FWCFB 5706
The attached document replaces the document previously issued with the above code on 15 August 2016.
The names ‘Mr B Grahan’ and ‘Mr A Anastasia’ listed in paragraph  and in the appearances at the end of this decision were misspelt and have been amended accordingly.
Associate to Commissioner Johns
24 August 2016
| FWCFB 5706|
|FAIR WORK COMMISSION|
REASONS FOR DECISION
Australian Government Industry Award 2016
Fair Work Act 2009
s.157 – Exercise of powers to achieve modern award objective
VICE PRESIDENT CATANZARITI
SYDNEY, 15 AUGUST 2016
Exercise of powers to achieve modern award objective - whether modern award should be made - modern award should be made in the circumstances - order to be settled by member of Full Bench.
 On 6 May 2016 the Fair Work Commission (Commission), as presently constituted by this Full Bench, initiated of its own motion under section 157(3)(a) of the Fair Work Act 2009 (FW Act) in the making of a modern award to be known as the Australian Government Industry Award 2016 (AGIA).
 We did so because a number of Commonwealth employers:
a) had previously made applications under item 4 of Schedule 6 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) for the Commission to make a modern enterprise award to replace awards that applied to them; but
b) indicated a preparedness to be a part of an industry award, the development of which was overseen by the Australian Public Service Commissioner (APSC) as the agency responsible for leading the development of workplace reforms in the Commonwealth public sector.
 The Commonwealth employers who expressly stated an interest in being covered by the AGIA were:
a) Australia Council;
b) Australian Film, Television and Radio School;
c) Australian Hearing Services;
d) Australian Institute of Marine Science;
e) Australian Maritime Safety Authority;
f) Australian Prudential Regulation Authority;
g) Australian Sports Commission;
h) Australian Tourist Commission;
i) Civil Aviation Safety Authority;j) National Gallery of Australia;
k) Special Broadcasting Authority; and
l) The Commonwealth of Australia.
 It was proposed that the AGIA will replace the following enterprise award-based transitional instruments:
a) EM2013/39 - Australian Maritime Safety Authority (Shore-Based Staff) Award 1999;
b) EM2013/40 - Australian Film, Television and Radio School Award 2000;
c) EM2013/43 - Australian Sports Commission Award 2003;
d) EM2013/44 - Australian Institute of Marine Science Award 2001;
e) EM2013/45 - Civil Aviation Safety Authority Award 2002;
f) EM2013/46 - National Gallery of Australia Award 2000;
g) EM2013/49 - Electorate Officers - Members of Australian Parliament (Salaries and Conditions of Employment) Award;
h) EM2013/50 - Australian Tourist Commission Award 2001;
i) EM2013/52 - Australian Hearing Services Award 2006;
j) EM2013/53 - Australia Council Award 2000;
k) EM2013/74 - Australian Prudential Regulation Authority Award 2000; and
l) EM2013/81 - SBS Employment Conditions Award 2001.
(collectively, the “Replaced Awards”)
 If there is any doubt as to its continued existence, the AGIA will also replace the Australian Government Employers – Conditions and Salaries Award 2003 (GECSA).
 In support of the making of the AGIA the APSC filed:
a) an Outline of Submissions (Exhibit 1);
b) a Statement of Donna Tait, Director, Conditions Policy, in the Workplace Relations Group, dated 1 June 2016 (Exhibit 2);
c) a copy of the proposed enterprise award Australian Government Industry Award 2016 (as a 16 June 2016) (Exhibit 3);
d) a table identifying changes made to the Proposed Award as between Version 9 filed on 1 June 2016 and the further amended version filed on 16 June 2016 (Exhibit 4);
e) a further Statement of Ms Tait dated 17 June 2016 (Exhibit 5).
 The making of the AGIA was also supported by the:
a) CPSU, the Community and Public Sector Union (CPSU) (Exhibit 6);
b) “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) (Exhibit 7);
c) The Association of Professional Engineers, Scientists and Managers, Australia (APESMA); and
d) The Australian Workers’ Union (AWU).
