| [2016] FWCFB 4418 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.156 - 4 yearly review of modern awards
VICE PRESIDENT HATCHER |
|
Vehicle Manufacturing, Repair, Services and Retail Award 2010.
Introduction and background
[1] As part of the conduct of the 4 yearly review of the Vehicle Manufacturing, Repair, Services and Retail Award 2010 1 (VMRSR Award), an exposure draft was published on 15 October 2014, and amended versions of the exposure draft were published on 23 January 2015, 19 February 2015 and 2 April 2015. Arising from submissions made by interested parties in relation to these exposure drafts, a number of substantive issues in contest were identified which were referred to this Full Bench for determination.
[2] These contested issues fell into three categories. Firstly, there were four proposed variations which were part of a “package” of variations agreed to by the Victorian Automobile Chamber of Commerce, the Motor Trader’s Association of NSW, the Motor Trades Association of South Australia and the Motor Trades Association of Western Australia (collectively, Motor Trades Organisations), the Australian Manufacturing Workers’ Union (AMWU), the Shop, Distributive and Allied Employees’ Association (SDA) and the Australian Workers’ Union (AWU). These four changes were opposed by the Australian Industry Group (Ai Group), Australian Business Industrial and the NSW Business Chamber (collectively ABI) and the Australian Federation of Employers and Industries (AFEI) (contested package variations). The contested package variations (identified by reference to the clause numbering in the exposure draft published on 2 April 2015) were as follows:
(1) Clause 33.4 allowed ordinary shifts of up to 12 hours per day, but shifts of 12 hours in length could only be implemented by agreement between the employer and the majority of employees in the enterprise or the relevant part of the enterprise, subject to a number of identified pre-conditions being satisfied. The proposed variation would limit daily hours to a maximum of 10 hours per day, with 12 hour shifts allowed by agreement. There would also be a transitional provision which preserved existing 12 hour arrangements in the mining or infrastructure industries until existing contractual arrangements expired.
(2) Clause 37.1(a) provided for the taking of meal and other breaks by driveway operators, console operators and roadhouse attendants. The provisions allowed for two alternatives: for meal and tea breaks to be taken at the discretion of the employer, or as a paid 20 minute crib break whilst maintaining customer service. The proposed variation would remove the employer discretion when breaks are taken and link the provision to clause 11.1, which specified for employees on continuous shift work when breaks are taken.
(3) Clause 38 provided for special provisions applicable to vehicle salespersons. This was proposed to be varied to ensure that vehicle salespersons were entitled to be paid the minimum hourly rate for all hours worked up to and exceeding 38 hours per week, including all hours “required” to be worked by the employer, and to allow commission payments to be applied to meet this minimum payment obligation, with a reconciliation to be conducted every 3 months.
(4) Clause 21.2 of the exposure draft was a proposed new provision which was not in the current VMRSR Award. Clause 21.2(a) defined overtime as any time worked outside the prescribed ordinary hours. The proposed variation was to provide that overtime was any time worked in excess of the employee’s rostered ordinary hours, calculated on a daily basis.
[3] The other variations in the “package” were either supported by all interested parties, or were not opposed. It is not presently necessary to refer to them.
[4] The second category was a single variation proposed by the Ai Group (Ai Group variation). It sought that clause 22.5, which dealt with payment for annual leave, be redrafted to make it clear that shiftworkers were to receive the greater of their shift loading or the annual leave loading while on annual leave, but not both.
[5] The third category was a variation proposed by the SDA (SDA variation) to align the casual loading and penalty rates for the classification of “casual console operator/roadhouse attendant engaged to primarily cook other than takeaway meals” with the comparable classification of casual driveway operator. It contended that the classifications had fallen out of alignment because of a past error in calculation.
[6] This Full Bench received written submissions and conducted a hearing on 10 August 2015 concerning the contested issues identified above. In considering the submissions advanced by a number of interested parties, we developed concerns about the current structure of the VMRSR Award and formed the provisional view that it should not continue in its current form. Accordingly on 2 November 2015 2 we issued a statement the pertinent parts of which read as follows:
“[2] At the hearing, it became apparent that the VMRSR Award, both in its current form and in the exposure draft, was unduly complex and difficult to understand. We consider that, to a significant degree, this difficulty is the result of the inclusion of disparate industry sectors within the same award. In particular, the inclusion of the vehicle manufacturing sector in the VMRSR Award, which is otherwise concerned with employment in the retail and service sectors, causes significant problems in the drafting and structure of the VMRSR Award.
[3] We have provisionally formed the view that the vehicle manufacturing sector should be removed from the VMRSR Award. Because the current award conditions for that sector are highly compatible with the conditions contained in the Manufacturing and Associated Industries and Occupations Award 2010 (Manufacturing Award), our provisional view is that the vehicle manufacturing sector should be placed within that Award.
[4] We intend to prepare and have published a new exposure draft of the VMRSR Award which, on a provisional basis, will:
(1) not contain the vehicle manufacturing sector;
(2) be re-drafted in simpler language and with a simpler structure; and
(3) deal with the issues the subject of argument at the hearing on 10 August 2015.
[5] A new exposure draft of the Manufacturing Award incorporating the vehicle manufacturing sector will also be published.
[6] Once the new exposure drafts are published, we will issue directions pursuant to which interested parties will have the opportunity to make submissions concerning the exposure drafts. We will also conduct a further hearing if the parties’ submissions indicate that there are significant issues concerning the exposure drafts which require determination.”
[7] After the above statement was issued, a number of interested parties sought the opportunity to address the provisional view we had formed to remove the vehicle manufacturing sector from the VMRSR Award before any further exposure drafts were issued. In response to this we issued a further statement on 24 December 2015 3, which included the following:
“[2] Since that Statement was issued, the Commission has received correspondence from the Victorian Automobile Chamber of Commerce and the Motor Trades Associations of New South Wales, South Australia and Western Australia, and the Australian Manufacturing Workers’ Union, requesting that the matter be relisted prior to the issue of the new exposure drafts for a further hearing. This request was based on a concern that the parties had not been afforded the opportunity to address, as a threshold issue, the provisional view expressed in the Statement of 2 November 2015.
[3] The concern so expressed is misplaced because the Statement clearly contemplated that the parties would have an opportunity to advance submissions challenging the provisional view that we have formed and advocating for a maintenance of the status quo or for some other course to be taken. Accordingly we do not intend to relist the matter prior to the issue of the new exposure drafts. We consider that any consideration of the appropriate course to be taken will proceed more expeditiously and on a better informed basis if the parties have available to them the new exposure drafts at the time they make submissions. That will, for example, enable them to identify any detriments to employers or employees which may result if the provisional view were to be implemented.
[4] However because the correspondence referred to clearly foreshadows that there will be significant opposition to the adoption of the provisional view, we consider that it will be necessary to conduct a further hearing in the matter. That hearing will occur on 19 and 20 April 2016 in Melbourne.
[5] On an indicative basis only, the program for the matter will broadly be as follows:
(1) End of January 2016: issue of exposure of drafts.
(2) Mid-March 2016: parties to file evidence and submissions.
(3) First week of April 2016: parties to file any evidence and submissions in reply.
[6] Formal directions and the notice of listing for the hearing will be issued at the same time as the new exposure drafts are issued.”
[8] Amended exposure drafts for the VMRSR Award and the Manufacturing and Associated Industries and Occupations Award 2010 4 (Manufacturing Award) were eventually published on 4 March 2016. These exposure drafts gave expression to our provisional view that the manufacturing sector should be moved from the VMRSR Award to the Manufacturing Award. The exposure draft for the VMRSR Award also set out our provisional view as to how the contested issues should be resolved. On the same day we issued a statement listing the matter for a further hearing on 23 and 24 May 2016 and making directions to facilitate the filing and service of evidence and submissions for that hearing.
[9] Evidence and submissions concerning the provisional proposal to transfer the vehicle manufacturing sector from the VMRSR Award to the Manufacturing Award were received from:
[10] Australian Business Industrial and the NSW Business Chamber supported the position of the Motor Trades Organisations but did not make separate submissions.
[11] On 5 October 2015 the SDA filed an application under s.160 of the Fair Work Act 2009 (Cth) (FW Act) seeking the correction of an alleged ambiguity, error or uncertainty in relation to the rates of pay for the classification of “casual console operator/roadhouse attendant engaged to primarily cook other than takeaway meals”. This application essentially sought to agitate the SDA variation referred to earlier under s.160 as well as under the aegis of the 4-yearly review. Somewhat belatedly this application was listed for hearing on 23 and 24 May 2016 together with the 4-yearly review of the VMRSR Award, but subsequently we gave interested parties the opportunity to file further written submissions in relation to this application.
