PR002006
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AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION
Workplace Relations Act 1996
Clause 29 of Schedule 6 and s.553(1) applications to vary awards
Clause 42 of Schedule 6 and s.113 references to Full Bench
Wages and Allowances Review 2006
Various industries |
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JUSTICE GIUDICE, PRESIDENT |
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VICE PRESIDENT LAWLER |
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SENIOR DEPUTY PRESIDENT MARSH |
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SENIOR DEPUTY PRESIDENT KAUFMAN |
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COMMISSIONER GRAINGER |
MELBOURNE, 8 DECEMBER 2006 |
DECISION
Introduction
[1] There is a large number of applications before the Commission to flow-on the wage-setting decision made by the Australian Fair Pay Commission (AFPC) on 26 October 2006. The applications fall into two categories. First, there are applications to vary wage rates and wage-related allowances in a number of transitional awards. Second, there are applications to vary wage-related allowances in a number of pre-reform awards. A full list of the applications can be found on the internet page established to provide information about these proceedings – www.e-airc.gov.au/wages2006.
[2] In addition to these claims the Minister for Employment and Workplace Relations, on behalf of the Commonwealth Government (the Commonwealth), has submitted that the Commission should adopt a policy to provide access to the Supported Wage System (SWS) and minimum wages and conditions for school-based apprentices and trainees in all transitional awards. The policy would require the Commission to insert provisions dealing with the SWS and school-based apprentices and trainees in transitional awards when considering any applications to increase wages in such awards.
[3] We shall deal with the applications and the Commonwealth’s proposals under the following headings:
The New Award System
[4] Before dealing with the issues and the parties’ submissions it is appropriate to give some of the statutory context. The Workplace Relations Amendment (Work Choices) Act 2005 (the Work Choices Act) made fundamental changes in the nature of the award system previously established and regulated by the Commission. For present purposes it is only necessary to deal with some of those changes.
[5] By operation of Item 4 of Schedule 4 to the Work Choices Act, awards made by this Commission and in force immediately before 27 March 2006 are taken to be replaced by an instrument in the same terms known as a pre-reform award. Pre-reform awards only apply to organisations previously bound by the award, employers as defined in s.6(1) of the Workplace Relations Act 1996 (the WR Act) and employees of such employers. Section 6(1) reads where relevant as follows:
“(1) In this Act, unless the contrary intention appears:
employer means:
(a) a constitutional corporation, so far as it employs, or usually employs, an individual; or
(b) the Commonwealth, so far as it employs, or usually employs, an individual; or
(c) a Commonwealth authority, so far as it employs, or usually employs, an individual; or
(d) a person or entity (which may be an unincorporated club) so far as the person or entity, in connection with constitutional trade or commerce, employs, or usually employs, an individual as:
(i) a flight crew officer; or
(ii) a maritime employee; or
(iii) a waterside worker; or
(e) a body corporate incorporated in a Territory, so far as the body employs, or usually employs, an individual; or
(f) a person or entity (which may be an unincorporated club) that carries on an activity (whether of a commercial, governmental or other nature) in a Territory in Australia, so far as the person or entity employs, or usually employs, an individual in connection with the activity carried on in the Territory.”
[6] We shall refer to employers coming within the definition as federal system employers and to their employees as federal system employees. Employers covered by federal awards prior to 27 March 2006 but who are not federal system employers are not covered by pre-reform awards. By force of cl.4 of Schedule 6 to the WR Act, awards in force prior to 27 March 2006 continue in force in relation to, among others, employers previously bound by the award who are not federal system employers, and their employees. Awards of this type are called transitional awards. It is intended that such awards should continue to operate for a maximum of 5 years. As will appear below, there are differences between the Commission’s powers to vary pre-reform awards and its powers to vary transitional awards.
[7] In summary, for the purposes of this case, employers and employees covered by federal awards prior to 27 March 2006 are now covered either by a pre-reform award, if they are federal system employers and employees, or by a transitional award if they are not. Importantly, pre-reform awards do not contain pay and classification scales. Pay and classification scales for all federal system employers and employees, not just those covered by pre-reform awards, are the responsibility of the AFPC. Pay and classification scales in transitional awards, however, are the responsibility of this Commission.
The AFPC Decision
[8] Pursuant to s.22 of the WR Act the AFPC is to conduct wage reviews and exercise its wage-setting powers as necessary depending on the outcomes of wages reviews. The main wage-setting powers relevant to these proceedings are adjusting the standard federal minimum wage (FMW), determining or adjusting special FMW’s and determining or adjusting basic periodic rates of pay and basic piece rates of pay. The AFPC’s wage-setting decisions affect minimum rates for all federal system employees including those covered by pre-reform awards. They do not, however, affect minimum rates in transitional awards.
[9] On 26 October 2006 the AFPC handed down its first wage-setting decision. In that decision the AFPC increased:
[10] In its reasons for decision the AFPC indicated that when expressed in weekly rates the effect of its decision was to increase:
[11] The AFPC also decided that these increases should be reflected in the Supported Wage System and in the rates to apply to school-based apprentices and trainees within its jurisdiction.
[12] The AFPC decision came into operation on 1 December 2006. It affects minimum rates for all federal system employees. The application of the AFPC decision to the Australian Pay and Classification Scales (APCSs) covering federal system employees employed under pre-reform awards is particularly relevant to the applications before us as will be seen below.
Adjustment of Wage Rates in Transitional Awards
[13] The Australian Council of Trade Unions (ACTU), the Commonwealth and the Australian Industry Group (AiG) and the Australian Catholic Council for Employment Relations (ACCER) all support or at least do not oppose the adoption of the AFPC wage-setting decision in the transitional awards. The Australian Chamber of Commerce and Industry (ACCI) opposed the flow-on of the AFPC decision but did not support that opposition with a substantive submission. In the case of most employer parties the main issue in contention is the operative date. We deal with this later.
[14] The National Farmers’ Federation (NFF) submitted that we should not accept the AFPC finding in relation to minimum wages. It presented us with the Executive Summary of the submissions it had put to the AFPC. The nub of the submission was that “any increase to wages and allowances in transitional awards should be no greater than the increase to the consumer price index.”
