[2015] FWCFB 616

The attached document replaces the document previously issued with the above code on 23 January 2015.

The Publication ID at the bottom of the document has been corrected.

Timothy Zahara

Associate to Vice President Catanzariti

Dated 2 February 2015

.

[2015] FWCFB 616
FAIR WORK COMMISSION

DECISION


Fair Work (Transitional Provisions and Consequential Amendments) Act 2009

Sch. 6, Item 4—Application to make a modern award to replace an enterprise instrument

Commonwealth of Australia acting through the Minister Assisting the Prime Minister for the Public Service
v
CPSU, the Community and Public Sector Union and Others
(EM2013/62)

Commonwealth employment

VICE PRESIDENT CATANZARITI
DEPUTY PRESIDENT SMITH
COMMISSIONER JOHNS

SYDNEY, 23 JANUARY 2015

Application for a modern enterprise award to replace the Australian Public Service Award 1998 [AP766579] - whether modern enterprise award should be made - modern enterprise award should be made in the circumstances - order to be settled by member of full bench.

Introduction

[1] The Commonwealth of Australia acting through the Minister Assisting the Prime Minister for the Public Service has made an application to make a modern enterprise award to replace the Australian Public Service Award 1998 [AP766579] (APS Award).

[2] The Public Service Minister (Minister) is an employing authority, pursuant to s.795 of the Fair Work Act 2009 (Act), and through whom the employer, being the Commonwealth of Australia, must act. This is significant as the Australian Public Service (APS) has over 160,000 employees with a range of occupations. It would be difficult to think of an occupation which was not represented in the Australian Public Service.

[3] On 12 December 2014 the Minister filed and served an exposure draft of the Australian Public Service Enterprise Award 2014 (Proposed Award). The terms of the Proposed Award are mostly agreed. The matters not agreed are the subject of this decision.

The approach

[4] In examining the approach which should be taken to the making of an enterprise modern award it is convenient to briefly review some of the history of the modern award process as it helps to put into context the task before us.

[5] The award modernisation process was initiated by a request signed by the Minister for Employment and Workplace Relations on 28 March 2008, pursuant to s.576C(1) of the Workplace Relations Act 1996 (WR Act).

[6] To appreciate the background against which award modernisation took place, we set out in part the request 1 signed by the then Minister for Employment and Workplace Relations, the Hon. Julia Gillard.

[7] The application of Clause 2(c) and (d) of the Request presented particular problems for the Commission in dealing with applications for modern awards. The modern award making process was not done in a vacuum and it had to take account of existing instruments. This was not a case of the parties having a clean slate and in the name of award modernisation, seeking changes without presenting proper merit arguments. An example in the process then, and in the matter before us now, is hours of work. Historically changes to ordinary hours of work have been accompanied by extensive and reasoned argument as to why the Commission should alter its awards. This tension in not trying to disadvantage employees and increase costs for employers led to the Full Bench in the modern award process to adopt a process of identifying the critical mass of particular terms and/or conditions of employment across the various awards with which it dealt. This concept is evidenced by many Full Bench decisions but the following is illustrative:

[8] It can be seen that whilst the creation of a modern enterprise award is a new award and not a variation to the existing award, nevertheless the current terms and conditions play an important role and must be given appropriate weight when regard is had to the history of the modern award process. The difficulty faced by the Commission when it was required to modernise numerous awards in a sector and examine the “critical mass”, is not present when an enterprise award is considered. The conversion of an existing enterprise award to a modern enterprise award presents a much clearer picture. The ability not to disadvantage employees and increase the cost to employers is a less complex task. We emphasise that the modern award process was not a substitute for reasoned argument with relevant evidence where significant changes were sought to be made to longstanding terms and conditions of employment which were in awards of the Commission. This is not to say that the modern award process cannot embrace change, it can. The legislative requirements demand change, but particular change. It can been seen that the award modernisation process was not designed, simpliciter, to alter bargaining power.

The legislative requirements

[9] 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 (Transitional Act) which provides:

[10] Item 6 links the modern enterprise award objective to the modern award objective and the minimum wages objective found at ss.134 and 284 of the Act. It provides:

[11] It is also relevant to draw attention to item 11 of Division 3 which provides:

[12] Item 11 highlights the injunction contained in the original request provided by the then Minister which related to disadvantage to employees.

The application of the legislative task

[13] We now turn to each of the matters that we must take into account.