[12] The hearing was completed on 23 May 2016. The issues to be decided were: whether the vehicle manufacturing section should be transferred to the Manufacturing Award, the contested package variations, the Ai Group variation and the SDA variation. We will deal with these issues in that order.
Vehicle Manufacturing Sector
Historical background
[13] The VMRSR Award was first made on 4 September 2009 as part of the award modernisation process conducted pursuant to Part 10A of the Workplace Relations Act 1996 (WR Act). It effectively involved an amalgamation of two awards which had hitherto been entirely separate: the Vehicle Industry Award 2000 and the Vehicle Industry - Repair, Services and Retail Award 2002 (RSR Award). The Vehicle Award had its origins in awards made in the settlement of industrial disputes involving the union then known as the Australian Coach Motor Car Tram Car Waggon Builders Wheelwrights and Rolling Stock Makers Employees' Federation and subsequently the Vehicle Builders’ Employees Federation of Australia (VBEF). In 1993 the VBEF amalgamated with the AMWU, and became in substance the AMWU’s autonomous Vehicle Division.
[14] The first award applicable to the vehicle industry was made by the Commonwealth Court of Conciliation and Arbitration (Lukin J) in 1927, and applied to identified respondents in (relevantly) the “industry of employees engaged or usually engaged in the process, trade, or business connected with or incidental to the manufacture or repairing of … trucks, motor cars … and all other vehicles, or parts thereof in wood and/or metal”. 5 Subsequently issues arose concerning the division of coverage between the vehicle industry award and the metal trades awards which preceded the Manufacturing Award. In 1935 the Court of Conciliation and Arbitration (Beeby J) made a new award which was described as covering substantially the same industries as the 1927 award, but contained a new exemption: “Employers engaged in the manufacturing and/or repairing of metal parts used in such industries at the date of this award or hereafter bound by the provisions of the Metal Trades award of 1935, are exempted from this award.”6 The decision of Beeby J referred to the dispute from which the award arose as concerning, relevantly, “the wages and conditions of employment in the making and repairing of motor bodies and the assembling of motor chasses …”.7 This was a description of an “industry” narrower in scope than it appeared to be in the award that was made, and did not include vehicle engines and engine parts. In relation to the industry so described, Beeby J said:
“The metal trades award will not be extended to the industry. The marginal rates fixed for metal trades workers employed in the industry will be maintained but all employees, irrespective of what unions they belong to, will come under one award. The metal trades award will be varied to make the exemption complete and permanent.
The Metal Trades Employers Association was mainly concerned with the schedule of employers to be bound by the award. Many of its members cited by the union of employees are not actually in the motor trade but as part of mixed engineering activities make and supply the motor body and coach building industry with springs, spare parts and accessories, under the industrial conditions prescribed by the metal trades award. This section of the trade is left under the metal trades award.” 8
[15] The first Vehicle Industry Award, so named, was made by Conciliation Commissioner Galvin in 1953 9 with coverage expressed in broad terms, but also with a wide exemption for employers engaged in manufacturing vehicle parts and components who were respondents to the Metal Trades Award. Clause 36 of the award made relevantly stated10:
“This award shall be binding on employer claimants and respondents as to every operation carried on within, or in connection with a plant principally concerned with the manufacturing, assembling or repairing of carriages, carts, wagons, trucks, motor cars, motor cycles, railway cars, tram cars, side-cars or other vehicles, or parts or components thereof in wood, metal and/or other materials; and in other plants it shall govern all such operations except the making or repairing of motor engines or parts thereof.
Provided that this award shall not apply to an employer who on the 19th day of May, 1938, was engaged in the manufacturing and/or assembling of metal parts, components or accessories of motor vehicles and is observing the terms and conditions of the Metal Trades award in relation thereto”.
[16] In 1962, on the application of the Motor Trades Association of NSW and the Victorian Automobile Chamber of Commerce, the Vehicle Industry Award was varied by the Commonwealth Conciliation and Arbitration Commission (Commissioner Apsey) to include a new “Part II - Retail Motor Industry”. 11 Clause 1 of Part II applied the provisions of the award generally and the provisions of the Part to respondents:
“…in respect to every operation including the repairing of motor engines and/or the making or repairing of parts thereof carried on within or in connection with a plant or establishment principally concerned with the distributing, repairing, maintaining and/or servicing of motor cars, motor trucks, motor cycles and other vehicles or parts or components, thereof in wood, metal and/or other materials, or the supply of running requirements for such vehicles …”. 12
[17] Part II included classifications for automotive parts salesman, car cleaner or washer, car polisher and driveway attendant.
[18] The inclusion of the “Retail Motor Industry” in the Vehicle Industry Award did not last long. The first, and separate, RSR Award was made (initially on an interim basis) by the Commonwealth Conciliation and Arbitration Commission (Senior Commissioner Taylor) in 1968 in settlement of disputes involving the VBEF, the Amalgamated Engineering Union (as the AMWU was then known) and a number of employer groups including the Victorian Automobile Chamber of Commerce and the Metal Trades Employers Association (as the Ai Group was then known). The decision to make the award 13 stated that “certain of the claimants” in the dispute (not identified) “asked the Commission to make a new and separate award to cover what they called the repair, services and retail section of the industry”. Vehicle salespersons were initially not included, and were subsequently the subject of a Motor Vehicle Salesman Interim Award 1970. However that position was not maintained and they were later included in the RSR Award.
[19] The major vehicle manufacturers in Australia in the 1960s developed in-house awards during the 1960s. The Vehicle Industry Award 1982 contained exemptions for specifically-named vehicle manufacturers (including Holden, Ford, Mitsubishi, Nissan and Leyland) which had such enterprise-specific awards 14, and by the time of the Vehicle Industry Award 2000 there was a general exemption for any business which “operates under a discrete enterprise/house award”.15
[20] In 1993, the Motor Trades Organisations were successful in having themselves removed from respondency to the Metal Trades Award, and instead a Retail Motor Industry (Metals) Award 1993 was made. 16 The coverage of this award was subsequently incorporated into the Vehicle Industry Award.17
[21] By the time the Australian Industrial Relations Commission (AIRC) undertook the award modernisation process in 2009, the coverage of the Vehicle Industry Award 2000 was relevantly expressed as follows:
“1.5 COVERAGE OF AWARD
1.5.1 This award shall apply in the States of New South Wales, Victoria, Queensland, South Australia and Tasmania to employer respondents:
(a) Subject to 1.5.1(b) hereof as to every operation carried on within or in connection with a plant principally concerned with the manufacturing, assembling or repairing of carriages, carts, wagons, trucks, motor cars, motor cycles, railway cars, tram cars, side-cars or other vehicles or parts or components thereof in wood, metal and/or other materials and in other plants as to all such operations except the making or repairing of motor engines or parts thereof.
(b) Notwithstanding 1.5.1(a) hereof, this award shall not apply:
...
(ii) to an employer who, on 12 July 1971, was engaged in the manufacturing and/or assembling of metal parts, components or accessories of motor vehicles and was bound to observe in relation thereto the award made under the Act known as the Metal Trades Award, 1952, as varied, or the Metal Engineering and Associated Industries Award, 1998, as varied;
(iii) to an employer bound to observe the award made under the Act, known as the Vehicle Industry - Repair, Services and Retail - Award 1983 [Print H5658 [V0019]]as varied: or
…
1.5.3 This award will not apply to any company that operates under a discrete enterprise/house award.
1.5.4 This award shall also apply in the States of New South Wales, Victoria and South Australia only to:
(a) The organisation of employees and employer respondents specified in clause 1.6.5 in respect to every engineering, metal working and fabricating operation carried on within or in connection with an establishment of an employer whose undertaking is principally concerned with the manufacture, assembly, repair, reconditioning, maintenance and/or distribution of vehicle servicing equipment, engines, parts, components, or accessories of motor vehicles, agricultural machinery or implements.
(b) Sub clause 1.5.4(a) shall not apply to an employer who is bound by any of the following awards, or any awards made in replacement of such awards:
The Metal Industry Award 1984 Part 1
The Vehicle Industry - Repair, Services & Retail Award 1983, as varied;
The Agricultural Implement Making Award 1980.
1.5.5 From the date of an order coming into operation to give effect to this award variation, the Vehicle Industry Award 2000 (ODN C No. 01522 of 1979)[Print F0813 [V0005] [AW801818]] shall supersede the Retail Motor Industry (Metals) Award 1993, [AW794787] but no rights, obligations or liabilities incurred or accrued shall be affected by such supersession.
(a) Notwithstanding anything elsewhere contained herein, the legal entitlements of an employee previously covered under the Retail Motor Industry (Metals) Award 1993, [AW794787] shall not be reduced by reason of this order.”
