DECISION

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

4 yearly review of modern awards—Payment of wages
(AM2016/8)

4 yearly review of modern awards – Payment of wages – Payment of wages and other amounts model term – Building and Construction General On-site Award 2010 – Joinery and building Trades Award 2010.

[1] This decision deals with claims by the Housing Industry Association (HIA) to vary the Building and Construction General On-site Award 2010 (Building Award) concerning the frequency of payment of wages and separately by Master Builders Australia (MBA) to vary the Building Award and the Joinery and Building Trades Award 2010 (Joinery Award) dealing with frequency of payment of wages and related matters concerning the payment of wages. The claims arise in the context of the 4 yearly review of modern awards.

[2] Relevantly, s.156(2) of the Act provides:

“(2) In a 4 yearly review of modern awards, the FWC:

(a) must review all modern awards; and

(b) may make:

(i) one or more determinations varying modern awards; and

(ii) one or more modern awards; and

(iii) one or more determinations revoking modern awards; and

(c) must not review, or make a determination to vary, a default fund term of a modern award.

Note 1: Special criteria apply to changing coverage of modern awards or revoking modern awards (see sections 163 and 164).

Note 2: For reviews of default fund terms of modern awards, see Division 4A.”

[3] Section 156(5) of the Act provides that in a Review each modern award must be reviewed in its own right, however, this does not prevent the Commission from reviewing two or more modern awards at the same time. In National Retail Association v Fair Work Commission¹ the Court noted the purpose of the ‘in its own right’ requirement is to ensure the review is ‘conducted by reference to the particular terms and the particular operation of each particular award rather than by a global assessment based upon generally applicable considerations.’²

[4] The ‘scope’ of the Review was considered in the Preliminary Jurisdictional Issues Decision.³  There the Full Bench observed that “[T]he Commission is obliged to ensure that modern awards, together with the NES, provide a fair and relevant minimum safety net taking into account, among other things, the need to ensure a ‘stable’ modern award system (s.134(1)(g)). The need for a ‘stable’ modern award system suggests that a party seeking to vary a modern award in the context of the Review must advance a merit argument in support of the proposed variations.”⁴

[5] The modern awards objective is set out in s.134 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

(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.

When does the modern awards objective apply?

(2) The modern awards objective applies to the performance or exercise of the FWC’s modern award powers, which are:

(a) the FWC’s functions or powers under this Part; and

(b) the FWC’s functions or powers under Part 2-6, so far as they relate to modern award minimum wages.

Note: The FWC must also take into account the objects of this Act and any other applicable provisions. For example, if the FWC is setting, varying or revoking modern award minimum wages, the minimum wages objective also applies (see section 284).”

[6] 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 expressed very broadly.⁵ A statutory requirement that a matter be taken into account means that the matter is a ‘relevant consideration’.⁶ 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.⁷ No particular primacy is attached to any particular consideration and not all will necessarily be relevant in the context of a particular proposal to vary a modern award.⁸

[7] Section 138 of the Act provides that terms included in modern awards must be “necessary to achieve the modern awards objective”. That which is ‘necessary’ will involve a value judgment based on the assessment of the considerations stated in s.134(1)(a) to (h), having regard to the submissions and evidence.⁹ 

[8] The modern awards objective applies to the exercise of the Commission’s modern award powers including the Commission’s functions or powers under Part 2–3 of the Act. The Review function is set out in s.156, which is in Part 2-3.

[9] Clause 31 of the Building Award deals with the payment of wages and provides:

“31. Payment of wages

31.1 All wages, allowances and other monies must be paid in cash, or by cheque, bank cheque, electronic funds transfer (EFT) or similar transfer or any combination.

31.2 An employee paid by cheque must be allowed reasonable time, as agreed between the employer and the employee, to attend the branch of the employee’s bank nearest the workplace to cash cheques during working hours.

