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 employment

Application for a modern enterprise award to replace the CPSU (Salaries and Conditions of Service) ACT Public Sector Award 1998; Employment Conditions Australian Capital Territory Public Sector Award 2000; General Service Officers and Related Classifications (Australian Capital Territory Public Sector) Award 2001; Journalists (Australian Capital Territory Government Departments and Instrumentalities) Award 1998; A.C.T. Legislative Assembly Members’ Staff Award 2003; School Assistants (Australian Capital Territory – Government Schools) Award 2000 - 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] This decision relates to 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 following awards (Current Enterprise Awards):

a) CPSU (Salaries and Conditions of Service) ACT Public Sector Award 1998;

b) Employment Conditions Australian Capital Territory Public Sector Award 2000;

c) General Service Officers and Related Classifications (Australian Capital Territory Public Sector) Award 2001;

d) Journalists (Australian Capital Territory Government Departments and Instrumentalities) Award 1998;

e) A.C.T. Legislative Assembly Members’ Staff Award 2003; and

f) School Assistants (Australian Capital Territory – Government Schools) Award 2000.

[2] The application was made by the Government of the Australian Capital Territory (ACT).

[3] The original application sought to subsume all ACT public sector awards into a single ACT public sector enterprise award. However, following the handing down of the decisions to make modern enterprise awards for Telstra and the Australian Public Service, the ACT determined that there were already modern awards in place that provide a sufficient safety net for employees in certain organisational units within the ACT public service.

[4] Consequently, the applicant sought the creation of a modern enterprise award to replace only the awards listed above.

[5] The amended application was supported by the:

a) Community and Public Sector Union (CPSU);

b) Construction, Forestry, Mining and Energy Union (CFMEU); and

c) Australian Workers’ Union.

[6] On 6 May 2016 the applicant filed the following material in support of the application:

a) Joint outline of submissions (Exhibit “A”);

b) Statement of Russell Noud, Executive Director of Public Sector Workplace Relations at the Chief Minister, Treasury and Economic Development Directorate (Exhibit “B”);

c) Draft Order; and

d) Draft of the Proposed Award.

[7] At the hearing of this matter on 23 May 2016:

a) Mr P Gillan appeared for the ACT Government

b) Mr A Nash appeared for the CPSU; and

c) Mr S Maxwell appeared for the CFMEU.

[8] At the conclusion of the hearing we announced our decision to make the ACT Public Sector Enterprise Award 2016 (Proposed Award) which had been agreed between the parties subject to the finalisation of its terms by Commissioner Johns.

[9] On 23 May 2016 the parties jointly submitted an amended version of the Proposed Award, amended to identify a superannuation default provider.

[10] On 31 May 2016 the parties jointly filed a further amended version of the Proposed Award, amended to:

a) include additional provisions for the model award flexibility term (relating to overtime rates, penalty rates, allowances and leave loading);

b) include the model term for the cashing out of annual leave and;

c) to ensure that clause 19 reflected the National Employment Standards.

[11] These are our reasons for making the Proposed Award.

The approach

[12] The approach to be taken to the making of an enterprise modern award was established by a Full Bench in Commonwealth of Australia acting through the Minister Assisting the Prime Minister for the Public Service v the Community and Public Sector Union and Others. 1 We adopt that approach in this matter.

The legislative requirements

[13] 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:

(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.

[14] 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:

6 The modern enterprise awards objective
(1) The modern awards objective and the minimum wages objective apply to the FWC making a modern enterprise award under this Division.
(2) However, in applying the modern awards objective and the minimum wages objective, the FWC must 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. This is the modern enterprise awards objective.

[15] 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.”

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

11 Enterprise instrument modernisation process is not intended to result in reduction in take-home pay
(1) The enterprise instrument modernisation process is not intended to result in a reduction in the take-home pay of employees.
(2) An employee’s take-home pay is the pay an employee actually receives:

(a) including wages and incentive-based payments, and additional amounts such as allowances and overtime; but
(b) disregarding the effect of any deductions that are made as permitted by section 324 of the FW Act.