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

[14] The Minister provided an extensive history beginning with the Public Service Act 1902 and the Public Service Act 1922 and leading up to the award simplification process which also set properly fixed minimum rates. 3 The APS Award replaced the Australian Public Service General Employment Conditions Award 1995 and consolidated and set aside the following instruments:

[15] It can be seen from this brief review that the APS has had a long and distinct history. This is a factor in favour of making a modern enterprise award.

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: Item 4(5)(b).

[16] It is submitted that there is no single award that would, but for the APS Award, cover all employees who are covered by the APS Award. It was submitted earlier that if a modern enterprise award was not made, then a large majority of employees would be covered by the Miscellaneous Award 2010 [MA000104] (the Miscellaneous Award).

[17] As was made clear in the award modernisation Full Bench decision dated 4 December 2009 ([2009] AIRCFB 945 at paragraph 153):

[18] The Miscellaneous Award was not created or designed to be a universal safety net but to be a transition point to another modern award whose coverage may require review. These circumstances are a factor in favour of creating a modern enterprise award.

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): Item 4(5)(c)

[19] It is apparent from the history of the awards which have been present in the APS that the content of the various industry specific modern awards do not reflect the needs, terms and conditions in the APS. This is a factor in favour of making a modern enterprise award.

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: Item 4(5)(e)

[20] We are satisfied that there are enterprise specific terms and conditions in the APS. We shall return to consider some of these matters later, but a few are worthy of mention:

[21] In particular we note that the wages have been fixed having regard to internal relativities rather than external comparisons which can be seen in industry modern awards. A Full Bench considered the conversion of paid rates awards in establishing properly fixed minimum rates:

[22] It established some appropriate principles which included:

[23] Salary relativities have been established for the APS and whilst there are some comparisons at the key classification level, the nature of the work which gives rise to the relativities is enterprise specific. This is a factor in favour of making a modern enterprise award.

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: Item 4(5)(f).

[24] Putting to one side for the present the Senior Executive Service (SES), if the award was not made it would seriously impact upon the Better Off Overall Test (BOOT) for the purpose of bargaining. True it is that the current agreement would mean that little actual change would take place; however, this is not the focus. The modern award exercise, in its totality, was concerned with a safety net going forward from which the BOOT could be applied as an anchor point for bargaining. The two streams should not be confused.

[25] It was submitted by the Minister that by contrast, if the modern enterprise award was made, the BOOT test would be assessed against a single enterprise specific award containing relevant terms and conditions of employment. There is considerable force to this argument and it is a factor in favour of making a modern enterprise award.

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

[26] All parties to the APS Award support the making of this modern enterprise award. No person opposes the award. Whilst consent is not decisive of the matter, it is a factor in favour of making a modern enterprise award.

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

[27] There are no regulations relevant to this criterion.

Matters at issue

[28] Whilst there has been a considerable amount of work in reaching a mostly agreed draft in the Proposed Award, some matters remain at issue and have been the subject of argument. We now turn to those matters.

1. Coverage of the Senior Executive Service

[29] It is the submission of the Minister that SES employees should not be covered by a modern enterprise award. It submits that the SES is only covered by five provisions of the APS Award and that the focus in developing the award has been for non-SES employees. In addition, the modern awards were not intended to cover those classes of employees, such as managerial employees, who, because of the nature or seniority of their role, have traditionally been award free. It was noted that SES employees earn in excess of the high income threshold referred to under s.47 of the Act.

[30] In opposing the deletion of SES employees from coverage it was argued that if they were removed they would lose unfair dismissal rights.

[31] Whilst the loss of unfair dismissal rights is a disadvantage, nonetheless the general scheme of the modern award safety net system discourages the coverage of high income earners. In this case there is limited coverage in relation to terms and conditions of employment and award regulation has not focused on this class of employment. There is no good reason to maintain award coverage which is relevant to the modern award objective or the minimum rates objective. We do not propose to cover SES classified employees.

2. Hours of Work and Span of Hours

[32] The Minister submits that hours of work should be increased, where applicable, from 36.75 hours per week to 38 hours per week. In addition, the span or ordinary hours should be varied from the current span (8.00am to 6.30pm) to 7.00am to 7.00pm. This change is opposed.

[33] It is argued by the Minister that:

[34] Those opposing the change to the ordinary hours of duty and the spread of hours argue:

[35] As to the ordinary hours of work, we see no reason to depart from that which has applied for over 90 years. The submission which seeks to attribute special reasons to particular sector for reduced hours in modern awards misunderstands the nature of award modernisation which was discussed earlier. The aim was to modernise, but not create, a situation where employees were disadvantaged and employers had to bear additional costs. Whatever the original reason for the reduction in hours of work in those sectors identified, it was not a reason why it was maintained in the modern award. Where a myriad of awards applied, the task was to identify the “critical mass” where a particular condition would remain. In the case of an enterprise modern award, as was stated earlier, this is a much easier task. The history of hours of work in the APS is clear and should be maintained for this process. Lest it be said otherwise this is not a ruling on the appropriateness of the current hours but to change those hours a proper case would need to be undertaken.

