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

NATIONAL AUSTRALIA BANK GROUP AWARD 2002

Application by Finance Sector Union and National Australia Bank for a modern enterprise award for National Australia Bank Group Award 2002 - Factors to be considered when making a modern enterprise award - Case for modern 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) and National Australia Bank Limited (NAB) have each made an application under Item 4 of Schedule 6 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act) for the Fair Work Commission to make a modern enterprise award to replace the National Australia Bank Group Award 2002 (the NAB Award).

[2] At the hearing of this matter Mr G. McConville and Ms P. Lee appeared for the FSU and Mr A. Wood of counsel and Ms M. Salmon appeared for NAB. Mr M. Tamvakologos of counsel appeared for the Australia and New Zealand Banking Group Limited and Mr G. Fredericks appeared for the Commonwealth Bank of Australia Limited.

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 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 NAB specific award provisions were in an appendix to the Bank Officials’ (Federal) Award 1963. That appendix was the source of the first NAB Award made in 2002. The FSU submits that the NAB Award was developed in circumstances of changing industrial regulation and changes in the industry itself including deregulation and technological change. NAB submits that in making the 2002 Award it was seeking to establish a single, enterprise-specific award which applied to all the employees working in its business. It was made shortly after the acquisition of MLC Limited by NAB. Separate Divisions of the Award applying to the Wealth Management Division were deleted in 2006, so that one set of provisions applied to all employees covered by the NAB Award.

[7] The Bank Officials’ (Federal) Award appendix covered employees classified in accordance with a 1987 Memorandum of Agreement that incorporated a job evaluation system. The appendix did not include classification definitions. Classifications were from Level O (lowest clerical level) to E (highest officer level). Certain provisions of the Award did not apply to levels H to E. The 2002 Award also covered Grades O to E and contained no classification definitions. A Job Evaluation process was incorporated into the Award.

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)

[8] Most of the persons covered by the enterprise award would be covered by the Banking, Finance and Insurance Award 2010 if the enterprise award is 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. NAB confirmed that there are approximately 5,800 employees who are covered by the NAB Award and who would be above level 6 of the industry award and therefore outside award coverage if a modern enterprise award is not made. The proposed enterprise award has the top salary for Grade E as $74,640 and maintains the notion that certain clauses of the Award do not apply to employees paid an annual salary above Grade H ($55,923). Evidence led in the proceedings establishes that the bank employs approximately 5,000 employees above $129,300.

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

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

[10] The FSU and NAB produced comparative tables indicating substantial differences between the NAB Award and the industry award. NAB agrees that the provisions of the industry award differ substantially from the terms and conditions of enterprise awards in banking and submits that the terms are not suitable for NAB’s business. Further, it submits that the implementation of the industry award would require a reconsideration of work arrangements in certain NAB workplaces, as the span of hours clause and shift work arrangements contained in the industry award are not considered appropriate to the way work is conducted in a number of NAB workplaces.

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

[11] Employees of NAB are employed under an enterprise agreement. The NAB Enterprise Agreement 2011, which had a nominal expiry date of 31 December 2013, incorporated the terms of the NAB Award into it and provided that where there were inconsistent provisions, the Agreement prevailed. It is the stated intention of NAB to have all of its employees in Australia covered by the enterprise agreement.

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

[12] NAB and the FSU submit that the NAB Award provides enterprise-specific provisions relating to award coverage, ordinary hours of work, shift work and premium rates.

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

[13] NAB places some importance on its aim to have all of its employees covered by the NAB Award as part of its workplace culture. It also submits that there will be an erosion of rights if some employees are not covered by the NAB Award, uncertainty and an administrative cost burden if it is covered by the industry award.

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

[14] Both NAB and the FSU support the making of an enterprise award. NAB communicated its intention to seek a modern enterprise award to its 28,000 employees and sought the views of employees on its proposal. Three employees responded. NAB submits that this indicates that employees generally support the application.

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

[15] There are no other matters prescribed in the regulations.

Conclusions

[16] The NAB Award has a recent history, having been first made in 2002. However there is a history of enterprise-specific terms and conditions in an appendix to a pre-existing industry award and different terms and conditions for business that have been acquired and integrated within the NAB Group over the years. That history has effectively been overtaken by the regular making of enterprise agreements applying to NAB and its employees.

[17] The current position of a comprehensive enterprise agreement underpinned by an enterprise specific award is the preferred model for NAB and the FSU into the future. Its reasons include the desire for one set of terms and conditions to apply to all employees, rather than having different groups covered by different instruments as would be the case if the industry award, that does not cover many senior employees, applied.

[18] We have considered the reasons behind this preference and weighed the factors of the parties’ preferences against the other considerations. We note that the enterprise award classifications have historically been limited to Grade E and below and that many provisions of the Award have not applied to those employed above Grade H. Further, the salaries in the NAB Award are significantly below the actual salaries of a great many NAB employees. This suggests to us that in reality the award has little relevance to senior employees.

[19] Further, NAB has chosen to adopt a wide scope for its enterprise agreement. While such an agreement is in operation the Award does not apply. Coverage under the agreement carries certain rights such as a right to take an unfair dismissal action and a right to pursue a dispute under the enterprise agreement dispute settlement procedure. Insofar as the enterprise agreement comprehensively governs the terms and conditions for all employees, the desire for uniform industrial regulation is effectively achieved.

[20] We do not consider that the industry award would present any difficulties in applying the better off overall test when the enterprise agreement is renegotiated. Certainly there are now a wide range of shift working operations covered by the Award and there has not been any demonstrated difficulty in making agreements that apply the industry safety net. We consider the submissions about the problems of industry award coverage to be somewhat overstated.

[21] The banking and finance industry is large and diverse. When considering modern award coverage for the industry, the Australian Industrial Relations Commission adopted a single award covering banks, building societies, insurance companies, financial advisors, stockbrokers and many other related businesses. All of the major banks, including NAB participated fully in that process. In particular, the major banks resisted the adoption of the more generous terms and conditions applying to them in the modern award.

[22] The first application for an enterprise award for the industry, concerning Bank of Queensland agents was rejected by a Full Bench. In doing so the Bench said: 1

“[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.”

[23] We have heard applications for modern enterprise awards relating to the ANZ Bank, the Commonwealth Bank, Westpac Bank and NAB. Some of the applications have been strongly opposed, others viewed with ambivalence and some supported. In our view, the pattern of award coverage in the entire industry is an important overall consideration. While consent of parties to instruments is relevant we do not consider that it should be determinative.

[24] The Act does not permit new enterprise awards to be made when there has been no history of enterprise award coverage. We have decided not to make modern enterprise awards for each of the other banks. That will retain the concept of a single private sector industry award applying to the whole industry and simplify the award system to that extent. In our view, an insufficient case has been made out to differentiate NAB from the remainder of the banking and finance sector and make a lone enterprise award. In our view, the modern awards objective and the modern enterprise awards objective are best achieved by dismissing the applications for a NAB enterprise award and bringing the entire banking and finance industry under the one safety net award.

[25] We would dismiss the applications. Pursuant to Item 9 (3) of schedule 6 to the Transitional Act the NAB Award subject to this application terminates as at the date of this decision.

VICE PRESIDENT

Appearances:

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

Mr A.Wood of counsel and Ms M Salmon for the National Australia Bank.

Mr M. Tamvakologos of counsel for the Australia and New Zealand Banking Group Limited.

Mr G. Fredericks for the Commonwealth Bank of Australia Limited.

Hearing details:

2014

Melbourne

26 June.

 1   [2010] FWCFB 3906.

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