Note: Deductions permitted by section 324 of the FW Act may (for example) include deductions under salary sacrificing arrangements.
(3) An employee suffers a modernisation-related reduction in take-home pay if, and only if:

(a) a modern enterprise award made in the enterprise instrument modernisation process starts to apply to the employee when the award comes into operation; and
(b) the employee is employed in the same position as (or a position that is comparable to) the position he or she was employed in immediately before the modern enterprise award came into operation; and
(c) the amount of the employee’s take-home pay for working particular hours or for a particular quantity of work after the modern enterprise award comes into operation is less than what would have been the employee’s take-home pay for those hours or that quantity of work immediately before the award came into operation; and
(d) that reduction in the employee’s take-home pay is attributable to the enterprise instrument modernisation process.

[17] 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

[18] We now turn to each of the matters that we took 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)

[19] The applicant provided a history of the Current Enterprise Awards. That history can be summarised as follows:

(a) ACT public sector employees are engaged pursuant to either the Public Sector Management Act 1994 (PSM Act) or, in relation to employees of Members of the ACT Legislative Assembly, the Legislative Assembly (Members Staff) Act 1989;
(b) Prior to its enactment, employees now employed pursuant to the PSM Act were employed as Commonwealth public servants. Upon commencement of the PSM Act, the ACT public service adopted the classification structure of the Australian Public Service (APS).
(c) Since 1994 the APS classification structure has been simplified, while the number of classifications under ACT enterprise agreements has grown to over 240. As a result the respective classification structures bear no resemblance to what applied in 1994.
(d) ACT public sector awards were simplified as a result of the Award Simplification process conducted pursuant to Item 51 of Part 2 of Schedule 5 of the Workplace Relations and Other Legislation Amendment Act 1996;
(e) The ACT Legislative Assembly Members’ Staff Award 2003 was created in 2003. This was the first award applying so such employees whose employment conditions were, prior to that point, determined by the ACT Chief Minister.

[20] It can be seen from this brief overview that the Current Enterprise Awards have had a long and distinct history. This factor weighed 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).

[21] It was submitted that there is no single award that would, but for the Proposed Award, cover all employees who are covered by the Current Enterprise Awards.

[22] It was further submitted that there is no industry based modern awards that covers employees in the ACT public sector.

[23] The parties submitted that a number of different modern occupational awards may cover limited groups of its employees. They are:

• Health Professionals and Support Services Award 2010;

• Joinery and Building Trade Award 2010;

• Manufacturing and Associated Industries and Occupations Award 2010; and

• Professional Employees Award 2010.

[24] It may be observed that coverage by a large number of modern awards may lead to difficulties in enterprise bargaining. Further, it might lead to an unnecessary fragmentation of the award safety net and would fail to achieve the modern awards objective.

[25] The parties submitted that if a modern enterprise award was not made, then a significant majority of employees would be covered by the Miscellaneous Award 2010 [MA000104] (the Miscellaneous Award).

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

“We agree with those who have suggested that the coverage of the award is very narrow and likely to be limited in time where emerging industries are concerned or where the expansion of coverage of a modern award is involved. Accordingly we do not think the award should contain a comprehensive safety net designed for any particular occupation or industry. Rather it should contain basic conditions only, leaving room for the application of an appropriate safety net in another modern award in due course.”

[27] 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 weighed 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)

[28] It was submitted that the content of the modern occupational awards are specific to each particular occupation and are not an appropriate safety net given the history of the ACT public sector.

[29] It is apparent from the history of the industrial arrangements which have applied to the ACT public service that the content of the various industry specific modern awards do not reflect the needs, terms and conditions of its employees. This factor weighed 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)(d)

[30] The parties submitted that the terms and conditions of all ACT public sector employees are covered by enterprise agreements. The enterprise agreements relevant to this application were submitted to be:

• Administrative and Related Classifications Enterprise Agreement 2013-17;

• Infrastructure Services Enterprise Agreement 2013-17;

• Legal Professionals Enterprise Agreement 2013-17;

• Support Services Enterprise Agreement 2013-17;

• Health Professions Enterprise Agreement 2013-17;

• Technical and Other Professional Classifications Enterprise Agreement 2013-17; and

• Legislative Assembly Members Staff Enterprise Agreement 2013-17.

