| [2019] FWCFB 4559 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s 156—4 yearly review of modern awards
4 yearly review of modern awards – Gas Industry Award 2010
(AM2018/10)
DEPUTY PRESIDENT SAMS |
|
4 yearly review of modern awards - substantive issues in Gas Industry Award 2010 – penalties in relation to meal breaks not taken, or interrupted – draft clause – further final submissions.
[1] In a decision issued by the Full Bench in September 2018 1 (September 2018 Decision) a Full Bench of the Fair Work Commission (Commission) considered some outstanding issues in relation to the Gas Industry Award 20102 (the ‘Award’). The Full Bench said:
“3.3 Gas Industry Award 2010
Item 3 – Meal breaks
[45] In the June 2018 decision, we dealt with an issue raised by Ai Group in relation to meal breaks. Ai Group submitted that, consistent with the July 2015 decision, the Exposure Draft should be amended so that the words ‘of the minimum hourly rate’ appear after each reference to a percentage appearing in clauses 9.1(b), 9.1(c) and 9.1(d). The proposed amendment would take the following form:
“9.1 Meal breaks
(a) A meal break of at least 30 minutes must be allowed to employees within five hours of the start of their shift.
(b) Employees required to work for more than five hours without a meal break as provided for in clause 9.1(a) must, for all time worked in excess of the five hours before being allowed a meal break, be paid at 200% of the minimum hourly rate.
(c) Employees required to continue work during the meal break must be paid at 150% of the minimum hourly rate for all hours worked from the beginning of the scheduled meal break until the full meal break is given.
(d) Employees required to resume work during the meal break must be paid at 150% of the minimum hourly rate for all hours worked from resuming work until the full meal break is given.
[46] Business SA supported Ai Group’s submission.
[47] The Australian Workers’ Union (AWU) submitted that in the October 2015 decision a similar issue arose in respect of the Manufacturing Award and the term ‘minimum hourly rate’ was replaced with ‘applicable hourly rate’. The AWU submitted that the term ‘applicable hourly rate’ also be used in the Gas Award, and stressed that if the term was not used there would be an incentive for employers to direct employees to continue or resume work during a meal break on Sundays and public holidays because they would be paid less.
[48] In the June 2018 decision, we agreed with the AWU that the effect of the term ‘minimum hourly rate’ would mean that an employee entitled to higher weekend or public holiday penalties would be entitled to a lesser amount under the circumstances contemplated by clause 9.1 of the Exposure Draft. We stated that the intention of the clause is to create a disincentive for employers to delay or interrupt employees’ meal breaks. In order to achieve this, the rates under clause 9.1 must be in excess of that which employees are otherwise entitled.
[49] Despite agreeing with the AWU, we expressed a provisional view that a definition of ‘applicable hourly rate’ would not be inserted into the Exposure Draft for the Gas Award as this may cause confusion and add an unnecessary level of complexity. We proposed to use the term ‘minimum hourly rate’ as suggested by Ai Group, and clarify this by adding the words ‘plus penalties and relevant loadings,’ as follows:
9.1 Meal breaks
(a) A meal break of at least 30 minutes must be allowed to employees within five hours of the start of their shift.
(b) Employees required to work for more than five hours without a meal break as provided for in clause 9.1(a) must, for all time worked in excess of the five hours before being allowed a meal break, be paid at 200% of the minimum hourly rate, plus penalties and relevant loadings.
(c) Employees required to continue work during the meal break must be paid at 150% of the minimum hourly rate, plus penalties and relevant loadings for all hours worked from the beginning of the scheduled meal break until the full meal break is given.
(d) Employees required to resume work during the meal break must be paid at 150% of the minimum hourly rate, plus penalties and relevant loadings for all hours worked from resuming work until the full meal break is given
[50] Interested parties were invited to comment on our provisional view.
[51] Submissions were received from the AWU, the AMWU, and Ai Group. No other party commented on the issue.
[52] Neither the AWU nor the AMWU opposed the provisional view. Ai Group opposed the provisional view.
