| [2019] FWCFB 1980 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.156 - 4 yearly review of modern awards
4 YEARLY REVIEW OF MODERN AWARDS—SUGAR INDUSTRY AWARD 2010
(AM2017/56)
Sugar industry | |
DEPUTY PRESIDENT ASBURY |
BRISBANE, 26 MARCH 2019 |
4 yearly review of modern awards – Sugar Industry Award 2010.
[1] Section 156 of the Fair Work Act 2009 (Cth) (the Act) provides that the Fair Work Commission (the Commission) must conduct a 4 yearly review of modern awards as soon as practicable after 1 January 2014 (the Review). 1 The Review has consisted of an initial stage (dealing with jurisdictional issues), a common issues stage and an award stage (which involves a review of all awards in four groups).2 The Sugar Industry Award 20103 (Sugar Industry Award) has been dealt with in Group 3 of the award stage. An Exposure Draft was first published by the Commission on 15 January 2016 and has been republished 4 times, most recently on 8 March 2019 .4
[2] By Decision issued on 30 October 2017 in relation to 4 yearly review of modern awards – Award Stage – Group 3 (Group 3 Decision)5 a Full Bench of the Commission determined a number of matters in relation to the Sugar Industry Award. The Full Bench also identified matters in respect of which it did not accept changes agreed by the parties or where the parties had not reached agreement in relation to proposed variations. 6 Subsequently this Full Bench was constituted for the purpose of hearing and determining substantive issues relating to the following matters referred to in the Group 3 Decision:
• Definition of seasonal employment
• Coverage and sugar industry definitions
• Hot work allowance
• Schedule D (summary of hourly rates of pay)
• Piecework rates and casual loading
• Tool allowance for apprentices (which was later referred to us).
[3] Further conferences of the parties were conducted resulting in agreement being reached on the majority of those matters and a draft determination to give effect to that agreement being developed by the parties. The matters which were not agreed were the subject of a hearing before this Full Bench in October 2018. The outstanding matters which are the subject of this Decision are:
• the interaction between casual loading and piecework rates; and
• provisions in relation to tool allowances for apprentices requiring repayment of the value of tools or the tool allowance in certain circumstances.
[4] This Decision refers to the relevant clauses as they appear in the current Sugar Industry Award and in the most recent Exposure Draft issued on 8 March 2019.
[5] Section 156(1) of the Act requires that the Commission conduct a 4 yearly review of modern awards. Section 156(2) of the Act deals with what must be done in the Review and provides that the Commission must review all modern awards and may, among other things, make determinations varying modern awards.
[6] A number of provisions in the Act relevant to the Review operate to constrain the breadth of the discretion in s.156(2). It is important to note that the modern awards objective (in s.134) applies to the performance or exercise of the Commission’s “modern awards powers”, which are defined to include the Commission’s functions or powers under Part 2-3 of the Act. The Review function in s.156 is in Part 2-3 of the Act and so will involve the performance or exercise of the Commission’s “modern award powers”. Thus, the modern awards objective applies to the Review. The modern awards objective is set out in s.134(1) of the Act, as follows:
“134 The modern awards objective
What is the modern awards objective?
(1) The FWC must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:
(a) relative living standards and the needs of the low paid; and
(b) the need to encourage collective bargaining; and
(c) the need to promote social inclusion through increased workforce participation; and
(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and
(da) the need to provide additional remuneration for:
(i) employees working overtime; or
(ii) employees working unsocial, irregular or unpredictable hours; or(iii) employees working on weekends or public holidays; or
(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.” 7
[7] Section 138 of the Act is also relevant to the Review and provides that;
“A modern award may include terms that it is permitted to include, and must include terms that it is required to include, only to the extent necessary to achieve the modern awards objective and (to the extent applicable) the minimum wages objective.” 8
[8] To comply with s.138, the terms included in modern awards must be “necessary to achieve the modern awards objective” 9. What is “necessary” in a particular case involves a value judgment taking into account the s.134 considerations, to the extent that they are relevant, having regard to the submissions and evidence directed to those considerations and the Commission bringing its own mind to relevant matters. Before varying a modern award in the Review, the Commission must be satisfied that the variation is necessary to achieve the modern awards objective.
[9] Section 136 sets out what can be included in modern awards;
“136 What can be included in modern awards
Terms that may or must be included
(1) A modern award must only include terms that are permitted or required by:
(a) Subdivision B (which deals with terms that may be included in modern awards); or
(b) Subdivision C (which deals with terms that must be included in modern awards); or
(c) section 55 (which deals with interaction between the National Employment Standards and a modern award or enterprise agreement); or
(d) Part 2-2 (which deals with the National Employment Standards).
Note 1: Subsection 55(4) permits inclusion of terms that are ancillary or incidental to, or that supplement, the National Employment Standards.
Note 2: Part 2-2 includes a number of provisions permitting inclusion of terms about particular matters.
Terms that must not be included
(2) A modern award must not include terms that contravene:
(a) Subdivision D (which deals with terms that must not be included in modern awards); or
(b) section 55 (which deals with the interaction between the National Employment Standards and a modern award or enterprise agreement).
Note: The provisions referred to in subsection (2) limit the terms that can be included in modern awards under the provisions referred to in subsection (1).” 10
[10] Section 142 is also relevant, as it provides:
“142 Incidental and machinery terms
Incidental terms
(1) A modern award may include terms that are:
(a) incidental to a term that is permitted or required to be in the modern award; and
(b) essential for the purpose of making a particular term operate in a practical way.