[31] It was submitted that the following provisions are part of a common set of terms and conditions appearing in the aforementioned enterprise agreements:

• industry specific classification pay rates;

• ordinary hours of work of less than 38 hours per week for many classifications of employees;

• a more generous entitlement to personal/carers leave than is provided by the NES;

• flextime;

• paid parental leave; and

• a more generous entitlement to redundancy pay than is provided by the NES.

[32] These factors weighed in favour of making a modern enterprise award.

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

[33] It was submitted that there are enterprise specific terms and conditions that apply to employees of the applicant. A few are worthy of mention:

• specific classification pay rates;

• hours of work;

• personnel leave;

• flextime;

• parental leave; and

• redundancy provisions.

[34] The parties also submitted that the rates of pay contained in the Current Enterprise Awards reflect long established relativities connected to the unique classification scheme that is utilised by the ACT public service.

[35] The parties drew the Commission’s attention to both the modern awards objective and the minimum wages objective, and submitted that these objectives require the Commission to have regard to the principle of equal remuneration for work of equal or comparable value.

[36] The parties submitted that if the Proposed Award were not made, the classifications and relativities contained in the Current Enterprise Awards would be lost, which they submitted would be contrary to the principle of equal remuneration for work of equal value.

[37] The parties submitted that the Full Bench of the Commission that modernised the APS Award recognised that the existence of established salary relativities was a factor in favour of making a modern enterprise award. The parties submitted that the existence of established wage relativities is a factor in favour of making the Proposed Award.

[38] These factors weighed 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).

[39] The parties submitted that

• The persons that would be covered by the proposed instrument represent almost half of the ACT public sector; and

• A decision to not make the Proposed Award would result in the better off overall test (BOOT) being assessed against the Miscellaneous Award 2010 and the aforementioned modern awards, which do not contain terms and conditions that reflect the particular circumstances of employment in the ACT public service.

[40] The applicant submitted that if the Proposed Award were made it would provide an adequate safety net for the employees and for the purpose of the BOOT, and enterprise agreements would be assessed against a single enterprise award with conditions specific to the ACT public sector.

[41] As we observed earlier, coverage by a large number of modern awards may lead to difficulties in enterprise bargaining and may lead to an unnecessary fragmentation of the award safety net. This may result in a failure to achieve the modern awards objective.

[42] These factors weighed in favour of making a modern enterprise award.

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

[43] All applicant and relevant unions supported the making of this modern enterprise award. No person opposed 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)

[44] There were no regulations relevant to this criterion.

Should a modern enterprise award be made?

[45] The ACT public service is a unique entity. There is no real industry of the ACT public sector beyond the operations of the applicant and no convenient alternative that can be said to better satisfy the modern awards objective than modernising the Current Enterprise Awards.

[46] The history of the Current Enterprise Awards discloses a rationale for their existence which remains current today. The terms of the Current Enterprise Awards contain enterprise specific terms. While some of these can and should be contained in enterprise agreements, the fact remains that the awards were developed for this enterprise, and once consolidated and modernised, remain the most suitable vehicle for a fair and relevant minimum safety net into the future. In our view there is a compelling case for the making of a modern enterprise award for the ACT public service. The above factors clearly made the case for such an outcome. We considered that the Proposed Award should be made.

[47] Consequently, we made the Proposed Award in the terms agreed between the parties as amended and filed in the Commission on 31 May 2016.

VICE PRESIDENT

Appearances:

P Gillan appeared for the ACT Government

A Nash appeared for the CPSU

S Maxwell appeared for the CFMEU

Hearing details:

2014.

Sydney, Canberra

May 23.

 1   [2015] FWCFB 616.

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