[36] The same is true for the spread of hours as the concepts are very much interrelated and have a shared history.

3. Remote conditions, district allowances and removal expenses

[37] The Minister’s submission in relation to these matters is that they should only be payable to employees where the transfer is in the interest of the APS or on promotion. The view of the respondents is that the existing provisions in the APS Award should remain.

[38] Two things need to be said in addition to the situation where these have been long standing provisions. The first is that remote conditions and district allowances are in the nature of a disability payment. It does not deal with the issue by creating two classes of persons who may suffer the same disability. If the disability no longer exists then that should be the focus rather than creating two classes of employees. The second observation is that employees cannot simply move from one location to another without approval. It is the approval process which should be the subject of examination rather than the course proposed by the Minister.

[39] Given the long history and the focus which should be on any disabilities suffered we will not alter the current position.

4. Travel expenses

[40] The Minister seeks a change in the focus of travel expenses from one where an identifiable travel allowance is paid to one where an employee is reimbursed reasonable travel expenses. Again, the Minister identifies the fact that many APS agreements provide for this approach. It is noted that most Commonwealth agencies supply employees with travel cards or other credit facilities that permit employees to charge reasonable expenses directly to the Commonwealth. The respondents oppose such a change.

[41] The Minister is correct in that the approach advocated is present in many modern awards. This is not an easy area to consider. Problems arise about what is reasonable often with reference to the Australian Tax Office approach to travel expenses for taxation purposes. Further, it is by no means universal that credit facilities are provided and this might lead to an employee having to bear the loss of personal funds for a period of time not to mention any credit charges if incurred.

[42] We prefer the approach of the respondents which creates a definable obligation as well as permitting the Commonwealth to take direct responsibility for travel expenses where it pays for those expenses directly. We are content that this is an appropriate modernisation of the current award provisions.

5. Superannuation

[43] Currently the award has limited reference to superannuation and simply refers to existing legislation. The respondents seek to include a provision dealing with superannuation with particular emphasis on the current contribution rate by the Commonwealth. The respondents argue that it is necessary to maintain that contribution rate in the event that legislation changes.

[44] The Minister draws our attention to s. 40 of the Act:

[45] It appears that the only reason the respondents seek to include a superannuation provision is to try to protect the current contribution rate for employee superannuation.

[46] We see no reason why we should now seek to regulate superannuation in an award where no regulation previously existed and where such regulation would, in any event, be moot.

6. Personal/carers leave

[47] This is largely an agreed item but nonetheless it is appropriate for the Full Bench to examine. Both the Commonwealth and the respondents seek to retain the current award entitlement for 15 days personal leave by supplementing the NES. What is not agreed is the continuation of the current provision where an employee after 12 months service is entitled to the full amount of leave on the anniversary of their employment. Currently the APS Award provides:

[48] The Minister argues that the NES provision should apply and that there is no good reason not to adopt the NES. The NES provides at s.96 of the Act:

[49] The respondents argue that the existing provision should remain and further, that to remove the current provision would avoid “presenteeism” where employees attend for work when they are sick. In addition, the respondents point to the Black Coal Mining Industry Award 2010 [MA000001] which not only provides for 15 days but provides for a full entitlement on each anniversary. There is no specific reference to this entitlement in the decision of the Full Bench 6 and therefore we will be informed by the arguments presented to us.

[50] To begin, we accept that the NES should be supplemented to provide for the current period of personal/carers leave. There is such a long history of this quantum being available to employees that we accept the agreement of the parties. We are not however persuaded to retain the present accrual approach. We believe that it is appropriate to adopt the NES approach to accrual. The reasons advanced by the respondent do not identify any specific enterprise reason for maintaining the previous accrual system.

7. Cashing out of annual leave

[51] The Minister seeks the ability for the employer and the employee to agree on cashing out of annual leave. This is opposed by the respondents. We note that this has not been adopted as a safety net award provision to date.

[52] We also note that the current review of modern awards will again look at this question and it may be revisited upon the decision in that case. Consequently, we reject at this stage, the Minister’s drafting in clause 16.6 of the Proposed Award.

