Fair Work Act 2009
s.156 - 4 yearly review of modern awards

4 yearly review of modern awards –Payment of wages.

[1] A Statement 1 issued on 24 February 2016 identified three issues related to payment of wages which were referred to a separate Full Bench as presently constituted. Further to that statement, the President has referred two additional issues to the Full Bench.

[2] The Full Bench will now deal with the 5 issues set out below.

(i) Timing of payment of wages

[3] The SDA application 2 seeks a variation to require that all wages be paid on a regular payday within four days of the end of the pay period. The variation is sought in the following awards:

● Fast Food Industry Award 2010;
● General Retail Industry Award 2010;
● Hair and Beauty Industry Award 2010; and
● Mannequins and Models Award 2010.

[4] These awards currently do not specify a payday or a period after the completion of the pay-cycle within which an employee will receive their pay. The SDA submit their proposed amendment is required ‘to avoid manipulation and abuse’.

[5] Attachment A contains lists of modern awards which provide for payment of wages within specified periods after the end of a pay cycle.

(ii) Removing a restriction on the days for payment of wages

[6] Restaurant and Catering Industrial (RCI) 3 has submitted a claim to delete the prohibition of payment of wages on Fridays, Saturdays and Sundays in the Restaurant Industry Award 2010.4 The RCI submit that this prohibition is ‘a restrictive business practice and contrary to the modern awards objective’.

(iii) Timing of payment on termination of employment

[7] There are two separate applications in relation to the timing of payment of wages on termination.

[8] Business SA and Australian Business Industrial and the New South Wales Business Chamber (ABI & NSWBC) have made applications seeking a variation that would require the employer to pay wages due to an employee within two business days (not including Saturday, Sunday or public holidays) of a termination of employment. 5 The variation is sought in the following awards:

● Business Equipment Award 2010;
● Food, Beverage and Tobacco Manufacturing Award 2010;
● Horticulture Award 2010;
● Manufacturing and Associated Industries and Occupations Award 2010;
● Storage Services and Wholesale Award 2010; and
● Supported Employment Services Award 2010.

[9] The current clauses in these awards require termination payment to be made either on the day of termination, 6 or forwarded (by post), either the next working day7 or within two business days.8 Business SA submits that employers may be unable to comply with these requirements, particularly where the termination occurs on a weekend or public holiday, and especially in the event of a summary termination.

[10] Business SA proposes a variation in similar terms to that of clause 24.4(a)(iii) of the Vehicle Manufacturing Repair, Service and Retail Award 2010, as follows:

“Except that where an employee abandons his or her employment or the employee’s employment is terminated without notice for serious and wilful misconduct the employer will pay the wages due to the employee within two business days (not including a Saturday, Sunday or public holiday) of the termination.” 9

[11] The Ai Group submitted a claim 10 to enable employers who pay by EFT to make termination payments in accordance with the normal pay cycle in the following awards:

● Manufacturing and Associated Industries and Occupations Award 2010;
● Graphic Arts, Printing and Publishing Award 2010;
● Storage Services and Wholesalers Award 2010;
● Road Transport and Distribution Award 2010;
● Road Transport (Long Distance) Award 2010;
● Business Equipment Award 2010;
● Horticulture Award 2010;
● Wine Industry Award 2010;
● Food, Beverage and Tobacco Manufacturing Award 2010.

[12] The awards presently stipulate that payment must be made at the time of termination or very shortly thereafter.

[13] Attachment B contains lists of modern awards which contain timing of payment on termination provisions.

(iv) Penalty for late payment of wages

[14] Two claims have been made in respect of penalties for payment of wages. The Health Services Union (HSU) has submitted claims¹¹ to introduce penalties for the late payment of wages in the following awards:

● Aboriginal Community Controlled Health Services Award 2010;
● Aged Care Award 2010; and
● Social, Community, Home Care and Disability Services Industry Award 2010.

[15] The awards above do not currently contain provision for penalties for late payment of wages.

[16] Master Builders Australia (MBA) has made claims 12 to delete the penalty for late payment of wages in the following awards:

● Building and Construction General On-site Award 2010; and
● Joinery and Building Trades Award 2010.