31.3 Payments must be paid and available to the employee not later than the end of ordinary hours of work on Thursday of each working week. Where an employer made payment less frequently in compliance with a relevant award or award-based transitional instrument, prior to the making of this award on 1 January 2010, or where an employer made payment less frequently in compliance with a Division 2B State award, prior to 1 January 2011, the employer may continue to make payment at that frequency, subject to the agreement of employees and/or a majority of employees if required by the relevant award, award-based transitional instrument or Division 2B State award.

31.4 When notice is given, all monies due to the employee must be paid at the time of termination of employment. Where this is not practicable, the employer will have two working days to send monies due to the employee by registered post (or where paid by EFT the monies are transferred into the employee’s account).

31.5 If an employee is paid wages by cash or cheque and is kept waiting for their wages more than a quarter of an hour after the usual time of finishing work on pay day (for reasons other than circumstances beyond the control of the employer), the employee is to be paid at overtime rates after that quarter of an hour for the period they are kept waiting, with a minimum payment of a quarter of an hour.”

[10] The corresponding provision of the Joinery Award is clause 26, which provides:

“26. Payment of wages

26.1 All monies due to an employee by the employer in relation to the performance of work must be paid and be available by no later than the time of cessation of ordinary hours of work on Thursday of each working week. Provided that in any week in which a public holiday falls on a Thursday or a Friday mutually acceptable alternative arrangements must be made.

26.2 All such monies must be paid by cash, cheque or direct credit to the account at an approved financial institution nominated by the employee, provided that payment other than by cash creates no undue financial burden to the employee.

26.3 Subject to clause 26.1, an employee who due to circumstances within the control of the employer does not receive such monies by the cessation of the ordinary hours of work on the Thursday of each week must be paid waiting time at overtime rates, with a minimum of a quarter of an hour, until such time as the monies due are paid.

26.4 Payment on termination of employment

(a) The employer must pay an employee no later than 7 days after the day on which the employee’s employment terminates:

(i) the employee’s wages under this award for any complete or incomplete pay period up to the end of the day of termination; and

(ii) all other amounts that are due to the employee under this award and the NES.

(b) The requirement to pay wages and other amounts under paragraph (a) is subject to further order of the Commission and the employer making deductions authorised by this award or the Act.

NOTE 1: Section 117(2) of the Act provides that an employer must not terminate an employee’s employment unless the employer has given the employee the required minimum period of notice or “has paid” to the employee payment instead of giving notice.

NOTE 2: Paragraph (b) allows the Commission to make an order delaying the requirement to make a payment under this clause. For example, the Commission could make an order delaying the requirement to pay redundancy pay if an employer makes an application under s.120 of the Act for the Commission to reduce the amount of redundancy pay an employee is entitled to under the NES.

NOTE 3: State and Territory long service leave laws or long service leave entitlements under s.113 of the Act, may require an employer to pay an employee for accrued long service leave on the day on which the employee’s employment terminates or shortly after.”

[11] Clause 31.3 of the Building Award requires that wages be paid to employees on a weekly basis by no later than the end of ordinary hours of work on Thursday. The claim prosecuted by HIA would replace existing clause 31.3 with the following:

“Payments must be paid and, to the extent of the employer’s control, be made available to the employee not later than the end of ordinary hours of work on Thursday of each working week or fortnight as determined by the employer, or monthly if mutually agreed.”

[12] MBA also proposes amendments to clause 31 of the Building Award involving several aspects of the payment of wages provisions including frequency. First, MBA proposes that clause 31.2 be deleted which allows an employee who is paid by cheque reasonable time (agreed between the employer and the employee), to attend the branch of the employee’s bank nearest the workplace to cash cheques during working hours.

[13] Secondly it proposes existing clause 31.3 (which provides for wages to be paid weekly) be deleted and replaced with (a renumbered) clause 31.2 as follows:

“31.2 Payments must be paid to employees either weekly or fortnightly.”

[14] Thirdly existing clause 31.5 (which deals with penalty payments for periods waiting for payment of wages) is proposed to be deleted and replaced by (a renumbered) clause 31.4 as follows:

“31.4 Where there is a delay in payment or a payment is not made in accordance with the usual pay cycle (for reasons other than circumstances beyond the control of the employer), and unless the employee is paid by electronic funds transfer (EFT), the employee is to be paid at overtime rates after that quarter of an hour for the period they are kept waiting, with a minimum payment of half an hour.”