[15] There are two difficulties with this submission. The first is that the increase flowing from the adoption of the submission was not quantified. Accordingly we are not in a position to properly evaluate it. The second difficulty is that the NFF asks us to disregard the AFPC decision without providing any analysis to indicate why we should reject it as wrong. We would not refuse to follow the decision in relation to minimum wages without substantial reasons for doing so.
[16] The Commission’s powers to vary transitional awards are set out in cl.8 of Schedule 6 of the WR Act as follows:
“8 Performance of Commission’s functions under this Schedule
(1) The Commission must perform its functions under this Schedule in a way that furthers the objects of this Schedule.
(2) In performing its functions under this Schedule, the Commission must ensure that minimum safety net entitlements are maintained for wages and other specified monetary entitlements, having regard to:
(a) the desirability of high levels of productivity, low inflation, creation of jobs and high levels of employment; and
(b) the principle that the wages and other monetary entitlements of transitional employees should not place them at a disadvantage compared with the entitlements of employees (within the meaning of subsection 5(1)); and
(c) the principle that the costs to transitional employers of wages and other monetary entitlements should not place them at a competitive disadvantage in relation to employers (within the meaning of subsection 6(1)).
(3) In having regard to the factors referred to in paragraph (2)(a), the Commission must have regard to:
(a) wage-setting decisions of the AFPC; and
(b) in particular, any statements by the AFPC about the effect of wage increases on productivity, inflation and levels of employment.
(4) In performing its functions under this Schedule, the Commission must have regard to:
(a) the desirability of its decisions being consistent with wage-setting decisions of the AFPC; and
(b) the importance of providing minimum safety net entitlements that act as an incentive to bargaining at the workplace level.”
[17] Clause 8(1) requires the Commission to carry out its functions in a way that furthers the objects of Schedule 6. The objects of Schedule 6 are to be found in cl.1(2) of the Schedule. So far as relevant that clause provides that:
“1 Objects of Schedule
…………
(2) The objects of this Schedule are to ensure that, during the transitional period:
………..
(c) The Commission’s function and powers to vary transitional awards are exercised so that wages and other monetary entitlements are not inconsistent with wage-setting decisions of the AFPC.”
[18] The Commission’s duty in relation to wage-setting decisions of the AFPC is also referred to in cl.8(3) and 8(4)(a). The terms of cl.8(2)(b), requiring the Commission to place emphasis on “the principle” that wages and other monetary entitlements of transitional employees should not place them at a disadvantage compared with the entitlements of federal system employees, is also important.
[19] In light of the provisions, and given the paucity of reasons advanced for a contrary course, it is clear that we should follow the AFPC’s wage-setting decision on this occasion. Minimum rates in transitional awards up to $700 per week should be increased by $27.40 per week and minimum rates above $700 per week should be increased by $22 per week. The Federal Minimum Wage in those awards should be increased by $27.40 per week to $511.90. We deal with rounding and related issues later under the Implementation heading.
Adjustment of Allowances in Transitional Awards
[20] We have already set out the terms of cl.8 of Schedule 6 of the WR Act. That clause applies equally to wages and allowances. The ACTU has submitted that the AFPC’s October 2006 wage-setting decision should be applied to wage-related allowances in transitional awards. There is no substantial opposition to this course.
[21] Clause 17(1)(j) of Schedule 6 to the WR Act governs the Commission’s power to deal with allowances in transitional awards. It reads:
“(1) Subject to this Division, a transitional award may include terms about the following matters (allowable transitional award matters) only:
…………………
(j) monetary allowances for:
(i) expenses incurred in the course of employment; or
(ii) responsibilities or skills that are not taken into account in rates of pay for transitional employees; or
(iii) disabilities associated with the performance of particular tasks or work in particular conditions or locations;
………..”
[22] We have reached the following conclusions. Given the statutory guidance in cl.8 of Schedule 6 the applications should be granted. Allowances which have in the past been adjusted by reference to and in accordance with safety net adjustments in minimum rates in the Commission’s awards ought now be altered in transitional awards by reference to and in accordance with the wage-setting decisions of the AFPC, provided always that minimum rates in transitional awards have been adjusted on the same basis. The allowances should be adjusted in accordance with the method of adjustment referred to in the Statement of Principles and found in the Furnishing and Glass Industries Allowances decision. 2
Adjustment of Allowances in Pre-Reform Awards
[23] The ACTU submitted that we should vary wage-related allowances in pre-reform awards by an amount equivalent to the AFPC’s October 2006 wage-setting decision. In dealing with applications to vary pre-reform awards the Commission is to be guided by the terms of ss.510 and 511 of the WR Act. Those sections read:
The objects of this Part are:
(a) to ensure that minimum safety net entitlements are protected through a system of enforceable awards maintained by the Commission; and
(b) to ensure that awards are rationalised and simplified so they are less complex and are more conducive to the efficient performance of work; and
(c) to ensure that the Commission performs its functions under this Part in a way that:
(i) encourages the making of agreements between employers and employees at the workplace or enterprise level; and
(ii) protects the competitive position of young people in the labour market, promotes youth employment, youth skills and community standards, and assists in reducing youth unemployment.
511 Performance of functions by the Commission
(1) The Commission must perform its functions under this Part in a way that furthers the objects of this Act and, in particular, the objects of this Part.
(2) In performing its functions under this Part, the Commission must have regard to:
(a) the desirability of high levels of productivity, low inflation, creation of jobs and high levels of employment; and
(b) decisions of the AFPC, and, in particular, the need to ensure that Commission decisions are not inconsistent with AFPC decisions; and
(c) the importance of providing minimum safety net entitlements that do not act as a disincentive to bargaining at the workplace level.”
[24] We draw attention to paragraph (a) of s.510 and the reference to ensuring that minimum safety net entitlements are protected through a system of enforceable awards maintained by the Commission. Also relevant is the requirement in paragraph (b) of s.511(2) that in performing its functions the Commission is to have regard to decisions of the AFPC and, in particular, the need to ensure that Commission decisions are not inconsistent with AFPC decisions.
