PN1

VICE PRESIDENT HATCHER: Yes, can I take the appearances please? Mr Ferguson, you appear for the Australian Industry Group?

PN2

MR FERGUSON: Yes.

PN3

VICE PRESIDENT HATCHER: Mr Johns, you appear for the National Road Transport Association?

PN4

MR JOHNS: Yes, your Honour.

PN5

VICE PRESIDENT HATCHER: Mr Ryan, you appear for the Hotels and Accommodation Australia Association?

PN6

MR RYAN: AHA and the Accommodation Association, yes.

PN7

VICE PRESIDENT HATCHER: I see. All right.

PN8

MR WOODS: Woods.

PN9

VICE PRESIDENT HATCHER: Yes?

PN10

MR WOODS: For Aurizon and others in the Rail Award.

PN11

VICE PRESIDENT HATCHER: Yes.

PN12

Mr Bull, you appear for United Voice?

PN13

MR BULL: That's correct, your Honour.

PN14

VICE PRESIDENT HATCHER: And Mr Miller and Mr Nguyen, you appear for the AMWU?

PN15

MR NGUYEN: That's correct, your Honour.

PN16

VICE PRESIDENT HATCHER: Are there any appearances in Melbourne? Mr Clarke, you appear for the ACTU?

PN17

MR CLARKE: Yes, your Honour.

PN18

VICE PRESIDENT HATCHER: Mr Nucifora, you appear for the ASU?

PN19

MR NUCIFORA: Yes, your Honour.

PN20

VICE PRESIDENT HATCHER: And Mr Tran is it - I can't see you - for the CFMMEU?

PN21

MS TRAN: Ms, your Honour.

PN22

VICE PRESIDENT HATCHER: Ms Tran, yes, all right and - - -

PN23

MS TRAN: That's all right.

PN24

VICE PRESIDENT HATCHER: Sorry, there's another appearance in - - -

PN25

MR S ZEVARI: Mr Zevari, initial S.

PN26

VICE PRESIDENT HATCHER: Yes.

PN27

MR ZEVARI: For ABI and the New South Wales Business Chamber, your Honour.

PN28

VICE PRESIDENT HATCHER: And Mr Rodgers, you appear by phone for the NFF?

PN29

MR ROGERS: That's correct, your Honour.

PN30

VICE PRESIDENT HATCHER: All right, who would like to go first? Is that you, Mr Ferguson?

PN31

MR FERGUSON: I'm content to lead the matters, Commissioner.

PN32

MR CLARKE: Sorry, your Honour, I was actually hoping to say something.

PN33

MR FERGUSON: I'm happy with that.

PN34

VICE PRESIDENT HATCHER: Mr Ferguson is happy with that, Mr Clarke, so go ahead.

PN35

MR CLARKE: Yes, would you prefer me to remain seated, or?

PN36

VICE PRESIDENT HATCHER: If that's convenient. It's probably easier because you stay closer to the microphone, so.

PN37

MR CLARKE: Yes, it's just in terms of what we're dealing with today or more succinctly what we're not dealing with today. There are a large part or a significant part of the decision which all these submissions were lodged in response to which are unambiguously expressed as conclusions of a Full Bench of this Commission. And there are aspects of many of the submissions that one way or another seek to challenge, refuse or ignore those conclusions. You know, you've got at paragraph 7 of the Ai Group's submissions of 27 March urging the Full Bench to be prepared to review the conclusions.

PN38

At paragraph 7 of the Legal Firms' submissions which are completely at odds with the conclusions in paragraph 121 of the decision. You've got paragraph 18 of the Restaurant and Catering Industrial's submissions which are clearly at odds with paragraph 143 of the decision, and I was hoping perhaps your Honours and Commissioner that you could give some guidance as to just what it was that was up for grabs and not up for grabs in the course of the proceedings today.

PN39

VICE PRESIDENT HATCHER: The decision which we issued on 20 February of this year at paragraph 134 invited submissions as to four matters at a level of generality, and then in relation to specific awards under consideration there were some specific references to further submissions in relation to those awards. But in terms of the general cases, the issues identified in paragraph 134. Does that make the position clear?

PN40

MR CLARKE: I believe it does. Thank you.

PN41

VICE PRESIDENT HATCHER: All right.

PN42

So back to you, Mr Ferguson?

PN43

MR FERGUSON: Well, just before I deal with the substance of the submissions, just in response to that issue I take the point that in some respects our submissions do, if you will, deal with matters that are the subject of the conclusions reached in the decision. I was going to say we haven't ignored any of the conclusions but we have obviously appealed to the Full Bench to be prepared to potentially reconsider some of those conclusions. That submission is made in the context of addressing the four points that this decision invited us to address, but they raise general issues and of course the way these proceedings have unfolded have been a little bit unusual in the sense that they were schedule for discrete hearings around individual award matters.

PN44

Now undoubtedly in the context of some of those individual proceedings issues of general significance arose for this Full Bench's consideration. But to some extent we haven't had an opportunity to deal with some of the general issues before so we've taken this opportunity to put our views about, you know, the construction of the Act and so forth. We understand the Full Bench's reached views and expressed views and we understand that we'd have to persuade it that there are cogent reasons for departing from those views, but we certainly aren't ignoring any of the conclusions that you've reached. But in some respects we do raise some submissions, and I don't think that falls foul of what your Honour has raised this morning.

PN45

VICE PRESIDENT HATCHER: All right.

PN46

MR FERGUSON: In terms of our submissions the Full Bench would be aware we've filed two sets of submissions responding to the matters arising from that 20 February decision by the Full Bench. Those are dated 27 March 2018 and 16 April 2018. Now, in that material we've expressed a number of concerns about the proposed model clauses and their potential replacement of existing annualised salary provisions. Now I don't want to go through all of that material but I'm of course happy to deal with any questions that the Bench has arising from that material.

PN47

But in saying that I don't want to sort of demur from the detail we've put or distract the Bench from all the various arguments, but I do want to instead just sort of focus on four key matters today. They are firstly the operation of section 139(1)(f) and the manner in which we perceive it operates. I want to do this because I'm conscious that the Bench has comments on its view of the operation of that section but in a sense this is the first opportunity that we've had to deal with this outside of the prism of specific claims that we were responding to.

PN48

Secondly I just want to emphasise some of our overarching concerns that we hold in relation to the proposed approach to the adopting of additional safeguards in the annual wage provisions and in that regard I particularly want to focus on proposed new requirements in relation to record keeping obligations. Now I need to do that because I need to emphasise the extent of my organisation's concern about the manner in which they would operate. That is a key concern but we don't wish to distract from all the other concerns, but that one is something that we think needs particular reconsideration.

PN49

Thirdly I just want to make some comments about whether in our view annualised wage arrangements should be included in other additional modern awards and then fourthly, just touch upon briefly what we see as potentially the next step in these proceedings from our perspective. Now that takes me then to the Act and, look, obviously we're conscious that the Full Bench has already accepted that there are benefits for both employers and employees with annual wage arrangements but we also appreciate that there's been an identified view that section 139(1)(f)(iii) potentially requires some further amendment to the existing safeguards.

PN50

I want to take the Bench briefly to that section and talk about what it requires or deals with. So that section provides - and I'll read it:

PN51

A modern award may include terms about any of the following matters -

PN52

and the relevant matter is (f), that's:

PN53

Annualised wage arrangements that have regard to patterns of work in an occupation, industry or enterprise and provide an alternate to the separate payment of wages and other monetary entitlements and include appropriate safeguards to ensure that individual employees are not disadvantaged.

PN54

Now, the first point I want to make is that we say that that section only permits the inclusion of terms about annualised wage arrangements of a particular character. So that is award terms about arrangements that meet the requirements of subsection 139(1)(f)(i), (ii) and (iii) and, more specifically, given the wording of (ii) it's only about annualised wage arrangements that provide an alternate to the separate payment of wages and monetary entitlement within the award context. So if you will it's arrangements that allow you to depart from the otherwise applicable award regime.

PN55

Now, what we say is that what falls from that is that the section doesn't permit awards to generally regulate the use of annualised salary arrangements as they may operate under common law contracts of employment. And we say that's important because there are undoubtedly many employers that pay people well above award rates and do so in complete compliance with the award, and I think we've seen a decision that there's acceptance by the Full Bench that that is appropriate and can occur regardless of whether there is an award clause, and that might occur with people paying people, you know, in conformity with any requirements about pay periods and so forth.

PN56

We just make the point that these clauses can't and shouldn't be written in a way that suggests that they're regulating the use of annualised salary arrangements where they're just entered into outside of the award context. So for example they couldn't impose a requirement on employers who may have a common law contractual arrangement with their employees to record their hours of work and so forth unless they were entering into an arrangement under the award. So we say that there is some concern in the way it's expressed now that it might suggest to some employers that they have to comply with some of the safeguard requirements even if they've just got a common law arrangement in place and not an arrangement pursuant to the agreement. Now there may be - - -

PN57

VICE PRESIDENT HATCHER: Can you tell us where that is?

PN58

MR FERGUSON: Yes, sorry, I was just coming to it may be that we're responding in part to a concern that some unions are reading that that way as opposed to the actual words because I think there's two views. On one reading of it, as I read through the individual obligations it seems that they're all just about employers who are entering into an annualised wage agreement. But the difficulty is there's no definition of - we didn't see there to be a definition of what that actually is as distinct from a common law contract.

PN59

So we just thought that there was some concern that in terms of being simple and easy to understand, an employer might read this clause and perceive that if they've entered into an agreement to pay someone annually, their wage arrangements, that they might be captured by this clause; and that there might be some improvement that could be made to make it clear that "Well, unless you're doing something pursuant to this, relying upon this to get out of the other award clauses, that you shouldn't be captured. So it's more that there's an absence of a clear definition about that, your Honour.

PN60

VICE PRESIDENT HATCHER: So have you proposed an amendment?

PN61

MR FERGUSON: I haven't. Yes I apologise, it occurred to me this morning that that would have been helpful but I've not got a form of words. But I might come back to you just a little bit later in the day if that's convenient?

PN62

VICE PRESIDENT HATCHER: All right.

PN63

MR FERGUSON: The second and the other point that I want to raise about the nature of this section is the nature of the safeguards as contemplated by (iii). We accept that section 139(1)(f) only permits the inclusion of award terms about annualised wage arrangements that include appropriate safeguards to ensure that individual employees are not disadvantaged. Moreover we're conscious of what the Full Bench has said about the operation of this provision and I think the central point is in paragraph 105 of the decision. I'm conscious it's this Full Bench's decision but I'll read it because it succinctly deals with the issue:

PN64

The requirement in section 139(1)(f)(iii) is that an annualised wage arrangement term include appropriate safeguards to ensure that individual employees are not disadvantaged. To ensure there is no disadvantage is, on the ordinary meaning of the language used, to make certain that it does not happen, so the safeguards must be sufficient to allow that state of certainty to be achieved. Assessing whether disadvantage exists is inherently a comparative exercise but the provision does not expressly state what the comparator is.