8. Definition of shiftworker for annual leave purposes

[53] The Minister seeks to use as a starting point s.87 of the Act which provides inter alia:

[54] In particular the Minister seeks to make it a requirement for the additional week’s leave that an employee has a shift pattern where they are continuously rostered 24 hours a day for 7 days a week and regularly work on Sundays and public holidays.

[55] The respondents seek to retain the present position which has similar constraints but does not require a roster to be a 24 hour, 7 day a week roster. There are many variations on roster patterns which attract the additional week’s leave. However, it is not universal that an employee must rotate through 24 hours and 7 days. It is necessary to regularly work weekends and public holidays. We believe that the approach under the current award should be maintained.

9. Maternity and paternity leave

[56] The Minister argues that it is unnecessary for the award to cover these matters as they are provided for in the Maternity Leave (Commonwealth Employees) Act 1973 (the ML Act). Again our attention is drawn to s. 40 of the Act.

[57] The respondents argue that:

[58] We acknowledge that there is legislation covering this subject and the operation of s.40 of the Act. However, there are some differences and we think the best course it to act out of an abundance of caution and retain the existing provision. These are important provisions and should not be altered lightly which may have unintended consequences.

10. Dispute resolution training leave and paid time for attending FWC proceedings

[59] The current award provides for both leave to attend short courses and payment for representatives to attend proceedings in the Commission under certain conditions. The Minister opposes the maintenance of these provisions and submits that they are not industry standards. The respondents seek the maintenance of the current provisions but added to the standard dispute resolution clause. It is submitted by the Minister that the respondents have enlarged the current clause. Dispute resolution training leave is not unusual in modern awards. Given that it is an existing provision, we will retain the substance of these provisions provided that the new clause does not travel further than the current provision.

11. Nursing classifications

[60] The Australian Nursing and Midwifery Federation (ANF) submit that nursing classifications and wage structures should be included in the new modern enterprise award. The Minister opposes such a course and submits that it only employs 16 practicing nurses and they are classified in general APS classifications. As we stated earlier in this decision, one of the reasons in support of making an enterprise modern award is the importance of the internal relativities established over time. With this in mind we decline to include specific nursing classifications and wage structures. We do so against the knowledge that nurses did succeed in achieving an occupational based modern award. However given the approach adopted under this enterprise award in the past, we will not include specific nursing classifications or wage scales.

12. Agency specific schedules

[61] The Minister opposes the inclusion of any agency specific schedules whereas the respondents seek to retain some entitlements which are agency specific. The respondents seek to retain a number of provisions which are based upon matters peculiar to the agency. For example the Department of Defence has an allowance for employees if they are employed on a surface vessel or a submarine.

[62] As a general rule we agree that work value or disability type payments should be retained in the new modern enterprise award. We have not had detailed submissions on each of these matters. We have no preference as to whether or not these matters are absorbed into the award proper or remain identified as an agency specific matter. However, if the same subject matter is dealt with both in the main body of the award and in a schedule there will have to be a good reason for any difference in treatment. We think the appropriate course is to refine these matters in the settlement of the orders.

13. Rates of pay for apprentices

[63] The pay percentages for apprentices are not included in the Ministers draft. It was submitted that it was a matter for the Full Bench to decide having heard the submissions. As a consequence of the Full Bench decision in the case involving apprentices, trainees and juniors, 7 the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) put forward a proposal. The AMWU took some time outlining its approach to the fixation of the percentages having regard to the Full Bench decision.

[64] In all the circumstances we will adopt that which is proposed by the AMWU.

Conclusion

[65] We are satisfied that a strong case has been made out for the creation of a modern enterprise award for the APS. We will make the Award in the terms we have decided. There are some matters of drafting which may require fine tuning so we refer the matter to Deputy President Smith to settle the orders with recourse to members of this Full Bench if necessary.

Seal of the Fair Work Commission with Vice President Catanzariti's Signature

VICE PRESIDENT

Appearances:

L Benfell with K Rowsell for the Community and Public Sector Union.

M Nicolaides for the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union.

P O’Grady of Counsel for the Commonwealth of Australia acting through the Minister Assisting the Prime Minister for the Public Service

Hearing details:

2014.

Canberra:

December 15 and 16.

 1   http://www.airc.gov.au/awardmod/download/award_modernisation_request.pdf

 2   [2010] FWAFB 305, paragraph 3.

 3   See for example the Paid Rates Review Print Q7661.

 4   Ibid, page 15–16.

 5   Ibid.

 6   [2008] AIRCFB 1000.

 7   (2013) FWCFB 5411.

Printed by authority of the Commonwealth Government Printer

<Price code C, AP766579  PR560403>