[15] MBA also proposes amendments to clause 26 of the Joinery Award by deleting existing clauses 26.1 to 26.3 (which concern wage payment frequency, method and delay) and instead inserting the following:

“26.1 Payments must be paid to employees either weekly or fortnightly.

26.2 All wages, allowances and other monies must be paid in cash, or by cheque, bank cheque, electronic funds transfer (EFT) or similar transfer or any combination.

26.3 Where there is a delay in payment or a payment is not made in accordance with the usual pay cycle (for reasons other than circumstances beyond the control of the employer), and unless the employee is paid by electronic funds transfer (EFT), the employee is to be paid at overtime rates after that quarter of an hour for the period they are kept waiting, with a minimum payment of half an hour.”

[16] We deal with each proposed variation below.

Consideration

Frequency of payment of wages

[17] The effect of the variation proposed by HIA to the Building Award would be to allow an employer to determine whether wages would be paid to employees on a weekly or fortnightly basis and “to the extent of the employer’s control” wages would be paid no later than by the end of ordinary hours of work on Thursday of each working week or fortnight in which payment is to be made. In addition, wages could be paid monthly if agreed to by the employer and employees. The savings provision in respect of less frequent payment arrangements by the relevant award, award-based transitional instrument or Division 2B State award would also be removed.

[18] MBA’s frequency of payment variation would have the effect of allowing wages to be paid to employees to whom either the Building Award or the Joinery Award applied on a weekly or fortnightly basis with the requirement for payment by a particular day and the savings provision (in the Building Award) being removed.

[19] In support of its variation proposal HIA contends:

•  The process of award modernisation consolidated a variety of pre-modern state and federal based instruments into one modern award and that the content of these modern awards (including the Building Award) were not updated to fit or reflect contemporary needs or circumstances;¹⁰

•  The history of the Building Award is relevant and discloses that the issue of the frequency of payment of wages has been largely an uncontested issue, and one which has been arrived at by way of consent positions;¹¹ and

•  Clause 31.3 of the Building Award does not meet the Modern Award Objectives¹² because:

•  It provides for an unjustifiable continued restriction on the ability of an employer to manage its pay cycle, detracting from the need to promote flexible modern work practices and the efficient and productive performance of work;¹³

•  It is at odds with Section 323(1) of the Act which contemplates a wage payment frequency of at least monthly;¹⁴

•  It has a negative impact on productivity, employment costs and unnecessarily adds to the regulatory burden for employers.¹⁵

[20] As to the last of these matters HIA relies on a statutory declaration of Kristen Lewis, HIA’s Economics Coordinator¹⁶ and the results of a HIA Member Survey¹⁷ conducted between 23 May 2016 and 21 June 2016¹⁸ which canvassed several issues including payment of wages.¹⁹ Some 23,810 HIA members received the survey²⁰ with 290 responding.²¹

[21] The HIA also contends that the current provision is cumbersome, recognises that pre-reform awards provided options for alternative payment arrangements and is at odds with the need to ensure Modern Awards are simple, easy to understand and stable.²²

[22] MBA led no evidence in support of its proposed variations and relies on its 2 December 2016 submissions filed in AM2016/23 - 4 Yearly Review of Modern Awards – Construction Awards. Those submissions contend that the provisional model draft term (with amendments it advanced in AM2016/8) for payment of wages (arising from AM2016/8) be incorporated into both Awards and that the remaining substantive provision in the Building Award be deleted. The same contention is made in respect of the Joinery Award.²³

[23] MBA says that its proposed variation to the frequency of payment provisions of the building Award and the Joinery Award should be made, however if we are minded to adopt the HIA’s proposal to vary clause 31.3 of the Building Award, MBA would not oppose that course, including for clause 26.1 of the Joinery Award.²⁴