[53] Ai Group submit the provisional view represents a substantive change to the award. Ai Group submit clauses 22.2 and 22.3 of the current award stipulate the rate that is to be paid to an employee who is not given a meal break after more than five hours of work or is required to continue or resume work during a meal break. Ai Group submit these clauses wholly regulate the amount that is payable in such circumstances. Clause 22 of the current award is set out as follows:
22. Meal breaks
22.1 A meal break of at least 30 minutes must be allowed to employees within five hours of the start of their shift.
22.2 Employees required to work for more than five hours without a suitable interval for a meal as provided for in clause 22.1 must, for all time worked in excess of the five hours before being allowed such interval, be paid at double time.
22.3 Employees required to continue or resume work during the meal break, must for the time of continuance or resumption until the full meal break is given, be paid at time and a half.
[54] Ai Group submits the proposed changes to clause 9.1 of the Exposure Draft would have the effect of requiring the payment of weekend penalties, public holiday penalties and shift loadings in addition to the penalty prescribed by clause 22 of the award for working during a meal break.
[55] Ai Group contends the changes proposed would lead to a substantial increase to employment costs, and provides an example of an employee who is required to work for more than five ordinary hours on a Sunday being entitled to 200% of their minimum hourly rate pursuant to clause 22.2 of the award. Under the provisional view, the employee would instead be entitled to 400% of the minimum hourly rate.
[56] Ai Group contends that the basis for the proposed amendments was only provided in the last two sentences of paragraph 181 of the June 2018 decision and submits the decision does not identify any basis for the findings that the intention of the relevant provisions is to create a disincentive for employers to delay or interrupt an employee’s meal break, or the rates payable in the relevant circumstances must be in excess of what employees are already entitled to. Ai Group further submits the intention of the clause “might equally be to simply provide employees in such circumstances with some compensation for working during a meal break”, and that there is no evidence before the Commission that establishes the proposition that a further increase to the entitlement due to employees will create a disincentive for employers to delay or interrupt their meal breaks.
[57] Ai Group identifies the following example of an employee working ordinary hours on a Saturday is to be paid 150% of the minimum hourly rate. If that employee is required to work for more than five hours without a meal break, clause 22.2 of the award entitles the employee to 200% of the minimum hourly rate. Under the Commission’s proposed changes, the employee would instead be entitled to 350% of the minimum hourly rate.
[58] Ai Group submits the proposition ‘an employee entitled to the higher weekend or public holiday penalties would be entitled to a lesser amount under the circumstances contemplated by clause 9.1 of the Exposure Draft’ should not be overstated, and highlights it is likely to arise only in very limited circumstances such as:
a) Where an employee is working on a public holiday; and
b) Where the employee is working on a Sunday and clauses 9.1(c) or (d) apply.
[59] Ai Group submits that a consideration of the relevant factors listed at section 134(1) of the FW Act does not lend support to the proposed variations and that the changes proposed are not necessary to ensure that the award achieves the modern awards objective. Ai Group maintains its view that clause 9.1 of the Exposure Draft be amended by inserting the words “minimum hourly rate” after each percentage penalty rate prescribed by it.
[60] If its primary position is rejected, Ai Group submit that any variations made to clause 9.1 of the Exposure Draft should extend no further than to maintain an employee’s rate of pay where an employee is working on a weekend or public holiday and therefore entitled to a higher rate of pay for time worked on that day. That is, the higher rate of pay would be payable in the circumstances in clauses 9.1(b) – (d) in lieu of the penalty rate prescribed by those clauses.
[61 We accept that the provisional view represents a substantive change to the award. However, the objective of the current award term is to provide a disincentive for employers to delay or interrupt employee’s meal breaks. That objective is not met in circumstances where the rate paid when an employee is required to continue working during a meal break (or to interrupt a meal break) is not greater than that which would otherwise apply.
[62] This matter will be given further consideration by a separately constituted Full Bench.”
[Endnotes omitted, underlining in original]
[2] In that decision the Full Bench, in referring to its provisional view expressed in the June 2018 Decision, 3 said at [61], that “[w]e accept that the provisional view represents a substantial change to the award.” The Full Bench then set out the objective of the current Award clause.