PN65

However the immediate context makes it clear enough that the comparisons between the benefits to the employee and the alternate afforded by an annualised wage arrangement compared to the normal separate payment of wages and other monetary entitlements under the relevant award. Because the subject matter is remuneration it is necessarily implicit that the question of whether there is a disadvantage involves a mathematical comparison between the remuneration under the annualised wage arrangement and the remuneration which would otherwise be payable under the awards provisions.

PN66

That the subject matter is annualised arrangements suggests that the issue of disadvantage may be assessed over the course of a year and not necessarily within the pay periods prescribed by the award. Therefore in summary, a permissible annualised wage term must guarantee that over the course of a year an employee does not receive any less remuneration under the arrangement than would otherwise be payable under the provisions of the award.

PN67

Now, in essence we very respectfully contend that an assessment of what constitutes an appropriate safeguard to ensure the individual employees are not disadvantaged requires more than a narrow mathematical assessment of whether the employee would have received more under the standard award terms when compared to the annualised wage arrangement. We say that in essence because the annualised wage arrangement will provide different benefits or relatively different advantages than the separate payment of wages and other amounts beyond just the mere quantum of the amount received.

PN68

So I think as the Full Bench has already accepted there will be additional advantages in the form of for example the regularity of the payments that would be received, but also importantly the (indistinct) of the payments that will be received. So for example an employee on an annualised wage arrangement may know with certainty that they'll be paid a certain quantum above the award rate, where if they're under the standard provisions it will just be subject to the variables of when the employer may for example want them to work and at what hours and so forth that will determine whether they get more or less. So that is a real advantage which we say needs to be taken into consideration when you consider what's contemplated by this section of the Act.

PN69

VICE PRESIDENT HATCHER: Taken into consideration by who?

PN70

MR FERGUSON: Well, by anyone framing - it would relevantly fall to anyone framing an award term to make sure it's compliant with this section of the Act because this section of the Act obviously does require that if they're to be included pursuant to this provision that individual employees not be disadvantaged. But when we say disadvantaged we are saying that does not go so far as to require that in every single instance the employees must be getting more under the annualised wage arrangement than they would be getting under the standard provisions in order for the term to be permissible.

PN71

VICE PRESIDENT HATCHER: So the logic of that submission is the employee can be paid less than what they would have received under the normal provisions of the award and not be disadvantaged?

PN72

MR FERGUSON: In some circumstances, yes.

PN73

VICE PRESIDENT HATCHER: And how does one measure that?

PN74

MR FERGUSON: I think it's a difficult prospect to deal with in complete, absolute terms because it may change in individual circumstances and in the context of individual awards. So measuring it in the sense of numerically is difficult. It seems to require a sort of a holistic consideration of that.

PN75

VICE PRESIDENT HATCHER: By who?

PN76

MR FERGUSON: By this Commission.

PN77

VICE PRESIDENT HATCHER: But we're setting a clause which is facilitative. We're not - it's not like a BOOT where we're testing each arrangement that's entered into. We set out the framework and then it's up to the parties to act in accordance with the framework. So who's going to be - - -

PN78

MR FERGUSON: That's right, but there may be the case that you can do this in various ways. It doesn't need to be the case that the only safeguard to do it, to ensure people aren't disadvantaged is one that ensures people get paid more than they would have. Because if you had other sorts of safeguards in there that might be appropriate in the particular industry.

PN79

VICE PRESIDENT HATCHER: Such as what?

PN80

MR FERGUSON: Well, such as requiring an employer to give thought to a salary - I mean I'm just taking - that they say is fair in the sense that - - -

PN81

VICE PRESIDENT HATCHER: Can you say that again?

PN82

MR FERGUSON: Sorry, I withdraw that. There could be various forms. One form of safeguard might be for example a requirement that an employer articulate the underpinning assumptions in the relevant - underpinning the relevant arrangement that the arrangement be terminable for example by an employee, that it be by agreement by the employee, and I think an argument could be advanced there that for example in that particular circumstance that the award would be ensuring that employees are not relevantly disadvantaged.

PN83

Now I think we are suggesting that what the task is actually for this Commission is to come up with terms that are appropriate in order to ensure that employees are not disadvantaged and when you look at what is appropriate we think that needs to cover a broader consideration of things - sorry, include a broader consideration of things. It needs to include a consideration of whether the provisions are so onerous that they would defeat the entire purpose of the annualised wage arrangement, if you will, and that's where I think we say it just can't be reduced to a strict - and I know this is a difficult proposition but it can't be released(sic) just to a mathematical proposition.

PN84

Because the other difficulty with the mathematical proposition is it requires an assumption that all things will remain equal, that if the employee had of been under the standard terms of the award that they would have worked the same hours, and I think logically you could accept that that's not going to be possible to suggest. I mean the reality is, if you just think about the practical scenario, an employer might be prepared to pay a particular quantum above the award rate as part of an annualised wage arrangement if the - you know, if it is certain that they won't have to be subject to potentially additional costs beyond that.

PN85

But if they're faced with the prospect of having to make good a payment under the standard terms as well, they could logically be expected to put in place other sorts of arrangements to make sure people don't work as many hours and so forth. Now I think that's the difficulty, is if you're trying to compare what would happen hypothetically, the reality is that the same outcome just might not arise, if that makes sense. I don't know if I'm putting it particularly clearly.

PN86

VICE PRESIDENT HATCHER: Well, you're assessing a counter‑factual.

PN87

MR FERGUSON: Yes.

PN88

VICE PRESIDENT HATCHER: But again how does one reduce that to a safeguard that complies with the Act?

PN89

MR FERGUSON: Well, I think - and that's where we've said when you consider what the provisions are actually requiring the Full Bench needs to approach that from a practical perspective in the context of giving effect to regulation which is, you know, consistent with the objects of the Act flexible for business and not one that would effectively circumvent what we see would be the key function of an annualised wage arrangement. Because when you think about what that function is in the context of in our view the section as a whole and the regulations and so forth - and I'm jumping around a little bit - one of the key functions is to enable employers to be relieved of the obligations of the record keeping requirements and so forth in relation to hours worked.

PN90

Now, I take the Bench's point that they raise that if you're relieved of those obligations it's difficult to do this mathematical assumption, but we say that's why it's assumed that a broader assessment of disadvantage than just quantum being paid is actually what's required. Now that makes it hard to manage - - -

PN91

MR CLARKE: I object to these submissions. It illustrates precisely the point that I raised at the commencement of these proceedings. The Bench has given a reasoned conclusion on a construction question at paragraphs 103 to 105 of its decision and what's sought to be done now is to unpick that and say "Well, no, no, that's wrong. You've misunderstood the nature of that section and so everything that follows is contaminated". It's a construction point. He's re-arguing a construction point. If he thinks that the construction issue that controls what terms might go in modern awards is the subject of some jurisdictional error the remedy of that is elsewhere. You don't come along to a Full Bench and say "You know, I recognise you've given a reasoned conclusion on a construction question but I don't like it so can you do it again?"

PN92

VICE PRESIDENT HATCHER: We hear what you say, Mr Clarke, but I think it might be more convenient just to hear Mr Ferguson out and we'll sort out what parts of the submissions address the questions and what don't.

PN93

MR CLARKE: Very well.

PN94

MR FERGUSON: I'll only say - I'm not letting that distract too much - is that the reason we've advanced these submissions is that they obviously colour the submissions that we now or we will make about what are the appropriate form of the safeguards and content and we can't do that absent a consideration of these issues, and of course all of these issues didn't necessarily arise in the context of the specific matters we were involved in.

PN95

VICE PRESIDENT HATCHER: They did arise in this sense that some of the appropriate safeguards which you suggested are things which I thought you vociferously opposed in respect of specific awards. For example that arrangements be by agreement - - -

PN96

MR FERGUSON: So - sorry I - that - - -

PN97

VICE PRESIDENT HATCHER: I thought the AiG was opposed to that in circumstances - - -

PN98

MR FERGUSON: No, sorry - - -

PN99

VICE PRESIDENT HATCHER: - - - where awards currently had it by right?

PN100

MR FERGUSON: Yes, yes, so I was raising that as an explanation of a possible way that this issue could be addressed. I don't by any means wish to advance that as a proposition that that would be appropriate in the context of each award. I think the question of disadvantage and what would be appropriate safeguards to allay that disadvantage needs to be considered in the context of each award potentially, and there may be different outcomes in that regard. I was just going through the academic exercise of suggesting to you that the proposition that there has to be this absolute reconciliation type process is not the only way to deal with it.

PN101

I mean I could equally point to the Contract Call Centres Award provisions where we say that those provisions direct the employer to have regard to those sorts of provisions or to the other standard terms and to take that into account in setting the arrangement. But that award in our submission was never intended to require a reconciliation that resulted in a further payment. I understand what you're saying. As I said we don't call for agreement to be a requirement of all of these provisions. We don't think it's appropriate in all of the contexts.

PN102

VICE PRESIDENT HATCHER: And it would follow that you don't say that the capacity of the employee to terminate the arrangement is appropriate in all contexts?

PN103

MR FERGUSON: That's right, but we're not - you know, this is a complex issue and as we looked at it we're not satisfied necessarily that there's a one size fits all answer to this across all the boards and we haven't proffered, you know, a clause that we say can just be promulgated through the system. We were initially responding to a specific series of cases and look, some of these issues arose I think in the course of an exchange during the hearing but obviously at that time it was just things we were dealing with on our feet. It wasn't necessarily the case we were answering originally and look, in this review I mean the Commission has generally taken a fairly broad approach as to how it will deal with matters that arise for consideration and look, I appreciate that they're our conclusions, but my organisation nonetheless has a view that we say must be taken into account.

PN104

But I suppose just before I leave this point, I think in summation what we're arguing or urging the Full Bench to do is to be mindful of the practical realities of the way this Act will apply in practice or this requirement might apply in practice and not develop safeguards that will be so onerous that they simply result in employees and employers either not entering into these sorts of arrangements and then defeating what we say to be the intent of there being - of the Act, that there be a facility that such arrangements be available; or not implement arrangements that are so onerous that in practice parties still carry on agreeing to some sort of arrangement because they regard it as advantageous even if the Commission doesn't and do so in contravention of the relevant award terms. But I don't wish to say any more on this particular point unless there's any questions on it?

PN105

VICE PRESIDENT HATCHER: Well, I was only going to say this, Mr Ferguson, that the design of clauses in general particular does depend upon the construction of how 139(1)(f)(iii) - if one took a different view of that than we did in the paragraph then it leads to different types of clauses. But assuming that the construction in paragraph 105 is correct it seems to point to certain unavoidable conclusions, doesn't it?