[25] As we have already noted, the AFPC’s wage-setting decisions apply directly to all federal system employers and employees on minimum rates including those who are covered by pre-reform awards. It is necessary to explore in a little more detail the boundaries between the powers and functions of the AFPC in relation to federal system employers and employees and the powers and functions of this Commission to vary pre-reform awards. The Commission’s power to vary pre-reform awards in relation to allowances is contained in s.513(1)(h) of the WR Act. It reads:
“513 Allowable award matters
(1) Subject to this Part, an award may include terms about the following matters (allowable award matters) only:
……..
(h) monetary allowances for:
(i) expenses incurred in the course of employment; or
(ii) responsibilities or skills that are not taken into account in rates of pay for employees; or
(iii) disabilities associated with the performance of particular tasks or work in particular conditions or locations;
…….”
[26] It can be seen that the legislature has taken some care to prescribe the kinds of allowances which are allowable award matters. In construing s.513(1)(h) it is relevant to note that the Work Choices Act does not give the Commission power to vary any other monetary amounts in pre-reform awards. Further, pursuant to s.516 of the WR Act, a matter for which provision is made by the Australian Pay and Conditions Standard (the Standard) is not an allowable award matter, subject to an exception which is not presently relevant. Part 7 of the WR Act deals with the Standard. Division 2 of Part 7 deals specifically with wages. Section 208, which is in Division 2, deals with APCSs derived from pre-reform awards. It reads where relevant:
“208 Deriving preserved APCSs from pre-reform wage instruments
(1) If a pre-reform wage instrument contains rate provisions determining one or more basic periodic rates of pay, or basic piece rates of pay, payable to employees, then, from the reform commencement, there is taken to be a preserved APCS that includes (subject to this Subdivision):
(a) those rate provisions; and
(b) if those rate provisions determine different basic periodic rates of pay, or different basic piece rates of pay, for employees of different classifications - the provisions of the instrument that describe those classifications; and
(c) any casual loading provisions of the instrument that determine casual loadings payable to employees, other than employees for whom the instrument provides basic piece rates of pay; and
(d) if the casual loading provisions determine different casual loadings for employees of different classifications - the provisions of the instrument that describe those classifications; and
(e) any provisions of the instrument that determine, in relation to employees to whom training arrangements apply, whether hours attending off-the-job training (including hours attending an educational institution) count as hours for which a basic periodic rate of pay is payable; and
(f) any frequency of payment provisions for the instrument; and
(g) the coverage provisions for the instrument.
(2) The preserved APCS is derived from the pre-reform wage instrument.”
[27] It should be noted that a wages award of this Commission in force prior to 27 March 2006 is a pre-reform wage instrument for the purposes of this section: s.178. The AFPC has the power to alter a preserved APCS: ss.216 and 217. In ascertaining the scope of the AFPC’s powers in relation to wages in pre-reform instruments, it is necessary to have regard to the meaning of the terms “rate provisions” and “basic periodic rate of pay” in s.208(1). “Rate provisions” is defined in s.181 of the WR Act as follows:
“181 Meaning of rate provisions
(1) For the purposes of this Division, rate provisions, of a pre-reform wage instrument or an APCS, are provisions of the instrument or APCS that determine a basic periodic rate of pay, or basic piece rates of pay, payable to an employee, or an employee of a particular classification.
(2) The means by which such provisions may determine a basic periodic rate of pay, or a basic piece rate of pay, include the following, or any combination of any of the following:
(a) direct specification of a rate;
(b) identification of a rate by reference to other provisions (whether or not of the same instrument or APCS);
(c) direct specification, or identification by reference to other provisions (whether or not of the same instrument or APCS), of a method for calculating a rate.
(3) Subject to the regulations, a method referred to in subsection (2) may provide for a person or body to determine a rate in a particular way. For the purposes of this Division, a rate determined by the person or body in that way is taken to be a rate determined by the provisions that specify or identify the method.”
[28] “Basic periodic rate of pay” is defined in s.178 of the WR Act as follows:
“178 Definitions
In this division
…
basic periodic rate of pay means a rate of pay for a period worked (however the rate is described) that does not include incentive-based payments and bonuses, loadings, monetary allowances, penalty rates or any other similar separately identifiable entitlements. The meaning of basic periodic rate of pay is also affected by section 210.”
[29] The AFPC’s powers to alter preserved APCSs may be relevant in construing the operation of s.513(1)(h) because it is to be presumed that the legislature intended that monetary payments prescribed in federal awards prior to 27 March 2006 after that date should become either preserved APCSs, within the AFPC’s jurisdiction, or allowances in pre-reform awards, which the Commission may adjust, but not both. (We leave aside monetary payments which are in neither category e.g. accident pay.) Nevertheless the principal guide to the Commission’s powers must be the words of s.513(1)(h).
[30] There are a number of applications in which it has been contended that particular monetary entitlements described in a pre-reform award as allowances are not allowances within the meaning of s.513(1)(h). The relevant parties are directed to confer in conjunction with the settling of the orders to implement this decision. Any outstanding issues relating to allowances will be dealt with by this Full Bench after the other aspects of the relevant orders have been finalised.
[31] The applications to vary pre-reform awards which are before us are based on the maintenance of the safety net. Applications to vary pre-reform awards on the basis that the variation is essential to maintain the safety net are dealt with in s.553 of the WR Act, which reads:
“553 Variation of awards if essential to maintain minimum safety net entitlements
(1) An employer, employee or organisation bound by an award may apply to the Commission for an order varying the award on the ground that that the variation is essential to the maintenance of minimum safety net entitlements.
(2) If an application is made under subsection (1), the Commission must take such steps as it thinks appropriate to ensure that each employer, employee and organisation bound by the award, and any other interested persons and bodies, are made aware of the application.
(3) The Minister may intervene in relation to the application.
(4) The Commission may make an order under this subsection varying the award only if the Commission is satisfied that:
(a) the variation is essential to the maintenance of minimum safety net entitlements; and
(b) all of the following conditions are met:
(i) the award as varied would not be inconsistent with decisions of the AFPC;
(ii) the award as varied would provide only minimum safety net entitlements for employees bound by the award;
(iii) the award as varied would not be inconsistent with the outcomes (if any) of award simplification and award rationalisation;
(iv) the making of the variation would not operate as a disincentive to agreement-making at the workplace level;
(v) such other requirements prescribed by the regulations (if any) for the purposes of this paragraph have been satisfied.”