[3] On the basis of the statement of the Full Bench at paragraph [61] the Australian Industry Group (Ai Group) submit that any changes to the existing clause 22 should be scrutinised by reference to the requirements of s.134(1) of the Fair Work Act 2009 (the ‘FW Act’) as the Full Bench, in stating the objective of the penalty, was not “clarifying the intended operation of the current award” but rather making a substantial change to the Award. In particular, the Ai Group takes issue with the view that the intention of clauses 22.2 and 22.3 of the Gas Industry Award 2010 is to provide a disincentive for employers to delay or interrupt an employee’s meal break. They label this view “the proposition”.
[4] The Ai Group take issue with the view expressed by the Full Bench in the June 2018 Decision and reiterated in the September 2018 Decision. In the June 2018 Decision the Full Bench said that:
[181] In this instance, we agree with the AWU that the effect of the use of the term ‘minimum hourly rate’ in the present circumstances would mean that an employee entitled to higher weekend or public holiday penalties would be entitled to a lesser amount under the circumstances contemplated by clause 9.1 of the Exposure Draft. The intention of the clause is to create a disincentive for employers to delay or interrupt employees’ meal breaks. In order to achieve this, the rates under clause 9.1 must be in excess of that which employees are otherwise entitled. (Underlining added)
[5] The Ai Group submit that for these reasons (expanded upon in their submission) this Full Bench should “not proceed to increase the entitlement of employees…based on that proposition.”
[6] The Ai Group label the objective of the clause as outlined in the June 2018 Decision and reiterated in the September 2018 Decision at paragraph [61] as the “central proposition”. The Ai Group says of this “central proposition” that:
(i) it has had no opportunity to make a submission in relation to that proposition prior to the view being expressed,
(ii) the Full Bench pointed to no relevant arbitral history of the clause to support that view;
(iii) it may well be that the intention is to do no more than provide payment for work carried out during a meal break;
(iv) the Full Bench did not explain why a higher rate than would otherwise be payable, would be necessary to achieve the stated intention of the clause;
(v) there is no evidence that a higher rate would provide any disincentive to employers; and
(vi) the reasoning of the Full Bench fails to acknowledge that the current formulation of the clause already creates a higher entitlement.
[7] We reject the views expressed by Ai Group that there is no support for the view expressed by the Full Bench that the intention of clause 22 of the Gas Industry Award 2010 is to provide a disincentive for employers to delay or interrupt a meal break. We do not consider that the Full Bench did anything other than “[clarify] the intended operation of the current Award” and was not proposing, in the view it expressed as to the intent of the clause, to make a substantial change to the Award. The critical issue is how to give effect to the existing clause in the context of the changes to the Award.
[8] The Full Bench did not suggest that what the Ai Group calls the “central proposition” was a substantive change to the Award, but rather that its proposal as to the clause as set out in its provisional view equated to a substantive change. They are different matters and to confuse them is to misrepresent the views of the Full Bench. The task given to this Full Bench was to give consideration as to how the issues with the clause should be addressed.
[9] The clause as it is currently drafted at clause 22 of the Gas Industry Award 2010 includes a penalty – payment at double time or time and a half – depending on the level of interruption to the meal break that must be allowed to employees within five hours of the start of the shift (clause 22.1).
[10] The penalty required to be paid is in the context of the requirement to provide a meal break. This provision is not optional – the employees have an entitlement to have a meal break. If this break is not provided or if it is interrupted such that the full break is not given, a payment must be made by the employer for this interruption until such time as the break is given. Whether, in reality, the penalty to be paid acts as a disincentive to any particular employer is a matter for them, but this does not change the character of the payment or the obligatory nature of the meal break. To suggest otherwise is disingenuous.
[11] The clause recognises that working through the meal break or interrupting the meal break is not a discretionary decision of the employee, but rather something that can only be done at the requirement of the employer. In these circumstances, it seems to us that the additional payment is intended to act as a disincentive to the employer to require the employee to not have, or interrupt the break.
[12] For these reasons, we concur with the view expressed by the Full Bench in the September 2018 Decision.
[13] If we are wrong and the additional payment is not a penalty imposed on the employer, then it must be an additional payment to which an employee, is entitled should their entitlement to the meal break not eventuate or be interrupted. If the payment is not to create a disincentive to employers it must be, therefore, to compensate an employee for not receiving that to which they are otherwise entitled – a meal break. In these circumstances it is difficult to understand why the payment would be less than the employee was otherwise entitled to receive for work performed prior to the meal break and why it would not contain an additional component over and above what would otherwise be payable.