 At the hearing of this matter on 20 June 2016 the following appearances were recorded:
● Mr B Gahan, a solicitor with Minter Ellison appeared on behalf of the APSC with permission pursuant to s.596(2)(a) of the FW Act;
● Ms D Tait appeared for the APSC;
● Ms S Queenan and Ms K Lejsek appeared for the Australian Maritime Safety Authority;
● Mr L Benfell appeared for the CPSU;
● Mr D Worthy and Ms A Chadwick appeared for the Australian Sports Commission;
● Mr A Anastasi appeared for the Civil Aviation and Safety Authority;
● Ms H Ward appeared for the National Gallery of Australia;
● Ms J Butler appeared for the Australia Council for the Arts;
● Ms S McSwiney appeared for the Australian Film, Television and Radio School;
● Mr W Escott appeared for the Australian Prudential Regulation Authority;
● Ms E Baxter appeared for Australian Hearing Services;
● Ms R Page and Mr R Byun appeared for the Special Broadcasting Service;
● Mr S Murphy appeared for Tourism Australia;
● Mr M Nicolaides appeared for the AMWU
● Ms S Gheller appeared for APESMA
 At the conclusion of the hearing we announced our decision to make the AGIA subject to the finalisation of its terms in conference with Commissioner Johns.
 On 22 June 2016 the parties jointly filed a further amended version of the AGIA which addressed the issues identified during the hearing.
 Later on 22 June 2016, the Commission informed the parties, of minor changes it proposed to make to clause 4.1, Schedule J – clause J.9.1 and Schedule H – clause H8.8, of its own accord. No objection was raised to the proposed amendments
 Further, the Commission’s Awards Modernisation team suggested further amendments to the AGIA because of the decision in the Annual Wage Review 2015–16 on 31 May 2016 [ FWCFB 3500]. It was proposed to adjust the wages and allowances in the AGIA.
 On 19 July 2016, the Commission provided the parties with:
● a copy of the Proposed Award (including changes incorporated from [ FWCFB 3500);
● a table clarifying the changes made to the Proposed Award; and
● a memorandum about the changes (the memo).
 The parties were directed to consider the “questions” posed in the memo, and provide comments and/or objections to the amended version of the Proposed AGIA, by 22 July 2016.
 On 20 July 2016, the AMWU submitted that it agreed with the further amended version of the AGIA, but suggested an additional amendment in relation to the title “Provide Advanced First Aid”.
 On 22 July 2016, the APSC filed in the Commission a further amended version of the AGIA, accompanied with extensive comments on the issues raised, explaining why different outcomes had been reached.
 On 4 August 2016, a final version of the AGIA incorporating the changes proposed by the APSC was provided to the parties for final comments. The APSC responded the next day with further minor typographical amendments.
 On 8 August 2016, Commissioner Johns advised the parties that all outstanding issues had been resolved, and subject to final inspection by the Awards Modernisation Team, the AGIA would be finalised and the Reasons for Decision and Order would be issued.
 These are our reasons for decision.
 In examining the approach which should be taken it is useful to briefly review some of the history of the modern award process as it helps to put into context the task before us. That history was set out by a Full Bench in Commonwealth of Australia acting through the Minister Assisting the Prime Minister for the Public Service v the Community and Public Sector Union and Others. 1
‘ The award modernisation process was initiated by a request signed by the Minister for Employment and Workplace Relations on 28 March 2008, pursuant to s.576C(1) of the Workplace Relations Act 1996 (WR Act).
 To appreciate the background against which award modernisation took place, we set out in part the request 2 signed by the then Minister for Employment and Workplace Relations, the Hon. Julia Gillard.
“(2) The creation of modern awards is not intended to:
(a) extend award coverage to those classes of employees, such as managerial employees, who, because of the nature or seniority of their role, have traditionally been award free. This does not preclude the extension of modern award coverage to new industries or new occupations where the work performed by employees in those industries or occupations is of a similar nature to work that has historically been regulated by awards (including State awards) in Australia;
(b) result in high-income employees being covered by modern awards;
(c) disadvantage employees;
(d) increase costs for employers;
(e) result in the modification of enterprise awards. This does not preclude the creation of a modern award for an industry or occupation in which enterprise awards operate.”