Machinery terms
(2) A modern award may include machinery terms, including formal matters (such as a title, date or table of contents).” 11
[11] In performing functions and exercising powers under a part of the Act (including Part 2-3 – Modern awards) the Commission must take into account the objects of the Act and any particular objects of the relevant part. The objects of the Act are set out in s.3 as follows:
The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:
(a) providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations; and
(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and
(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and
(d) assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and
(e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and
(f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and
(g) acknowledging the special circumstances of small and medium-sized businesses.” 12
[12] The legislative context for the Review has been considered in detail in a number of Decisions of Full Benches of the Commission including: 4 Yearly Review of Modern Awards - Penalty Rates Decision (Penalty Rates Decision)13; 4 Yearly Review of Modern Awards – Annual Leave Decision (Annual Leave Decision)14; and 4 yearly Review of Modern Awards: Preliminary Jurisdictional Issues Decision (Preliminary Jurisdictional Issues Decision)15.
[13] The Full Bench in the Annual Leave Decision observed that the general provisions relating to the performance of the Commission’s functions apply to the Review. Sections 577 and 578 are particularly relevant in this regard. In conducting the Review the Commission is able to exercise its usual procedural powers contained in Division 3 of Part 5-1 of the Act. Importantly, the Commission may inform itself in relation to the Review in such manner as it considers appropriate (s.590) and as the Full Bench in the Penalty Rates Decision observed:
“[110] The Review is to be distinguished from inter partes proceedings. Section 156 imposes an obligation on the Commission to review all modern awards and each modern award must be reviewed in its own right. The Review is conducted on the Commission’s own motion and is not dependent upon an application by an interested party. Nor is the Commission constrained by the terms of a particular application. The Commission is not required to make a decision in the terms applied for (s.599) and, in a Review, may vary a modern award in whatever terms it considers appropriate, subject to its obligation to accord interested parties procedural fairness and the application of relevant statutory provisions, such as ss.134, 138 and 578.” 16
[14] The Full Bench in the Annual Leave Decision observed that:
“[18] The modern awards objective is directed at ensuring that modern awards, together with the NES, provide a ‘fair and relevant minimum safety net of terms and conditions’ taking into account the particular considerations identified in paragraphs 134(1)(a) to (h). The objective is very broadly expressed. The obligation to take into account the matters set out in paragraphs 134(1)(a) to (h) means that each of these matters must be treated as a matter of significance in the decision making process.
[19] No particular primacy is attached to any of the s.134 considerations and not all of the matters identified will necessarily be relevant to a particular proposal to vary a modern award.
[20] There is a degree of tension between some s.134 considerations. The Commission’s task is to balance the various considerations and ensure that modern awards, together with the NES, provide a fair and relevant minimum safety net of terms and conditions.”17
[15] In the Penalty Rates Decision the Full Bench identified and distilled the following propositions established in the Preliminary Jurisdictional Issues Decision:
1.The Review is broader in scope than the Transitional Review of modern awards completed in 2013.
2.In conducting the Review the Commission will have regard to the historical context applicable to each modern award.
3.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.
4.Variations to modern awards should be founded on merit based arguments. The extent of the argument and material required will depend on the circumstances. 18
[16] The Full Bench in the Penalty Rates Decision also stated that “fairness” in the context of the Review is to be assessed from the perspective of the employees and employers covered by the modern award in question and that “relevant” is intended to convey that a modern award should be suited to contemporary circumstances.19 Further the Full Bench in that case observed that the modern awards objective is a composite expression which requires that modern awards, together with the National Employment Standards (NES) provide “a fair and relevant minimum safety net of terms and conditions”.20
[17] We have adopted and applied these principles in the present matter and now consider the agreed amendments and the disputed matters.
[18] We turn first to consider the amendments agreed between the parties. In the Group 3 Decision, the Full Bench identified tension between the definition of “seasonal employee” in clause 3.1 of the Sugar Industry Award (clause 2 of the Exposure Draft) and some substantive entitlements of employees. 21 The amendments agreed by the parties include a definition in clause 3.1 that does not provide for substantive entitlements and inserts a new clause 11.5 (clause 7.6 of the Exposure Draft) which contains a deeming provision and makes clear that it is for the purposes of a 38 hour week only.22 We are of the view that the amended definition proposed by the parties for clause 3.1, together with clause 11.5, addresses the issues identified by the Full Bench in the Group 3 Decision.
[19] The Full Bench in the Group 3 Decision also identified inconsistencies between the coverage of the Sugar Industry Award as set out in clause 4.2 and the definitions of various sectors of the industry in clause 3.1 of the Award. The parties have agreed on amendments to the coverage provisions of the Sugar Industry Award in clause 4.2 so that the terminology in those provisions is consistent with the terminology in the definitions clause in the Award. 23 This addresses the matters identified by the Full Bench in the Group 3 Decision24 and establishes consistency between those definitions and the coverage of the Sugar Industry Award.
[20] The parties have agreed on the allowances that do or do not apply in addition to the hot work allowance in clause 22.20 of the Sugar Industry Award (clause 16.1(t)(iv) of the Exposure Draft). 25
[21] The parties have also agreed on a number of matters concerning Schedule D of the Exposure Draft of the Sugar Industry Award which contains a summary of hourly rates of pay. These matters were identified in the Group 3 Decision at paragraphs [508] – [516]. The parties have agreed that Schedule D is to be retained, however propose that a notation should be inserted to make clear that in items D.2.1 and D.2.3 of that Schedule, the rates in the column titled “100%” may not be applicable to all employees at all times and that a cross-reference to clause 15.3 of the Exposure Draft should be made. 26 Clause 15.3 of the Exposure Draft deals with method of work and payment for ordinary hours with respect to the averaging system in the sugar industry which provides for 36 and 40 hour divisors being used in the slack and crushing seasons respectively. Items D.2.1 and D.2.3 set out ordinary rates and penalty rates for milling, distillery, refinery and maintenance employees other than shift workers and for shift workers respectively.