[32] The requirements of this section, and in particular the requirements of s.553(4)(b), have all been met by the applications before us. It is clear, in particular, that as a general rule allowances which have in the past been adjusted by reference to and in accordance with safety net variations in minimum rates in the Commission’s awards ought now be altered in pre-reform awards by reference to and in accordance with the wage-setting decisions of the AFPC. The only qualification is that care must be taken that no allowances are varied which are not allowances as described in s.513(h).
Operative Date
[33] We turn first to the variations to the transitional awards. Clause 66 of Schedule 6 to the WR Act provides as follows:
(1) An order made by the Commission for the purposes of this Schedule must be expressed to come into force on a specified day.
(2) Unless the Commission is satisfied that there are exceptional circumstances, the day specified in the order must not be earlier than the date of the order.”
[34] It can be seen that the Commission is required not to make orders with retrospective effect unless it is satisfied there are exceptional circumstances. The ACTU, the union applicants and some employers submit that the operative date of orders made in relation to applications filed before our decision should be 1 December 2006 – the operative date of the AFPC’s October 2006 wage-setting decision. ACCI, AiG and a number of other employers submitted that any award variations flowing from our decision should operate prospectively. The Commonwealth submitted that the variations should operate as close to 1 December as possible. The Commonwealth made no substantive submission on the terms of cl.66.
[35] The ACTU submitted that there are exceptional circumstances. In particular it submitted that it would be unjust if minimum rates in transitional awards were not adjusted on 1 December 2006. It also said we ought also take a number of other considerations into account including the fact that employers had been forewarned of a likely amount and operative date because of the terms of cll.8(2) and (3) of Schedule 6. It also drew our attention to a number of communications from employer bodies concerning the possibility of the AFPC decision being implemented in transitional awards.
[36] Employer opposition to the ACTU proposal centred on concerns that employers had not been given sufficient notice, the possibility of administrative and other errors if draft orders were not properly considered and the Commission’s long-standing practice of making safety net adjustments prospective. In particular the large number of applications was said to compound these problems. Some emphasis was also placed on the difficulties for some employers in recovering increases in labour costs awarded retrospectively where contractual arrangements were on a cost plus or similar basis.
[37] All federal system employees engaged on minimum rates were entitled to receive an increase in rates on 1 December 2006. In light of the Commission’s statutory duty in cl.8 of Schedule 6 to the WR Act, in particular the terms of cll.8(3) and (4), there is no reason that employees under transitional awards should be disadvantaged by a later operative date than will apply to federal system employees. Those clauses read:
“(3) In having regard to the factors referred to in paragraph (2)(a), the Commission must have regard to:
(a) wage-setting decisions of the AFPC; and
(b) in particular, any statements by the AFPC about the effect of wage increases on productivity, inflation and levels of employment.
(4) In performing its functions under this Schedule, the Commission must have regard to:
(a) the desirability of its decisions being consistent with wage-setting decisions of the AFPC; and
(b) the importance of providing minimum safety net entitlements that act as an incentive to bargaining at the workplace level.”
[38] It would be inequitable, particularly in light of the universal application of the AFPC decision to federal system employees reliant on rates in APCSs, if we were to order a later operative date in the applications before us than the first pay period on or after 1 December 2006. The scheme of the legislation suggests that the only reason that minimum rates in transitional awards are not within the jurisdiction of the AFPC is the Commonwealth Parliament’s lack of legislative power in relation to them. The term “transitional” confirms that conclusion. The interaction between the two wage-fixation systems, timing considerations and the lead role given to the system administered by the AFPC, together constitute exceptional circumstances. We do not suggest that whenever the AFPC issues a wage-setting decision the Commission should vary wages and allowances in its awards from the same operative date as the AFPC’s decision regardless of when applications are lodged and dealt with. It is only necessary that we indicate that the circumstances before us on this occasion in their totality are exceptional and justify retrospectivity.
[39] ACCI, AiG and a number of other employer bodies referred to the difficulties in calculating the new pay scales and the need for accuracy. It was said that employers with the best will in the world will need time to attend to these matters and to ensure draft orders are correct. If awards have an operative date earlier than the date of the orders, inconvenience, cost and hardship would result.
[40] While these arguments have some force, they must be weighed against the equity arguments for transitional employees. Equally significant is the fact that the AFPC has not published any pay scales whatever following its wage-setting decision. Any disadvantage suffered by transitional employers as a result of our decision is certainly not as great as that suffered by federal system employers.
[41] In light of our decision that the operative date for the wage increases resulting from this decision should be the first pay period commencing on or after 1 December 2006, it is appropriate that the variation in allowances in transitional and pre-reform awards before us should also operate from the same date. In addition to the matters we have referred to there are significant considerations of cost and convenience which also support a common operative date for all variations in the applications before us.
The Supported Wage System
[42] The Commonwealth proposed that we should adopt a policy to provide access to the SWS in all transitional awards. The policy would require the Commission, when considering applications to vary wages rates in transitional awards, to include SWS provisions in any awards which do not already include such provisions. The substance of the Commonwealth’s case is set out in the following extract from its written submissions.
“3.3 The key points made in support of the proposal to adopt such a policy
are:
[43] The ACTU, while not objecting in principle to the inclusion of SWS provisions, submitted that parties wishing to contend that SWS provisions should not be included in a particular award should be given the opportunity to do so. The Construction, Forestry, Mining and Energy Union (CFMEU) indicated that it may not be appropriate to include SWS provisions in two specific awards and sought discussions with the parties to those awards in conjunction with the settlement of orders.
[44] We think the Commonwealth’s position has merit. The Commission has generally supported the formulation of the model SWS provisions and their inclusion in awards. 3 We also note that in its recent decision the AFPC has extended SWS provisions to all federal wage instruments. We are under a statutory requirement to exercise our functions and powers to vary transitional awards so that wages are not inconsistent with the AFPC’s wage-setting decisions. Further cl.62(1)(c) of Schedule 6 to the WR Act requires the Commission, when making a transitional award-related order, to ensure, if appropriate, that the order includes SWS provisions.