However s.576V of the Act provides that a modern award is to be expressed not to bind an employer who is bound by an enterprise award in respect of an employee to whom the enterprise award applies.
 The application of Clause 2(c) and (d) of the Request presented particular problems for the Commission in dealing with applications for modern awards. The modern award making process was not done in a vacuum and it had to take account of existing instruments. This was not a case of the parties having a clean slate and in the name of award modernisation, seeking changes without presenting proper merit arguments. An example in the process then, and in the matter before us now, is hours of work. Historically changes to ordinary hours of work have been accompanied by extensive and reasoned argument as to why the Commission should alter its awards. This tension in not trying to disadvantage employees and increase costs for employers led to the Full Bench in the modern award process to adopt a process of identifying the critical mass of particular terms and/or conditions of employment across the various awards with which it dealt. This concept is evidenced by many Full Bench decisions but the following is illustrative:
In general terms we have considered the applications in line with our general approach in establishing the terms of modern awards. We have had particular regard to the terms of existing instruments. Where there is significant disparity in those terms and conditions we have attached weight to the critical mass of provisions and terms which are clearly supported by arbitrated decisions and industrial merit. 3
 It can be seen that whilst the creation of a modern enterprise award is a new award and not a variation to the existing award, nevertheless the current terms and conditions play an important role and must be given appropriate weight when regard is had to the history of the modern award process. The difficulty faced by the Commission when it was required to modernise numerous awards in a sector and examine the “critical mass”, is not present when an enterprise award is considered. The conversion of an existing enterprise award to a modern enterprise award presents a much clearer picture. The ability not to disadvantage employees and increase the cost to employers is a less complex task. We emphasise that the modern award process was not a substitute for reasoned argument with relevant evidence where significant changes were sought to be made to longstanding terms and conditions of employment which were in awards of the Commission. This is not to say that the modern award process cannot embrace change, it can. The legislative requirements demand change, but particular change. It can been seen that the award modernisation process was not designed, simpliciter, to alter bargaining power.’
 The above principles were adopted by the Commission (Commissioner Johns) in a Statement issued on 1 April 2016 (Principles Statement). The Principles Statement assisted in guiding the parties in their discussions about the development of the AGIA.
The power to make a modern award
 The Commission is empowered under paragraph 157(1)(b) of the FW Act to make a modern award if it is satisfied that making the modern award outside the system of 4 yearly reviews of modern awards is necessary to achieve the modern awards objective. The Commission may make a modern award on its own motion under subsection 157(3)(a) of the FW Act.
 The effect of the Commission making the AGIA is that the Replaced Awards will cease to cover (and can never again cover) any employee, or the employer or union parties currently covered by the Replaced Awards 4.
 Under section 143(1) of the FW Act a modern award must include terms setting out the employers and employees that are covered by the award. Clause 3 of the AGIA is a detailed coverage clause that, we are satisfied, complies with the requirements of section 143 of the FW Act in that it specifies the employers and employees of employers covered by the modern award. 5
 In short the AGIA will, subject to specific exclusions, cover employers in the Australian Government administration industry. That industry is defined to mean “all activities undertaken by bodies established by the Commonwealth for public purpose”. 6 The definition is deliberately intended to apply broadly, and cover the Commonwealth’s activities undertaken for a public purpose on its own behalf or, for example through a body corporate.