PN106

MR FERGUSON: It does which is why we say that the Act doesn't implicitly require that there be this mathematical calculation. We must, and that way you could have other provisions that would be satisfactory which are provisions that said that the employers are directed to give contemplation like in the Clerks Award, to a salary that satisfies all of this, these requirements, but doesn't go so far as to have a reconciliation process might well be a sufficient safeguard in our view. If all that's required is you have to then look each year at the arrangement and have regard to whether it's appropriate I don't think it necessarily dictates that you go so far as to specify that, well, there needs to be a reconciliation.

PN107

VICE PRESIDENT HATCHER: A number of existing provisions refer to a requirement to conduct a review on an annual basis. But speaking for myself I simply don't understand what that requires an employer to actually do and what would constitute a failure to conduct the review and how it constitutes the safeguard of anything.

PN108

MR FERGUSON: I think talking about some of those arrangements and just in general terms some of them require the employer to have regard to setting a salary that satisfies all of the requirements in the award, okay, that is higher than - and I'm talking - thinking of the Clerks Award in particular. What that allows an employer to do is to set a clause - a salary which is so high that it clearly would cover any entitlement that the employee might have under the standard arrangements. Now we think in practice lots of employers do that. They have an understanding of the parameters of the work that people actually are likely to undertake or possibly even undertake and they're able to set a salary which is well above anything that they might get under the standard terms, and they still might have to review - and I'll find the words in a moment but - - -

PN109

VICE PRESIDENT HATCHER: The Clerks' clause is set out in paragraph 15 of the decision.

PN110

MR FERGUSON: Yes.

PN111

VICE PRESIDENT HATCHER: So clause 17.2(a).

PN112

MR FERGUSON: Yes.

PN113

VICE PRESIDENT HATCHER: Seems to take an approach to disadvantage which is the same as in paragraph 105 of the decision, but then apart from that the safeguard is simply that it be viewed annually to ensure that it's appropriate having regard to the award provisions.

PN114

MR FERGUSON: Yes so - - -

PN115

VICE PRESIDENT HATCHER: And if a review is not a reconciliation I'm just wondering what the employer is actually required to do?

PN116

MR FERGUSON: Well, I think in that specific context in that specific award the requirement is actually to make sure that the annualised salary is at all times above the amount that would be payable under the award.

PN117

VICE PRESIDENT HATCHER: How does one do that without keeping a record of hours?

PN118

MR FERGUSON: Because you may know the parameters of work that your employee possibly does and you may know that the salary - and I suggest this is very common - is certainly well above anything that might be payable under the award, not even in the same ball park.

PN119

VICE PRESIDENT HATCHER: Well, you might know that and you might not know that. I don't know.

PN120

MR FERGUSON: That's the point. We don't know because there's no evidence to suggest that's not working, not in any sort of widespread way, and I think the practical reality is for lots of clerks - I'm not suggesting that it's always working without exception but for lots of clerks the arrangement that I'm referring to is undoubtedly very common where people do set salaries well above the award and they do so in the expectation that they will be relieved from record keeping requirements.

PN121

That's part of the justification for entering into it and we say that's what the regulation and the interplay from the regulation and the Act contemplates and facilitates and that there's no reason why that's not working in the context of the clerical industry at least, absent some sort of evidence being brought to suggest there is some widespread problem, and not just a perceived problem by the unions, actual examples of people being paid salaries which are not appropriate.

PN122

So this one goes, you know, in one view a long way towards rectifying or addressing the interpretation considered in paragraph 105. It just excludes the obligations to keep records and to go through that process and to actually pay something out, because it works differently. It assumes you'll always be above it. Now if you're not then it's arguably not an annualised salary as contemplated by this award and all of the award provisions apply by their own force anyway and you have to pay those provisions. But we don't have that evidence of that problem.

PN123

VICE PRESIDENT HATCHER: If the employee considers that they are being disadvantaged and 17.2(1) is being breached how can they enforce the award in circumstances where there's no record of hours worked?

PN124

MR FERGUSON: Well, firstly there is a proceeding safeguard in that they have to be told what obligations are being satisfied by the award. So it does go a long way to informing them about what is required and of course they will have access to the award as well and understand what the obligations will be and they will know what hours they work as well.

PN125

VICE PRESIDENT HATCHER: It's more than knowing it. They have to prove it to a Court.

PN126

MR FERGUSON: That's right and they may keep a record, they may be able to prove it in some other way. It may be, you know, a practice that an employer endorses. Well, if an employer doesn't keep any records they may face some difficulty in that sort of situation but the employee could potentially keep their own records and give their own evidence about what hours they've worked. But in any event I think the issue is we say in the context of the clerical industry, and I think the Full Bench in the award modernisation process or in the contemplation of these clauses came to the same conclusion, that this safeguard is appropriate and doesn't need to go that extra step.

PN127

Because as I've said we don't want to disrupt the arrangement that's applying undoubtedly very widely across Australia, if you think about all the clerical employees, that they don't keep records of hours worked. And as I said I can't - and I don't mean to be cute - I mean I can't put it in other ways and saying we don't have evidence that there's some big problem that we're actually trying to fix. But I appreciate what your Honour is raising and what the Bench raises is there's a practical problem at least theoretically about how you test these sorts of issues or how you actually make sure that the reconciliation of the review process is working.

PN128

But what we would urge the Full Bench to be mindful of is you don't want to address one theoretical practical problem by then creating a very real practical problem of making people record all of the start and finish times and hours of work of their employees when we say in a whole range of circumstances that's just not going to be workable, and that is the next point I will turn to and that's where it's difficult. As I understand on one view the model clauses removes all doubt about disadvantage save that it might result in employees suffering disadvantages in the sense that they won't get these arrangements, these beneficial arrangements, but it might satisfy undoubtedly the requirements of that clause but I think it's just a too heavy handed approach. I don't know if I've answered your question or skidded around it, your Honour?

PN129

VICE PRESIDENT HATCHER: Well, it just highlights the problem. That is if 139(f)(iii) is interpreted the way we suggest it should be or we found it should be then it creates difficulties in terms of crafting a clause which complies with the Act.

PN130

MR FERGUSON: Well, I think certainly more thought would have to be given to it than the current approach because as I said we understand the difficulty but we're in the horns of a problem that you're potentially creating a different practical problem that is no less just as real, and we think you have to give meaning to what's appropriate as well, and we think it can't be appropriate that you create a safeguard that completely undermines the point of an annualised wage arrangement. It's a little unnecessary in a modern awards context. But it is a difficulty perhaps with the way the Act works is that disadvantage doesn't implicitly mean that it's just reduced to a numerical exercise. The Bench - - -

PN131

VICE PRESIDENT HATCHER: That's what you fall back on.

PN132

MR FERGUSON: That's what you fall back on but that's - - -

PN133

VICE PRESIDENT HATCHER: But what I'm really trying to tease out from you is whether you have a concrete proposal to make in respect of - - -

PN134

MR FERGUSON: I don't.

PN135

VICE PRESIDENT HATCHER: - - - generally assuming that 105 is the correct approach and there's some alternate way that you can ensure that there's no disadvantage, because I'd be very - speaking for myself I'd be very interested in hearing it.

PN136

MR FERGUSON: And I don't have unfortunately a concrete alternate proposal to advance. My organisation had taken the view that the clauses as they were were not deficient and satisfied the requirements in the same manner as the Full Bench of the AIRC did, and so that has been its position. But of course our difficulty is - well, it might be that if the Full Bench reaches a conclusion that the way this section is interpreted does leave some room for contemplation of advantages other than just numerical payments that some thought could be given by our organisation and all the parties to what differently framed safeguards could be.

PN137

But because of the way the matter's unfolded we've sort of been dealing with these conclusions which we're not sure if the Bench has been willing to entertain any departure from that, and apart from that regrettably we don't have an alternate to advance today. But as I said if the Full Bench changes its view on that conclusion it may be that that's something we would certainly give thought to, but I can't take it any further today, your Honour.

PN138

VICE PRESIDENT HATCHER: All right.

PN139

MR FERGUSON: That then takes me to the concerns over the safeguards, the particular safeguards more squarely, and look I think obviously the broad submissions that we're advancing is that we think that elements of the proposed safeguards are overly burdensome and not necessary to meet section 139(1)(f) or the modern awards objective. But we're particularly alarmed about the record keeping requirements as obviously evidenced by exchanges today, and we addressed that squarely in paragraphs 8 to 20 of our March submissions but it actually - it permeates through different sections of both sets of our submissions. It really is a core concern, and as I've said already the difficulty we envisage is that the safeguard dealing with the record keeping requirements will undermine an essential purpose or benefit of an annualised wage arrangement as we see it.

PN140

COMMISSIONER SAUNDERS: Mr Ferguson, do you say there's a way of undertaking an annual reconciliation if you don't have records?

PN141

MR FERGUSON: So there is in a sense that if you don't keep records of what this clause requires, start and finish times for example, you may well know with certainty the outer parameters of the hours worked by the employee. So you may know for example that your employee might work an extra couple of hours a week and that's the extent of it, but that you're undoubtedly paying significantly more if you take the approach in the Clerks Award. You've thought about it, thought about what the award requires and you've set a salary that is sufficient to cover all of these entitlements.

PN142

You then reflect upon it, you know what these people do in practice and you don't need to go through the minutiae of actually working out when they started, when they finished and looking at all of that because you're well above it. And undoubtedly this is a more flexible approach that the Clerks Award requires but that's probably quite appropriate in the context of clerical employment as opposed to perhaps - and I say this is not my industry, some hospitality industry employer or whatever where there might be highly variable hours of work and significantly more exposure to penalty rates and so forth. So I don't think you need to necessarily go through the process of checking these hours, the start and finish times in the bulk of situations.

PN143

COMMISSIONER SAUNDERS: So your submission assumes that you have a person who's paid well above the award rate. Aren't you really saying that if you have somebody paid well above the award rate in those particular circumstances there's no need for a reconciliation and therefore no need for records of hours to be kept? But you would have to define some way, wouldn't you, in an award clause how much above the award rate you're talking about?

PN144

MR FERGUSON: That would be another way of doing it and it sort of draws in some way by analogy upon the sort of traditional approach in the Clerks Award in the New South Wales. A different dynamic but the exemption rate where there's a percentage above. Now admittedly that's on a weekly rate if memory serves, as opposed to an annualised rate, but that's the sort of logic as well. If you're going to do this at least there should be a margin of X amount. Now I don't pretend to be able to proffer a view about what that margin might be in the context of each individual award, and that's the complexity of this matter.

PN145

It is ultimately perhaps an award by award matter, but that's another way of getting around this. So I've talked about a few different ways now. That would be another way and it comes into an issue that I touched upon before in that if you're going to put these sorts of provisions in there maybe you want to think about reinserting an exemption rate type arrangement in there, bearing in mind that the reason the Clerks Award - I mean it had one, the modern Clerks Award. It came out and the annualised wage arrangement was the replacement.