[22] The other agreed amendments to Schedule D of the Exposure Draft relate to remedying inaccuracies or clarifying the entitlements in Schedule D.3. That is, the parties have agreed that the table in Schedule D.3.1 should be corrected to state that bulk terminal operation employees receive an overtime penalty of “200%” and that the heading should be amended to read “overtime Monday to Friday”. 27 The parties have also agreed that an amendment should be made to the heading of the table at Schedule D.3.2 so that it is clear that the rates apply to shiftworkers only and that the fourth column in the table be amended to read “continuous afternoon or night shift or no rotation to day shift” instead of “other than day shift”.28 The parties claim this amendment is required in order to accurately reflect the award provisions. Consequential amendments as outlined above for D.3.1 and D.3.2 should also be made to Schedule D.3.2.4 and D.3.5 which relate to casual bulk terminals operation employees and casual bulk terminal operation shiftworkers.29
We accept that the amendments agreed by the parties in relation to the matters relating to Schedule D.3 are required to clarify the operation of that part of the schedule and/or to correct errors. We do not accept that the amendments agreed by the parties with respect to Schedule D.2 are sufficient to address the issues with the hourly rates identified by the parties and set out by the Full Bench in the Group 3 decision, at [511]. This matter is dealt with later in this Decision.
Interaction between piecework and casual loadings
[23] The issue in relation to the interaction between piecework and casual loadings was argued by the National Farmers’ Federation (NFF) 30 and The Australian Workers’ Union (the AWU). 31 It is common ground between the NFF and the AWU that casual employees are entitled to both casual and piece work loadings. The NFF referred to the view expressed by a Full Bench of the Commission in relation to the Horticulture Award 201032 that it is appropriate for a safety net award to provide for a casual loading for pieceworkers as compensation for the absence of service-related entitlements. The NFF does not oppose a variation to the Sugar Industry Award to clarify this position.
[24] However in relation to the manner in which the piecework loading should be calculated the NFF submits that it should not compound the casual loading on the basis that the history and language of the Sugar Industry Award support a conclusion that entitlements were intended to be calculated separately.
The NFF submits that the logic underpinning the requirement to pay a casual loading is that it compensates casual employees for leave entitlements while the piecework loading is designed to incentivise faster or harder work so as to encourage and enhance productivity. There is no interaction between the loadings evidenced by the fact that when a non-casual pieceworker works faster or harder there is no additional leave entitlement. The NFF also points to the fact that under the pre-modernisation award which covered the majority of field workers in the sector, namely the Queensland Sugar Field Sector Award State – 2005, 33 (the Queensland Award) pieceworkers did not receive annual leave34 or sick leave35 and were paid a 20 per cent loading in lieu of those and other entitlements. 36
[25] The NFF claims that the Queensland Award provisions in relation to pieceworkers were imported without significant change, into the Sugar Industry Award. However, under the NES and by virtue of the Sugar Industry Award, all employees except casuals are entitled to sick leave and annual leave. As such, while retaining the 20 per cent loading under the Sugar Industry Award, full-time or part-time pieceworkers also picked up the usual leave entitlements. The NFF submits that given this history it is arguable that the piecework loading is double dipping and to compound that loading by the casual loading would exacerbate this.
[26] The NFF also submits that the language of the Sugar Industry Award does not provide any basis to conclude that the casual loading should be factored into the piecework loading and in fact points to a conclusion that it should not. In this regard, the NFF points to clause 11.3 of the Sugar Industry Award which provides that casual loading does not constitute part of the casual employee’s all-purpose rate. The all-purpose rate is the rate used to calculate entitlements such as overtime and other penalties which are determined by reference to pay. Although not expressed as such, it should be assumed that piecework rates follow this convention and are calculated on the all-purpose rate. Accordingly piecework rates should not be based on a figure which includes the casual loading.
[27] In support of this contention the NFF pointed to the Award Modernisation Decision of the Australian Industrial Relations Commission in December 2008 37 where it determined that as a general rule, penalties and the casual loading should be calculated separately on the employee’s ordinary hourly rate of pay. The NFF also pointed to clause 20.2(e) of the Sugar Industry Award which provides that:
“The full rate of pay in relation to entitlements under the NES for an employee on a piecework rate is the minimum wage identified in clause 38 for the employee’s classification level plus a loading of 20%.” 38
[28] The NFF submits that the clause does not make reference to the casual loading for the purpose of calculating the piecework rate, either directly or by reference to clause 38.
[29] The AWU contends that a pieceworker is entitled to a piecework rate that ensures that the employee earns at least equal to the following amounts in each pay period:
1. the hourly rate the pieceworker would have received for time worked; plus
2. any time-based loadings such as overtime if applicable; plus
3. any casual loading if applicable; plus
4. a 20 per cent loading on the total of these amounts.
[30] The AWU accepts that the casual loading is not payable for all purposes of the Award but submits that this is not relevant to determining the interaction between the casual loading and the piecework loading. A pieceworker is paid an amount per unit of work completed and therefore does not receive a consistent hourly rate and multiplying the relevant hourly rate by the casual loading and the piecework loading (whether compounding or cumulative) is not necessarily a true reflection of the piecework arrangement under the award. According to the AWU, clause 20(2)(a) of the Sugar Industry Award sets a minimum guarantee of earnings with the 20 per cent piecework rate being an element of that safety net. This is the threshold or floor to be observed both when determining a pieceworker’s rate and also the pieceworker’s earnings for the relevant pay period. As a pieceworker is paid per unit of work completed, he or she may earn in excess of the minimum but cannot earn less.