 The meaning of 'employer' is defined in the AGIA to mean:
a Commonwealth entity within the meaning of the Public Governance, Performance and Accountability Act 2013 (Cth) insofar as it does not engage staff under the Public Service Act 1999. For the avoidance of doubt, Employer also includes the Commonwealth in relation to its employment of an Employee under the Members of Parliament (Staff) Act 1984 (Cth). 7
 The key aspects of the definition of 'employer' are as follows:
a) the relevant employers are 'Commonwealth entities' for the purposes of the Public Governance, Performance and Accountability Act 2013 (Cth) (PGPA Act). This ensures that only Commonwealth employers, as opposed to state or territory government employers, will be covered by the AGIA;
b) the definition does not include 'Commonwealth companies', which are 12 companies incorporated under the Corporations Act 2001 (Cth) that the Commonwealth controls. For example, Commonwealth companies include ASC Pty Limited and NBN Co Limited (among others); 8 and
c) employment under the Members of Parliament (Staff) Act 1984 (Cth) has a unique status.
 The AGIA is expressed to cover the employees of the employers that are covered by it. 9 Specific employees are excluded from the coverage.10 Consequently, we are satisfied that the AGIA complies with the requirements of sections 143(2)(b), 143(5)(b) and 143(7) of the FW Act.
 In accordance with subsection 143(8) of the FW Act, the AGIA is expressed not to cover employees who are covered by a modern enterprise award, or employers in relation to those employees.
 Finally on the subject of coverage we note that Ms Tait deposed that, during the process conducted by the APSC for the making of the AGIA, no employer that will be covered by the AGIA sought to be excluded from its coverage on the basis that they considered it inappropriate for them to be covered by the AGIA due to their activities.
Terms of the AGIA
 The AGIA contains only those terms that may be permitted in modern awards and, in the case of allowances, terms dealing with allowances ensure that they are separately and clearly identified in the award. 11 The AGIA also contains those terms that must be included in a modern award, pursuant to Subdivision C, Division 3, of Part 2-3 of the FW Act.
 The APSC submitted that all the terms of the AGIA are necessary to achieve the modern awards objective and, to the extent it is applicable, the minimum wages objective. 12
 There are two main parts to the AGIA. First, there are those parts of the AGIA that apply to all employees covered by the AGIA, namely, the body of the AGIA and Schedules A to D and Q to S (referred to as the 'body').
 The terms of the body of the AGIA reflect a consensus reached by interested parties in relation to terms that are commonly found in modern awards, and for which there was a "critical mass" or a consistency in entitlements across the GECSA and Replaced Awards.
 The body of the AGIA includes those terms that are required by the FW Act, namely:
a) coverage terms; 13
b) a flexibility term; 14
c) terms in relation to consultation about changes to rosters or hours of work that comply with the requirements of subsection 145A(2) of the FW Act; 15
d) a term about settling disputes; 16
e) a term specifying, or providing for the determination of, the ordinary hours of work; 17
f) terms relating to the automatic variation of allowances; 18
g) a term requiring employers to make superannuation contributions for the benefit of an employee so as to avoid liability to pay the superannuation guarantee charge; 19 and
h) a 'default fund term' that complies with section 149D of the FW Act. 20
In addition to the body of the AGIA certain employers agreed upon a schedule with a relevant union or unions that will apply only to that specific employer. Unless specifically indicated in the Schedule, those terms are intended to operate in addition to the terms in the body of the AGIA. The schedules reflect the fact that different employers have previously been covered by different industrial instruments, and that their operations and circumstances are different. The use of schedules has been necessary to maintain the safety net that has previously applied to specific employees. The schedules ensure that the award modernisation process does not disadvantage, nor create new rights for, those employees.
 The AGIA does not include any terms that are not permitted to be included in a modern award: see Subdivision D, Division 3, of Part 2-3 of the FW Act.
The necessity to achieve the modern awards objective
 We were required to be satisfied, on a proper basis, that the making of the AGIA was necessary to achieve the modern awards objective.
 The modern awards objective provides that:
‘134 The modern awards objective
What is the modern awards objective?
(1) The FWC must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:
(a) relative living standards and the needs of the low paid; and
(b) the need to encourage collective bargaining; and
(c) the need to promote social inclusion through increased workforce participation; and
(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and
(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.’
 The factors listed in (a)-(h) are broad social objectives and, consequently, they are broad considerations which the Commission 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. 21 To the extent that each factor was relevant to the AGIA we took them into account.