PN146

So there's clearly ways to do it but I take your point, as you draw - as the salary draws closer to the level, the base award rate, these issues become more meaningful. As does the fact that if they're in industries where there's more variable hours these issues become more meaningful too because you can't assess it. But what we're saying is we don't know that it's actually causing a problem. Let's not rush to create another one in resolution of a potential problem.

PN147

VICE PRESIDENT HATCHER: The other way might be if you've got a fairly stable workplace in terms of hours worked that if the arrangement actually fixed the hours that were covered by the salary and it was based on a calculation as to what you would need to pay to cover those hours, then on one view you might not need a reconciliation because the salary would cover a fixed number of hours.

PN148

MR FERGUSON: That's right, which is I suppose a further development of the proposition that if you gave someone an understanding of what are the assumptions underpinning it - I mean I was thinking if you gave that understanding and they had a right to terminate and so that might be one way of cutting it. But another way would be, yes, to say "Well, that's for these number of hours" and requiring the parties to set their minds to that. I mean I don't want to think these things through on the run entirely but I appreciate now is the time, but it is difficult because the Act talks about an individual employee as well, whereas the award of course sets terms and conditions for everyone. So you're charged with setting a framework, which I appreciate the difficulties, but I think there are different ways this can be done in the context of different industries. As I said our view is that the Clerks Award - in this context the clerks' industry gets you there in practice and we haven't seen proof that it's not.

PN149

VICE PRESIDENT HATCHER: Well, we haven't seen proof of anything. There was some evidence led by the ASU about the Clerks Award which was very limited and none at all - - -

PN150

MR FERGUSON: That's why I don't mean to be too cut but they said there were some disputes, but of course we don't know - and I can't remember the full tenor of that evidence but that doesn't establish that it's not working, just that it's disputed. But there certainly isn't evidence of widespread problems but I think, you know, we need to ensure that we're maintaining a stable modern award system and I think part of the way that's achieved by the Full Bench is not acting absent clear evidence of what would occur if you did act to vary an award, because that will just result in the (indistinct) arising. So if you varied the award to say there are record keeping requirements that must be implemented, that could cause chaos or problems and then we'd be rushing to say "Well, change the award".

PN151

Now that's not something that we say the Full Bench should do. We say it should only vary the awards if there are cogent reasons and a solid evidentiary basis if necessary justifying those variations. Because otherwise you're just sort of guessing at whether or not it's going to work, and it's no criticism of anyone, it's the way the matter has unfolded and the Bench has raised relevant issues. But perhaps the best course of action is to not go so far as to take sort of a heavy handed approach that we think is being proposed.

PN152

VICE PRESIDENT HATCHER: With the Clerks Award at the end of the day the ASU made a claim. They called some evidence in support of it and there was no evidence adduced in response.

PN153

MR FERGUSON: Now I don't know if the - I can't recall and I may be wrong, it's some time ago now, your Honour, that the central issue here was deficiency and the question of whether people were being disadvantaged and as a result we wouldn't have called any evidence in response, and of course it's not a party-party jurisdiction any more. I mean we can't really be criticised for not calling evidence in response to every claim that a union comes up with in the context of this review. It's the Commission's review. We appreciate the point and we can't rely on factual assertions unreported if they're contested, but just practically speaking we're not going to be able to rise to every claim.

PN154

And as I said the view was in this review that prima facie we're proceeding on the basis that they met the modern awards objective and that they continue to do so. Now we're saying that there's just not enough of a basis to vary them in the way now being proposed. You just don't have a clear enough picture, and that takes us to what I was saying is that the relevant history of the evolution of the regulations. Now I think we set out in our submissions the issues that arose from the introduction of the Work Choices regulation in 2006.

PN155

That regulation - and I'm simplifying it but it is dealt with in detail - included a requirement that for all employees there be hours - times and - start and finish times be recorded. Now when that commenced it caused a very significant issue as I'm instructed. There was a great controversy. I have some recollection of it but my organisation has a much stronger one and it culminated in that regulation being amended just within a matter of months to relieve employers, at least in the context of those not paying Super - overtime from the obligation to record start and finish times.

PN156

Now we take the point that's not evidence in the sense that it's not evidence of what would happen now but it should give this Full Bench a reason to pause. It clearly showed that there was a significant problem that flowed from an outcome which is essentially what is being contemplated now, and we are very keen to ensure that this Full Bench not replicate within the award system the kind of problem that flowed from the 2006 Work Choices regulation, and we say that that approach in the regulation, not in the same terms but that approach has been carried over into the current regulation and we say that's why it's always been intended that people entering into annualised wage arrangements are able to avoid the record keeping requirement, or certain record keeping requirements as we've identified in our subs.

PN157

We don't think that's a gap to be filled. We think that's always been the intent and we don't want to see that problematic controversy arise again just because of the fact that there's no evidence that's going to cause a problem. This should give you sufficient basis to be satisfied that there's a real issue here when you look at this history. And I don't know that anyone is seriously contesting the proposition that there was a significant controversy that arose at that time. But secondly, at a more fundamental level we're concerned that the proposed safeguards around record keeping requirements just won't be either workable or - certainly they won't be workable, they'll be particularly burdensome or they'll necessitate undesirable changes in the way employees work or are paid in particular circumstances.

PN158

And we make the point that that would be contrary to numerous considerations arising under the modern awards objective and that's particularly considerations arising under section 134(1)(d) which is the need to promote flexible modern work practices in the efficient and productive performance of work, and considerations arising under section 134(1)(f) which talks to the likely impact of the exercising of modern award powers on business. But I think - I mean it's not hard to realise that you're going to have people in some of the industries caught by this potentially working alone unsupervised or with a high degree of autonomy over the hours that they actually work and, you know, I've pointed to the classification structure in the Clerks Award as demonstrating this.

PN159

It expressly contemplates that. You know, in a number of industries you've got people who under annualised wage arrangements, senior employees for example, they're quite properly paid for the work they do not by reference to the time. So there's just real problems about how you actually record the hours that they perform and no one has suggested how that could actually be achieved, and I think it is simplistic just to assume that people can do it. That's why they pay annualised salaries in the first place. Just one final point on the record keeping requirements.

PN160

It's a minor issue but another problem with the way the clause has been framed is it proposes the keeping of records that require a record of the starting and finishing time of work. However it doesn't differentiate between work that an employee has been required to do or work that they just perform. Now in our submission there are lots of circumstances where employees perform work that they've not been required or directed to do for lots of reasons, some of them due to their own preferences and they like the work, it suits them, they want to proceed in their career, whatever it might be and these issues, you know, would be known to the Full Bench.

PN161

The difficulty is this just requires the recording of all hours of work which we don't say is appropriate, but it's particularly a problem where you've got awards that have been structured to require the payment of overtime only in circumstances where the overtime is actually required to be worked. So some awards just talk about work performed outside of ordinary hours, some actually expressly put that it's only where an employee's directed to perform the overtime. So even if you implemented the record keeping requirements as crafted you're not going to get the records you need in order to work out what the employee would have received under the award.

PN162

VICE PRESIDENT HATCHER: Regulation 3.34 is expressed by reference to the number of overtime hours worked by the employee during the day and when the employee started and ceased working overtime hours. So how is the proposal different from that?

PN163

MR FERGUSON: It's not in that sense but that really just speaks to a deficiency in the regulation because I think this was an issue that was grappled with when you look to the amendments to the Work Choices legislation where they specifically changed the Act to only require recording certain hours that someone was required to work. But what I'm getting at is - I mean that's a problem with the records keeping regulation and whether that allows verification of award entitlements. That's just a problem. That's not for this Full Bench to fix in the sense that some of the - what you're proposing is records that would enable someone to undertake that reconciliation process and all I'm getting to is a simple point that this won't get you there.

PN164

Even if you were against us and included them, some amendment would be required. Now all I'm saying is that's got to be grappled with and that's got to be looked at on an award by award basis. I think we referred to the Local Government Award for example as having that form of word that I've articulated. There might be others. We just in all candour haven't gone through the process of checking each of the awards, hopeful to dissuade the Bench of the record keeping obligations being made. But that will have to be done in a stage before the matters are settled, in our view. Look, the only other comment I want to make on the particular concerns about safeguards is in relation to a concern we've expressed at paragraphs 82 to 86 of our March submissions, that there's an unreasonable sort of cumulative effect of the inclusion of all of the various forms of safeguards.

PN165

Now we weren't sure whether the Full Bench had a view that they were all necessary in each clause or whether they were just being articulated as possible separate elements but it seems, put simply, that if you include some of the safeguards they'd satisfy section 139(1)(f) without inclusion of others. So for example I'm not calling for this, but if you had the obligation to reconcile someone's actual earnings versus the standard award earnings it's difficult to see why you'd need additional safeguards dealing with what are the underpinning assumptions in the award and so forth.

PN166

Or you could cut it the reverse way. You know, if you've got provisions which require the explanation of the assumptions and require agreement and include termination, then perhaps there's less justification as I've already said for the inclusion of the reconciliation process. So the only point we make, and we articulate it in our submissions in more detail, is that it seems that not all of these safeguards could be seen as necessary to meet the modern awards objective at the same time.

PN167

VICE PRESIDENT HATCHER: In relation to the Restaurant Award, the clauses set out in paragraph 65, that does have in clause 28.2 a reconciliation requirement coupled with a requirement to keep records and my distinct recollection of being told by the representative of the representative of Restaurant and Catering - of Restaurant and Catering Industrial is that was working satisfactorily.

PN168

MR FERGUSON: Happily the restaurant industry is one that does not trouble me. I must confess I don't know whether it is or it isn't. We can only make submissions about the industries that we have an intimate knowledge of and as I've said to you we know from history and from engagement currently with members that the record keeping requirements would cause deep alarm, and you could think of things like, you know, in some industries where you have the annualised salary provisions like manufacturing but they only apply to the senior people and so forth, potentially they're going to work unsupervised and it's difficult to see how this would actually operate. But I can't comment on whether it's genuinely working in that industry or not.

PN169

VICE PRESIDENT HATCHER: There's also a record keeping requirement in the Hospitality Award at 27.1(e). That's in the preceding paragraph.

PN170

MR FERGUSON: Yes, and I won't say that I've no experience of that but I'll confess to no practical experience of how that clause is actually operating in that industry. Again it's one we have a relevant interest in but not our core.

PN171

VICE PRESIDENT HATCHER: Right.