[31] The AWU submits that reference at clause 20.2(a) to the minimum piecework rate being equal to the payment for the actual hours worked based on ordinary time and overtime “in the relevant pay period” makes clear an intention to guarantee a minimum level of earnings each pay period. This can be contrasted with the casual loading which is paid for each hour worked. The AWU submits that the inclusion of the 20 per cent loading is to assist the employer and employee to arrive at a piecework rate which will ensure that the pieceworker is paid his or her minimum entitlement as a pieceworker – what the employee would have been paid if paid on an hourly basis for the work performed – plus a 20 per cent loading. A casual employee receives a loading of 25 per cent on all ordinary hours and the AWU submits that it is not controversial to state that the casual loading of 25 per cent forms part of the payment for actual hours worked by a casual employee. The AWU submits that clause 20.2(a) of the Sugar Industry Award prescribes that the piecework loading of 20 per cent is calculated on the payment and not on the minimum rate of pay for a full-time employee and the use of the term “payment” is intended to reflect that actual amount that would have been received by a non-pieceworker for actual hours worked and not merely on the base rate of pay without loadings. The AWU conclude that as a result the piecework loading is to be calculated on the entire amount of the payment to a casual employee including the casual loading.
[32] Further, the AWU submits that the reference to overtime and ordinary time in clause 20.2(a) and to “the relevant pay period” evinces a clear intention that the pieceworker loading is not intended to be calculated in the same manner as other loadings in the Sugar Industry Award and is therefore not constrained by whether or not any other loading is all-purpose. The AWU also pointed to the mechanism for review of piecework agreements in clause 20.2(b) and submitted that it would be more burdensome for an employer to have two separate loadings for this purpose than if the 20 per cent piecework loading was simply applied to the hourly rate plus all other loadings including the casual loading.
[33] The AWU submits that it is clear in the language of the relevant clauses of the Award that the pieceworker loading of 20 per cent is calculated on what a pieceworker would have been paid if he or she was paid by the hour over the course of the relevant pay period including all relevant loadings. As a casual employee paid by the hour would be paid the casual loading for every hour worked, the casual loading forms part of the payment for a casual pieceworker that the 20 per cent loading is calculated on to ensure that the piecework rate is appropriate and is therefore compounded by the piecework loading. The AWU submits that amendments to the Sugar Industry Award may be required to increase clarity around this issue.
Tool Allowance - Apprentices
[34] As we have previously noted, agreement has been reached between the parties in relation to a tool allowance for apprentices covered by the Sugar Industry Award. The agreed position involves the insertion of a new clause that requires employers to supply apprentices with a tool pack to a minimum value or to pay apprentices a tool allowance equivalent to the total retail value of the tools. 39 The outstanding issue in relation to apprentice tool allowances was argued between the Communications Electrical and Plumbing Union (CEPU) and The Australian Industry Group (AiG). The CEPU generally agrees with and supports the clause proposed by the Australian Manufacturing Workers’ Union (AMWU) and AiG with the exception of two sub-clauses requiring that an apprentice who does not complete an apprenticeship with their employer either returns the tool pack or reimburses the employer for its retail value.40 The relevant sub-clauses are in the following terms:
“22.31(f) If the apprentice does not complete the apprenticeship with their employer:
i. the Apprentice Tool Pack must be returned to the employer; or
ii. the value of the Apprentice Tool Pack must be reimbursed to the employer, as calculated at the time of supply.
22.31(g) Where the apprentice was provided an apprentice tool allowance paid in a single instalment, the pro rata value of the allowance for the incomplete portion of the apprenticeship must be refunded by the apprentice to the Employer within three months of the end of employment.” 41
[35] The CEPU contends that clause 22.31(f) would have an adverse effect on apprentices who do not complete an apprenticeship where termination of employment is not at their initiative – for instance in cases of redundancy. In such cases the CEPU contends that apprentices will be penalised by either returning the tool pack and therefore deriving a lesser benefit from the time or reimbursing the monetary value of the tool pack at the time it was supplied to them. The CEPU contends that it would be unreasonable for the apprentice to reimburse the employer for the value of the tool pack at the time it was supplied rather than at a depreciated or market rate. In this regard, the CEPU points to s.324 and s.326 of the Act which deal with deductions from wages and relevantly provide:
(1) An employer may deduct an amount from an amount payable to an employee in accordance with subsection 323(1) if:
(a) the deduction is authorised in writing by the employee and is principally for the employee’s benefit; or
(b) the deduction is authorised by the employee in accordance with an enterprise agreement; or
(c) the deduction is authorised by or under a modern award or an FWC order; or
(d) the deduction is authorised by or under a law of the Commonwealth, a State or a Territory, or an order of a court.
Note 1: A deduction in accordance with a salary sacrifice or other arrangement, under which an employee chooses to:
(a) forgo an amount payable to the employee in relation to the performance of work; but
(b) receive some other form of benefit or remuneration;
will be permitted if it is made in accordance with this section and the other provisions of this Division.
Note 2: Certain terms of modern awards, enterprise agreements and contracts of employment relating to deductions have no effect (see section 326). A deduction made in accordance with such a term will not be authorised for the purposes of this section.
(2) An authorisation for the purposes of paragraph (1)(a):
(a) must specify the amount of the deduction; and
(b) may be withdrawn in writing by the employee at any time.