[14] Regardless of its purpose, the payment does exist in its current form. It is an additional payment required to be made if the meal break is not given, or is interrupted. The Full Bench, in our view, did no more than reflect this fact. In this respect, we note that this Award is not the only award to contain such a provision.
[15] For these reasons, we do not consider the view expressed by the Full Bench in this regard needs to be further scrutinised to enable this Full Bench to carry out its role.
[16] We do note that a similar issue arose with respect to the Manufacturing and Associated Industries and Occupations Award 2010 4 where the proposed definition of ordinary hourly rate contained in the Exposure Draft for that award meant that employees required to work through their meal breaks would receive a lesser entitlement in some circumstances, while working through the meal break than they would for working ordinary hours immediately before, or after the interrupted meal break. This was so as the proposed entitlement for working through a meal break was the ordinary hourly rate and this did not include penalties that would otherwise be payable for working ordinary hours (e.g. 150% of the ordinary hourly rate for working ordinary hours on a Saturday).
[17] The matter in the Manufacturing Award was eventually resolved by setting specific additional payments for working through a meal break, regardless of the time the ordinary hours are being worked. The Full Bench in that matter adopted the proposal put forward by the interested parties as an acceptable approach to the issue.
[18] Under the current Award an employee is entitled to a payment at “double time” or “time and a half”, depending on the level of interruption to the meal break. The Ai Group suggest that the current clause sets a flat 200% of the minimum hourly rate in circumstances where a meal break is not given, or 150% of the minimum hourly rate where the meal break is interrupted. The Ai Group further submits that, on the proposed construction of the clause in the provisional view expressed in the September 2018 Decision, the penalty would be applied to any other penalties that applied to the ordinary time being worked. That is the 200% penalty imposed for working through a meal break would apply to the actual rate being paid for ordinary work, resulting in a windfall for some employees.
[19] The Ai Group does recognise that, under its formulation of the provision, in limited circumstances an employee would receive the same or less for having to work through the meal break, or having the meal break interrupted, than they would otherwise receive for working ordinary hours immediately before the time of the meal break.
[20] Ai Group says that the proposed clause should not be varied either, as put in the provisional view or by otherwise increasing the amounts payable because:
• it would amount to significant change and there is no probative evidence to support the change;
• there is no cogent reason for departing from the view that the Gas Industry Award 2010 when made met the modern awards objective such that there is no reason to vary it.
[21] The Ai Group submits that, at most, the Commission might vary the clause so that an employee should receive no less a payment when required to work through, or the meal break is interrupted than they would otherwise receive for working ordinary hours so that no reduction in pay is received where the meal break is not given, or is interrupted.
[22] The Ai Group submits that when the provisional view proposal is assessed against the modern awards objective and the requirements of a “fair and relevant minimum safety net” the provisional view is at odds with the modern awards objective and the clause should not be varied in such a way.
[23] The AWU submits that the Award is to be read as a beneficial instrument and the standard approach is for entitlements to be cumulative. It says that when an award intends to diverge from this approach it is expressly stated. It submits as an example the overtime clause of the Award. On the basis that the Award does indicate when penalties are not cumulative the AWU says that this provides an important textual consideration as to what it says is the cumulative approach that should be taken in this instance.
[24] Further, the AWU submits that the Full Benches dealing with penalty rates and part-time and casual employment have both confirmed that a casual loading is normally paid in addition to penalty rates and overtime payments.
[25] The AWU submits that logic is that the current arrangement should continue of an extra 100% or 50% in addition to any other payments the employee is entitled to (e.g. shift allowance, casual loading etc).
[26] The Ai Group reject the submissions of the AWU. It says that it dealt with the proper interpretation of the current clause and it does not accept that other penalties, loading or allowances are payable when the penalty is payable.
[27] The Ai Group also rejects that AWU proposition that an award should be interpreted in a beneficial manner. It rejects the proposition put by the AWU that penalties, loadings and allowances, otherwise payable, are required to be paid in addition to the penalties for working through or interruption to a lunch break. The Ai Group say that where there is a conflict between a general and specific provision, the specific provision should apply. In this case it says the specific provision does not require the payment of the allowances etc as claimed by the AWU.