PN172

MR FERGUSON: As I said we've expressed concerns about other elements in our written submissions but we've done that carefully so I'm not going to go into that. The next point is, you know, should annualised salaries be included in other awards. We've not proposed that in the course of these proceedings. We've obviously initially proposed an expansion of the arrangements into the Health Professionals Award, but I don't want it to be understood that we think that there's necessarily no merit in including such provisions in awards. We think there potentially is but we've looked at this in the context of the specific model clauses being advanced and said we're concerned that the proposals being advanced wouldn't be suitably necessarily to all of the different industries and so we can't advocate for their inclusion in every industry. I mean I think there is potentially merit to including greater flexibility around these things in lots of awards and I don't see an obvious reason why that couldn't be accommodated with appropriate safeguards. But - - -

PN173

VICE PRESIDENT HATCHER: Well, the bigger question is why these clauses are necessary to meet the objective in some awards but not others. It seems to me that apart from historical accident there's no rationale as to why they're in some awards and not others by reference to the objective, is there?

PN174

MR FERGUSON: No, I mean look it may be that, you know, there's just not a practice of annualised arrangements in some industries.

PN175

VICE PRESIDENT HATCHER: Because they don't have the clause.

PN176

MR FERGUSON: Because they don't have a clause, so it's a chicken and egg sort of situation. It may be that the reality is that there is a practice but that it's in contravention of either the record keeping requirements or some sort of obligation under the award or the Act in relation to pay periods and so forth. That's why we say that there probably is some merit in including these provisions in lots of awards and with appropriate safeguards, but we're not really in a position to say what they should look like in each and every award. Where you have concern that given the way the model clause was crafted that the benefits would be outweighed from an employer's perspective by the detriments flying from the new obligations. That's why we're not advancing it.

PN177

I think some of the unions might have been of the view that we were therefore ambivalent about their benefit; we're not. It's just that we can't in good conscience go and advance something that we don't know will work.

PN178

Now then take you to the final point, unless there are any questions and that's just on the next steps. Obviously, the Full Bench has developed model clauses that it has expressed a provisional view about potentially giving effect to the conclusions that it reached. We've obviously tried to advance submissions saying, that well, some of those conclusions should perhaps be reassessed, but that the model clauses should be varied anyway.

PN179

Our view is that if after these proceedings the Full Bench - this is just one option - forms a view that there is a more formalised or finalised set of model terms that should be implemented in awards, the next step would be to allow parties to comment on that changed form of words and indicate whether or not in the context of individual awards they would be appropriate for inclusion, or whether they'd need to be tailored in some way, dealing even with the minutia of issues that we've raised about how they interact with the overtime clauses and so forth.

PN180

That's generally the approach that's been taken in other sorts of proceedings, like the annualised wage proceedings where you've come to a sort of finalised stage almost with the model clauses but then the Full Bench has allowed parties to look at whether or not that needs - or where there's an argument that needs to be advanced to say well, not in this award or not in that award, or if you're going to put it in that award, there needs to be some amendment.

PN181

VICE PRESIDENT HATCHER: I thought that was the purpose of today's hearing.

PN182

MR FERGUSON: I understand. The difficulties - the only difference in the way this has been, is that from our perspective, we've assumed that the Full Bench is calling for submissions about the content of the clauses and it might, in light of those submissions, significantly revisit that issue. Because from our perspective, it's a little bit difficult to aim at whether it should go into particular awards or not, when you don't have certainty around what the model clause actually looks like. So I'm just suggesting to you that that's a process that other - and I don't particularly want this to keep indefinitely either, but that's the sort of approach that's been adopted in some of the other common issues proceedings. It's just subtly different.

PN183

I say that also because as we've already foreshadowed, if the annualised wage provisions, in particular the Clerical Award, the Contract Call Centres Award are radically altered, we would suggest that there might be a need to relook at the remuneration provisions more holistically and potentially, we would want an opportunity to advocate for an exemption rate type provision being included in there. Because there's nothing in section 139 as we see it, which would prohibit an award from including provisions which limit the application of certain entitlements, like overtime entitlements and so forth to certain categories of employees or to employees in receipt of a weekly wage above a certain amount.

PN184

We think you could lose the flexibilities that you've got in the Clerks Award, in annualised salaries, then you need to look at the award in its entirety and see whether some other flexibility needs to be afforded. In the Contract Call Centres Award, I know my organisation has a view that the intention was that that clause operated in a manner akin to an exemption rate. Now, I'm not sure the drafting is clear that that's the way it works, but that award was drafted after following extensive negotiations between the relevant parties. We'd say that it suits the circumstances of that industry.

PN185

Now we accept what some of the unions are putting it, that this isn't a jurisdiction anymore that gives the same level of weight to consent between the parties, but the relevance of it is, that key industrial parties in the context of that award negotiated for a long time to find terms that suited that particular industry. So, if you're going to throw out those terms, then you need to potentially look at what goes in, in their place, rather than just putting some standard form response in its place. Because if you don't have a clear picture of how that industry works, if you don't have evidence before you, which is not in its fault, you just don't. That's why we say that there should be another process, potentially looking at award-specific issues.

PN186

VICE PRESIDENT HATCHER: Mr Ferguson, if you go to model clause two which is in paragraph 131. You'll see it's got effectively three levels of safeguard. The first is that there's a minimum amount you have to pay above the weekly wage, that's in little (a). The second in little (b) and (c) is that there's an outer limit of hours at which every cycle you can work under the arrangement and beyond that you pay penalty rates. (d) is the reconciliation provision. Sorry, (x)(ii) is the reconciliation provision.

PN187

MR FERGUSON: Yes.

PN188

VICE PRESIDENT HATCHER: No doubt you would say that with the first two protections, (x)(ii) becomes unnecessary. I thought that was the tenure of your submission.

PN189

MR FERGUSON: It is.

PN190

VICE PRESIDENT HATCHER: But that depends very much on us getting some input as to if we were to consider that, that get some input as to what the percentage of the first safeguard would be. You haven't - which is what we're really looking for.

PN191

MR FERGUSON: No.

PN192

VICE PRESIDENT HATCHER: I mean it may be that if you or core organisations proposed a generous safeguard under (a) that you might be right in saying a reconciliation is not required. But we haven't heard any proposals from I don't think anybody.

PN193

MR FERGUSON: I think part of it was - no we hadn't, and part of it was because we hadn't thought about it in entirely this way as being a solution. I think we'd thought well, that's not necessary because you've got the reconciliations which we say shouldn't happen, but the conclusion suggests that that's going to be a very difficult argument for us to succeed. But I think you're right. The consideration might need to be given to that. I just don't have a number to advance today. But if there's a preparedness to reconsider some of the conclusions, potentially.

PN194

VICE PRESIDENT HATCHER: Well, it's like you said in reconsidering the conclusions. It's reconsidering what we're asking you to make submissions about, that is the form of the clause.

PN195

MR FERGUSON: No, no, that's probably.

PN196

VICE PRESIDENT HATCHER: So that if there's a view that in that example the first two protections make the reconciliation unnecessary, well you could propose a clause which demonstrates that and proposes a percentage which would make it unnecessary. But again, we haven't heard any alternative proposals.

PN197

MR FERGUSON: That's right, because as said, obviously we've as an organisation, proceeded on the basis that the current arrangement for all the reasons I've said, is sufficient. But it may be if the Full Bench reaches a view that well it's not satisfied with that proposition, but that it sees that potentially some of these could work without all of them, we would give thought to that. But I can't take it further and I can't just pluck a number for the air.

PN198

VICE PRESIDENT HATCHER: I know that.

PN199

MR FERGUSON: No, no, sorry I don't mean to be - I appreciate the point. We obviously take a different view which is maintain what is there.

PN200

VICE PRESIDENT HATCHER: Right.

PN201

MR FERGUSON: But I don't think that reflects a lack of preparedness to give thought to that, but I can't take that further. That are essentially the submissions unless there are any other questions.

PN202

VICE PRESIDENT HATCHER: Right, thank you.

PN203

MR FERGUSON: Thank you.

PN204

VICE PRESIDENT HATCHER: Let's go along the Bar table, Mr Johns, do you want to go next?

PN205

MR JOHNS: Thank you, your Honour. Can you hear me all right from here? Yes, thank you. Look, Mr Ferguson has traversed a great deal of material today, particularly around the record-keeping and some of that, so perhaps the easiest way, rather than making submissions on those points, it's easier to say that we support the submissions made by Mr Ferguson on those points.

PN206

Perhaps if I can head to our specific submissions in relation to the Transport Awards, as that's the key awards that our members are interested in. We've filed submissions in this matter on 20 March. Look, I don't intend to take the Full Bench through our submissions in detail and basically we rely on our written submissions.

PN207

Now the road transport industry at the present time, there is not the two awards - the Road Transport and Distribution Award and the Road Transport Long Distance Operation Award, do not presently contain annualised salary provisions. This is one of the examples perhaps, as to why this hasn't actually occurred. If I can take you to the provisions in the Long Distance Operation Award. There's two forms of remuneration arrangements for the parties to agree on.

PN208

In fact the first is the cents per kilometre rate which is by default the arrangement if the parties do not agree on a specific methodology. The second is by distance - sorry, agreed driving hours. Now those hours and the distances are actually set out in the award on the key locations between centres throughout Australia. The cents per kilometre rate, if I can take your attention to that, does actually encompass within its construct, some of those very elements in relation to considerations for overtime for going from whatever point to whatever point as set out in that award.

PN209

We've canvassed our members in relation to the proposed model terms. The concern we have is that in relation to the record-keeping and other things like that, the road transport industry is a highly regulated industry, so the log books and other things like that, again, whether those records could be depended upon in fact to meet the obligations. However, on the presently drafted terms that we've been asked to comment on, our members are telling us there would not be an uptake and there is, in actual fact, they don't really meet the needs of our industry.

PN210

In actual fact, we don't support the adoption of the annualised salary provisions into those two specific awards.

PN211

VICE PRESIDENT HATCHER: You've dealt with the long distance award, so I can understand that part of it.

PN212

MR JOHNS: Yes.

PN213

VICE PRESIDENT HATCHER: Why might it not be of some utility in the main award?

PN214

MR JOHNS: Again, it's the very nature of our industry. It's not typically an arrangement an employer and employee would arrive at because of the irregularity within that industry and the nature of the industry. It's typically that they depend upon the hourly rate for the overtime and other things like that. Again, we're talking about industries which are probably - not being unfair to the industry which is probably more dependent upon award rates, so they're the lower paid elements. So it is very much the bread and butter for the drivers that their hourly rate and their overtime rates come into play. It's not something we would see much utility, even in that sector of the industry.

PN215

However, having said that, if the Full Bench wasn't inclined to not adopt an annualised salary provision, at page 8 of our submission, and I actually have copies here to assist the Bench.

PN216

VICE PRESIDENT HATCHER: No, we have all the submissions.

PN217

MR JOHNS: Yes, so page - if I can take the Full Bench to page 8, whilst we covered off in the submissions that the clauses that have been proposed and invited for comment on, whilst we say in our submissions and we actually go through it quite thoroughly. Through paragraphs 12 to 34 of our written submissions, as to why we don't see that those clauses actually meet the requirements for our industry, rather than just arguing in the negative, if the Bench is not inclined to accept our arguments as to the need of the annualised salary provisions in our awards, we've actually proposed an alternate model clause if the Bench is inclined to actually, in meeting the obligations of the review, to actually propose an alternate clause for the consideration of the Bench.

