[2018] FWC 1544

FAIR WORK COMMISSION

STATEMENT

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

4 yearly review of modern awards – Plain language re-drafting
(AM2016/15)

JUSTICE ROSS, PRESIDENT

MELBOURNE, 21 MARCH 2018

Terminology of rates – inclusion of annual, weekly and hourly rates in minimum wages tables – other matters – referrals to Plain Language Full Bench

Introduction

[1] This statement deals with the referral of two issues to the Plain Language re-drafting Full Bench. The first issue concerns the terminology used in exposure drafts to describe various rates and the second is the inclusion of annual, weekly and hourly rates in minimum wages tables.

[2] In addition, the statement sets out other issues that have arisen in the Award stage and common issue proceedings of the Review which have been referred to the Plain Language Full Bench.

Issue 1: Terminology of rates

[3] During the Award stage of the Review Ai Group have made submissions in relation to a number of exposure drafts which they contend use inconsistent terminology, such as penalties, loadings or allowances to describe particular premiums payable in awards. In particular, Ai Group refer to terminology which had changed existing references to shift loadings, allowances or rates; and to shift penalties,¹ arguing that the change has implications for the calculation of other entitlements; 2 such as the interaction between shift loading and annual leave loading.3

[4] The Ai Group submission 4 of 31 August 2016 is as follows:

‘3. Our first concern relates to the characterisation of premiums payable pursuant to an award. Modern awards variously characterise premiums that are payable to an employee as penalties, loadings or allowances. For example, an employee may be entitled to a shift “loading” in respect of work performed during a shift at a particular time. In numerous instances, the characterisation of a particular premium payable under an award has been altered in the corresponding provision of an exposure draft. For instance, where a current award mandates the payment of a shift “allowance”, the exposure draft may instead refer to it as a shift “penalty”. A change to the terminology used to describe a particular payment in an award often has implications for the calculation of other entitlements in the award. We are also concerned that a change in terminology may have implications for the calculation of entitlements under legislation, such as workers’ compensation and long service leave statutes.

[5] In its submissions of 23 September 2016 Ai Group further submitted:⁵

• ‘An award provision which requires that shiftworkers be paid, say, 15% extra can legitimately be called a “loading”, but it cannot legitimately be called a “penalty rate” or a “shift rate”.

• An award provision which states that shiftworkers are to be paid, say, 115% of the ordinary time rate cannot legitimately be referred to as a “loading” or an “allowance”, but it can be referred to as a “shift rate”.

• The annual leave clause in an award cannot legitimately refer to the “shift loadings” in the shiftwork clause if the shift loadings (e.g. 15%) have been replaced with shift rates (e.g. 115%) and the loading is not separately identified.

• The annual leave clause in the award cannot provide that an employee is to receive a 17.5% loading or any higher “shift penalty”, if the former shift penalty of, say, 15% has been redrafted as 115%.’

[6] In the Group 3 decision ([2017] FWCFB 3433), the Full Bench acknowledged that payment to compensate employees for working shiftwork had been variously described as penalties, loadings, allowances, or rates in modern awards and that ‘shift penalties’ had been used in the Exposure Drafts to make the term consistent, 6 stating that:

‘We are satisfied that a consistent approach on shift penalties is appropriate. While Ai Group proffers a return to existing terminology, an examination of the current award provisions shows there is no consistency between or even within modern awards. The Ai Group submissions on inconsistencies within the exposure drafts of the awards are noted and we will provide provisional views as to how these may be resolved.’ 7

[7] The Full Bench referred this issue to the Plain Language Full Bench. 8

[8] In relation to annual leave loading, Ai Group contended that any reference to an employee being paid the higher of annual leave loading or ‘shift loading’ in exposure drafts could be interpreted as an employee on annual leave being paid the higher of 17.5% or a shift loading of, for example 130%. Ai Group stated that this could lead to some shiftworkers being paid 230% while on annual leave.

[9] The Ai Group Submission is as follows:

‘4. Our second concern relates to the manner in which premiums are expressed in exposure drafts. Numerous exposure drafts state, for example, that a shift worker is to be paid 130% of the relevant rate, rather than a 30% loading. This has implications for the calculation of other award entitlements which still refer to loadings (e.g. annual leave payments).’ 9

[10] Some 55 modern awards contain a reference to an employee being paid the higher of the annual leave loading or a shift “loading” or an “allowance”. 10

[11] The Group 3 Full Bench noted:

‘In our view, these exposure drafts may be ambiguous because the annual leave loading clause isolates the loading component of the shiftwork provision and compares it to annual leave loading. As the redrafted penalty rates clause no longer identifies the loading component of the shiftwork penalty separately, the annual leave loading clause is not comparing like with like.’ 11

[12] The Full Bench referred the issue of annual leave loading to the Plain Language Full Bench in [2017] FWCFB 5536. 12

[13] The Fair Work Ombudsman (FWO) also previously raised concerns about the method for calculating annual leave loading in a number of awards including the Food, Beverage and Tobacco Manufacturing Award 2010. The FWO has received queries about which allowances, penalty rates or loadings apply when calculating annual leave loading. 13 These issues will also be referred to the Plain Language Full Bench.