 We were satisfied that the making of the AGIA would:
a) encourage collective bargaining through the setting of a fair and reasonable safety net for employers in the Commonwealth;
b) not unduly restrict the adoption by employers and employees of flexible modern work practices and the efficient and productive performance of work;
c) provide additional remuneration for employees working overtime, unsocial, irregular or unpredictable hours, on weekends or public holidays, or shifts;
d) not have any adverse impact on business, including on productivity, employment costs and the regulatory burden; and
e) not adversely impact on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.
 Further, we were satisfied that the development of the AGIA was consistent with the Principles Statement in that the AGIA:
a) does not extend award coverage;
b) does not increase costs for employers;
c) attaches weight to the critical mass of provisions where there are varying conditions across employers in the Commonwealth;
d) incorporates, as appropriate, long standing conditions; and
e) does not create new rights.
 In support of the making of the AGIA the APSC submitted the following:
6.1 The Commonwealth conducts its activities through a range of different employers, including:
(a) the Commonwealth;
(b) 'Commonwealth authorities', as defined in section 12 of the FW Act; and
(c) statutory offices.
(Commonwealth Government Employers)
6.2 Traditionally, Commonwealth Government Employers and their employees have been regulated by industrial awards covering one or more Commonwealth Government Employers. The occupational or industry based industrial awards that covered private sector employers and employees have not had application to Commonwealth Government Employers and employees.
6.3 The Australian Public Service (APS), being a discrete workforce employed under the Public Service Act 1999 (PS Act), is covered by the Australian Public Service Enterprise Award 2015 [sic] (APS Award) and, before that, the Australian Public Service Award 1998.
6.4 Non-APS Commonwealth Government Employers either:
(a) employ employees, but not pursuant to the PS Act; or
(b) have "dual-staffing powers" and do not exclusively engage employees under the PS Act.
6.5 Previously, these employers have been covered by the GECSA. Subject to specific exclusions, the GECSA applied to all Commonwealth authorities. In addition, a small number of non-APS Commonwealth Government Employers have been, and some will continue to be, covered by enterprise-based awards.
6.6 Traditionally, there has been a large degree of similarity between the terms and conditions in industrial awards covering APS and non-APS Commonwealth Government Employers.
6.7 The APSC understands that the Commission takes the view that the GECSA has been terminated in accordance with sub item 9(4) of Schedule 6 of the Transitional Act. As a result, the coverage of non-APS Commonwealth Government Employers by modern awards is now uncertain. If the Industry Award is not made by the Commission, Commonwealth Government Employers may be covered by a patchwork of arrangements, including:
(a) for APS agencies and employees, the APS Award;
(b) a modern enterprise award, where one has been made;
(c) occupational-based modern awards;
(d) possibly, industry-based modern awards;
(e) the Miscellaneous Award 2010 (Miscellaneous Award).
6.8 If the Industry Award is not made, it will result in three categories of Commonwealth Government Employers. Specifically, the three categories would be: those employers covered by the APS Award; those covered by a modern enterprise award; and those covered by the awards in subparagraphs 6.7(c) to 6.7(e).
6.9 The development of the modern awards in subparagraphs 6.7(c) to 6.7(e) did not take into account the terms and conditions that have historically applied to non-APS Commonwealth Government Employees. Whereas, the Industry Award provides for industry specific terms.
6.10 Some significant modern awards only apply to employers and their employees in the private sector. For example, the Clerks – Private Sector Award 2010 is a significant modern award that only applies to the private sector and there is no comparable award that applies to employees engaged in clerical or administrative role in the public sector (apart from the APS Award): see clause 4.1 of the Clerks – Private Sector Award 2010.