(3) Any variation in the amount of the deduction must be authorised in writing by the employee.” 42
[36] The CEPU submits that in relation to s.326 of the Act, concerns arise as to whether clause 22.31(f)(ii) of the proposed clause is a term that will have no effect as:
• the employer is deriving benefit from the use of the apprentice tool pack in the course of employment; and
• it would be unreasonable to place a large financial burden on an apprentice to repay the employer the value of the tool pack at the time it was supplied rather than at the market value particularly if the apprentice was made redundant.
[37] The CEPU also submits that there is no incentive for the proposed clause 22.31(f)(ii) to operate if the apprentice is going to be substantially out of pocket and an apprentice would be more likely to return the tool pack than pay the value of tools ranging from $1,350 to $2,250 based on the figures in the proposed clause. Further, the CEPU submits that the terms proposed fail to take s.326(4) of the Act into consideration. That section requires that a parent or guardian agree in writing to any deduction from an amount payable to an apprentice for the performance of work for apprentices under the age of 18 years.
[38] In relation to the proposed clause 22.31(g), the CEPU has concerns specifically in relation to circumstances whereby an apprentice is unable to complete their apprenticeship because the employer has made the apprentice redundant. The CEPU submits that the apprentice is placed in a disadvantageous position if required to then pay a large amount of money back to the employer because of the employer’s operational decisions or bankruptcy. The CEPU proposes amendments to the sub-clauses so that they apply only where an apprentice is terminated for reasons of misconduct or resigns his or her employment. The CEPU also submits that while the parties’ proposed draft determination would greatly assist apprentices in the sugar industry, its current form has room for improvement to ensure that apprentices do not have to endure any financial hardship through no fault of their own and that the amendments proposed by the CEPU would improve the draft determination and ensure further protection for apprentices in the sugar industry.
[39] In response to a question at the hearing about how the market value of a tool pack would be calculated, the CEPU submitted that this is a matter that should be agreed between the apprentice and the employer at the time employment ceased. 43 In oral submissions at the hearing the AMWU supported the amendment proposed by the CEPU in relation to limiting reimbursement to circumstances where employment ended through no fault of the apprentice but maintained that the market value of tools at the time of termination would be too difficult to calculate and the draft determination reflecting the agreed position of the parties in this regard was appropriate.44
[40] AiG pointed to the fact that it had originally opposed the proposed apprentice tool allowance provisions contained in the draft determination and put an alternative proposition forward that was based on the approach in the Manufacturing and Associated Industries and Occupations Award 2010 which provides for a weekly rate of tool allowance based on a proportion of the trade rate. 45 In light of the practice in the industry and in particular in Queensland where a tool kit is provided at the start of an apprenticeship, an agreed clause was arrived at loosely based on a previous Order applicable in Queensland in relation to the supply of tools to apprentices.46
[41] AiG submitted that the allowances set out in the parties’ proposed draft determination are generous and would be indexed in line with other allowances, unlike the terms of the previous Order which had not been indexed for many years. 47 The draft determination at clause 22.31(f)(ii) gives apprentices the option to return the tool pack or repay the employer the value of the tools at the time of supply. In relation to clause 22.31(g), AiG submitted that this provision only requires the apprentice to reimburse the portion of any allowances paid at the commencement of employment. AiG submits that in both cases the provisions are reasonable.
[42] In relation to the submission of the CEPU with respect to s.326 and s.323 of the Act, AiG referred to the Decision of a Full Bench of the Commission in 4 yearly review of modern awards – plain language re-drafting – standard clauses 48 where a number of qualifications were inserted into clauses allowing for deductions so that it is stated that any deduction with respect to an employee who is under 18 years of age requires the written agreement of a parent or guardian and that any deduction must not be unreasonable in the circumstances.49 AiG submitted that while the agreed outcome represented by the draft determination is fair and reasonable, if the Commission was concerned in relation to the effect of the clauses, similar wording could be inserted into the Sugar Industry Award. In response to a question from the Commission, AiG agreed that it may also be appropriate to amend clause 22.31(l) in the draft determination to ensure that it operated only in relation to employers covered by the Sugar Industry Award.50 AiG also expressed concern that it had reached agreement with the AMWU in relation to the provisions of the draft determination dealing with tool allowance for apprentices and that the agreed position was a package which the AMWU now sought to depart from by supporting the amendments proposed by the CEPU.
Agreed matters
[43] We are content to adopt the amendments agreed to by the parties in relation to the issues referred to us with respect to:
• definition of seasonal employment;
• coverage and ‘sugar industry’ definition; and
• hot work allowance.
[44] In this regard, we are satisfied that the agreed amendments are consistent with the modern awards objective in s.134 of the Act and that the agreed amendments will result in terms being included in the Sugar Industry Award that are consistent with the provisions in sub-division B of Part 2-3 Division 3 of the Act. We also consider that the agreed variations will assist in ensuring that the Sugar Industry Award is operating without anomalies or technical problems, particularly in relation to the operation of the hot work allowance.
[45] In adopting those agreed terms we are of the view that the inclusion of those terms in the Sugar Industry Award is consistent with the modern awards objective and the other legislative provisions to which we are required to have regard. In relation to the Schedule D matters we do not consider that that the amendments agreed by the parties address all of the matters raised by the Full Bench in the Group 3 Decision. The items in Schedule D which were referred by the Full Bench in the Group 3 Decision to this Full Bench are D2, D3.1, D3.2, D3.3, D3.4 and D3.5. The Full Bench in the Group 3 Decision summarised these matters as follows:
[508] As with most exposure drafts, this exposure draft includes a schedule containing a summary of hourly rates of pay. The Employer parties seek the deletion of, or alternatively the simplification of, the tables. The Union parties seek to retain the schedule.
