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

WESTPAC EMPLOYEES’ AWARD 2002

ST. GEORGE BANK EMPLOYEES AWARD 2002

Application by the Finance Sector Union of Australia for a modern enterprise award for Westpac Employees' Award 2002 and St. George Bank Employees Award 2002 - case for modern enterprise award not established - application dismissed - Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, Schedule 6 Item 4, Schedule 6 Item 6, Schedule 6 Item 9 - Fair Work Act 2009, s.134.

Introduction

[1] The Finance Sector Union of Australia (FSU) has made an application under item 4 of Schedule 6 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) for the Fair Work Commission to make a modern enterprise award to replace the Westpac Employees’ Award 2002 (Westpac Award) and the St. George Bank Employees Award 2002 (St George Award). The FSU made an alternative application for two awards if the Commission considered it inappropriate to make a single modern enterprise award.

[2] At the hearing of this matter Mr G McConville and Ms P Lee appeared for the FSU and Ms H Eager of counsel and Ms L Brown and Mr M Johnson appeared for Westpac Banking Corporation (Westpac).

The Legislative Task

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

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

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


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


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


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


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


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


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


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

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

“134 The modern awards objective

What is the modern awards objective?

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

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

(b) the need to encourage collective bargaining; and

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

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

(da) the need to provide additional remuneration for:

(i) employees working overtime; or

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

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

(iv) employees working shifts; and

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

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

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

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

This is the modern awards objective.”

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

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

[6] The first Westpac specific award provisions were in an appendix to the Bank Officials (Federal) Award 1963. That appendix was the source of the first Westpac award made in 1998. The 2002 award arose from the award simplification process conducted in accordance with the Workplace Relations Act 1996. The FSU submits that the award was developed in circumstances of changing industrial regulation and changes in the industry itself including deregulation and technological change.

[7] The St George Award has a different history. When a building society it was covered by the Building Societies Clerical General Award (NSW). An interim Federal award was made in 1992 when St George was granted a banking license. The 1995 award was made on the same day as the first enterprise agreement was made. The 2002 award was also the product of the award simplification process.

[8] The history of these awards reflects the move towards an enterprise focus in the regulation of terms and conditions generally. The enterprise awards were the first step in that direction. Now enterprise agreements reflect the actual terms and conditions in the banking industry.

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

[9] Most of the persons covered by the enterprise awards would be covered by the Banking, Finance and Insurance Award 2010 if the enterprise awards are not modernised. The FSU submits that it is highly likely that some senior employees would not be covered because of the limits to the level 6 classification in that award. This is evident from decisions of the Commission in two unfair dismissal applications.

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

[10] The FSU submits that the terms of the industry award are largely settled and major changes are not expected during the 2014 award review.

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

[11] The FSU acknowledges that there are many similarities between the enterprise awards and the industry award but also important differences. The FSU submits that regard must be had to the incidence of enterprise awards in the banking industry. In terms of numbers of employees it estimates that about two thirds of employees are covered by enterprise agreements (in which it is involved) which utilise an enterprise award rather than the industry award.

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

[12] The National Assistant Secretary of the FSU, Mr Geoff Derrick, gave evidence about the enterprise specific terms of the awards. He contends that the enterprise specific terms of the Westpac Award include the coverage clause, consultation in redundancy disputes, changes in part-time hours by mutual agreement, minimum engagement period for casuals, no maximum hours for casuals, higher notice period, salary deductions, hours of work, public holiday loadings, meal break duration, higher duties provisions and additional public holidays.

[13] In the St George Award there is provision for a 37½ hour week, reduced casual loading, revised definitions of part-time employees, salary packaging arrangements, the absence of some allowances, voluntary standby arrangements, differences in the quantum of allowances, different treatment of meal breaks, travel expenses and motor vehicle allowances, increased public holidays, part time employee differences and various differences in leave provisions.

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

[14] The FSU submits that the proposed modern award will not have any impact on Westpac’s profitability. It is fearful that the change to the award safety net may prompt a reconsideration of some terms in future enterprise bargaining negotiations. It also considers that some senior employees will lose unfair dismissal access and access to the dispute settlement provisions of the Act.

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

[15] The FSU is in favour of modernising the enterprise awards and submits that as a result of research it commissioned employees also support the retention of an enterprise award. The research indicated that of the Westpac employees who completed the survey, 28 per cent considered that the Westpac award was more beneficial than the industry award. Four per cent thought the opposite. Sixty three per cent did not know. Eighty one per cent indicated support for the FSU application.

[16] Of the St George employees who completed the survey, 42 per cent considered that the St George Award was more beneficial, three per cent considered the opposite and 50 per cent did not know. Seventy two per cent indicated support for the FSU application.

[17] Westpac did not support or oppose the application, and made no substantive submissions on the matter.

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

[18] There are no other matters prescribed.

Conclusions

[19] In our view the nature of industrial regulation in the banking and finance industry is an important consideration in this matter. The industry award was developed during the award modernisation process. The major banks had a significant input into the terms of that award and participated in the proceedings with legal representation. The terms of the award borrowed heavily from the Credit Union Award 1998 and the Insurance Industry Award 1998 given the wide range of businesses in the finance sector covered by it.

[20] The first application to make a modern enterprise award was in the banking industry. The application to modernise the Bank of Queensland Agents Award was rejected by a Full Bench. 1 The Full Bench expressed its conclusion as follows:

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

[21] In various proceedings for the modernisation of enterprise awards two banks are strongly opposed to making a modern enterprise award and Westpac is ambivalent.

[22] The circumstances of each bank need to be considered in relation to the criteria set out above. This includes a consideration of the most appropriate form of industrial regulation in the banking and finance industry. The four major banks are major Australian businesses. The industry is characterised however by a myriad of different employers including banks, insurance companies, credit unions, building societies, financial intermediaries, trustee creditors and agencies, money market dealers, credit or charge card institutions, wool broking, agribusiness and services to the above industries such as broking, trading, debt recovery, financial consulting, valuation, money changing, data processing, transaction accounts, telephone enquiries and transaction processing.

[23] The Westpac and St George awards were made at a time when enterprise bargaining was becoming the major focus of the industrial relations system. As can be expected, the terms of those early awards reflected the practices then in existence rather than an award safety net, and in certain respects departed from industry award terms. Actual terms have been superseded by enterprise agreements, which have continued to evolve with the needs of the business.

[24] In our view the continuation of an enterprise award will not have great significance. The appropriate scope of industrial coverage of employees can be dealt with in bargaining and the consequences of that scope will determine the actual level of employees within the bank that will have access to enterprise agreement dispute settlement provisions and statutory unfair dismissal rights. Regardless of which award applies there are unlikely to be significant issues with the application of the better off overall test.

[25] The system of industrial regulation will be simpler if one award covers the industry and enterprise arrangements apply on top of it. In our view this is an important consideration. In the absence of a strong reason or important implications of terminating the enterprise awards we consider that single award coverage in the industry is the best path forward. We are not persuaded that an enterprise award should be made in this matter. Therefore the application for a modern enterprise award is dismissed. Pursuant to Item 9 (3) of schedule 6 to the Transitional Act the Awards subject to his application terminate as at the date of this decision.

VICE PRESIDENT

Appearances:

Mr G McConville and Ms P Lee for the Finance Sector Union.

Ms H Eager of counsel, Ms L Brown and Mr M Johnson for Westpac Banking Corporation.

Hearing details:

2014.

Melbourne.

28 July.

Final written submissions:

Finance Sector Union of Australia on 30 May 2014.

 1   [2010] FWAFB 3906.

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