PN218

VICE PRESIDENT HATCHER: So, at (x)(ii)(c), what's the basis of the 912 hours number?

PN219

MR JOHNS: That's the average hours across that six week period, your Honour.

PN220

VICE PRESIDENT HATCHER: Based upon what hours per week?

PN221

MR JOHNS: Sorry, your Honour?

PN222

VICE PRESIDENT HATCHER: Based upon what hours a week?

PN223

MR JOHNS: The average of 38 hours per week. I must confess to the Bench I've inherited this from a previous member of the staff, so I'm flying with it; it's not my original arguments.

PN224

VICE PRESIDENT HATCHER: Yes, all right. Anything else

PN225

MR JOHNS: No, that's it, thank you.

PN226

VICE PRESIDENT HATCHER: All right, Mr Woods?

PN227

MR WOODS: Your Honour, where I'm just addressing obviously the rail awards, it's specifically not generally, which has already got an existing clause. There were specific written submissions that we lodged on 19 March. The essence of those submissions was that in responding to the question that was in the decision, we felt that there was no particular need to change the current clause or run with the amendment that we've otherwise identified.

PN228

For the purposes of today, that's still the primary position that we put and in looking at it, the additional points that I raise in respect of it, is going back to the section of the Act, 139, it's about what's appropriate to the industry. In our award, the award covers broad classification of employees between the Clerical Professional, and the Operation, which generally covers those people who are on trains, on train stations, controlling movement of trains and then the technical and civil, so for the infrastructure type work, so that sort of broad three categories.

PN229

Now across that industry, it does have a variety of employees, so we do clearly have 24/7 shift workers who have rotating shifts and we have people that will vary between just working days or just working nights. Then we've got the standard clerical work. So there is a variety and what the clause, as it currently stands, seeks to address that in the way it's calling it out and the proactive position in terms of the identification of the elements that go into the agreement. We started off with the clause with the basis that there's a written agreement that spells all that out.

PN230

In looking at the industry also in terms of the obligation of the Act about what's appropriate. It is a heavily regulated industry, its safety hours are controlled, length of hours of work for those people who are in safety critical roles is very clearly controlled. If we then place on that picture of the annualised salary in respect of that, there is variable hours that arose. At paragraph 127 of the decision there was I think a question from your Honour, Vice President, about Mr Johnson who gave evidence from Aurizon in respect of what he would do. You identify in the decision that at clause 18.4, the view that it doesn't actually address that when the hours change.

PN231

What we say was said in those written submissions that we don't see a reason to vary it, with some reflection in respect of that, and looking at those questions about the reconciliation that you've put into the model clause and also in terms of how do you ensure. A proposition which I bring as a secondary position for the consideration of the Commission - if I can hand up some copies of the - and its slightly amended clause 18.4. What that does in respect of clauses 18.1 and 18.2 is just repositioning some of the provisions that area already there, so there is no major change and then adopting in 18.4 the NES requirement.

PN232

The main point then address how the changes would arise, appears in 18.6(c). The award, as it currently stands, has a termination provision by agreement or by 12 months' notice. In trying to address this issue of what happens if the shifts are changing, what we propose is to allow the employee effectively to terminate the agreement on four weeks' notice. Where having identified in the requirement in the agreement about what has gone into the salary and what's being relied upon perhaps of the annual salary, to effectively give the employee the right to say I don't think this is working for me and to get out of it early.

PN233

That then, because the employee has got clear statement about what's covered in the agreement, and realising that the concept of an annualised salary, particularly in an industry that's got such a variable workforce, the annualisation is important because there can be peaks and troughs in terms of the work done. But what this allows for, is an opportunity that if the employee seeks to have it end early because the employee doesn't think that it's - the package is now suitable, this is a lever to do so.

PN234

It's a different lever compared to just giving the 12 months' notice because that could just simply be an employee saying I don't want this annualised flat salary every month, it doesn't suit me anymore for a range of reasons, I want to get out of it, or the employer getting out of it, saying it's not suiting us generally anymore. But this is one that actually goes to address the question of if things have changed, how can we address it quickly.

PN235

Clearly the purpose behind that because in terms of the other provisions in model clause 3 which you identified - which was suggested that we look at, we haven't gone into the reconciliation on a pay cycle against a fixed number of hours and paying above that. We haven't gone into the annual reconciliation and going through all of that for the reasons that those two things are what - they go against the annualised salary principle in terms of having to maintain that approach and the fact that you're dealing with variables in terms of having an annualised salary to flatten it out during the course of the year.

PN236

This is a proposition which we see if the Commission was not satisfied with our primary submissions that this would be a trigger for trying to address that issue.

PN237

VICE PRESIDENT HATCHER: So why is 18.4 being deleted?

PN238

MR WOODS: 18.4, the elements of 18.4 have been moved up the substandard material dated in point 2(c). It's because the otherwise 18.4, the first half of it actually just says we're rewriting it.

PN239

VICE PRESIDENT HATCHER: If things change, you've just in effect have a nuclear option where if things change, the employee just blows it up. I mean why can't there be some proposal along the lines of the evidence that the thing can be recalculated by agreement on the basis of the original calculation?

PN240

MR WOODS: That's there because - so the issue we've tried to address and this is clearly, there's an ability to agree. What happens if you don't agree? There's no reason why you can't agree and you can bury it and you've got a new agreement coming into play so the option in doing it this way, the nuclear option is to say well, I'm not happy with anything else you want to put forward to me. I'm not happy with the variation. I want to go back to the award level and then we start from there. That gives the employee, if they're not satisfied with those negotiations, a way of triggering an end, and an end before it goes on for too long through the unhappiness, because otherwise, under the award, they've got to give 12 months' notice and wait for that period to end.

PN241

This does bring it forward. It changes the negotiation positions in respect of the employer and the employee in terms of if any attempts that have been made already to renegotiate. So it's just if we - so the proposition if you put in a clause that said that you - if someone thinks they're not being paid appropriately, you are required to renegotiate, well that's just - that doesn't take you very far, so that's why we've gone with this option to create a power balance in respect or it.

PN242

VICE PRESIDENT HATCHER: Right, thank you.

PN243

MR WOODS: Thank you.

PN244

VICE PRESIDENT HATCHER: Mr Miller and Mr Nguyen, do you want to go next?

PN245

MR MILLER: Thank you, your Honour. Is it convenient if I remain back here?

PN246

VICE PRESIDENT HATCHER: Yes, can everyone hear Mr Miller in Melbourne?

PN247

MS TRAN: Yes we can.

PN248

VICE PRESIDENT HATCHER: Yes, all right, go ahead.

PN249

MR MILLER: I will, thank you, your Honour. The first thing I will address you on is just point out the AMWU hasn't been involved in this matter until very recently when we filed our submissions on 20 March and 13 April. What I intend to do in my submission today is speak to some of the proposals that we've outlined in our submissions and then I'll also go on to respond to some of the submissions that the Australian Industry Group have made in their written submissions.

PN250

Firstly, in relation to our proposals that we've put forward in our written submissions, what we have presented are the changes that we say are necessary to ensure that the award contains appropriate safeguards for employees as per section 139(1)(f)(iii) of the Act. Of our proposals, we say that all of them are necessary to work together to create an appropriate safeguard for award reliant employees.

PN251

Of the Commission's proposed model clauses, we say that model clause 3 is the closest - bears the closest resemblance to the suite of protections that we've put forward that we say would be appropriate for adoption into the manufacturing award. In particular, we support the Commission's proposal of a reconciliation and record keeping requirements which appear in model clause 3.

PN252

I'll just briefly speak to some of the further amendments that we say would be necessary to model clause 3 in order for it to meet the requirement to ensure appropriate employee safeguards and thus be appropriate to be adopted into the Manufacturing Award. Briefly these are a proposal around majority support, protections for employees against coercion and duress. Protections to safeguard the interests of employees who are from culturally and linguistically diverse backgrounds.

PN253

Furthermore, we say that contrary to the proposed model clause, an employee on an annualised wage arrangement, when taking annual leave or personal leave, should be paid their actual rate of pay and not their base rate of pay. Furthermore, in respect of the Manufacturing Award, as your Honour's would know, it is currently restricted - the application of the AMI's wage arrangement in that clause is currently restricted to employees employed as trainers, supervisors and coordinators. We say that should remain the case if there is to be any change in the Manufacturing Award.

PN254

VICE PRESIDENT HATCHER: Why does the modern award's objective require an annualised wage arrangements clause for them, but nobody else under the award?

PN255

MR MILLER: Well, we would just say that the pattern of work in the industry is that employees are remunerated on an hourly rate basis. Traditionally, there's been no provision for employees other than trainers, supervisors and coordinators in the award history to be remunerated by an annualised salary. So we say that if the scope of that clause was to be broadened, that would require further consideration in much further detail and scrutiny as to whether such broadening of the scope would be necessary to meet the modern award objective.

PN256

VICE PRESIDENT HATCHER: Again, I thought that was the purpose of today's hearing.

PN257

MR MILLER: I take your point, your Honour. Look, I suppose if there was a clear submission for us to respond to as to why it would be necessary to broaden the scope of the annualised wage arrangement clauses in the Manufacturing Award, we would respectfully reserve the right to call evidence and make further submissions about why that should not be done.

PN258

I just would also briefly state that we would support the submissions of United Voice in relation to a payment under an annualised wage arrangement being indexed in accordance with the annual minimum wage processes and the United Voice submission regarding the requirement that the model clauses provide a facility for an employee to inspect their time and wages records that are contemplated in the model clauses.

PN259

Firstly, I'll just speak to our proposal regarding majority support. So the reason we say that majority support forms part of an appropriate employee safeguard, is to improve employee knowledge and understanding of the way they're remunerated. Our proposal will ensure that there is a discussion at a workplace level about what would constitute a significant change to the way a majority of employees are remunerated. Facilitating better employee understanding will ensure that employees are better able to safeguard their own interests and protect one another to ensure that the terms of any annualised wage arrangement are complied with. In particular, any reconciliation requirement.

PN260

We say that's necessary because of the non-compliance issues which we've outlined in our written submissions. I won't go into them in any great detail, other than to just point out that the annual wage review decision, acknowledged that there was a level of non-compliance when it came to award reliant workers. Although the expert panel did not state that the unresponsiveness of the wage prices debts could not entirely be attributed to non-compliance, it did acknowledge that it was part of the reason.

PN261

We would say that non-compliance could operate to suppress the wage price index from rising as a result of a 3.3 per cent increase for award reliant workers means that it does apparently exist at an unacceptable level. We would further say that non-compliance is exacerbated by a low employee knowledge of their entitlements, low union density and the limited reach of the Ombudsman. This is not to say that all non-compliance is intentional, however misunderstanding about obligations that favour an employer are more likely to occur in circumstances where the risk of an employee claim of an underpayment is low.