Annual, weekly and hourly rates in minimum wages tables

[14] The majority of exposure drafts have been amended to include a column of minimum hourly rates in the minimum wages table, in addition to the minimum weekly rates or minimum annual salary currently in the modern award.’ 14

[15] In [2015] FWCFB 4658, the Full Bench concluded that:

‘In our view, the inclusion of hourly rates of pay in the body of the award is appropriate to ensure that awards are simple and easy to understand. The body of the award will contain the weekly rate of pay along with the minimum hourly rate.’ 15

[16] The minimum wages table at clause 10.1(a) of the Labour Market Assistance Industry Award 2015 Exposure Draft 16 illustrates the format which has generally been included in the Exposure Drafts:

10. Minimum wages

10.1 An employer must pay employees the following minimum wages for ordinary hours worked by the employee:

(a) Administrative assistant

Employee classification	Minimum weekly wage $	Minimum hourly rate $
Pay point 1	787.00	20.71
Pay point 2	800.30	21.06
Pay point 3	829.10	21.82
Pay point 4	855.40	22.51

[17] Ai Group submitted that as the preamble to the minimum wages table does not state the table applies to full-time employees and ‘a literal reading of it appears to require the payment of the minimum weekly rate to all adult employees, including part-time and casual employees.’ 17

[18] Ai Group submitted that ‘[i]n order to rectify this, it may be sufficient to include the words “(full-time employees)” below the heading of the column containing minimum weekly rates.’ 18 The Ai Group has made similar submissions to numerous awards during the technical and drafting stage.

[19] The Aged Care Award 2016 Exposure Draft 19 was amended to refer to ‘full-time employees’:

17. Minimum wages

An employer must pay adult employees the following minimum wages for ordinary hours worked by the employee:

17.1 Minimum wages—Aged Care Employee

Employee classification	Minimum weekly rate (full-time employee) $	Minimum hourly rate $
Aged care employee—level 1	$738.80	$19.44
Aged care employee—level 2	$769.40	$20.25
Aged care employee—level 3	$799.60	$21.04
Aged care employee—level 4	$809.10	$21.29
Aged care employee—level 5	$836.40	$22.01
Aged care employee—level 6	$881.50	$23.20
Aged care employee—level 7	$897.40	$23.62

[20] A small number of exposure drafts have been amended in the same way.

[21] In addition, some exposure drafts contain schedules that include a minimum salary per annum but do not specify that such a salary only applies to full-time employees.

[22] I am satisfied that a consistent approach is required for exposure drafts that contain a possible ambiguity in the minimum wages clause or schedules. Accordingly these issues will be dealt with by the Plain Language Full Bench.

Other matters

[23] The following matters have also been referred to the Plain Language Full Bench for consideration:

● Placement of a definitions clause at clause 2 in the body of awards rather than including definitions in a schedule. 20

● Shutdown provisions and continuity of service while taking unpaid leave during a shutdown period. 21

● Coverage clauses that refer to incorrect cross-references. 22

● Hourly rates of pay schedules. 23

● Minimum hourly rates and percentages of ordinary hourly rates in the hourly rates of pay schedules. 24

● Occupational health and safety references. 25

● Item 12 in the Horticulture Award 2010 – Part-time employees. The inclusion of a footnote next to ‘minimum hourly rate’ in the minimum wages table clarifying that consistent with definition of ordinary hourly rate all purpose allowances need to be added to the rates in the table where they are applicable.’ 26

● Item 14B – Job search entitlement for casual employees in the Fitness Industry Award 2010 – the issue concerning whether a casual employee has an entitlement to up to one day’s time off without loss of pay for the purpose of seeking other employment where an employer has given notice of termination. 27

● Substitution of public holiday clauses listed in Attachments A and B of a Statement of 15 March 2018 and the Sporting Organisations Award 2010. 28

● Reasonable overtime and the interaction with the NES in 12 awards. 29

● National Training Wage award-specific schedules. 30

Conclusion and next steps

[24] The Plain Language Full Bench will issue directions dealing with these issues in due course.

PRESIDENT

Printed by authority of the Commonwealth Government Printer

1 Ai Group submission, 31 August 2016 at [3].

2 Ai Group submission, 31 August 2016 at [3].

3 Ai Group submission, 31 August 2016 at [7].

4 Ai Group submission, 31 August 2016 at [3].

5 Ai Group submission, 23 September 2016 at [6].

6 [2017] FWCFB 3433 at [367].