[22] The part of the coverage in clause 15.4 above was that derived from the Retail Motor Industry (Metals) Award 1993.
[23] Thus the coverage of the Vehicle Industry Award 2000 was relevantly subject to the following exclusions:
(1) employers in the repair, services and retail sector were generally respondents to the RSR Award;
(2) many vehicle parts and components manufacturers were subject to the Metals Award; and
(3) the major vehicle manufacturers were subject to their own enterprise awards.
[24] The award modernisation process required under Part 10A of the WR Act commenced in 2008. The vehicle manufacturing industry was initially included for consideration with the metals and manufacturing industries generally, but this was resisted by the AMWU and the Ai Group. The Motor Trades Organisation advanced a proposal to join the RSR Award and the Vehicle Industry Award into a single award. In a Statement issued on 22 May 2009 18, the AIRC Award Modernisation Full Bench acceded to this proposal as follows:
“[224] We publish a draft Vehicle Manufacturing, Repair, Services and Retail Award 2010. The proposed award is intended to deal comprehensively with the vehicle manufacturing sector and the repair, services and retail sector. It is our preliminary view that there will be operational benefits in having one industry award as there are many common conditions. Where necessary separate provision is made for distinct parts of the industry. Given the nature of much post-production and after-sale modification of specialised vehicles, it is anticipated that access to a single source of industrial regulation will assist employees and employers alike.
[225] The draft award does not markedly depart from the provisions of the existing pre-reform awards and existing conditions for employees involved in the sale of fuel and other vehicle related retailing have been adopted. We have decided not to include the pay and classification provisions from the Clerks Modern Award or from any other award. It is our view at this stage that clerks should not be covered by the vehicle industry award.
…
[228] We accept that the elimination of the differentials from several of the pay rates, casual loadings and shift premiums payable under Queensland and Western Australian NAPSAs will require staged implementation and note the arrangements proposed by the Motor Trades Association of Australia. These will be considered at a later stage.
[229] The relevant pre-reform awards contain different terms for conversion of casuals who have worked full-time hours, for four and six weeks respectively. Such provisions have the capacity to operate inflexibly against the interests of the casual employee and the employer. We have included the conversion provision found in the Manufacturing Modern Award.
[230] Finally we note that appropriate exclusions may be necessary in the coverage clauses of the Manufacturing Modern Award and the RT&D Modern Award.”
[25] In response, the Ai Group and the AMWU made submissions expressing strong opposition to the exposure draft for the VMRSR Award, and in particular opposed the vehicle and component manufacturers then covered by the Metal, Engineering and Associated Industries Award 1998 (Metals Award 1998) or the Rubber, Plastic and Cablemaking Industry - General Award 1998 being included in the VMRSR Award. On 16 June 2009 the Ai Group filed a submission which included the following:
“7. Ai Group acknowledges that there are some vehicle component manufacturers (albeit a small number) who are currently covered under the Vehicle Industry Award 2000 and who do not wish to be bound by the Modern Manufacturing Award. Some of the issues here relate more to relationships and politics concerning the Metals and Vehicle Divisions of the AMWU, rather than concerns about inappropriate award conditions. However, given the views of these employers, Ai Group supports the Modern Vehicle Repair Service and Retail Award applying to:
[26] On 4 September 2009 the Full Bench issued a decision 19 concerning a number of proposed modern awards in which it relevantly stated:
“Vehicle industry (repair, service and retail)
Vehicle manufacturing industry
Vehicle Manufacturing, Repair, Services and Retail Award 2010
[270] There has been widespread support for an integrated vehicle industry award to apply as reflected in the exposure draft – the Vehicle Manufacturing, Repair, Services and Retail Award 2010 (the Modern Vehicle Award). In adopting that course we have accepted a number of changes in the exposure draft arising from the parties’ submissions, so that the modern award generally accords with the structure and content of the antecedent awards.
[271] Consistent with unification of the vehicle awards, and notwithstanding the representations of the Shop, Distributive and Allied Employees Association, we have preserved the existing classification structures, including provisions as to the retailing of fuel and other commodities through the console operations which characterise modern service/petrol stations and which have been the subject of review in several earlier Commission proceedings. Similarly, we have accepted the need, given the specialised functions of the award requiring driving, for the retention of the current driving classifications. An appropriate exclusion will appear in the RT&D Modern award.
[272] As to coverage it is important that the making of the new award not unsettle the relationship which has existed satisfactorily for many years between the awards of the vehicle industry and the award regulating manufacturing. The fact of complementary exclusion provisions in the Modern Vehicle and the Manufacturing Modern awards is intended to have this effect. Where claims have been made for additions to the scope of coverage of the Modern Vehicle Award, to include, for example, boats and bicycles, our approach has been to maintain the status quo.”
[27] The above approach adopted by the Full Bench concerning coverage appears to have been substantially consistent with the position advanced by the Ai Group in its 16 June 2009 submission as earlier quoted. The VMRSR Award was ultimately made in a form consistent with that approach. Clause 4 of the VMRSR Award as it now stands sets out the award’s coverage, relevantly, as follows:
“4. Coverage
4.1 This award covers employers throughout Australia of employees engaged in vehicle manufacturing and/or vehicle industry repair, services and retail, as defined in this clause, to the exclusion of any other modern award and where the employer’s establishment, plant or undertaking is principally connected or concerned with:
(a) the selling, distributing, dismantling/wrecking/restoring, recycling, preparing for sale, storage, repairing, maintaining, towing, servicing, and/or parking of motor vehicles of all kinds, including caravans, trailers or the like and equipment or parts or components or accessories thereof including the establishments concerned for such vehicles and the like;
(b) operations or allied businesses concerned with selling, distributing or supplying running requirements for vehicles (including motor fuels, gas and oils);
(c) the selling and/or handling and/or retreading and/or storing/distribution and/or fitting and/or repairing of tyres or the like made of any material;
(d) the repair and servicing of motor vehicles in the establishment of an employer not falling within clauses 4.1(a), (b) and (c) but who is engaged in the motor vehicle rental business;
(e) the manufacturing, assembling or repairing of carriages, carts, wagons, trucks, motor cars, bodies, motorcycles, railway cars, tram cars, side-cars or other vehicles or parts or components or accessories in wood, metal and/or other materials;
(f) manufacturing, assembling, fabricating, installing, servicing, maintaining, reconditioning or repairing of engines or vehicle servicing equipment and agricultural machinery or implements or the like where such employer immediately prior to 31 December 2009 was bound by clause 1.5.4(a) of the Vehicle Industry Award 2000;
(g) any operation concerned with roadside/mobile service; or
(h) driving school instruction.
4.2 For the purposes of coverage of this award:
(a) employees engaged in vehicle industry repair, services and retail means employees covered by the classifications at clause 33 and for whom Section 1 - Vehicle Industry RS&R Employees applies; and
(b) employees engaged in vehicle manufacturing means employees covered by the classifications at clause 45 and for whom Section 2, Section 3 and Section 4 applies.
4.3 Exclusions
(a) This award does not cover:
…
(iii) an employer who, on 31 December 2009 was engaged in the manufacture and/or assembly of metal parts or accessories and was bound to observe the Metal, Engineering and Associated Industries Award 1998; …
…
(b) Where an employer is covered by more than one award, an employee of that employer is covered by the award classification which is most appropriate to the work performed by the employee and to the environment in which the employee normally performs the work.
…”
[28] The coverage of the Manufacturing Award set out in clause 4 is expressed in broad terms and has extensive potential application to vehicle manufacture and repair. The most directly relevant provisions of clause 4 are as follows:
“4. Coverage
4.1 This award covers employers throughout Australia of employees in the Manufacturing and Associated Industries and Occupations who are covered by the classifications in this award and those employees.
…
4.9 Manufacturing and Associated Industries and Occupations means:
(a) the following industries and parts of industries:
(i) the manufacture, making, assembly, processing, treatment, fabrication and preparation of:
● the products, structures, articles, parts or components set out in clause 4.10; or
…
● any products, structures, articles, parts or components made from, or containing, the materials or substances set out in clause 4.10.
…
(iii) the repair, refurbishment, reconditioning, maintenance, installation, testing and fault finding of:
4.10 For the purposes of clause 4.9(a)(i), the products, structures, articles, parts, components, materials and substances include:
(a) all products made from, or containing, steel, iron, metal, sheet metal, tin, brass, copper and non-ferrous metal.
…
(h) motor engines, motor cars, motor cycles and other motor driven vehicles and components.
…
(r) brake linings, disc pads, clutch facings and other friction materials for automotive or other industrial applications.