[24] The only evidentiary material before us is the Member Survey on which the HIA relies. The survey results need to be read conjunction with the spreadsheet of the responses to the survey which was produced by HIA in response to an order for production in AM2016/23 - 4 Yearly Review of Modern Awards – Construction Awards.²⁵ We consider the Member Survey to be of limited probative value for several reasons. First, it is a survey which was conducted in the middle of 2016 - more than four years ago - and it is therefore not current. Secondly, it received limited responses. The total cohort sought to be surveyed numbered 23,810 HIA members but the response rate was only 1.2% (290) of the cohort. Thirdly, the responses to the survey about the impact on business of a requirement to pay weekly on which HIA relies²⁶ were given in responses to the following question:

“If you do not currently pay weekly, what would be the effect on your business if you were required to do so?”

[25] The question is problematic on many levels. It presupposes, so far as is presently relevant, that a change is proposed from a payment of a less frequency (fortnightly or monthly) to a greater (weekly). No such proposal exists. Moreover, the question as framed is akin to asking a respondent what the business impact would be if it complied with the law rather than ignoring the law. In addition, it is not at all clear how many of the respondents answering the question were bound to apply the Building Award. To the extent that some of the respondents were beneficiaries of the savings provision in clause 31.2 of the Building Award – allowing payment of wages less frequently in compliance with a relevant award or award-based transitional instrument, prior to 1 January 2010 – the question presupposes a change to that arrangement. The CFMMEU does not propose a change. The HIA’s proposal, which would delete the savings provision, would also not likely alter the position of those respondents.

[26] Turning then to the Modern Awards Objective. As is apparent from the HIA’s submissions, it says the current provision of the Building Award (clause 31.3) does not meet the Modern Awards Objective and specifically s.134(1)(d), (f) and (g).

[27] The HIA contends that clause 31.3 of the Building Award provides an unjustifiable continued restriction on the ability of an employer to manage its pay cycle, detracting from the need to promote flexible modern work practices and the efficient and productive performance of work. We are not persuaded that HIA has made good its submission. Frequency of wage payment provisions are concerned with how often employees are to be paid for the work performed and say little about the manner in which the work is performed, the efficiency with which the work is undertaken or the effectiveness of productive effort of the work undertaken. It may be accepted that frequency of pay cycles may impact on the work of employees not covered by the Building Award who are responsible for payment processing because this will likely affect the volume of their work. However, this says little about the efficiency or the productive performance of the work or about the work practices. In any event there is no evidence about any of this.

[28] The HIA also contends that clause 31.3 of the Building Award is at odds with s.323 of the Act. This plainly is not so. Section 323 requires wages to be paid “at least monthly”. It does not prohibit a modern award or enterprise agreement containing terms which require payment of wages more frequently than monthly. Modern Awards may include terms that deal, inter alia, with minimum wages, overtime and penalty rates.²⁷ A provision in a Modern Award which requires payment of wages at a frequency greater than monthly will comply with s.323 and is permissible because it is an incidental or machinery term permitted by s 142 of the Act.

[29] To the extent that HIA relies on frequency of payment provisions of other modern awards and on the decision of Hamberger SDP in Graphic Arts, Printing and Publishing Award 2010 28, these are of limited assistance in determining the particular circumstances of the building and construction industry. It is to be remembered that this industry continues to utilise daily hire engagement for which the Building Award makes provision and so provides a point of distinction when comparing the frequency of payment provisions in other awards.