[28] The task given to this Full Bench was to give further consideration to the matter covered in paragraphs [45] – [61] of the September 2018 Decision. That is, we are to give consideration to the review of clause 22 of the Gas Industry Award 2010. In doing so, we see no need to demur from the Full Bench view as to the objective of the current Award term. For the reasons we have given above, we accept that the purpose of the current Award term is to provide a disincentive for employers to delay or interrupt an employee’s meal break. If it is not this, then it surely is a payment to the employee for the loss of an entitlement (a meal break of 30 minutes). Further, we are satisfied that in reaching this view the Full Bench had regard to the views expressed by Ai Group as to the operation of the clause.
[29] Clause 22 of the Gas Industry Award 2010 reads as follows:
“22. Meal breaks
22.1 A meal break of at least 30 minutes must be allowed to employees within five hours of the start of their shift.
22.2 Employees required to work for more than five hours without a suitable interval for a meal as provided for in clause 22.1 must, for all time worked in excess of the five hours before being allowed such interval, be paid at double time.
22.3 Employees required to continue or resume work during the meal break, must for the time of continuance or resumption until the full meal break is given, be paid at time and a half.”
[30] The matter for us to consider is how we should treat the requirement to pay at “double time” and “time and a half”.
[31] The Exposure Draft originally published proposed that the clause be amended to read:
“9.1 Meal breaks
(a) A meal break of at least 30 minutes must be allowed to employees within five hours of the start of their shift.
(b) Employees required to work for more than five hours without a meal break as provided for in clause 9.1(a) must, for all time worked in excess of the five hours before being allowed a meal break, be paid at 200%.
(c) Employees required to continue work during the meal break must be paid at 150% for all hours worked from the beginning of the scheduled meal break until the full meal break is given.
(d) Employees required to resume work during the meal break must be paid at 150% for all hours worked from resuming work until the full meal break is given.”
[32] It was from this clause that the Full Bench, having heard from the Ai Group and AWU expressed its provisional view which has led to this Full Bench’s consideration. The difficulties with the Exposure Draft stem from the uncertainty as to what particular rate the penalty should be applied to, given the variety of circumstances in which ordinary time can be worked.
[33] The current Gas Industry Award 2010 contains a variety of penalties and loadings payable to employees. It establishes the rate of pay to be paid to employees for working ordinary hours of work which, of itself, contains a number of penalties:
• Day work on Monday to Friday attracts a payment of 100% of the ordinary rate of pay.
• Afternoon shift worked Monday to Friday is paid at 115% of the ordinary hourly rate.
• Night shift worked on Monday to Friday is paid at the rate of 130% of the ordinary hourly rate.
• Saturday ordinary hours are paid at the rate of time and a half.
• Sunday ordinary hours are paid at double time.
• Public Holidays ordinary hours are paid at double time and a half.
[34] The penalties are payable for ordinary hours worked outside Monday to Friday day work to compensate for the time at which the ordinary hours are required to be worked. They compensate for no more and no less. Such penalties do not compensate employees for any other matter associated with their employment.
[35] The payments set out in the Gas Industry Award 2010 at clause 21 to be made when an employee is required to work through, or has their meal break interrupted are, as the Full Bench in the September 2018 Decision observed, a disincentive to an employer to require an employee to work through, or have their meal break interrupted.
[36] There is nothing in the Award to suggest that the penalties for working ordinary hours outside day work Monday to Friday is in substitution for the penalty payable when an employer requires an employee to work through, or interrupt their meal breaks (or any other penalty). Clause 23.1 (which deals with overtime payments) is the only clause of the Gas Industry Award 2010 that specifies the circumstances where rates are not cumulative and it does not go to ordinary time rates of pay and penalties in relation to meal breaks not taken, or interrupted.
[37] Further, we are satisfied that there is nothing in the Award that suggests that the penalty for working through, or having a meal beak interrupted should change based on when the ordinary hours are being worked (that is on shift work, on a Saturday etc).
[38] We do accept that the penalties payable for working through, or an interrupted meal break should not result in some windfall to employees, which does appear to have been an unintended consequence of the provisional view expressed in the September 2018 Decision.