…”
Evidence and submissions
[29] All interested parties who filed submissions opposed the transfer of the vehicle manufacturing sector to the Manufacturing Award. The AMWU and the Motor Trades Organisations filed a number of witness statements. The makers of these statements were not required for cross-examination, and the statements were accordingly received into evidence.
[30] The evidence in the witness statements tendered by the Motor Trades Organisations may be summarised as follows:
(1) Robert James Lucas, the Chief Executive of the Caravan Trade & Industries Association of Victoria, gave evidence in his statement concerning the manufacture of caravans, motor homes, campervans and the like in Australia. He characterised the caravan industry as predominantly consisting of small-sized mixed businesses with fewer than 20 employees, but with several companies employing close to 1000 and some employing over 50 employees. He said it was common for his Association’s members to have an interest in two or all three of the sectors of manufacturing, retail and service. He described “manufacturing” as predominantly involving assembling parts to form a vehicle. He described the benefits of having one award as stability and “common interpretations which leads to greater certainty in compliance and less potential for industrial disputation”. He expressed the concern that any change to this might lead to confusion and compliance issues, his members might not relate to an award that was not vehicle based, the Association’s training scheme would be in jeopardy because it was aligned with the VMRSR Award, there would be likely to be duplication of award coverage at the enterprise level and the efficiencies gained by having one award would be lost.
(2) Nicholas Rowe, Director of Vin Rowe Farm Machinery Pty Ltd, gave evidence concerning his business, which distributes, sells and services and repairs imported agricultural machinery, and in doing so engaged in some assembly and modification of imported equipment. He expressed concern that the splitting of service staff into a separate award would cause extra administrative work and the possibility of confusion over conditions and entitlements.
(3) Geoffrey Lowe, the Managing Director of Proven Products Pty Ltd and Country Vice President of the Motor Traders’ Association of NSW, described Proven Products’ business as involving the manufacture, servicing and repair of suspension system parts. He said that the business employed nine staff, of whom about half performed manufacturing work and a further quarter did a mix of manufacturing and retail work, with the rest filling clerical or managerial roles. He said that it would be difficult to separate manufacturing roles from service and repair roles. He also described the benefits of having consistent conditions across the workforce in relation to hours of work and meal breaks and the ability to engage casual and part-time employees with no minimum hours of engagement. He was concerned that this would change under the Manufacturing Award.
(4) Geoffrey Green, the proprietor of Arctic Truck Bodies Pty Ltd, gave evidence that his business primarily manufactured specialised truck bodies, for the most part on request from truck dealerships. About 10% of the work was repair work. His business had 15 employees who were required to perform both repair and manufacturing duties, and accordingly did not want different awards applying to these functions.
(5) Paul McFadden, the Human Resources Manager for the Yamaha Australia Group, described the business as involving the distribution of a diverse range of Yamaha products and parts and the provision of technical advice to Yamaha dealers. The business employed 315 staff of whom six were engaged in the manufacturing-type activity of customising Yamaha products. He was concerned that such employees might be moved into a separate award, and said that it was not possible to neatly categorise employees into repair, retail, manufacture or service.
(6) William Andrews, the Managing Director of Royans Wagga Pty Ltd, gave evidence that Royans was a leading business in truck and trailer repairs and fibre glass repairs, and that the business also manufactured truck bumper bars, front walls and checker plates and carried out modifications to horse floats, motorhomes and boats. The business employed 250 persons across six branches, with a small proportion engaged in manufacture. At the smaller Wagga branch, there were 19 tradespersons who primarily carried out repair work but might sometimes perform manufacturing work. He did not want to have to apply a second award to his trades workforce, and he was concerned that the Manufacturing Award only allowed work on Saturdays by agreement.
(7) Peter Morelli, of PR & CM Morelli Pty Ltd trading as MARS Transport, said his business manufactured and repaired trailers, tray tops and semitrailers, and also sold parts, accessories and off-road components. He was concerned about a different award applying to his manufacturing operations, given that his workforce was multi-skilled and performed a mix of work depending on client demand. His view was that the diversity of his business should not result in the application of multiple awards.
(8) Pat Hall of Raw Performance Industry said that he ran a business which designed, manufactured and built high performance engines for clients seeking race or road vehicles. He intended to expand the business to provide repairs, maintenance and servicing for such vehicles. His business was specialised in nature, produced high performance products, and required master tradespersons capable of acquiring high skill levels. He was concerned about his future operations falling under a different award, and objected to either increasing the number of awards or changing the award applicable to his business. He had six production staff who performed a range of diverse functions.
(9) Rob Cuming was the President of the Boating Industry Association of SA and ran a business which manufactured trailerable boats, repaired and serviced inboard and outboard motors, and sold boats, parts and accessories. He had 24 staff including 13 involved in various stages of manufacture, with some involved in cross-skilling into repairs, maintenance and servicing. He said that the diversification of businesses such as his meant he did not want his staff being split into different awards, particularly given that staff might at different times be employed in manufacturing or repair.
(10) Mark Flynn, the Director of Coast Yamaha Pty Ltd and the Deputy Chairperson of the Motorcycle Industry Association of SA, gave evidence that imported motorcycles and leisure craft did not arrive in Australia fully assembled, and required two to five hours’ work to be assembled ready for sale. They might also require specialty items/accessories to be manufactured and assembled. Of his 15 staff, two performed the assembly function. His business also engaged in sales, service and repair, and he had a franchise for the sale, service and repair of outdoor power equipment. He did not want a situation where multiple awards applied to his staff, or different awards applied at different times of the day or week.
(11) Lisa Day, the Group HR Manager and Marketing Director of JJ O’Connor’s & Sons Pty Ltd, described the O’Connor’s business as primarily involving the sale and support of agricultural machinery across six dealerships, as well as one Mitsubishi dealership. It also had an engineering department which manufactured utility trays, trailers for combine fronts and sprayer tank extensions and fabricated comb trailers, ute trays, tandem trailers, frames and bracketry for aftermarket parts on machinery. New imported equipment also required predelivery and assembly work. The business employed a total of 150 persons in a variety of roles. She was concerned that the application of multiple awards to operational staff would create confusion and angst among staff. The business required the capacity to freely move staff between different divisions to meet changing customer requirements.
[31] The evidence contained in the AMWU’s witness statements was, in summary, as follows:
(1) Andrew Dettmer, the National President of the AMWU, gave evidence that there had always been overlapping coverage between the pre-modernisation Vehicles Industry Award and the Metals Award, particularly in relation to the manufacture of automotive parts and components, and that this had primarily been managed by the respondency of particular employees to one of the two awards. He was concerned that moving all vehicle manufacturing to the Manufacturing Award would add complexity and might lead to confusion about which provisions applied to whom within that award.
(2) Ian Curry, the National Co-ordinator, Skills, Training & Apprenticeships for the AMWU, pointed to some inconsistencies in skill levels and classifications for certain functions between the vehicle manufacturing classifications and the current manufacturing classifications.
(3) David Smith, the Assistant National Secretary of the AMWU and National Secretary of the AMWU’s Vehicle Divisions, gave evidence that the training arrangements for vehicle manufacturing in the VMRSR Award were distinct and more flexible than those in the Manufacturing Award, and he was concerned that the incorporation of vehicle manufacturing into the Manufacturing Award would lead to confusion, give rise to inconsistencies under that award concerning training arrangements and classification structures, and ultimately weaken the training arrangements and classification structure developed for vehicle manufacturing employees. He was also concerned about the loss of some entitlements, and expressed the opinion that it would be detrimental to enterprise bargaining. Mr Smith identified a number of companies engaged in truck, bus, recreational vehicle and caravan manufacturing who had enterprise agreements underpinned by the VMRSR Award. He said that “While the VMRSR Award is a somewhat complex instrument, it is reasonably well understood by employers, unions and employees in the vehicle industry”.
(4) Ian Leslie Else, the Group Human Resources Manager of MaxiTRANS Industries Limited, said that MaxiTRANS was Australia’s largest supplier of road transport trailing solutions, and manufactured leading trailer brands and urethane foam and body panels, supplied and distributed parts, provided service and repair support, and sold new and used trailing equipment. It operated two sites which were purely manufacturing, one site which was totally repair, service and retail, four sites which combined these functions, and 23 retail sites. The VMRSR Award was the underlying award for all of the five enterprise agreements which applied to its staff. Mr Else was concerned that if vehicle manufacturing was moved into the Manufacturing Award, there would be two reference points for future enterprise bargaining, which would add difficulty. He said that there would potentially be both additional costs and cost savings, but did not support it happening.