[45] As a general rule supported wage system provisions should be included in all transitional awards. The existing model clause should be used, unless there is justification for departure from it. The model clause is contained in Appendix A to this decision. Any unresolved objection to the inclusion of the model clause in any of the awards before us will be dealt with by this Full Bench after the other aspects of the relevant orders have been finalised.
[46] The Commonwealth proposed that the minimum amount payable in the SWS model clause should be increased to $64 to maintain its equivalence to the Income Test Free Area for the Disability Support Pension and achieve consistency with the AFPC wage-setting decision. There was no opposition to that course. We think it is appropriate. The variation should be dealt with in the settlement of the orders.
School-based Apprentices and Trainees
[47] The Commonwealth proposed that the Commission adopt a policy of including minimum wages and conditions for school-based apprentices and trainees in all relevant transitional awards. It submitted that when considering any applications to vary transitional awards in accordance with this decision, the Commission should insert provisions for school-based apprentices and trainees if there is potential for employees to be engaged under the provisions and the award does not include such provisions already.
[48] The substance of the Commonwealth’s case is set out in the following extract from its written submissions:
“4.6 The key reasons supporting the Commonwealth’s submission to fill gaps in the coverage of minimum wages and conditions for school-based apprentices and trainees include that:
[49] The ACTU, while not objecting in principle to the proposal that school-based apprenticeship and trainee provisions be included in transitional awards, submitted that parties wishing to contend that the provisions should not be included in a particular award should be given an opportunity to do so. The CFMEU expressed some reservations about the content of school-based apprenticeship and trainee provisions advanced by the Commonwealth and the appropriateness of their inclusion in particular awards. Despite this there was no opposition in principle to the Commonwealth’s approach.
[50] We agree with the Commonwealth’s proposal. The Commission has supported the formulation and adoption of provisions for school-based apprentices and trainees for some time. We refer to some of the relevant events and decisions below. The existence of skill shortages in Australia is notorious and can be attributed in part to shortcomings in training arrangements, although clearly the issue is a multi-factor one. The Council of Australian Governments has recently agreed on measures, including the availability of school-based apprenticeships, to address skill shortages. The Work Choices Act dealt directly with school-based apprenticeships and traineeships so far as federal system employers and employees are concerned. Minimum wages for school-based apprentices and trainees of federal system employers are set out in ss.552 and 555 respectively of the WR Act. These provisions operated from December 2005, as explained in the Commonwealth’s submission, and were therefore current for the 2006 school year.
[51] We are also conscious of the requirement in cl.62(1)(d) that the Commission when making a transitional award-related order ensures, if appropriate, that the order includes provisions for, among other things, school-based apprenticeships and traineeships.
[52] Turning now to the nature of the provisions to be included in awards, we shall deal with the provisions relating to school-based apprentices and those relating to school-based trainees separately.
[53] The history of the Commission’s involvement in the development of model clauses relating to school-based apprentices is set out in the Commonwealth’s submissions. For present purposes it is sufficient to note that a Full Bench approved a model clause for, among others, school-based apprenticeships, in 2000. 4 Following that decision discussions between ACCI and the ACTU produced an agreed model clause dealing specifically with school-based apprentices. The agreed model clause is in Appendix B to this decision. On its own motion the Commission called on a large number of awards which were varied to include the agreed model clause. In only one award was arbitration required. The decision resulted in some modifications to the model clause in the National Building and Construction Industry Award 2000.5
[54] As a general rule the model clause relating to school-based apprentices should be included in any transitional award where an apprenticeship can potentially be undertaken. We note that the Commonwealth takes the view that the arbitrated modifications to the model clause in the National Building and Construction Industry Award 2000 may be appropriate for inclusion in other construction industry awards. Any unresolved problems in relation to the inclusion of school-based apprenticeship provisions in the transitional awards before us will be dealt with by this Full Bench after the other aspects of the relevant orders have been finalised.
[55] The Commonwealth placed particular emphasis on the desirability of school-based apprenticeship provisions becoming operative before 31 December 2006 so as to facilitate apprenticeships being offered in the 2007 school year. In this connection it referred to the Council of Australian Governments’ agreement reached earlier this year which set a target date of 31 December 2006 for the removal of industrial barriers to school-based apprenticeships in a number of specified skill shortage industries. In response to a question from the Commission the Commonwealth provided a list of the transitional awards applying in the skills shortage industries which do not already include school-based apprenticeship provisions. The list is in Appendix C to this decision. The list is in two parts. The first part contains transitional awards already before the Commission in these applications. The second part contains awards not before the Commission. In relation to the awards presently before the Commission, priority should be given to settlement of all relevant orders prior to 31 December 2006. In relation to awards not before the Commission, parties should make applications as they are advised, bearing in mind our view that school-based apprenticeship provisions should be included wherever appropriate. Acknowledging the difficulties, but in light of the skills shortage, inclusion should be sooner rather than later and desirably before 31 December 2006.
[56] Turning now to school-based trainees, the National Training Wage Award 2000 [Transitional] 6 (NTW award) provides for part-time and school-based traineeships. It reflects an agreement reached between the ACTU, ACCI and the Commonwealth in 1997.7 Although there is no application formally before us to vary the NTW award to reflect the AFPC October wage-setting decision, we presume the award will be varied in that respect in due course.
[57] The Commonwealth proposed that the NTW award be incorporated by reference into all transitional awards where a traineeship can potentially be undertaken. It also acknowledged that there may be transitional awards in which it would be inappropriate to incorporate the whole of the NTW award. In such cases the award might simply adopt the school-based trainee provisions of the NTW award. We agree with that approach.
[58] Any unresolved objection to the inclusion of school-based trainee provisions of the kind we have identified will be dealt with by this Full Bench after the other aspects of the relevant orders have been finalised.
Principles – Transitional Awards
[59] Subject to the question of operative date this decision will have general effect in relation to applications to vary wage rates and wage-related allowances in transitional awards based on the AFPC’s October 2006 wage-setting decision. The powers in cl.40 of Schedule 6 to the WR Act to establish principles about varying transitional awards underpin our decision in that respect.