PN262

In an environment where the Ombudsman can't be everywhere and union density is low, we say that the best protection that workers have are one another. A process which affirms their ability to discuss and confer with each other about proposals which change their take home pay, we say is an important cultural shift.

PN263

Against this context, the requirement that annualised wage arrangements include appropriate safeguards to ensure individual employees are not disadvantaged, must include some measure which addresses the low employee knowledge about aware entitlements and the current low level of oversight by the Ombudsman. We say that our proposal regarding majority support does this.

PN264

VICE PRESIDENT HATCHER: I'm just trying to remember the current clause in the Manufacturing Award is by individual agreement.

PN265

MR MILLER: That's right.

PN266

VICE PRESIDENT HATCHER: You want to move to majority agreement?

PN267

MR MILLER: That's correct.

PN268

VICE PRESIDENT HATCHER: Which may mean that individuals may have an arrangement imposed upon them and they don't want it.

PN269

MR MILLER: No, we would say that the majority agreement takes account of a situation where an employer seeks to introduce such arrangements to a majority of their workforce or the majority of a section of their workforce. The terms of each individual agreement would then have to be negotiated with each individual employee.

PN270

VICE PRESIDENT HATCHER: I see, so you need to get a majority to do it at all.

PN271

MR MILLER: That's correct.

PN272

VICE PRESIDENT HATCHER: Then you need individual agreement with each individual?

PN273

MR MILLER: Essentially, that's correct. Of course, if under our proposal, if a majority agreement was not obtained, an employee would still be at liberty to reach individual agreement with individual employees that were in the minority.

PN274

VICE PRESIDENT HATCHER: Well, what's the purpose of the majority agreement then?

PN275

MR MILLER: The purpose of the majority agreement is to facilitate a discussion so the employees have a much better understanding of what is being proposed and can scrutinise either collective, whether such a proposal is necessary for the majority.

PN276

I might move on to some of the other protections that we say are necessary to ensure individual employees are appropriately safeguarded. So, as we pointed out in our written submissions, we put forward a provision to ensure that the needs of employees from culturally and linguistically diverse backgrounds are protected. Such a clause currently exists in the current manufacturing award clause.

PN277

As per the Ombudsman report that we cite in our written submissions, it appears that there is non-compliance in areas where there is a high proportion of workplace participants from culturally and linguistically diverse backgrounds. The manufacturing industry generally has a high level of employees from culturally and linguistically diverse backgrounds.

PN278

Again, we would propose a provision as exists currently in the manufacturing award and this would essentially require an employer to take steps to ensure that employees with limited understanding of written English, understand the annualised wage arrangement that had been proposed to them. We note that on the face of it, no parties have rejected this proposal in the written submissions thus far.

PN279

We would also point out that such a step is necessitated in other industrial contexts, for example, an employer is required to take into account particular needs of employees from culturally and linguistically diverse backgrounds when explaining the terms of a proposed enterprise agreement to an employee, under section 180(6)(a) of the Act.

PN280

We would also say that then requires to be protections against coercion and duress in any model annualised wage arrangement term that's adopted by the Commission. The current manufacturing clause contains a provision that states that an employee must genuinely agree to the arrangement without the influence of coercion of duress. We say that it is self-evidence that such clauses are necessary for inclusion in order to meet the requirement at 139(1)(f)(iii) that an annualised wage arrangement clause contain appropriate safeguards for individual employees.

PN281

Moving on in relation to the issue about broadening the scope of the Manufacturing Award. I've already addressed your Honour on this. We say that the current scope of the clause should remain as it is now if the Commission is minded to make any variations to the Manufacturing Award.

PN282

VICE PRESIDENT HATCHER: If it's by agreement, why wouldn't it suit some employees to have a stable income under an appropriately safeguarded clause rather than have variable incomes if that's what suits their needs?

PN283

MR MILLER: Do you mean in relation to all employees under the Manufacturing Award?

PN284

VICE PRESIDENT HATCHER: Yes. I mean I'm not sure - but with those sorts of considerations, I'm not sure what's different about training supervisors and coordinators. That might suit all sorts of people under the award.

PN285

MR MILLER: It may well do. All I can say to that is that I would have to point out that currently the only difference probably is that the history of the award is that that's been the practice in relation to those classifications but not all classifications. We would merely make the point that any change to that would require more thorough analysis and scrutiny than has been engaged in by the AMWU thus far.

PN286

Moving on, I'll just address your Honours on our submission that an employee should be paid their actual rate of pay, not their base rate of pay when taking leave. I might actually just hand up a copy of an extract of the Manufacturing Award. There's two parts to the document that I'm handing up. I'm looking at page 2. This is clause 41.4.

PN287

VICE PRESIDENT HATCHER: Sorry Mr Miller, how does this claim arise at this stage of the proceedings?

PN288

MR MILLER: This is in relation to the proposed model clauses which talk about how the base rate of pay is to be calculated for an employee on an annualised wage arrangement.

PN289

VICE PRESIDENT HATCHER: Right.

PN290

MR FERGUSON: Is this being advanced as a claim to deal with the Manufacturing Award or a claim to vary the model award? Because I must say, I read paragraph 134 to see that it was only open to parties' advance proposals in relation to the model clauses. Not to just advance new claims to vary individual awards that have annualised salary provisions which - I didn't want to make too much of it, but I was going to deal with it in reply. It just seems we're outside the scope of these proceedings if that's what's being advocated.

PN291

VICE PRESIDENT HATCHER: Well, I just want to understand what's being advanced? Do you say all the model clause, any model clause should have a provision about this? Is that what you're advancing?

PN292

MR MILLER: No we're not saying - we're not making any broader submission about what the entitlement is in any particular award, as to whether they should be paid the actual rate of pay, or their base rate of pay. However, in the Manufacturing Award, the entitlement is for an employee to be paid their actual rate of pay when they take annual leave. So if there was to be a proposed - if one of the model clauses that are proposed was to be adopted into the Manufacturing Award, we say that it would need to take into account clause 41.4 which requires that annual leave be paid at an employee's actual rate of pay and not their base rate of pay.

PN293

We would also say that this tells in favour of the Commission taking an award by award approach, as to whether an annualised wage arrangement clause should be inserted into a modern award, rather than inserting a generic annualised wage arrangement clause into a modern award without further amendment.

PN294

VICE PRESIDENT HATCHER: The existing clause 41.4 applies, does it, to annualised arrangements under that award?

PN295

MR MILLER: We would see no reason why it would not apply.

PN296

VICE PRESIDENT HATCHER: Your point is you don't want that affected if there's an alteration to the annualised wages arrangement clause in that award?

PN297

MR MILLER: That's correct. We would acknowledge, and this was something that my friend pointed out that there is no equivalent provision in relation to personal leave. In relation to that, we would simply submit that we just think that's an inconsistency in the drafting and that we would submit that, at least in the case of the Manufacturing Award, it's not the case that an employee should have their pay cut every time they take sick leave. And again, we make the same submission as in relation to annual leave that that should not be disturbed should an annualised wage arrangement be inserted into the Manufacturing Award.

PN298

In essence, that's all I really wanted to say about our extra proposals to the proposed model clauses. As I mentioned before we support the submissions of United Voice in relation to there being an annual wage review and also in relation to the inspection of records. We agree that the model clauses should contain a facility to allow employees to access and inspect their time and wages records, those time and wages records that are contemplated by the Commission's proposed model clauses. We agree with the United Voice submission that it is ambiguous where the regulation 3.42 applies to the records contemplated by the model clauses.

PN299

Finally, I might just respond to some of the submissions of the Australian Industry Group, in particular the written submissions. Ai Group I think have taken issue with the fact that in our written submission we made a general statement about the union's general position in relation to annualised wage arrangements, which is that we don't like them. Australian Industry Group's response to that was that we should not be allowed to walk away from an agreement which was made in relation to 2008 award modernisation proceedings.

PN300

In response to that we just briefly say that it's clear that many things have changed since the joint draft award was jointly proposed to the Commission in 2008. The award in 2018 is not as the parties proposed then. Secondly, the review has caused the annualised wage arrangement to be reviewed. The AMWU has not put in an application to delete the clause. Since the review has sought comment from the parties, we express our view on annualised wage arrangements.

PN301

Ai Group have also indicated that the Commission has not invited parties to advance alternate model clauses which we have done. These arguments essentially amount to an argument that process should exclude submissions and ideas from the Commission's consideration. We say that this submission should not be abstained.

PN302

Just briefly to respond to Australian Industry Group's submissions regarding record keeping requirements. Australian Industry Group appear to claim that the fundamental benefit of an annualised wage arrangement for an employer is the ability to avoid having to keep certain records. We would say this is a nonsense. The comparison should be between the position where no annualised wage arrangement is in place and where the proposed clause is in place, where the proposed clause is in place, considering the administrative burden. If there's no annualised wage arrangement in place, the employer still has to keep records.

PN303

It cannot be said that a model clause that does protect employees and a clause that - sorry, I'll withdraw that. the argument that employee record keeping needs to be sacrificed for employer benefit obscures the real outcome of such a claim, which is non-compliance with basic award terms. This is so, because throwing out record keeping requirements will also throw out the ability for employees to protect themselves from disadvantage, as it removes the effectiveness of any reconciliation and would create another hurdle for employees who want to make a claim about their disadvantage.

PN304

Of all the submissions that Australian Industry Group have made, the one that is of most concern to the union is the submission that is found at paragraph 44 of the submissions of 16 April. I think I heard it repeated here again. Ai Group appear to have made a philosophical argument that in some cases, annualised wage arrangements will shift so that an employee is effectively paid for their work performed rather than their hours worked. This submission should be strongly rejected. An annualised wage arrangement is still remuneration within the confines of the award and it is remuneration for a person's time worked, rather than the performance of work generally.

PN305

If Australian Industry Group want to make an argument that some employees should be remunerated with reference to work, rather than hours worked, they should have brought that case before the Commission and they have not done so.

PN306

I would just as well, briefly address the issue about whether annualised wage arrangements have any applicability to part time employees and also respond to the submissions from the Australian Industry Group in response to the submissions that we've already made in relation to that.

PN307

Australian Industry Group have taken issue with the submission of the AMWU that annualised wage arrangements are not easily applied to part time employees. Australian Industry Group claim that clause 24.1(g) of the Manufacturing Award, which is the relevant annualised wage arrangement clause, applies to part time employees. While this may technically be the case, we weren't asked whether it technically applies to part time employees under the Manufacturing Award. We were asked whether it would have practical application to part time employees under the award.

PN308

In respect of this, we press our submission of 20 March. The document that I handed up earlier on the other side, it has the relevant part time clause extracted from the Manufacturing Award. Essentially, under this award, an employee is entitled to be paid overtime for all of their hours that are worked in excess of their agreed set hours that they agree to with their employer. The relevant clause here is 13.8 which provides that entitlement.