(5) Greg Dober, the Vice-President, Human Resources for Volvo Group Australia, said that Volvo had traditionally been covered by the Vehicle Industry Award, and since 2010 by the VMRSR Award. He said the VMRSR Award was currently incorporated into all its enterprise agreements, and having a single award that applied assisted the efficient operation of its business and interactions across both manufacture and repair/service sectors.
[32] The Motor Trades Organisations submitted:
[33] The AMWU’s submissions advanced many of the same propositions as the Motor Trades Organisations, and to that extent it is not necessary to repeat them. The AMWU also submitted:
[34] The AMWU annexed to its written submissions a detailed schedule which set out the changes said to be detrimental to employees which it identified in the exposure drafts.
[35] The Ai Group submitted:
[36] The Ai Group’s submission also provided a detailed analysis of particular provisions of the exposure draft for the Manufacturing Award with which it had a concern.
[37] ABI, Business SA, the SDA and the Motor Trades Association of Queensland did not make substantive submissions of their own but supported the position that the coverage of the VMRSR Award should remain the same.
Consideration
[38] Section 134(1) of the FW Act requires the Commission to ensure that modern awards meet the modern awards objective. Section 134(2)(a) requires the modern award objective to be applied to all the Commission’s functions and powers under Pt.3-4 of the FW Act, which necessarily includes the conduct of the 4 yearly review of each modern award required by s.154. Section 134(1) provides:
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.
[39] The modern awards objective is broadly expressed. 20 In National Retail Association v Fair Work Commission21 the Federal Court Full Court made it clear that broad consideration required by s.134(1) did not require a finding to be made in relation to each of the identified factors to be taken into account, saying:
“[109] It is apparent from the terms of s.134(1) that the factors listed in (a)-(h) are broad considerations which the FWC must take into account in considering whether a modern award meets the objective set by s.134(1), that is to say, whether it provides a fair and relevant minimum safety net of terms and conditions. The listed factors do not, in themselves, however, pose any questions or set any standard against which a modern award could be evaluated. Many of them are broad social objectives. What, for example, was the finding called for in relation to the first factor (“relative living standards and the needs of the low paid”)? Furthermore, it was common ground that some of the factors were inapplicable to the SDA’s claim.
[110] The relevant finding the FWC is called upon to make is that the modern award either achieves or does not achieve the modern awards objective. The NRA’s contention that it was necessary for the FWC to have made a finding that the Retail Award failed to satisfy at least one of the s 134(1) factors must be rejected.”
[40] The Full Court also observed that a conclusion that a modern award does not meet the modern awards objective may arise from an analysis of the award as a whole or from a single provision (noting that the “review” referred to was 2-yearly review required by item 6 of Schedule 5 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009):
“[86] That the review of each modern award must focus on the particular terms and the particular operation of the particular award does not suggest that the review of that award was intended to be confined to a single holistic assessment of all of its terms. The conclusion that a modern award fails to comply with the modern awards objective may be based upon a single offending provision. There is no reason in principle why the FWC could not come to that conclusion without reviewing the entire award. Nor can we discern any reason why the review of a modern award was intended to be confined to a single holistic exercise…”
[41] The Full Bench in the 4 yearly review of modern awards - Annual leave decision 22 also (by reference to authority) confirmed the following propositions:
There is a degree of tension between some of the s.134 considerations. The Commission’s task is to balance the various considerations and ensure that modern awards provide a fair and relevant minimum safety net of terms and conditions. 26
[42] Notwithstanding the evidence and detailed submissions advanced by the parties who appeared before us, we have come to the conclusion that the VMRSR Award in its current form does not satisfy the modern awards objective in s.134(1) having regard in particular to the consideration in paragraph (g). There are two primary reasons for this conclusion.
[43] The first is that the contested substantive issues before us have highlighted that the VMRSR Award is complex and difficult to understand. The parties before us have, for the most part, conceded its complexity but to varying degrees have defended its comprehensibility. Although the submissions, supported by some of the witness statements, have contended that the parties understand what the award means, we consider that on its face it is apparent that the VMRSR Award would be difficult for a layperson to navigate and apply in many respects. This must be regarded as a significant detriment in an industry which, on the evidence, contains a very large proportion of small and award-dependent employees. The principal reason for this is that the VMRSR Award has attempted to marry - we consider unsuccessfully - conditions from two very different pre-modern awards which applied to very different working environments.
[44] Although a number of the witnesses claimed that there were benefits in having a single modern award apply to a workforce which engaged in a mixture of manufacturing operations and repair, service and retail functions, those benefits are necessarily limited by the fact that, to a substantial degree, the VMRSR Award is effectively two awards in one. It contains some provisions which are common to all employees covered by the award, but the main operative provisions of the award are divided into four discrete sections: - Section 1 for “Vehicle Industry RS&R Employees”, Section 2 for “Vehicle Manufacturing employees”, Section 3 for “Drafting, planning and technical employees” and Section 4 for “Supervisory employees”. For example, the classification structure in Section 1 for “Vehicle Industry RS&R Employees” is substantially different to that in Section 2 for “Vehicle manufacturing employees” such as would make any swapping of employees between different functions very difficult (assuming the different parts of the award are applied to the different kinds of work). Likewise the hours of work provisions, including provisions for weekend work and shift work, for the two groups are quite different.
[45] It may be the case that employers who operate primarily repair, service and retail businesses but perform ancillary manufacturing work only utilise the provisions of Section 1 and not Section 2. That would seem to be permissible, since while Section 2 is confined to that part of the coverage of the part of the award concerned with manufacturing (clause 45.1), Section 1 is not confined in the same way. Section 1 applies by reference to the classifications in clause 33 (see clause 4.2(a)), which, although labelled as “Vehicle RS&R industry employee” levels, have skill level definitions (in Schedule B) which are broad enough to cover the type of ancillary manufacturing functions described by many of the witnesses called by the Motor Trades Organisations. For example, the classification of “Vehicle industry RS&R employee - Level R4” includes the function of “Motorcycle assembler”, which was discussed in the evidence of Mr Flynn. Because none of the persons who made witness statements were required for cross-examination, there not being any contradicting party, their evidence was not tested. This has placed us at a disadvantage in assessing their evidence. Doing the best we can, we consider it is likely that the witnesses for the Motor Trades Organisation like Mr Flynn who described the advantages of having a single award covering the variety of functions performed in their businesses were primarily utilising the provisions of Section 1, and were not swapping employees between the different sections as their work mix changed and did not have employees engaged under different sections of the VMRSR Award in a single workplace. We note that the larger employers about which evidence was given which did have discrete sections of their business devoted to different functions (such as Volvo and MaxiTRANS) had enterprise agreements in place and were not award-dependent.
[46] The second reason is that there is no satisfactory industry, occupational or functional dividing line between the type of vehicle industry manufacturing covered by the VMRSR Award and that covered by the Manufacturing Award. We have earlier set out the relevant parts of the coverage provisions of the two awards. Clause 4.1 of the VMRSR Award provides that it covers “employers throughout Australia of employees engaged in vehicle manufacturing and/or vehicle industry repair, services and retail, as defined in this clause, to the exclusion of any other modern award” (underlining added) provided the employer’s business principally involves one or more of the activities set out in paragraphs (a)-(h). The exclusion of all other modern awards at first blush would make the coverage of the VMRSR Award in respect of the work functions described exclusive. However cl.4.1(f), which relates to the business activity of “manufacturing, assembling, fabricating, installing, servicing, maintaining, reconditioning or repairing of engines or vehicle servicing equipment and agricultural machinery or implements or the like”, only applies to employers who, immediately prior to 31 December 2009 (the date the VMRSR Award commenced operation) were bound by cl.1.5.4(a) of the Vehicle Industry Award 2000. Employers who were not so bound are therefore presumably covered by the Manufacturing Award. Further, in cl.4.3(a)(iii), there is an exclusion for any employer who on 31 December 2009 was engaged in the manufacture and/or assembly of metal parts or accessories and was bound to observe the Metal, Engineering and Associated Industries Award 1998.
[47] That has led to the result described in the Ai Group’s submissions whereby, notwithstanding the VMRSR Award’s prima facie coverage of vehicle manufacturing, “the majority of vehicle manufacturing businesses and their employees are currently covered by the Manufacturing Award (e.g. the vast majority of Tier 1 and Tier 2 automotive component manufacturers)”. The predominance of the Manufacturing Award in vehicle manufacturing will only increase once the decision to shut down car manufacturing in Australia has fully taken effect by the end of 2017. Whether an employer engaged in vehicle manufacturing was, before 31 December 2009, bound by the Metals Award 1998 or the Vehicle Industry Award 2000 was, as the Ai Group submitted, primarily a consequence of which union the employer’s employees belonged to, and also, we consider, which employer association the employer belonged to. That is not a proper basis upon which a fair and relevant award safety net should operate. It would make it practically impossible for any affected employee to know which award covered him or her without the benefit of specialist advice, and it would probably create a similar difficulty for many affected employers, especially small employers. It also offends the principle of regulatory neutrality that employers engaged in the same type of business activity should be bound by different awards with different conditions.
