sufficiently meritorious case has been established to justify the making of a modern enterprise award.

[80] The Water Industry Award is an industry award and covers other irrigation companies throughout Australia. There are no modern enterprise awards in the water industry, and MIL’s operations, and the needs of its employees, are not such as to warrant it having a minimum award coverage that differs from the rest of the industry.

[81] The application is dismissed. In accordance with item 9(3) of Schedule 6, the 2004 Award is terminated with effect from the date of this decision.

SENIOR DEPUTY PRESIDENT

Appearances:

S Coyne with D Houlihan and N Scott for Murray Irrigation Limited.

J Gherjestani for the Australian Workers’ Union.

Hearing details:

Sydney.

2015.

June 19.

 1   AN120355.

 2   Ibid cl 2.2.

 3   MA000113.

 4   Fair Work Act 2009 (Cth) s.134(1).

 5   Fair Work Act 2009 (Cth) s.284(1).

 6   [2014] FWCFB 2170.

 7   Ibid paras [10]-[11].

 8   [2012] FCA 1315; [2012] FCAFC 114.

 9   [2015] FCAFC 95.

 10   AN120146.

 11   AP835789.

 12   AN120532.

 13   Exhibit MIL 2.

 14   Exhibit MIL 5 para 1.

 15   Ibid para 7.

 16   Exhibit MIL 6 para 2.

 17   We note the mobile crane hire arm of MIL’s business currently does not engage any full-time employees, and there is only one employee engaged to deliver MILCast’s products to its customers.

 18   Exhibit MIL 1 paras 9-12.

 19   Exhibit AWU 1 paras 6-7; exhibit PSA 1 paras 6-7.

 20   Exhibit AWU 1 para 4; exhibit PSA 1 para 4.

 21   MA000113 cl 4.1.

 22   Ibid sch B.

 23   Exhibit MIL 1 paras 14-21.

 24   Ibid paras 17, 19.

 25   PR549545.

 26   PR551821; PR566922.

 27   PR561478.

 28   PR559307.

 29   PR560058.

 30   PR567253.

 31   Exhibit MIL 1 paras 24 and 25.

 32   EA98/263.

 33   EA01/164.

 34   EA03/173.

 35   EA06/51.

 36   AE871871.

 37   Ibid cl 14.

 38   Clause 38.4 suggests there is a schedule, Schedule 4, dealing with these employees, but none is contained in the agreement. See also clause 9.9.

 39   AE405911.

 40   Ibid cl 8.

 41   Ibid cl 9.

 42   Exhibit MIL 1 para 33.

 43   Ibid para 55.

 44   Ibid paras 34-44.

 45   Exhibit MIL 2 cl 4.4.

 46   Ibid cl 18.2.

 47   Ibid cl 3 (definition of “roster worker”).

 48   Ibid cl 18.5.1.

 49   AN120355 cl 15.

 50   Exhibit MIL 2 cl 18.

 51   We understand these employees perform the roles of channel attendant or water orderer: PN48.

 52   Exhibit MIL 1 para 25.

 53   MA000113 cl 25.3(c)(ii).

 54   PN62, PN81.

 55   MA000113 cl 25.3(a).

 56   PN81, PN183-PN185.

 57   Exhibit MIL 2 cl 13.1.

 58   Exhibit MIL 1 para 39.

 59   AN120355 cl 21.3.1.

 60   It was not suggested the channel attendants were shift workers as defined in the proposed award: PN68-PN73.

 61   Exhibit MIL 2 cl 19.5.

 62   Fair Work Act 2009 (Cth) s.88(2).

 63   MA000113 cl 27.4(a).

 64   Exhibit MIL 2 cl 19.2.

 65   Clause 27.3(a) of the Water Industry Award provides that an “employee will be paid an annual leave loading of 17.5% calculated on the employee’s base rate of pay in addition to payment for annual leave”. 17.5% of 4 weeks’ annual leave payment is equal to 1.346% of annual salary (that is, 1.346% of 52 weeks at an employee’s base rate of pay).

 66   MA000113 cl 27.3(b).

 67   PN214-PN215, PN230, PN285, PN293, PN340-PN379.

 68   Exhibit MIL 1 para 53.

 69   Exhibit AWU 1 para 4; exhibit PSA 1 para 4.

 70   Exhibit AWU 1 para 3; exhibit PSA 1 para 3.

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