[60] The ACTU submitted that applications to vary transitional awards filed after the date of our decision should operate from the date on which the order is made, although it submitted that it was open to the Commission to award an earlier operative date. Almost without exception the employers objected to any retrospectivity. The Commonwealth submitted that any variation should operate from as close to 1 December 2006 as possible. We have decided that increases in minimum wages and allowances in transitional awards in accordance with this decision (other than the applications before this Full Bench) will operate from the date on which the order for variation is made.
Principles – Pre-reform Awards
[61] We note that there is no power to establish Full Bench principles for the variation of pre-reform awards where the variation is necessary to maintain the safety net. This may be because the legislation is already very prescriptive in relation to variations of that kind. Whatever the reason, it follows that this decision cannot have general effect in relation to applications to vary wage-related allowances in pre-reform awards based on the AFPC’s October 2006 wage-setting decision. However, we have no doubt the conclusions we have reached will carry persuasive weight when similar applications come before the Commission.
Statement of Principles
[62] Several parties addressed us on the implications of the Work Choices Act and this decision for the Commission’s Statement of Principles. 8 While a Full Bench of the Commission has power to make principles in relation to transitional awards, as we have already noted there does not appear to be a power to make principles in relation to safety net variations to pre-reform awards. In any event many aspects of the Statement would require review in light of the changes in the Commission’s powers and functions.
[63] We have reached the conclusion that the Statement of Principles should be the subject of a conference involving the major participants in these proceedings. The President will convene a conference in February 2007 on a date to be advised.
[64] A number of issues about the Statement of Principles arise for decision in these proceedings. The first of these is the operation of the so-called 12 month rule in Principle 8(b). In our view it would be inconsistent with the approach adopted by the AFPC in its October 2006 decision if we were to apply the 12 month rule to minimum rates in transitional awards and furthermore it would clearly be inequitable to do so. ACCI proposed that we should require a commitment to absorption from unions of the kind contained in Principle 8(d). We think such a provision is unnecessary, although the matter can be further considered in the context of the foreshadowed conference. Similarly, there is no need for an award clause of the kind in Principle 8(c). It is clear the variations will only have effect in relation to minimum award rates.
[65] To the extent that the Commission’s Statement of Principles is inconsistent with this decision this decision will prevail. To avoid doubt, the so-called 12 month rule in Principle 8(b) shall have no application, we shall not require unions to give a commitment to absorption of the kind referred to in Principle 8(d) and there will be no requirement for awards to include a clause in the form provided for in Principle 8(e). It is clear that the variations will only have effect in relation to minimum award rates. Principle 12 Economic Incapacity will continue to be available.
Implementation
[66] ACCI submitted that there were a number of technical difficulties in the calculation of increases, including rounding issues, because the APCSs under the AFPC’s jurisdiction are to be expressed in hourly rates whereas the transitional awards for the most part contain weekly rates. It is difficult to express minimum rates in transitional awards in a way which precisely mirrors the rates resulting from the AFPC decision, if for no other reason than because the AFPC has not published the hourly rates resulting from its decision. In the circumstances, and because of the concerns raised by ACCI, we have rounded the increases in the AFPC decision. In this respect we have used as a base the weekly rates which the AFPC itself has indicated should be applied then rounded those figures to the nearest 10 cents.
[67] In light of our conclusion on the operative date it would not be appropriate to refer the various applications before us to industry panels, although applications filed after 1 December 2006 will be allocated to Panels in the normal way. The orders necessary to give effect to this decision are to be settled in the Registry in conjunction with the parties with resort to the President. We see no impediment to variations to expense-related allowances being included in orders made to give effect to this decision.
[68] We mention for completeness that while no party sought to invoke r.74(1) of the Commission’s Interim Rules, we are satisfied that in the circumstances compliance should not be required.
BY THE COMMISSION:
PRESIDENT
Appearances:
R Watts with M Gaynor for the Australian Council of Trade Unions and all applicant unions.
S Maxwell with J Gray for the Construction, Forestry, Mining and Energy Union.
N Keats for the Textile, Clothing and Footwear Union of Australia.
J Nucifora for the Australian Municipal, Administrative, Clerical and Services Union.
B Johnson for the Transport Workers’ Union of Australia.
M Butler and T Smith for The Association of Professional Engineers, Scientists and Managers, Australia.
B Redford with B Forbath on behalf of the Liquor, Hospitality and Miscellaneous Union.
P Gilbert with N Blake for the Australian Nursing Federation.
B Lawrence (intervening) for the Australian Catholic Council for Employment Relations.
S Barklamb with D Mammone for the Australian Chamber of Commerce and Industry, ACT and Region Chamber of Commerce and Industry, Australian Business Limited/State Chamber, Business SA, Chamber of Commerce and Industry Western Australia, Chamber of Commerce Northern Territory, Commerce Queensland, Employers First TM, Tasmanian Chamber of Commerce and Industry, Victorian Employers’ Chamber of Commerce and Industry, Agribusiness Employer Federation, The Australian Retailers Association, Master Builders Australia, The Master Plumbers’ and Mechanical Services Association of Australia, The National Electrical Contractors Association, The Pharmacy Guild of Australia, Printing Industries Association of Australia, Restaurant and Catering Australia, Victorian Automobile Chamber of Commerce.
D Wawn for the National Farmers’ Federation.
R Calver for the Master Builders’ Australia.
S Smith for the Australian Industry Group and the Engineering Employers Association, South Australia.
G Marton with L Yilmaz for the Victorian Employers’ Chamber of Commerce and Industry and the Motor Traders’ Association of New South Wales.
J Hargrave for the Printing Industries Association of Australia.
J Mobayad for The Pharmacy Guild of Australia.
J Clarke for BT Financial Group, Card Link Services Ltd, Commonwealth Bank of Australia, AVCO Financial Services Limited, Coal and Allied Operations Pty Ltd, Bengalla Mining Company Pty Ltd, Rio Tinto Coal Australia Pty Ltd, Warkworth Mining Limited, Mt Thorley Operations Pty Ltd, Kestrel Coal Pty Ltd, Airly Coal Pty Limited, Berrima Coal Pty Ltd, Centennial Mandalong Pty Limited, Centennial Myuna Pty Limited, Centennial Newstan Pty Limited, Centennial Springvale Pty Limited, Charbon Coal Pty Limited, Clarence Colliery Pty Limited, Ivanhoe Coal Pty Limited and Tahmoor Coal Pty Limited.