[48] The conclusions we have reached about the structure of the VMRSR Award are clearly different to those of the Award Modernisation Full Bench in 2009 when it determined to make the award in its current form. That does not preclude us from giving effect to our views. In the 4 yearly review of modern awards - Annual leave decision 27, the Full Bench quoted paragraphs [19]-[24] of the earlier 4 Yearly Review of Modern Awards: Preliminary Jurisdictional Issues decision28 and said:
“[14] The short points to be drawn from the above extract are that in the Review:
(i) the Commission will proceed on the basis that prima facie the modern award being reviewed achieved the modern awards objective at the time it was made; and
(ii) variations to modern awards should be founded on merit based arguments that address the relevant legislative provisions, accompanied by probative evidence directed to what are said to be the facts in support of a particular claim. The extent of the argument and material required will depend on the circumstances.
[15] It is also important to appreciate the context in which the observations set out at paragraphs [13] and [14] above were made. The Full Bench was there dealing with submissions about what a party seeking to vary a modern award in the Review should be required to demonstrate. It should not be inferred from the quoted passage that in conducting the Review the Commission is confined to only dealing with variation applications made by interested parties. The FW Act charges the Commission with the responsibility of acting on its own motion to review all modern awards; it is not dependent upon the applications of interested parties in performing that statutory function.”
[49] In the light of the issues before us which exposed the difficulties in the structure and comprehensibility of the VMRSR Award, the Ai Group submission which demonstrated that the majority of vehicle manufacturing employers are in fact covered by the Manufacturing Award, and the impending cessation of car manufacturing in Australia, we do not consider that the inclusion of vehicle manufacturing in the VMRSR Award in its current form satisfies the modern award objective. We find that it is not a simple, easy to understand, stable and sustainable award and it does not avoid unnecessary overlap of modern awards. This conclusion and finding must necessarily displace the prima facie position that the VMRSR Award achieved the modern awards objective at the time it was made. They also provide cogent reasons to depart from the conclusions about coverage reached by the Award Modernisation Full Bench in 2009.
[50] Consequently, further consideration of the VMRSR Award (and the Manufacturing Award) will proceed along the lines of the exposure drafts published on 4 March 2016. However four important matters need to be clarified having regard to the submissions of the parties before us:
(1) We do not intend that smaller employers which primarily operate repair, service and retail businesses but perform ancillary manufacturing work would have to apply the Manufacturing Award in future to any manufacturing work performed. The businesses described in the evidence of Mr Rowe, Mr McFadden, Mr Andrews, Ms Day and Mr Flynn would definitely fall into this category, and also possibly some of Mr Lucas’ members and the businesses described by Mr Morelli and Mr Cuming. We consider that the provisions of the exposure draft for the (re-named) VMRSR Award published on 4 March 2016 would continue to cover all the functions and employees of businesses of this type (except for clerical/managerial work), and accordingly the concern about multiple award coverage which many of the witnesses expressed is in most cases misplaced. However we recognise that there is scope to make the position clearer in this respect.
(2) The principal concern expressed by the Ai Group was that provisions imported from the VMRSR Award into the exposure draft for the Manufacturing Award and expressed to apply to vehicle manufacturers would apply to employers engaged in vehicle manufacturing functions which were already covered by the Manufacturing Award and had never been covered by the VMRSR Award. This would change the conditions applicable to them in ways which might be detrimental. We do not intend to alter the Manufacturing Award in a way which would significantly affect employers and employees already covered by it, and it is accepted that the exposure draft will require further modification to give effect to this intention.
(3) In relation to the AMWU’s submission that the transfer of vehicle manufacturing coverage to the Manufacturing Award would, based on the exposure draft, cause financial detriment to employees, it is not our intention that employees should suffer any non-trivial loss of income. Most of the particular matters raised by the AMWU in this respect do not appear to us to be of much significance, but we accept that further consideration of this issue is required. Such consideration should however occur on a holistic basis, taking into account the total effect of a transfer to the Manufacturing Award, and not simply on an item-by-item basis.
(4) In relation to the AMWU’s evidence and submissions concerning training arrangements for employees in vehicle manufacturing, it is not our intention that any change be required in this respect. Consideration will need to be given to the Manufacturing Award exposure draft to ensure that it reflects this intention.
[51] We consider that the interested parties should, with the benefit of the conclusions stated in this decision, be given the opportunity to have further input into the exposure drafts. This will enable the parties to advance their own proposals as to how best to give effect to this decision, and to address the issues of detail raised in the submissions of the Motor Trades Organisations, the AMWU and the Ai Group. The parties are directed in the first instance to confer between themselves about this. In due course, Vice President Hatcher will conduct a conference in relation to the exposure draft for the (re-named) VMRSR Award, and Commissioner Bissett, who already has carriage of the Manufacturing Award, will conduct a conference in relation to the exposure draft for that award. Once this conference process has been completed, the matters will return to this Full Bench for finalisation of the exposure drafts. We will then give consideration to any agreed proposals for alteration to the current exposure drafts and determine any disputed or otherwise outstanding matters concerning the transfer of the vehicle manufacturing coverage and any other issues.
[52] One matter which we raise for consideration of the parties is the operative date for the transfer of vehicle manufacturing coverage to the Manufacturing Award. One possibility is that this should not occur before large-scale car manufacturing in Australia comes to an end in 2017.
Contested package variations
[53] In relation to the four contested package issues earlier identified, the parties made further submissions about issues (1) and (3).
[54] In relation to issue (1), the 4 March 2016 exposure draft proposed modified shift length provisions as follows (noting that clause numbering had changed as compared to the 2 April 2015 exposure draft because of the removal of vehicle manufacturing provisions):
18.3 Employees may be required to work up to a maximum of 10 ordinary hours per day.
18.4 The commencing time of any permanent employee’s daily hours once fixed may vary from day to day in a week but not by more than two hours.
18.5 Twelve hour shifts
(a) By agreement between an employer and the majority of employees in the enterprise or part of the enterprise, 12 hour days or shifts may be introduced subject to:
(i) proper health monitoring procedures being introduced;
(ii) suitable roster arrangement being made;
(iii) proper supervision being provided;
(iv) adequate breaks being provided; and
(v) a trial or review process being jointly implemented by the employer and the employees or their representatives.
(b) At any enterprise or section of an enterprise where 12 hour days or shifts were rostered on a regular basis prior to 1 January 2016, 12 hour days or shifts may continue to be worked notwithstanding clauses 18.3 and 18.5(a)
[55] The AMWU submitted that clause 18.5(b) was different to the transitional provision which was agreed as part of the package variations, that it was intended that the 10 hour day would be the default position, and that any employer which had previously obtained the agreement of employees to a 12 hour day should be required to have the agreement “renewed and refreshed by the workforce”, and that existing arrangements for a 12 hour day should not automatically be rolled over. The Motor Trades Organisations also pressed for the variation as part of the “package” agreed with the AMWU and other unions.
[56] The Ai Group maintained its primary position that there did not need to be any change to the existing provision in the VMRSR Award concerning shift lengths. Alternatively it submitted the facilitative provision should allow working arrangements in excess of 10 hours and up to 12 hours, and not just 12 hour shifts. It also submitted that the transitional provision in clause 18.5(b) should extend to any existing arrangements allowing work in excess of 10 hours per day, not just those permitting 12 hour shifts.
[57] We reject the AMWU position. Where there is an existing arrangement for 12 hour shifts, which under the VMRSR Award as it currently stands must be by agreement with a majority of employees and involve a series of safeguards being complied with, we see no reason why that process (now contained in clause 18.5(a)) should have to be repeated.
[58] We accept the Ai Group submission that, with the establishment of a default position of 10 hour shifts, the facilitative provision in clause 18.5 should be modified to allow shifts in excess of 10 hours per day and up to 12 hours per day to be introduced. However we do not accept that the transitional provision in clause 18.5(b) should be extended to any arrangement for working hours of over 10 and under 12 hours per day, since any such arrangement would not have been introduced by agreement and subject to the safeguards currently embodied in clause 18.5(a). Such arrangements may be re-introduced under clause 18.5(a).