[509] If the Schedule is to be retained, there were a number of issues identified in relation to the Schedule as follows.
[510] The 15 January 2015 exposure draft sought clarification from the parties as to the effect clause 17.3(b) and (c) of that draft in respect of the hourly rates set out in Schedule D.2 (which are based on a 38 hour week).
[511] The parties advised that the hourly rates prescribed in Schedule D.2 are calculated on a 38 hourly divisor and the schedule does not contemplate those employees whose pay rates are calculated on a 36 or 40 hourly divisor (as provided for in clause 17.3(b) and (c) of the 15 January 2015 exposure draft; renumbered as 15.3(b) and (c) in the 3 June 2016 exposure draft). It was proposed by AiGroup that a clear notation should be inserted that the Schedule D.2 hourly rates do not necessarily apply.
[512] The NFF submitted that the columns dealing with Saturday and Sunday overtime rates should be deleted or alternatively, amended to make clear that the rates only apply after 152 hours in 4 weeks has been exceeded (for example those contained in Schedule D1.2). The AWU in reply assert that ordinary hours have to be fixed under clause 11.2(a) and hours in addition to these will be overtime, even if the 152 hours over a 4 week period has not been worked.
[513] The AWU submitted that the column containing Monday to Friday rates in Schedule D.3.1 are incorrect and should be deleted. The AWU notes that the permanent employee rate for ordinary hours within this period is 100% and hours outside this span would be paid at the overtime rate of 200%. The AWU submitted the same error is contained in Schedule D.3.4. The ASMC advised that it agrees with the AWU’s view that the column is incorrect.
[46] As previously noted, we accept that the amendments agreed by the parties with respect to items D3.1 – 3.5 are appropriate and will remedy inaccuracies or clarify the entitlements in Schedule D.3. We do not accept that the proposal agreed to by the parties to rectify inconsistencies between the tables in D.2 and clause 15.3 of the Exposure Draft (clause 40.1 of the Award) appropriately addresses the concerns raised by the Full Bench in the Group 3 Decision, which we also share.
[47] The issue arises because there is an inconsistency in provisions in the Exposure Draft between the hourly rates for ordinary time in clause 15.3 and items D.2.1 and D.2.3 of Schedule D on the one hand and clause 15.3 of the Exposure Draft on the other hand. Clause 15.3 of the Exposure Draft sets out the method of working a 38 hour week which is applicable only to sugar mills. Essentially that method involves sugar mill employees working 40 ordinary hours per week during the nominal crushing season and 36 ordinary hours per week during the nominal slack season. Sugar mill employees are paid the same weekly rate but the divisor for ordinary hours changes depending on whether the hours are worked in the crushing season or the slack season.
[48] The hourly rates in the table in clause 15.1 and the 100% column in item D.2.1 and D.2.3 of the Exposure Draft are minimum hourly rates calculated by applying a divisor of 38 to the minimum weekly wage rate. As a result, the dollar values of the hourly rates are not accurate and are inconsistent with the clause 15.3 of the Exposure Draft which provides at (b) that during the nominal slack season employees other than seasonals or those deemed to be seasonal, will be paid for all ordinary hours at the weekly rate divided by 36 and at (c) that during the nominal crushing season all employees will be paid for all ordinary hours at the weekly rate divided by 40. All of the penalty rates in the tables in Schedule D.2 of the Exposure Draft are correct on the basis that penalty rates are always calculated on the basis of a 38 hour divisor.
[49] The solution to this inconsistency with respect to the ordinary hourly rates for sugar mill employees proposed by the parties is that a notation be inserted into each relevant table stating that all the rates listed in the columns titled “100%” may not be applicable to all employees at all times, with a cross reference to clause 15.3 of the Exposure Draft.
[50] In our view this notation is not sufficient to address the issue. This is because clause 15.3(d) provides that: “In no case will the average rate calculated in accordance with this clause be less than the relevant minimum hourly rate in clause 15.1”. This is not possible, given that the result of dividing the weekly rate in clause 15.1 of the Exposure Draft by 40 during the nominal crushing season – as is provided for in clause 15.3(b) – will result in hourly rates for sugar mill employees that are less than the minimum hourly rates in clause 15.1.
[51] This is a matter that has not been considered in the proceedings to date and which requires further deliberation. A conference for this purpose will be conducted by Deputy President Asbury. We turn now to consider the disputed matters.
Interaction between piecework and casual loadings
[52] In relation to the interaction between piecework loading and casual loading, we have concluded that the historical context of the Sugar Industry Award does not support a construction of the Award that requires that casual loading is compounded by the piecework rate. The principles of construction of industrial instruments are well established, most recently in AMWU v Berri, 51 and we do not repeat them. However, applying those principles does not lead us to conclude that a proper construction of the current Award provisions requires that the casual loading is compounded in the manner contended for by the AWU. The plain wording of clause 20.2 of the Sugar Industry Award does not support the AWU’s contention.