M Cusack for the WorkCover Corporation of South Australia, ISS Security Pty Ltd, and the Friendly Society Medical Association Limited.
C Yuen for the Qantas Group of Companies.
M Felle for Jobs Australia Limited.
T Ralph for Clubs Victoria Inc.
P Ryan for the Australian Road Transport Industrial Organisation.
G. Fraumano for clients of Jenny Fraumano and Associates.
E. R. Cole with M. Roddam and J. Stewart for the Minister for Employment and Workplace Relations on behalf of the Commonwealth.
A. Klemis for the Baking Industry Association of Victoria, the Australian Meat Industry Council, and The Bread Manufacturers’ Industrial Association of Australia.
M. Serong for Bank of Queensland Agents, Overseas Chinese Banking Corporation Bank, Salomon Smith Barney Australia Pty Ltd, Citigroup Capital Markets Australia, Scottish Pacific Business Finance Pty Ltd, JP Morgan Chase Bank, Sealcorp Holdings Limited, Citibank Limited, Standard Chartered Bank Australia Limited, Australian Executor Trustees Limited, Australian Executor (SA) Trustees Limited, Equity Trustees Limited, Permanent Trustee Company Limited, Tasmanian Perpetual Trustees Limited, Sandhurst Trustees Limited, Deutsche Bank Australia Limited, Bank of China, Bank of America Limited, HSBC Bank Australia Limited, Macquarie Bank Limited and Perpetual Trustees Australia Limited.
R. Burrows with B. Clarke for the Victorian Hospitals’ Industrial Association and Child Care Centres Association.
E. Westgarth for the Australian Shipowners Association.
E. Watt for The Timber Merchants’ Association (Victoria), the Cabinet Makers Association Inc. and the Furnishing Industry Association of Australia (Vic/Tas) Inc.
M. Perica for the CPSU, the Community and Public Sector Union.
D. McLaughlin for Harris Scarfe Ltd, Swan Transit Pty Ltd and Swan Transit South Pty Ltd.
M. Follett for Caltex Refineries New South Wales Pty Ltd.
P. Houlihan for NatRoad Ltd.
N. Walsh for Master Grocers’ Australia.
S. Pennington for Adsteam Marine Ltd.
Hearing details:
2006.
Melbourne:
November 20.
December 4 and 5.
1 Australian Fair Pay Commission October 2006 Decision, p.63.
2 Print M9675; 1996 40 AIRC 3-399.
3 Supported Wage System Decision 1994, Print L5723. Safety Net Review Wages May 2003 Decision, Print PR002003 at paras [235] and [238].
4 Part-time Apprenticeships Test Case, 6 March 2000, Print S3850.
5 AP790741, Decision 5 August 2004, PR950423.
6 AT790899.
7 See: Traineeship Wages – Safety New Review, 6 July 1997, Print P2738.
8 The Statement of Principles is Attachment A to the Safety Net Review Wages June 2005 Decision; PR002005.
APPENDIX A:
Supported Wage System Model Clause
1.1 Workers eligible for a supported wage
(a) This clause defines the conditions which will apply to employees who, because of the effects of a disability, are eligible for a supported wage under the terms of this agreement/Award. In the context of this clause, the following definitions will apply:
(i) "Supported Wage System" means the Commonwealth Government System to promote employment for people who cannot work at full Award wages because of a disability, as documented in "[Supported Wage System: Guidelines and Assessment Process]".
(ii) "Accredited Assessor" means a person accredited by the management unit established by the Commonwealth under the Supported Wage System to perform assessments of an individual’s productive capacity within the Supported Wage System.
(iii) "Disability Support Pension" means the Commonwealth pension scheme to provide income security for persons with a disability as provided under the Social Security Act 1991, as amended from time to time, or any successor to that scheme.
(iv) "Assessment instrument" means the form provided for under the Supported Wage System that records the assessment of the productive capacity of the person to be employed under the Supported Wage System.
1.2 Eligibility criteria
(b) Employees covered by this clause will be those who are unable to perform the range of duties to the competence level required within the class of work for which the employee is engaged under this agreement/Award, because of the effects of a disability on their productive capacity and who meet the impairment criteria for receipt of a Disability Support Pension.
(The clause does not apply to any existing employee who has a claim against the employer which is subject to the provisions of workers’ compensation legislation or any provision of this agreement/Award relating to the rehabilitation of employees who are injured in the course of their current employment).
The Award does not apply to employers in respect of their facility, program, undertaking service or the like which receives funding under the Disability Services Act 1986 and fulfils the dual role of service provider and sheltered employer to people with disabilities who are receiving or are eligible for a disability support pension, except with respect to an organisation which has received recognition under Section 10 or under Section 12A of the Act, or if a part only has received recognition, that part.
1.3 Supported wage rates
(c) Employees to whom this clause applies shall be paid the applicable percentage of the minimum rate of pay prescribed by this Award/agreement for the class of work which the person is performing according the following schedule:
Assessed capacity % of prescribed award rate
(sub-clause (d))
10%* 10%
20% 20%
30% 30%
40% 40%
50% 50%
60% 60%
70% 70%
80% 80%
90% 90%
(Provided that the minimum amount payable shall be not less than $64 per week).
* Where a person’s assessed capacity is 10 per cent, they shall receive a high degree of assistance and support.
1.4 Assessment of capacity
(d) For the purpose of establishing the percentage of the Award rate to be paid to an employee under this Award/agreement, the productive capacity of the employee will be assessed in accordance with the Supported Wage System and documented in an assessment instrument by either:
(i) the employer and a union party to the Award/agreement, in consultation with the employee or, if desired by any of these;
(ii) the employer and an accredited Assessor from a panel agreed by the parties to the Award and the employee.
1.5 Lodgment of assessment instrument
(e) (i) All assessment instruments under the conditions of this clause, including the appropriate percentage of the award rate to be paid to the employee, shall be lodged by the employer with the Registrar of the Industrial Relations Commission.
(ii) All assessment instruments shall be agreed and signed by the parties to the assessment, provided that where a union which is party to the Award/agreement, is not a party to the assessment, it shall be referred by the Registrar to the union by certified mail and shall take effect unless an objection is notified to the Registrar within 10 working days.