[59] Consequently clause 18.5 of the 4 March 2016 exposure draft will be modified to read as follows:
18.5 Shifts in excess of 10 hours
(a) By agreement between an employer and the majority of employees in the enterprise or part of the enterprise, arrangements involving the working of days or shifts in excess of 10 hours and up to 12 hours per day may be introduced subject to:
(i) proper health monitoring procedures being introduced;
(ii) suitable roster arrangements being made;
(iii) proper supervision being provided;
(iv) adequate breaks being provided; and
(v) a trial or review process being jointly implemented by the employer and the employees or their representatives.
(b) At any enterprise or section of an enterprise where 12 hour days or shifts were rostered on a regular basis prior to 1 January 2016, 12 hour days or shifts may continue to be worked notwithstanding clauses 18.3 and 18.5(a)
[60] In relation to issue (3), clause 24.5 of the 4 March 2016 exposure draft provided:
24.5 Minimum remuneration and calculation of wages
(a) A vehicle salesperson is entitled to be paid the minimum hourly rate under clause 11.2 or 11.6, as applicable, for all hours worked and the penalty rates in clause 24.3 (provided that the payments for work on a Sunday under clause 24.3(c) are in substitution for and not in addition to the minimum hourly rates in clause 11.2 or clause 11.6).
(b) A vehicle salesperson who is paid commission in accordance with clause 24.4 must be paid the minimum remuneration required under clause 24.5(a) in at least each successive three month period subject to the following:
(i) Any amount of commission paid during the three month period may be offset against the amount required to be paid under clause 24.5(a).
(ii) An employer will conduct a reconciliation of total payments made to a vehicle salesperson against the minimum remuneration amount required by clause 24.5(a) at least every three months, and will pay any shortfall to the employee within 21 days of that reconciliation.
[61] There was contention between the parties concerning whether commission payments should be able to be offset against all minimum hourly payments, or just those payable for work in excess of 38 hours per week. There was also a concern about the drafting of clause 24.5(a) insofar as it related to the payment of the penalty rates required by clause 24.3. On 31 May 2016, correspondence was received from the Victorian Automobile Chamber of Commerce indicating that an agreed position had been reached between the Motor Trades Organisation, the AMWU and the SDA, and that ABI did not oppose that position. Subject to some drafting variations, we propose to adopt that agreed position. Clause 24.5 will provide as follows:
24.5 Minimum remuneration and calculation of wages
(a) A vehicle salesperson will be entitled to be paid the minimum hourly rate under clause 11.2 or clause 11.6, as applicable, and any applicable casual loading, for all hours required by the employer to be worked up to and exceeding 38 hours per week ("minimum remuneration"). A vehicle salesperson will also be entitled, where applicable, to:
(i) any penalties payable under clauses 24.3(a) (Payment for work on days off) and 24.3(b) (Payment for work on public holidays), or in the case of casual employees clauses 24.2(c) and (d), instead of the applicable minimum hourly rate; and
(ii) any penalties payable under clause 24.3(c) (Payment for work on a Sunday), in addition to the minimum hourly rate, for employees other than casual employees,
(b) In respect of a vehicle salesperson who is paid commission in accordance with clause 24.4:
(i) an employer's obligation to pay a vehicle salesperson in respect of hours required to be worked in excess of 38 in any week may be met by the payment to the employee of any commission negotiated under clause 24.4; and
(ii) an employer will at least every three months ensure compliance with clause 24.5(a) above and make any necessary additional payments within 21 days after the last day of the relevant month.
[62] Contested package variations (2) and (4) are resolved respectively by clause 23.1(a) and clause 20.2(a) of the 4 March 2016 exposure draft (noting that the cross-reference to clause 17 in clause 20.2(a) of that exposure draft is incorrect and should refer to clause 18). Clause 23.1(a) of the exposure draft retains the structure of the existing provision, but makes it clear (in paragraph (i)) that while the times at which meal and tea breaks are taken is to be determined at the employer’s discretion, the employer does not have a discretion as to whether those breaks are taken at all. Clause 20.2(a) of the exposure draft is intended to clarify that overtime is payable when working hours over the working cycle exceed the ordinary hours specified in clause 18.2, or when daily working hours exceed the maximum of 10 hours specified in clause 18.3 or alternatively exceed any maximum daily shift length over 10 hours and up to 12 hours introduced or preserved under clause 18.5.
Ai Group variation
[63] We do not accept that the payment of annual leave clause is ambiguous, or requires modification, as submitted by the Ai Group. Clause 25.5 of the 4 March 2016 exposure draft accordingly reflects the existing payment for annual leave clause in the VMRSR Award.
SDA variation
[64] The SDA application variation seeks to increase the rates for the classification of “casual console operator/roadhouse attendant engaged to primarily cook other than takeaway meals” (casual console operators) contained in clause 36.3 of the VMRSR Award as it currently stands. Insofar as the SDA variation is sought as part of the 4-yearly review, it is necessary to have regard to s.156(3) and (4) of the FW Act, which provide:
(3) In a 4 yearly review of modern awards, the FWC may make a determination varying modern award minimum wages only if the FWC is satisfied that the variation of modern award minimum wages is justified by work value reasons.
(4) Work value reasons are reasons justifying the amount that employees should be paid for doing a particular kind of work, being reasons related to any of the following:
(a) the nature of the work;
(b) the level of skill or responsibility involved in doing the work;
(c) the conditions under which the work is done.
[65] Section 160, which provides the alternate basis for the SDA variation, provides:
Variation of modern award to remove ambiguity or uncertainty or correct error
(1) The FWC may make a determination varying a modern award to remove an ambiguity or uncertainty or to correct an error.
(2) The FWC may make the determination:
(a) on its own initiative; or
(b) on application by an employer, employee, organisation or outworker entity that is covered by the modern award; or
(c) on application by an organisation that is entitled to represent the industrial interests of one or more employers or employees that are covered by the modern award; or
(d) if the modern award includes outworker terms--on application by an organisation that is entitled to represent the industrial interests of one or more outworkers to whom the outworker terms relate.
[66] The principles applicable to the interpretation and application of s.160 were set out, in a manner with which we respectfully agree, by Asbury C (as she then was) in Property Sales Association of Queensland, Union of Employees re Real Estate Industry Award 2010 29 as follows (footnote omitted):
“[14] The power in s.160 of the Act to vary a modern award is discretionary. The exercise of the power first requires consideration of whether there is an ambiguity, uncertainty or error in an award. If it is established that this is the case, further consideration is required as to whether the discretion should be exercised. Where there is no ambiguity or uncertainty, or where the Tribunal is not satisfied that there is an error in the terms of an award, there is no jurisdiction to vary a modern award under s.160 of the Act. This is consistent with the clear intention of the legislature to limit the circumstances under which modern awards can be varied outside 4 yearly and annual wage reviews.”
[67] The starting point for the SDA’s case was based on the proposition that the current effective loading and penalty rates for casual console operators are anomalously lower than those for driveway attendants and “roadhouse attendants required to cook takeaway foods” (roadhouse attendants). We accept that is the case. The anomaly becomes apparent when the rates are set out as percentages of the permanent hourly rate for each classification, as they have been in clause 23.2 of the 4 March 2016 exposure draft. It is noted that the SDA and the Motor Trades Organisations have raised some issues about the precise calculation of those percentages, which will need to be dealt with, but the essential point remains. Another way to put it is that the percentage differentials between the hourly rates for the casual driveway attendant, roadhouse attendant and console operator do not align with the percentage differentials between the hourly rates for the permanent driveway attendant, roadhouse attendant and console operator (which are set at the classifications of “Vehicle industry RSR employee” Level R1, R2 and R4 respectively).
[68] Dealing with the s.160 aspect of the SDA variation first, the question at the outset is whether this anomaly constitutes an “error” for the purposes of s.160, or whether it is explicable on some rational or historic basis. The SDA submissions essay an examination of the exceedingly complex history of the rates for driveway attendants, roadhouse attendants and console attendants in order to demonstrate that, at a certain point in that history, an error crept into the calculation of the rates for console operators. In considering that long and detailed submission, it is not necessary to address all aspects of that history. It is sufficient to identify two fundamental matters.
[69] First, it is not possible to identify any rational basis for the casual rates for driveway attendants and roadhouse operators which were first added to the RSR Award in 1970 30 and upon which the whole structure of rates was consequently built. The history in this respect was described in an AIRC Full Bench decision of 7 March 199631 which dealt with an application to vary the casual rates as follows:
“BACKGROUND
The award prescribes casual wage rates in subclause 6(f). Paragraph 6(f)(ii) contains casual provisions which are common in awards of the Commission. They prescribe an hourly rate of the relevant weekly rate divided by the standard hours of work and relevant percentage loadings to apply at various time. These common provisions apply generally to casual employees in the award, other than in respect of driveway or roadhouse attendants, console operators or vehicle salespersons.