[17] The Building and Construction General On-site Award 2010 provides that an employee paid by cash or cheque is entitled to payment at overtime rates if the employee is kept waiting for their wages for more than 15 minutes after finishing work on payday (other than in circumstances beyond the control of the employer). 13 The Joinery and Building Trades Award 2010 provides that an employee who does not receive their pay by the cessation of ordinary hours of work on Thursday is entitled to payment for waiting time at overtime rates (other than in circumstances beyond the control of the employer).14 The MBA submits that waiting time is anomalous.

[18] The issue of late payment of wages has been addressed in respect of the Timber Industry Award 2010. 15 The CFMEU sought introduction of a penalty for late payment when payment is made by EFT. In rejecting the claim the full bench stated: 16

“[121] The CFMEU submitted that the inclusion in the Timber Award of the amended clause 25.5 it proposes would better meet the needs of the low paid, in light of the potential financial stresses of the late payment of wages. We think this misconstrues s.134(1)(a) of the Act in that it is the fair and relevant minimum safety net of terms and conditions which is fixed taking into account relative living standards and the needs of the low paid. The variation proposed does not fix the award component of the safety net. Rather it is directed to including a penalty for late payment to encourage compliance with the payment of wages required to be paid in accordance with the award safety net. Whilst we accept that non-compliance with the safety net will detract from the application of the safety net wages, we are not persuaded that the late payment provision is necessary for compliance with the payment of wages as a penalty for non-application of the requirements of the Timber Award in addition to the existing penalties for non-compliance within the Act. Nor, given the evidence as to the occurrence of late payment under both the pre-modern awards and the Timber Award and the evidence of late payment in some instances where enterprise agreements contained a provision of the type now sought by the CFMEU that the variation of clause 25.5 would prevent instances of late payment.

[123] Against those considerations, the variation sought would increase employment costs and an increased regulatory burden through the added payments required in the event of late payment, in some circumstances where an employer has done all that they can to ensure that payment will be accessible to employees when they are due. Even where the payment obligation did not arise as a result of the proposed clause 25.8(c), an employer would nonetheless be obliged to make some payment and undertake the administrative actions necessary to do so, even in circumstances in which late payment occurred for reasons beyond the employer’s control.

[124] Further, as a matter of merit, we think that the prescription of payment in respect of time spent by an employee waiting for a late payment by cash or cheque, in respect of the delayed departure of an employee from their place of employment because their wages are not paid on time 93 is qualitatively different from the imposition of a penalty in respect of late payment by EFT.”   

[19] The issue of late payment of wages was also addressed in respect of an application to delete the penalty for late payment applying to payment by cash, bank cheque or EFT in the Professional Diving Industry (Industrial) Award 2010. In that matter the Full Bench adopted the position expressed in relation to the Timber Industry Award 2010 as follows: 17

“[233] We agree with the sentiment that late payment penalties are not appropriate in circumstances where employees are paid by electronic funds transfer (EFT). We also agree with the comments of Mayo J of the South Australian Supreme Court in Cranford-Webster v McFarlane 18:

“I think it means time which the employee spends at the employer’s establishment actually waiting for his pay …

“Waiting time’ would mean in its ordinary sense the time that an employee spent and wasted in loitering about whilst payment of wages to him was not forthcoming. The appropriate meaning to be given to ‘waiting’ would seem to be staying in expectation, stopping or remaining stationary, or inactive till the happening of the event, holding over departure.

[234] However the Exposure Draft provides, at clause 10.3(b) that wages may be paid by cash, bank cheque or EFT. In circumstances where wages are paid in cash or bank cheque the penalty for late payment (in clause 10.3(c)) remains relevant. For that reason we do not propose to amend the Exposure Draft in the manner suggested by AMMA.”

[20] Attachment C contains a list of modern awards which contain penalties for late payment of wages.

(v) Annual leave loading issue

[21] The Ai Group seek to vary a number of awards to address an alleged anomaly in the annual leave clauses relating to provisions dealing with payment of annual leave and annual leave loading. 19 The claim relates to the following awards:

● Contract Call Centres Award 2010;
● Electrical, Electronic and Communications Contracting Award 2010;
● Food, Beverage and Tobacco Manufacturing Award 2010;
● Joinery and Building Trades Award 2010; and
● Telecommunications Services Award 2010.

[22] The Ai Group submit that the respective award clauses can be read as inappropriately entitling employees to either:

● payment of both the relevant shift loading (and potentially other amounts payable in respect of ordinary hours) and an additional annual leave loading; or

● alternatively, the clauses could be read as potentially requiring the payment of such shift loadings twice when an employee receives annual leave entitlements.