[53] The historical context of the Sugar Industry Award is that prior to that Award being made the significant majority of employees in the sugar industry were employed in Queensland and covered by awards of the Queensland Industrial Relations Commission. In the case of field sector employees the relevant award was the Queensland Award. 52
The Queensland Award provided for weekly, daily or hourly engagement and did not contain provisions for casual employment. The Queensland Award also provided for piecework agreements to be entered into and payment for pieceworkers. Piecework is a system of payment by results where an employee is paid a stipulated amount per unit or article produced. Piecework is a system of payment and not a category of employment, although employees working under such a system are termed “pieceworkers”. The Queensland Award stated that pieceworkers were not entitled to annual leave or sick leave. 53
[54] As submitted by the NFF, the piecework provisions in the Sugar Industry Award were derived from the Queensland Award and are almost identical to the terms of clause 5.5 of that Award. However the Sugar Industry Award allows for casual employment including in the field sector and for piecework arrangements to be entered into for employees in the field sector for full-time, part-time and casual employees. Further, the Sugar Industry Award and the NES provide an entitlement to annual leave, sick leave and other forms of leave to pieceworkers who are employed on a full-time or part-time basis.
[55] The piecework provisions in clause 20.2 of the Sugar Industry Award (and in clause 13.3 of the Exposure Draft) establish a minimum rate of pay that a pieceworker must receive under a piecework agreement. That minimum rate is set by reference to a requirement that the pieceworker receive a minimum piecework rate sufficient to equal the payment for the actual hours worked based on both ordinary time and overtime as the case may be, in the relevant pay period, plus a loading of 20 per cent.
[56] The effect of clause 20.2 of the Sugar Industry Award is that a pieceworker must receive payment at least equivalent to what he or she would have been entitled to be paid in the relevant pay period, for working the hours worked in that pay period, including ordinary time and overtime where relevant, plus a loading of 20 per cent. Time based payments under the Sugar Industry Award include:
• ordinary time;
• a payment of 150 per cent of the minimum hourly rate for ordinary hours worked on weekends;
• allowances; and
• overtime payments.
[57] Clause 20.2 of the Sugar Industry Award is essentially a formula for calculating the minimum payment in each pay period that a pieceworker must receive. The minimum is calculated by reference to the hours worked by the pieceworker under the piecework arrangement in each pay period and what the pieceworker would be paid for those hours if the pieceworker was paid the time based payments under the Sugar Industry Award for those hours. The 20 per cent loading is then added to this amount. The 20 per cent loading does not compensate for loss of time based payments but rather is paid in addition to the quantum of such payments for the purpose of providing an incentive to pieceworkers to be more productive.
[58] Casual loading, as provided in clause 11.3(a) of the Sugar Industry Award (clause 7.3(d) of the Exposure Draft), is paid instead of entitlements to paid leave and other matters from which casual employees are excluded by virtue of the terms of the Sugar Industry Award and the NES. The clause as it appears in the Exposure Draft is in the following terms:
“(d) Casual loading
(i) For each hour worked a casual employee must be paid:
• the minimum hourly rate; and
• a loading of 25% of the minimum hourly rate
• the class of work performed.
(ii) The casual loading is paid instead of entitlements to paid leave and other matters from which casuals are excluded by the terms of this award and the NES.
(iii) The casual loading does not constitute part of the casual employee’s all purpose rate.”
[59] The term “minimum hourly rate” is defined in clause 2 of the Exposure Draft as: “the award minimum weekly rate divided by 38”. The current Sugar Industry Award refers to the term as “minimum hourly wage” and defines it as “the award minimum weekly wage divided by 38”. It is notable that clause 11.3(a) (7.3(d)(iii) of the Exposure Draft) states that the casual loading does not constitute part of the casual employee’s all-purpose rate which means that the casual loading is not compounded by overtime rates or by the 50 per cent loading for ordinary hours worked on weekends (i.e. 150 per cent of the minimum hourly rate). In short, full-time or part-time employees do not receive additional leave entitlements for working in excess of their ordinary hours or for working their ordinary hours on weekends. For the same reasons casual employees do not receive an uplift to the casual loading for working overtime or ordinary hours on weekends. Full-time or part-time employees working on a piecework basis do not receive additional leave for being more productive. It follows that it is neither fair nor necessary to meet the modern awards objective in s.134 of the Act for casual employees to have their casual loading compounded by the 20 per cent piecework loading.
[60] The amendment we propose to the Sugar Industry Award to clarify the interaction between the casual loading and the piecework loading is not inconsistent with the modern awards objective in s.134 of the Act. In particular the Sugar Industry Award will continue to provide additional remuneration for pieceworkers: working overtime; working unsocial, irregular or unpredictable hours; working on weekends and public holidays; or working shiftwork. This additional remuneration is guaranteed by the piecework formula and by the 20 per cent margin in addition to that formula notwithstanding that it does not compound the casual loading.
[61] We are also of the view that the proposed amendment is consistent with the need to ensure a simple, easy to understand, stable and sustainable modern awards system. In this regard, we note that the interaction between the casual loading and piecework rates in the Sugar Industry Award is unclear. A question of substance has arisen between industrial parties in relation to this matter. It is consistent with the modern awards objective in s.134(1)(g) of the Act that the issue of the interaction of the loadings is clarified in order to minimise disputes or uncertainty over the meaning and application of the relevant terms of the Award.
[62] We do not accept that it is fair or relevant for the piecework loading under the Sugar Industry Award to compound the casual loading having regard to each of those amounts and the rationale for their payment. We are also of the view that an amendment in this regard is consistent with the modern awards objective in s.134 of the Act and in particular s.134(1)(g). Further we are satisfied that such an amendment will result in a term being included in the Sugar Industry Award that is consistent with the provisions in sub-division B of Part 2-3 of Division 3 of the Act. We intend to amend clause 20.2 of the current Sugar Industry Award (clause 13.3 of the Exposure Draft) to make clear that the 20 per cent piecework loading does not compound the casual loading and that both loadings are payable to casual employees working under piecework arrangements.