Casual conditions for vehicle salespersons are prescribed in paragraph 6(f)(iii) prescribing relevant weekly rate divided by the standard hours and relevant percentage loadings.
Paragraph 6(f)(iv), the relevant subclause within the applications, sets out a series of hourly rates for casual driveway/roadhouse attendants (sub-paragraph 6(f)(iv)(1)) and console operators (sub-paragraph 6(f)(iv)(2)).
The special casual provisions in relation to driveway and roadhouse attendants and console operators - with hourly rates directly prescribed - have their origin in 1970 proceedings before Senior Commissioner Taylor (transcript in tab 1, exhibit MTA 1).
The Senior Commissioner established specified hourly rates in an effort to provide clarity of award obligations, although the basis upon which the rates were established is not evident in the material before us.
The rates then determined for this limited group of casual classifications have been subsequently adjusted for wage increases by a simple formula of:
Old Casual Hourly Rate |
x |
New Weekly Rate |
= |
New Casual Hourly Rate |
Old Weekly Rate |
The formula does not comprehend standard hours of work or any change to standard hours.
Standard hours of 38 were introduced into the award with effect from 1 October 1988 (39 hours) and 1 May 1989 (38 hours) through an order in Print H8305, giving effect to a Full Bench decision in Print H4166. The award variation was one of several arising out of Print H4166, giving effect to an agreement of the parties in respect of the March 1987 National Wage Case [Print G6800] restructuring and efficiency principle and standard hours of 38. The order in Print H8305, introduced standard hours of 38 in clause 18 for weekly employees and applied a 38 hour week to casual employees subject to paragraphs 6(f)(ii) and (iii). Whilst the hourly rate in paragraph 6(f)(iv) was altered in respect of wage rises arising from the structural efficiency principle, through other orders, no change occurred to the hourly rate to give effect to a 38 hour week.”
[70] In short, the Monday-Friday, weekend/public holiday and overtime rates for casual driveway attendants and roadhouse operators first established in 1970 did not have an explicable relationship to the permanent weekly rates for those classifications. They were subsequently simply adjusted by the same percentage as the permanent weekly rates. The Full Bench decision in 1996 identified the deficiency in that adjustment formula in that it had not taken account of the introduction of the 38-hour week (because it operated by reference to the weekly permanent rate and not the hourly permanent rate). Therefore it is not possible now to “unpick” the rates and work out what the correct casual loading on the permanent hourly rates should be, since the casual rates do not appear to originally have been calculated on that basis.
[71] Second, the SDA identifies the relevant “error” for the purpose of s.160 to have occurred in 1994 when the casual console operator hourly rate was first introduced. Immediately prior to this there was no separate hourly rate for casual console operators, but there was an hourly allowance for casual driveway operators who used a console. The SDA’s submissions assert that the new casual console operator was calculated by taking the casual driveway attendant hourly rate, adding the console allowance, and then increasing this amount by the percentage increase in the permanent weekly rate (in accordance with the traditional adjustment formula).
[72] We are prepared to accept that this was in fact how the new rate was calculated, although we have not been provided with any record of the proceedings which makes this clear. The SDA submits that this approach was erroneous because the console allowance “did not have any factors of casual loading or penalty loading included but was applied to a rate that did have these factors in it”. It proposed an alternate calculation which, if used, would have avoided that difficulty.
[73] With respect to the SDA, this is not demonstrative of any error. It only demonstrates that a methodology was used which the SDA, with the benefit of hindsight, would prefer not to have been used. Nothing was placed before us to suggest that the AIRC did not intend to use that methodology, or that some mathematical error was made in calculating the rates in accordance with that methodology. We do not accept that disagreement - even a well-founded disagreement - with a previous decision concerning an award is sufficient to establish an error for the purpose of s.160. What is necessary is to show that some sort of mistake occurred, in that a provision of the award was made in a form which did not reflect the tribunal’s intention. There is nothing to suggest that this occurred here. Accordingly the SDA’s application under s.160 must be dismissed.
[74] To the extent that the SDA variation was agitated as part of the 4-yearly review, the SDA did not advance any work value reasons in its support. However we consider that there is a work value element to the anomaly which is apparent on the face of the casual rates for driveway attendants, roadhouse attendants and console operators. As earlier stated, the rates for the equivalent full-time weekly classifications are those for Levels R1, R2 and R4 respectively. The classification structure for full-time weekly employees in the VMRSR Award is derived from the broadbanded classification structure in the RSR Award which was established in accordance with the structural efficiency principle. Accordingly the relativities between each classification must be presumed to correctly reflect the relative work value of those classifications. This presumption is confirmed by the variation to the RSR Award which added the classification structure. That variation assigned each classification a percentage relativity to each classification by reference to the tradesperson Level 1 classification in Level R6, which was itself aligned with the C3 classification in the Metals Award.
[75] In the VMRSR Award currently, the full-time weekly rate for Level R2 is 2.88% higher than that for Level R1, and Level R4 is 10.5% higher than Level 1. However these relativities are not reflected in the casual rates for driveway attendants, roadhouse attendants and console operators. The relativities are as follows (for casual roadhouse attendants and casual console operators as compared to casual driveway attendants):
M-F rate |
Weekend/PH rate |
Overtime rate | |
Casual roadhouse attendant (Lvl R2) |
2.92% |
2.93% |
2.77% |
Casual console operator (Lvl R4) |
9.99% |
9.60% |
11.92% |
[76] It can be seen that the relativity for the casual roadhouse attendant to the casual driveway operator is reasonably close to what it is for full-time weekly employees in Levels R2 and R1, although they do not precisely align. The relativities for the casual console operator to the driveway attendant are however significantly out of line with that for full-time weekly employees in Levels R4 and R1, with the Monday-Friday rates being too low and the overtime rate being too high.
[77] Arguably, because the relativities for the casual rates for driveway attendants, roadhouse attendants and console operators are out of alignment with those for full-time weekly employees in Levels R1, R2 and R4, they do not correctly reflect the work value of each classification. Therefore there may be work value reasons for those rates to be varied as part of the 4-yearly review in accordance with s.156(3).
[78] Because we were not addressed by the parties in relation to this matter, we will provide the parties with an opportunity to consider their positions about this and to provide further submissions at a later stage. The matter can in the first instance be discussed further at the conference concerning the VMRSR Award to occur before Hatcher VP.
Other matters
[79] The submissions have raised a range of other matters going to the detail of the 4 March 2016 exposure drafts. We do not propose to determine those matters as part of this decision. They may, at least initially, be discussed further in the course of the conference concerning the VMRSR Award to occur before Hatcher VP and the conference concerning the Manufacturing Award to occur before Bissett C.
VICE PRESIDENT
Appearances and hearing details:
2016.
Melbourne:
23 May.
J. Forbes of counsel for the Victorian Automobile Chamber of Commerce, Motor Traders’ Association of New South Wales, Motor Trades Association of South Australia and the Motor Trades Association of Western Australia.
B. Ferguson for the Australian Industry Group.
J. Fetter of counsel for the Australian Manufacturing Workers’ Union.
S. Burnley for the Shop, Distributive and Allied Employees Association.
2015.
Melbourne:
10 August.
A. Moussa and W. Butler for the Australian Manufacturing Workers’ Union.
S. Burnley for the Shop, Distributive and Allied Employees Association.
B. Chesterman and N. Horvat for Victorian Automobile Chamber of Commerce, Motor Trades Association Western Australia.
A. Baumgartner for the Motor Traders’ Association New South Wales.
P. Eblen for the Motor Trades Association South Australia.
B. Ferguson for the Australian Industry Group
K. Scott for Australian Business Industrial and New South Wales Business Chamber.
J. Light and L. Jacobs for Australian Federation of Employers and Industries.
5 (1927) 25 CAR 327 at 328
6 (1935) 35 CAR 599 at 637
7 Ibid at 601
8 Ibid at 601
9 (1953) 76 CAR 280
10 Ibid at 403
11 (1962) 99 CAR 407 at 408
12 Ibid at 408
13 (1968) 125 CAR 953
14 (1982) 285 CAR 535 at 539, cl.3(c)
15 Cl.1.5.3
16 Print K6596, 8 February 1993, Keogh SDP
17 PR910783, 3 October 2001, Foggo C
18 [2009] AIRCFB 450; (2009) 182 IR 413
20 See Shop, Distributive and Allied Employees Association (No. 2) [2012] FCA 480; (2012) 205 FCR 227 at [35] per Tracey J.
21 [2014] FCAFC 118; (2014) 225 FCR 154
23 Ibid at [19]
24 Ibid at [20]
25 Ibid at [21]
26 Ibid at [22]
30 (1970) 134 CAR 313 at 317 cl.6(iv)
31 Print M9796
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