[23] Ai Group submit that a similar, but not identical issue, was dealt with by the Full Bench in the Manufacturing and Associated Industries and Occupations Award 2010 20, where the Full Bench determined that a clause in the exposure draft would be amended to remove a potential anomaly that might allow for payment of shift loadings and annual leave loadings for periods of annual leave.

[24] Schedule D contains the clauses in each of the above awards subject to the Ai Group claim.

Next Steps

[25] These matters will be listed before Justice Ross for mention at 1pm on Thursday 30 June 2016 in Sydney. Requests to attend via video link should be sent to chambers.ross.j@fwc.gov.au. The purpose of the mention will be to:

(i) Determine whether this statement reflects the position of the parties;
(ii) Consider whether conciliation would be beneficial to narrow any issues in dispute;
(iii) Obtain an indication of the scope of each party’s case, and whether they intend to call any evidence;
(iv) Give consideration to the directions to be issued.

[26] A notice of listing will follow in due course.

PRESIDENT

<Price code C, PR581401>

ATTACHMENT A—Awards that contain timing of payment of wages provisions

The Commission has identified 11 modern awards that currently provide for payment within a specified period (most commonly two to seven days) after the end of a pay cycle (A.1). Three awards containing provision for four weekly or monthly payment specify that payment must be made two weeks in advance and two weeks in arrears, or as close to the middle of the cycle as possible (A.2).

A further four modern awards specify that payment is to be made in arrears, but do not limit the number of days after conclusion of the pay cycle within which payment must be made (A.3).

The remaining 104 modern awards, including those subject to the SDA application, make no mention of the timing of payment of wages.

A.1 Awards containing provision for payment within specified period after pay cycle

A.2 Awards containing provision for payment four weekly and/or monthly with provision for payment half in advance and half in arrears

A.3 Awards containing provision for payment in arrears

ATTACHMENT B—Awards that contain timing of payment on termination provisions

The Commission has identified six modern awards that require payment on the day of termination (B.1). One modern award contains an option for the employer to make payment either on termination or in accordance with the normal pay cycle (B.2). A further 25 modern awards contain provision for payment within a specified timeframe (between one and three days) after termination of employment (B.3). Three awards that specify a timeframe within which payment must be made after termination also contain a penalty where an employee is kept waiting past this time.

The remaining 88 modern awards make no mention of timing of payment on termination of employment.

B.1 Awards containing provision for payment on termination

B.2 Award containing option for payment on termination or according to the normal pay cycle

B.3 Awards containing provision for payment within specified period from termination

ATTACHMENT C—Awards that contain penalty for late payment of wages provisions

The Commission has identified 16 awards which provide for penalty for late payment of wages. None of these awards specify a time period within which payment must be made after the completion of the pay-cycle.

ATTACHMENT D—Extract of payment of annual leave loading provisions subject to Ai Group application

 1   [2016] FWC 1191SD at PNS [16] – [19].

 2   SDA submission 2 March 2015; Transcript 14 December 2015, PN 410.

 3   RCI submission 2 March 2015.

 4   A number of awards contain provisions stating payday must not be later than Thursday in a week.

 5   Business SA submission 2 March 2015; Transcript 14 December 2015 PN 127; ABI & NSWBC submission 2 March 2015.

 6   Supported Employment Services Award 2010.

 7   Horticulture Award 2010; Manufacturing and Associated Industries and Occupations Award 2010; Business Equipment Award 2010.

 8   Storage Services and Wholesale Award 2010.

 9   MA000089 at clause 24.4(a)(iii).

 10   Ai Group submission of 26 April 2016.

¹¹ HSU submissions (Aged Care, ACCHSA, SACS) 2 March 2015.

 12   MBA submissions (Building, Joinery) 2 March 2015.

 13   MA000020 at clause 31.5.

 14   MA000029 at clause 26.3.

 15   [2015] FWCFB 2856

 16   [2015] FWCFB 2856

 17   [2015] FWCFB 2856 at PNs [49] - and [2015] FWCFB 7236 at PNS [229] – [234]

 18   [1947] SASR 162; also see Re Darling Harbour Development Project Industrial Agreement (1988) 27 IR 375.

 19   Ai Group submission 12 November 2015

 20   [2015] FWCFB 7236 at [78]

Printed by authority of the Commonwealth Government Printer