[39] For these reasons, we do not accept the proposal of either the Ai Group or the AWU.
[40] The Exposure Draft for the Award sets out the following rates for working ordinary hours:
• Day work on Monday to Friday attracts a payment of 100% of the ordinary rate of pay.
• Afternoon shift worked Monday to Friday is paid at 115% of the minimum hourly rate.
• Night shift worked on Monday to Friday is paid at the rate of 130% of the minimum hourly rate.
• Saturday ordinary hours are paid at 150% of the minimum hourly rate.
• Sunday ordinary hours are paid at 200% of the minimum hourly rate.
• Public Holidays ordinary hours are paid at 250% of the minimum hourly rate.
[41] The existing clause in the Gas Industry Award 2010 provides that an additional payment of 100% or 50% is to be made for working through, or an interrupted meal break. For the reasons given above, we accept that there should be a penalty in addition to whatever rate is being paid for ordinary hours, such that the disincentive or compensation for loss of the meal break, remains.
[42] It is our view that the matter is resolved by recognising that a penalty of 100% of the minimum hourly rate for the employee’s classification as set out in clause 10.1 (of the Exposure Draft) is payable if an employee is required to work through their meal break until such time as the meal break is given and that a penalty of 50% of the minimum hourly rate for the employee’s classification as set out in clause 10.1 (of the Exposure Draft) is payable when an employee is required to continue or resume work until the full meal break is given. We are satisfied that this decision gives effect to the clause in the Gas Industry Award 2010 which, in effect, provides for a penalty payment of 100% or 50% of the ordinary rate of pay where a meal break is not given, or is interrupted.
[43] Such penalties should be in addition to (and not in substitution of) the penalties payable for ordinary hours worked at the particular time.
[44] Such a construction of the clause stops the excessive accumulation of penalties which is of concern to the Ai Group, but continues to recognise the importance of a meal break and impose a penalty should the break not be given, or be interrupted.
[45] The following draft of the clause to give effect to our decision is as follows:
(a) A meal break of at least 30 minutes must be allowed to employees within five hours of the start of their shift.
(b) Employees required to work for more than five hours without a meal break as provided for in clause 9.1(a) must, for all time worked in excess of the five hours before being allowed a meal break, be paid:
(i) the hourly rate applying to the employee immediately before the meal break provided for in clause 9.1(a); and
(ii) 100% of the minimum hourly rate in clause 10.1 for their classification.
(c) Employees required to continue work during their meal break provided for in 9.1(a) must, for all time worked from the beginning of the scheduled meal break until the full meal break is given, be paid:
(i) the hourly rate applying to the employee immediately before the meal break provided for in clause 9.1(a); and
(ii) 50% of the minimum hourly rate in clause 10.1 for their classification.
(d) Employees required to resume work during their meal break provided for in 9.1(a) must, for all time worked from resuming work until the full meal break is given, be paid:
(i) the hourly rate applying to the employee immediately before the meal break provided for in clause 9.1(a); and
(ii) 50% of the minimum hourly rate in clause 10.1 for their classification.
[46] The effect of the proposed clause is as follows:
|
Ordinary hours |
Clause 9.1(b) |
Clause 9.1(c) or (d) | ||||
Full time |
Casual |
Full time |
Casual |
Full time |
Casual | |
|
Day work |
100% |
125% |
200% |
225% |
150% |
175% |
|
Afternoon shift |
115% |
140% |
215% |
240% |
165% |
190% |
|
Night shift |
130% |
155% |
230% |
255% |
180% |
205% |
|
Ordinary hours |
150% |
175% |
250% |
275% |
200% |
225% |
|
Ordinary hours |
200% |
225% |
300% |
325% |
250% |
275% |
Public holidays |
250% |
275% |
350% |
375% |
300% |
325% |
[47] The views of the parties as to the proposed clause are now sought. Submissions should be filed in accordance with the following timetable:
1. Interested parties’ submissions are to be filed by 4pm, 7 August 2019.
2. Reply submissions are to be filed by 4pm, 28 August 2019.
[48] The Full Bench will finally determine this matter after consideration of the interested parties’ submissions.
DEPUTY PRESIDENT
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