Tool allowances for apprentices
[63] We are conscious that agreement was reached between the AMWU and AiG relation to the matter of tool allowances for apprentices. However, we are also of the view that the CEPU has raised a number of matters which should be addressed. The tool allowance provisions agreed between the AMWU and AiG provide a benefit for apprentices who tend to be among the low paid, particularly those who are young persons. The provisions also benefit apprentices by virtue of the fact that they may be supplied with a tool pack which the apprentice can opt to retain on termination of employment. The modern awards objective at s.134(1)(a) requires us to balance the benefits to apprentices derived from the proposed tool allowance provision with any potential requirement of apprentices having to meet costs associated with reimbursing the employer for the cost of the tool pack whilst on low pay.
[64] We are of the view that the proposal of the CEPU that any deduction for the value of the tool pack supplied be at market value is not workable given the difficulty in prescribing a formula to establish market value. We are also of the view that the overall benefit provided by the clause outweighs any disadvantage arising from the fact that the obligation to return the tool pack or repay the allowance arises regardless of the reason for termination of employment. In this regard we note that the apprentice has the option of returning the tool pack instead of paying the allowance and that the employer cannot deduct the value of the tool pack in whole or in part, if the apprentice returns it. We are therefore satisfied that s.134(1)(a) does not weigh against the adoption of the tool allowance provision in the Sugar Industry Award.
[65] However, we are also of the view that in the interests of the Sugar Industry Award provision in relation to tool allowances for apprentices being fair and relevant and consistent with the modern awards objective in s.134(1)(g) that the Award should not contain provisions that may be of no effect because of s.326 of the Act. In particular we are concerned that to amend the Sugar Industry Award to allow for deductions which may be considered unreasonable within the meaning of s.326(1)(b) of the Act or deductions from the wages of employees who are aged under 18 years may result in the term of the Award allowing such deductions to have no effect.
[66] To address this concern we intend to adopt the wording developed by a Full Bench of the Commission in 4 yearly review of modern awards – plain language re-drafting – standard clauses 54 to make clear that a deduction must not be unreasonable in the circumstances and that a deduction must not be made from an amount that is payable to an employee if the employee is under 18 years of age and the deduction is not agreed in writing by a parent or guardian of the employee. Subject to amendments in relation to these matters, the provision we propose in relation to the tool allowance for apprentices is consistent with the modern awards objective in s.134 and will not result in the term being inconsistent with the provisions in sub-division B of Part 2-3 of Division 3 of the Act.
[67] A draft variation determination is issued with this Decision. Interested parties have 14 days to comment on the draft variation determination. A conference will be convened before Deputy President Asbury to deal with the outstanding matter of how to accurately reflect minimum hourly rates for sugar mill workers in the Award. Further Directions will issue in relation to that conference.
DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
<PR706218>
1 The Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Act 2018 (Cth) repealed the provision for 4 yearly reviews of modern awards in the Fair Work Act 2009 (Cth) (Act) with effect from 1 January 2018. Under the application and transitional provisions of the Amending Act, a review of an award that commenced but was not completed before 1 January 2018 can continue under the terms of the repealed provisions, the review of the Sugar Industry Award 2010 falls within this transitional provision.
4 The Exposure Draft–Sugar Industry Award 2016 was also republished on 1 June 2016, 3 June 2016 and 2 November 2017.
6 Ibid at [456] – [524].
7 Fair Work Act 2009 (Cth) s.134.
8 Ibid s.138.
9 Ibid.
10 Ibid s.136.
11 Ibid s.142.
12 Ibid s.3.
13 [2017] FWCFB 1001 at [95] – [141], [162] – [165] and [ 230] – [270].
14 [2015] FWCFB 3406 at [11] – [38].
16 [2017] FWCFB 1001 at [110].
17 [2015] FWCFB 3406 at [18] – [20].
18 Penalty Rates Decision [2017] FWCFB 1001 at [111] citing Preliminary Jurisdictional Issues Decision [2014] FWCFB 1788 at [19]-[24].
19 [2017] FWCFB 1001 at [117] – [120].
20 Ibid at [128].
21 [2017] FWCFB 5536 at [459].
22 AWU final consensus position submission and draft determination – 25 September 2018 at [9] and [15]-[17].
23 Ibid at [9].
24 [2017] FWCFB 5536 at [465]-[468].
25 AWU final consensus position submission and draft determination – 25 September 2018 at [27]-[28].
26 Ibid at [31]-[33].
27 Ibid at [38]-[40].
28 Ibid at [43]-[44].
29 Ibid at [48] and [51]-[52].
30 NFF submission – 7 June 2018; submissions in reply – 18 June 2018.
31 The AWU submission – 8 June 2018; submission in reply – 18 June 2018.
32 [2009] AIRCFB 966 at [18].
34 Ibid at clause 7.1.1.
35 Ibid at clause 7.2(a).
36 Ibid at clause 5.5.1.
37 [2008] AIRCFB 1000 at [50].
38 Sugar Industry Award - clause 20.2(e).
39 Ai Group and Ors joint submission – 14 September 2018.
40 CEPU submission in reply – 20 September 2018.
41 Ai Group and Ors joint submission – 14 September 2018.
42 Fair Work Act 2009 (Cth) s.324.
43 Transcript of proceedings – 16 October 2018 at PN48.
44 Ibid at PN56 –PN60.
45 Ibid at PN64.
46 Ibid at PN66.
47 Ibid at PN67.
49 Transcript of proceedings – 16 October 2018 at PN70-PN72.
50 Ibid at PN88.
53 Ibid at clauses 7.1.1 and 7.2(a).