1.6 Review of assessment
(f) The assessment of the applicable percentage should be subject to annual review or earlier on the basis of a reasonable request for such a review. The process of review shall be in accordance with the procedures for assessing capacity under the Supported Wage System.
1.7 Other terms and conditions of employment
(g) Where an assessment has been made, the applicable percentage shall apply to the wage rate only. Employees covered by the provisions of the clause will be entitled to the same terms and conditions of employment as all other workers covered by this Award/agreement paid on a pro-rata basis.
1.8 Workplace adjustment
(h) An employer wishing to employ a person under the provisions of this clause shall take reasonable steps to make changes in the workplace to enhance the employee’s capacity to do the job. Changes may involve re-design of job duties, working time arrangements and work organisation in consultation with other workers in the area.
1.9 Trial period
(i) In order for an adequate assessment of the employee’s capacity to be made, an employer may employ a person under the provisions of this clause for a trial period not exceeding 12 weeks, except that in some cases additional work adjustment time (not exceeding four weeks) may be needed.
(ii) During that trial period the assessment of capacity shall be undertaken and the proposed wage rate for a continuing employment relationship shall be determined.
(iii) The minimum amount payable to the employee during the trial period shall be no less than $64 per week.
(iv) Work trials should include induction or training as appropriate to the job being trialled.
(v) Where the employer and employee wish to establish a continuing employment relationship following the completion of the trial period, a further contract of employment shall be entered into based on the outcome of assessment under subclause (d) hereof.
APPENDIX B:
‘MODEL’ SCHOOL-BASED APPRENTICESHIP CLAUSE
(a) This clause shall apply to school-based apprentices. A school-based apprentice is a person who is undertaking an apprenticeship in accordance with this clause while also undertaking a course of secondary education.
(b) The hourly rates for full-time junior and adult apprentices as set out in this award shall apply to school-based apprentices for total hours worked including time deemed to be spent in off-the-job training.
(c) For the purposes of (b) above, where an apprentice is a full-time school student, the time spent in off-the-job training for which the apprentice is paid is deemed to be 25% of the actual hours each week worked on-the-job. The wages paid for training time may be averaged over the semester or year.
(d) The school-based apprentice shall be allowed, over the duration of the apprenticeship, the same amount of time to attend off-the-job training as an equivalent full-time apprentice.
(e) For the purposes of this sub-clause, off-the-job training is structured training delivered by a Registered Training Organisation separate from normal work duties or general supervised practice undertaken on the job.
(f) The duration of the apprenticeship shall be as specified in the training agreement or contract for each apprentice. The period so specified to which the apprentice wage rates apply shall not exceed six years.
(g) School-based apprentices shall progress through the wage scale at the rate of 12 months progression for each two years of employment as an apprentice.
(h) These rates are based on a standard full-time apprenticeship of four years. The rate of progression reflects the average rate of skill acquisition expected from the typical combination of work and training for a school-based apprentice undertaking the applicable apprenticeship.
(i) Where an apprentice converts from school-based to full-time, all time spent as a full-time apprentice shall count for the purposes of progression through the wage scale. This progression shall apply in addition to the progression achieved as a school-based apprentice.
(j) School-based apprentices shall be entitled pro-rata to all of the conditions of employees under this award.
APPENDIX C:
TRANSITIONAL AWARDS IN COAG SKILLS SHORTAGE INDUSTRIES
Brass, Copper and Non-Ferrous Metals Industry Award 1998 |
AT769405 |
Brass, copper and non-ferrous metals industry | |
National Joinery and Building Trades Products Award 2002 |
AT817265 |
Building, metal and civil construction industries | |
National Metal and Engineering On-site Construction Industry Award 2002
|
AT816828 |
Building, metal and civil construction industries | |
Roof Slaters and Tilers (Victoria) Award 2002 |
AT818507 |
Building, metal and civil construction industries | |
Catering - Victoria - Award 1998 |
AT772681 |
Catering industry | |
Industrial Catering, Cleaning and Incidental Services (AWU and LHMU) Award 2000 |
AT834748 |
Catering industry | |
Coal Mining Industry (Production and Engineering) Consolidated Award 1997, The |
AT774609 |
Coal Industry | |
South Australian Power Industry Award 2002 |
AT814328 |
Electrical power industry | |
Biscuit (Victoria) Award 1998 |
AT769690 |
Food, beverages and tobacco industry | |
National Fast Food Retail Award 2000 |
AT806313 |
Food, beverages and tobacco industry | |
Furnishing Industry National Award 2003 |
AT825280 |
Furnishing industry | |
Licensed Clubs (Victoria) Award 1998 |
AT787060 |
Liquor and accommodation industry | |
Motels, Accommodation and Resorts Award 1998 |
AT787952 |
Liquor and accommodation industry | |
Metal, Engineering and Associated Industries Award 1998
|
AT789529 |
Metal Industry | |
Gas Industry (Contractors - Mains and Services) Award 2003, The |
AT824709 |
Oil and gas industry | |
Liquefied Petroleum Gas Industry Award 1998 |
AT787043 |
Oil and gas industry | |
Transport Workers' (L.P. Gas Industry) Award 2005 |
AT841105 |
Oil and gas industry | |
Transport Workers (Tasmanian Gas Industry) Award 2002 |
AT814635 |
Oil and gas industry | |
Vehicle Industry Award 2000 |
AT801818 |
Vehicle industry | |
Transitional awards not subject to current applications before the Commission | |||
National Electrical, Electronic and Communications Contracting Industry Award 1998 |
AT791396 |
Electrical contracting industry |
|
Gasfitters (Queensland) Award 2000 |
AT782198 |
Plumbing industry | |
Plumbing Industry (Qld and WA) Award 1999 |
AT792354 |
Plumbing industry | |
Plumbing Trades (Mixed Industry) Award 2000 |
AT792574 |
Plumbing industry | |
Plumbing Trades (Southern States) Construction Award, 1999
|
AT792355 |
Plumbing industry | |
Sprinkler Pipe Fitters' Award 1998, The |
AT796030 |
Plumbing industry |
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