[30] The HIA contends that clause 31.3 of the Building Award has a negative impact on productivity, employment costs and unnecessarily adds to the regulatory burden for employers. There is no evidence why this is so. The Member Survey on which HIA relies and the respondents’ comments set out in its submission²⁹ are of little assistance since they are responsive to a question which suggests a proposed change from a less frequent pay cycle to a more frequent payment cycle. That said, it seems to us likely that the frequency with which wages must be paid will impact upon employment costs and the regulatory burden of employers. We consider that the more frequent the requirement to pay wages the greater will be the likely administrative cost that is associated. Similarly, the more frequent the requirement to pay wages the greater is the regulatory burden imposed. The difficulty, in the absence of probative evidence, is assessing how significant an impost or burden a more frequent pay cycle is compared to a less frequent pay cycle. That point is reflected in some of the responses to the Member Survey with multiple respondents suggesting the effect of a change to weekly pay cycles on their business will be “nil”, “no change”, ‘none’, “not a huge issue” “zero”, “no effect”, “no real effect”, “nothing” and “no, it would only affect the worker”.³⁰ Furthermore, we have no evidence about the nature of the payroll systems used in the industry or the extent to which those systems are computerised, automated or outsourced, matters which would plainly bear upon our assessment.

[31] HIA also contends that clause 31.3 is cumbersome and at odds with the need to ensure Modern Awards are simple, easy to understand and stable. The difficulty with this contention is that the proposed solution seeks to change or alter the existing entitlement of employees covered by the Building Award to be paid weekly. HIA offers no drafting solution which would retain the existing entitlement. Moreover, HIA’s proposed clause 31.3 would allow an employer to determine and periodically alter the pay cycle between weekly and fortnightly pay period without any safeguard about how often in a 12 month period this might occur, how employees would be notified of the alteration and whether any notice of the alteration is to be given. This aspect of the Modern Awards objective does not support the change for which HIA contends.

[32] The CFMMEU acknowledges that the current clause is cumbersome with its reference to awards, award-based transitional instruments and Division 2B State awards. It has proposed an amendment which it says will not alter the legal obligations created by clause 31.3. The CFMMEU proposes the following:

“31.3 Payments must be paid and available to the employee not later than the end of ordinary hours of work on Thursday of each working week. Where an employer made payment less frequently prior to 1 January 2011, the employer may continue to make payment at that frequency, subject to the agreement of employees and/or a majority of employees if required.”

[33] No response is given by either the HIA or MBA. Our preliminary view is that the proposal has some merit in simplifying clause 31.3 of the Building Award. We propose to allow HIA and MBA 7 days from the publication of this decision within which to indicate whether they agree with the proposal. If so, then we would be inclined to vary clause 31.3 of the Building Award in the manner proposed.

[34] The MBA did not engage with the modern awards objective in its submission nor did it adduce any evidence relevant to its claim for an alteration to the frequency with which wages are required to be paid under the Building Award or the Joinery Award.

[35] For the reasons stated, we are not persuaded that a variation to the frequency of payment provisions in clause 31.2 of the Building Award or clause 26.1 of the Joinery award is necessary to achieve the modern awards objective nor are we persuaded that the current provisions do not achieve the modern awards objective.

Other payment of wages claims advanced by MBA

[36] Apart from the frequency of payment of wages issue, MBA seeks other alterations to the payment of wages provisions of the Building Award and the Joinery Award. MBA contends that these alterations seek to:

•  Clarify the provision that provides a penalty for employers in circumstances where an employee is kept waiting for their wages within both the Building and Joinery Awards; and

•  Remove the requirement for employees paid by cheque to be allowed reasonable time, as agreed between the employer and the employee, to attend the branch of the bank nearest the workplace to cash cheques during working hours within the Building Award; and

•  Amend the provision within the Joinery Award that deals with methods of payment to reflect modern business practices and to align with the mirror provision within the Building Award.³¹

[37] Subject to minor amendments (with which MBA agrees)³² these proposed amendments are supported by HIA.³³ The CFMMEU opposes these changes as did the CEPU.³⁴

[38] As with the earlier matter, MBA does not engage with the modern awards objective in its submission nor did it adduce any evidence relevant to its claim for an alteration to the payment of wages provisions of the Building Award or the Joinery Award.

[39] Contested applications to replace existing payment of wages terms of the awards at issue should be supported by probative evidence that the existing terms are impractical or operate unfairly on the employers and employees covered by the relevant awards. Moreover, parties need to engage with the modern awards objective. It is not enough to propose an amendment and to assert that this will “reflect modern business practices” without leading some evidence about what those practices are and how widespread they are in the field of the award’s coverage.