6.11 The APSC also submits that it would be inappropriate for the Miscellaneous Award to cover Commonwealth Government Employers. In Award Modernisation - Decision - re Stage 4 modern awards  AIRCFB 945 at paragraph , the Full Bench of the Australian Industrial Relations Commission (as it was then), stated:
We agree with those who have suggested that the coverage of the [Miscellaneous Award] is very narrow and likely to be limited in time where emerging industries are concerned or where the expansion of coverage of a modern award is involved. Accordingly we do not think the award should contain a comprehensive safety net designed for any particular occupation or industry. Rather it should contain basic conditions only, leaving room for the application of an appropriate safety net in another modern award in due course.
6.12 Commonwealth Government Employers are not part of an emerging industry. Such employers have traditionally been covered by industrial awards, most recently, this has included the GECSA and the Replaced Awards. The APSC submits that the 'appropriate safety net' in this case is the Industry Award.
6.13 If the Industry Award is not made, many employees will lose the benefit of the safety net of terms and conditions that have traditionally applied to them under the GECSA. Whereas, by a quirk of history and not considered policy, those employees of Commonwealth Government Employers covered by enterprise-based awards would continue to enjoy the benefit of their traditional safety net.
6.14 In other words, taking into account, in particular, paragraph 134(1)(g) of the FW Act, which provides for 'the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards', in the absence of making the Industry Award the APSC submits that it is not fair for the safety net applying to non- APS Commonwealth employees to apply in such a haphazard manner. Nor is the current applicable safety net relevant to non-APS Commonwealth Government Employers and their employees, having regard to the particular industrial history and circumstances of Commonwealth Government Employers.
 We accepted the correctness of those submissions (which were supported by the CPSU and the AMWU).
 Having considered all that was submitted in the matter and the terms of the AGIA we were satisfied that the making of the AGIA was consistent with the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards. The AGIA will ensure that:
a) non-APS employers of the Commonwealth are covered by a single modern award, unless they are covered by their own modern enterprise award;
b) the history of employers of the Commonwealth being covered by public sector specific industrial awards is continued;
c) there will be no unnecessary overlap in modern award coverage; and
d) the coverage of modern awards will be simple and easy to understand.
 As is apparent from our reasons above we were satisfied that a strong case had been made out for the creation of a modern award for the Australian Government Industry. We made the AGIA in the terms agreed between the parties and filed on 4 August 2016.
Mr B Gahan for Minter Ellison and D Tait for the APSC.
S Queenan and K Lejsek for the Australian Maritime Safety Authority.
L Benfell for the CPSU, the Community and Public Sector Union.
D Worthy and A Chadwick for the Australian Sports Commission.
A Anastasi for the Civil Aviation and Safety Authority.
H Ward for the National Gallery of Australia.
J Butler for the Australia Council for the Arts.
S McSwiney for the Australian Film, Television and Radio School.
W Escott for the Australian Prudential Regulation Authority.
E Baxter for Australian Hearing Services.
R Page and R Byun for the Special Broadcasting Service.
S Murphy for Tourism Australia.
M Nicolaides for the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU).
S Gheller for The Association of Professional Engineers, Scientists and Managers, Australia.
Canberra, Melbourne, Sydney:
1  FWCFB 616.
3  FWAFB 305, paragraph 3.
4 See Item 29, Part 5, Division 2 of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.
5 Section 143(2) of the FW Act.
6 Clause 3.2 of the AGIA.
7 Clause 3.1(b).
8 See sections 10 and 89 of the PGPA Act.
9 Clause 3.2(b).
10 Clauses 3.3 and 3.4, and Schedule A
11 Section 139 FW Act.
12 Section 138 FW Act.
13 Clause 3 of the AGIA.
14 Subsection 144(1) FW Act, clause 5 of the AGIA.
15 Subsection 145A(1) FW Act, clauses 7.10 to 7.14 of the AGIA.
16 Section 146 FW Act, clause 8 of the AGIA.
17 Section 147 FW Act, clause 17 of the AGIA.
18 Section 149 FW Act, clause 13.5 of the AGIA.
19 Section 149B FW Act, clause 16.2 of the AGIA.
20 Subsection 149C(1) FW Act, clause 16.4 of the AGIA.
21 National Retail Association v Fair Work Commission  FCAFC 118, para 109.
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