[40] Consequently, we are not persuaded that any of the changes proposed by MBA are necessary to achieve the modern awards objective nor are we persuaded that the current provisions do not achieve the modern awards objective.

Conclusion

[41] For the reason given, the claims made by HIA to vary the payment of wages provisions of the Building Award and those made by MBA to vary the payment of wages provisions of the Building Award and of the Joinery Award are rejected.

[42] HIA and MBA may within 7 days from the publication of this decision indicate in writing whether they agree with the proposal advanced by the CFMMEU in its submission and discussed at [32]-[33] above.

DEPUTY PRESIDENT

Determined on the papers by consent

Written submissions:

Master Builders Australia, 13 May 2020, 28 August 2020 and 20 October 2020
Housing Industry Association, 13 May 2020 and 30 July 2020
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, 17 June 2020
Construction, Forestry, Maritime, Mining and Energy Union, 17 June 2020 and 28 August 2020

Printed by authority of the Commonwealth Government Printer

<PR724887>

1 [2014] FCAFC 118

2 Ibid at [85]

3 [2014] FWCFB 1788

4 Ibid at [23]

5 Shop, Distributive and Allied Employees Association v National Retail Association (No 2) (2012) 205 FCR 227 at [35] per Tracey J

6 Minister for Aboriginal Affairs and Another v Peko-Wallsend Limited and Others [1986] HCA 40, (1986) 162 CLR 24; see also Griffiths v The Queen (1989) 167 CLR 372 at 379; Ho v Professional Services Review Committee No 295 [2007] FCA 388 at [23]-[26] and cited in Hasim v Attorney-General of the Commonwealth [2013] FCA 1433, (2013) 218 FCR 25 at [65]

7 Friends of Hichinbrook Society Inc v Minister for Environment (No 3) (1997) 77 FCR 153; Australian Competition and Consumer Commission v Leelee Pty Ltd [1999] FCA 1121; Edwards v Giudice [1999] FCA 1836

8 4 yearly review of modern awards – Penalty Rates [2017] FWCFB 1001 at [115]

9 4 yearly review of modern awards – Preliminary Jurisdictional Issues [2014] FWCFB 1788 at [36]

10 HIA Submissions 13 May 2020 at p 10

11 Ibid at p 12

12 Ibid

13 Ibid at p 13

14 Ibid

15 Ibid at 14

16 Ibid at Attachment C

17 Ibid at Attachment D

18 Ibid, Attachment C at [7]

19 Ibid, Attachment C at Annexure A Q23-Q26

20 Ibid, Annexure C at [12]

21 Ibid, Attachment D at p 3

22 Ibid at 15

23 Submissions of Master Builders Australia, 13 May 2020 at [5]-[[7], Reply Submissions of Master Builders Australia, 28 August 2020 at [4] and Master Builders Australia 2 December 2016 Submissions in AM2016/23 - 4 Yearly Review of Modern Awards – Construction Awards at [16] and [26]

24 Submissions of Master Builders Australia, 13 May 2020 at [8]-[9]

25 The document was marked as Exhibit 5 in AM2016/23 and is annexed to the Submissions of the Construction, Forestry, Maritime, Mining and Energy Union, 17 June 2020 filed in this proceeding

26 HIA Submissions 13 May 2020 at pp 14-15

27 Fair Work Act 2009, s 139

 28   [2012] FWA 8726

29 HIA Submissions 13 May 2020 at pp 14-17, Annexure D at pp 38-39

30 HIA Submissions 13 May 2020, Annexure D at pp 38-39

31 Summary of Submissions of Master Builders Australia, 20 October 2020 at [5]

32 Reply Submissions of Master Builders Australia, 28 August 2020, at [7]-[8]

33 Correspondence from HIA, 30 July 2020

34 Reply Submissions of the CFMMEU, 17 June 2020 at [8]-[18]; Reply Submissions of the CEPU, 17 June 2020 at [3]