PN309

Considering this is the case, it's difficult to envisage how an employee and employer can contemplate the number of overtime hours that an employee will work on a regular basis, because if their overtime hours are so regular so as to be easily contemplated, it begs the question why weren't they contemplated at the outset and included as part of the employee's agreed hours.

PN310

Thus, we say an annualised wage arrangement while it might technically be able to be applied to an employee in the context of the Manufacturing Award, it would not easily be practically applied to an employee under the Manufacturing Award. We don't make any broad submission about whether annualised wage arrangements have any practical application to employees - to part time employees in any other modern award.

PN311

VICE PRESIDENT HATCHER: So is our submission that the agreement referred to in clause 13.3 can incorporate hours other than ordinary hours?

PN312

MR MILLER: No, that is not our submission. Our submission is that because all hours other than those concentrated in the agreement which is set out at 13.3 will be paid at overtime hours. We don't understand how if its possible to contemplate in an annualised wage arrangement, regular overtime hours, why that wasn't just considered at the outset when setting out the hours.

PN313

VICE PRESIDENT HATCHER: What's the maximum daily ordinary hours under this award?

PN314

MR MILLER: Whatever is agreed between the employee and the employer. So if a part time employee works four hours as per their agreement that's reached, and then they're asked to work hours in excess of that, those hours would be overtime.

PN315

VICE PRESIDENT HATCHER: That question was directed at full time employees.

PN316

MR MILLER: For full time employees - 38 hours per week.

PN317

VICE PRESIDENT HATCHER: No, per day.

PN318

MR MILLER: Per day? 7.6.

PN319

VICE PRESIDENT HATCHER: So, if you wanted a part time employee to work one day per week for 10 hours, is the 10 hours contemplated as being covered by the agreement in 13.3, or is that confined to 7.6 and then you pay them overtime? Because I'm trying to work out whether you need an annualised salary to accommodate an arrangement like that or whether it can just be done at the 13.3.

PN320

MR MILLER: If it would be acceptable, your Honour, I would respectfully ask to maybe take that question on notice and provide you with a note after this hearing.

PN321

VICE PRESIDENT HATCHER: All right.

PN322

MR MILLER: Unless there's any further questions, those were the submissions of the AMWU.

PN323

VICE PRESIDENT HATCHER: Thank you. Mr Bull?

PN324

MR BULL: I understand my friend wants to go first, Mr Zevari.

PN325

MR ZEVARI: Your Honour, I'll be very brief. I've just got - I do need to excuse myself for over lunch, so I just wanted to note that the Australian Business Industrial and New South Wales Business Chamber will rely on our submissions and submissions in reply filed in March and April respectively. In this matter, I believe we've addressed the matters that have been addressed this morning. Otherwise unless there's any questions, I just ask to be excused.

PN326

VICE PRESIDENT HATCHER: Right, you're excused, thank you. Mr Bull.

PN327

MR BULL: I'll be fairly brief. Look, we appreciate and we think it's a good decision and it's heading in the right direction. Just to perhaps clarify our position in relation to your comments about annualised salaries, how they appear to have a sort of ad hoc historical nature. If we were rewriting all these awards, we wouldn't have them, we would suggest that they're not appropriate in modern awards. They are a feature of hospitality and it's on that basis that we're engaging in this process, that we think that they're not desirable.

PN328

That leads on I suppose to the second issue, which is that they are award-based arrangements. They're arrangements where the employer is paying a person on the award and they shouldn't be confused with some arrangement where the employee is paid some premium above the award. So, the complaints of the employer are broadly that what you're proposing is excessively complex and so forth, needs to be viewed in the context of the fact that these are award-based arrangements. If you want to be free from complexity, we say the way to do that is to pay a significant premium above the award.

PN329

From my experience, it's anecdotal. When you see the common law arrangements which are truly above the award, it is obvious. I dealt with - I had to give advice to one of our branches where it was a member who was employed at a mine in the Northern Territory. If this person was engaged on the award the base salary was $39,000 a year. They were paid a salary of over $80,000 a year. This person was - - -

PN330

VICE PRESIDENT HATCHER: Was this the uranium mine, was it?

PN331

MR BULL: It was the uranium mine. This person was complaining about being directed to do excessive overtime and the advice I said was appropriate was that it's very hard to say that you're being directed to do excessive overtime, when your salary is effectively double the base rates of the award.

PN332

VICE PRESIDENT HATCHER: This is a waive of privilege, is it?

PN333

MR BULL: Beg your pardon?

PN334

VICE PRESIDENT HATCHER: Is it a waive of privilege here, was it?

PN335

MR BULL: I haven't mentioned anything about the person. You actually cornered me and the Northern Territory is a large place; you just made it smaller. I'm just using it as an example. When you have an arrangement which is above the award, it's clearly above the award. The problem of annualised salaries is that they skirt around the award, and that's where they're problematic. They're used effectively, you know in hospitality, often it's the chef and the front of house manager who's paid an annualised salary and they work every Sunday and Saturday and so forth.

PN336

Arguments about burdensome record keeping should be viewed in the context that these are award-based arrangements. The idea that there's a non-mathematical benefit, I don't know what that means. It is about money because a level of remuneration does clarify and simplify these arrangements, hence our suggestion and our submission that the only models that should be used are ones that involve a significant increment above the base rates of the award. Otherwise, they're really just becoming - you're setting up vehicles for abuse. Because what's the point of having an annualised salary close to the base rates of the award. You may as well just pay the base rates.

PN337

We would suggest that clauses should all have a significant increment a percentage above the base rates as the starting point, because that will provide some utility for the arrangement. Because we're assuming that we are buying out overtime, some penalty rates and so forth. We've used the number 25 per cent simply because that seems to be the standard in the two hospitality awards. I note that in the Clubs Award there's arrangements which I think are 25 and 50. A number above 25 wouldn't be inappropriate, because in relation to hospitality, you're dealing with people who work these unsociable hours where a significant amount of their remuneration is not on the base rate; it's penalty rates and so forth.

PN338

There appears to be some agreement with the AHA and us that potentially these arrangements can be terminated on four weeks' notice, that the 12 months is not necessary. We've made some comments about indexation principally because, with respect, I find the draft clause X3 opaque, I'm not quite sure what that means. So the idea of indexation, once again, goes to the fact that these are award-based arrangements. If they're award-based arrangements, they should be indexed in relation to award-based remuneration.

PN339

The other thing is, if you're hoping that they're going to be longs standing, the sort of employees who will typically hold - be annualised salary holders are, at least in hospitality, they tend to be the more stable and experienced part of the workforce. They're the front of house manager, so the head waiter and chef and so forth, the people who are hanging around for longer periods, so there should be some indexation of their remuneration.

PN340

I make a bit of a plea to excuse the annual leave loading. I'm suggesting that the annual leave loading may now be an incentive to take leave rather than have it cashed out and so forth. I'll leave that to you. I've had some of our branches in particular - this is in relation to hospitality, there is a tradition apparently, where there's a break, an unpaid break after five or six hours work. That's important in kitchens and so forth where if they're conducting service they have periods of intense activity and it's part of the culture to have a break. We just simply make a plea that that allowance, or that aspect of that award condition not be incorporated into annualised salaries to preserve the concept of a break.

PN341

The last matter which I was going to - - -

PN342

VICE PRESIDENT HATCHER: So that's not in the award?

PN343

MR BULL: Beg your pardon?

PN344

VICE PRESIDENT HATCHER: But the break is not in the award?

PN345

MR BULL: It is in the award.

PN346

VICE PRESIDENT HATCHER: It is in the award. What clause is it?

PN347

MR BULL: Sorry, 24.2 - no 31.1, sorry. Hospitality is 31.1 and in the restaurant's it's 32.4. Just one matter that I was going to put which may be of assistance, and this is if you like, dealing with the fact that what you are proposing is essentially award-based. It's a mechanism for employees to pay the award through an annualised salary. So it's not a common law contract where they're paid some premium. It may be appropriate, for example, to have a prescribed form in relation to these arrangements which would, if you like signify the fact that they're award-based arrangements and they're not basically common law contracts.

PN348

Because what does happen in hospitality is that people are just paid a salary and that's taken as absolving the employer of all award-based conditions. So perhaps some more formality, and if they want to have salaries, then they pay more. That's what we say should be the arrangement. That's all I wish to say.

PN349

VICE PRESIDENT HATCHER: Again Mr Ryan.

PN350

MR RYAN: Thank you, your Honour. Your Honours and Commissioner, I appear today on behalf of the AHA and the Accommodation Association of Australia and the Motor Inn and the Motel Accommodation Association. Our interest in these proceedings is in relation to the whipping boy of these proceedings, the hospitality industry and the Hospitality Award.

PN351

However, I want to make it clear that there's been some general assertions about compliance in various sectors of the broader hospitality industry and particularly in these proceedings in December 2016 when that came up, there was some reports tendered following those proceedings from the campaigns conducted by the Fair Work Ombudsman. In particular, insofar as the pubs, bar, taverns and accommodation sector of the industry is concerned, the Fair Work Ombudsman concluded that there was no significant industry-wide issues. The Fair Work Ombudsman conducts regular campaigns. Indeed, presently there is a campaign taking place in various parts of the country in relation to the hospitality industry.

PN352

Just to touch on some things Mr Bull said just a moment ago, indexation, it's not needed, both in the existing provisions in the Hospitality Award and the proposed model clauses, the requirement is that the salary be at least a percentage above the minimum rate in the relevant award and that rate is subject to assessment by the minimum wage panel of this Commissioner on an annual basis, so indexation is not required.

PN353

VICE PRESIDENT HATCHER: Sorry, don't you enter into an arrangement that's 25 per cent above?

PN354

MR RYAN: Yes.

PN355

VICE PRESIDENT HATCHER: You assess and that automatically adjusts itself, does it?

PN356

MR RYAN: If they're on the threshold they'd have to review it. There is a requirement, your Honour, that in the Hospitality Award, we're looking at clause - I'm dealing with non-managerial staff at the moment, 27.1, the requirement is to ensure that they're paid sufficiently, as if they weren't on the award and that 27.1(a), as an alternative to being paid by the week, the salary must be at least 25 per cent or more above clause 20 minimum wages.

PN357

If they're on that threshold, and I suspect some are - a lot are not, a lot would be above that, but if they're right on that threshold, then if the base rate in clause 20 is adjusted by the minimum wage panel, then it would flow-on as a consequential amendment that that salary would need to be adjusted.

PN358

Mr Bull mentioned about carving out break penalties for kitchen staff. That is not something that I think in our submission can be done, and it's not something that we're aware is being done. That's all we wish to say about that.

PN359

In relation to our submissions, we filed some submissions in late March in response to the decision and the matters set out at paragraph 134 of the decision. What we would say about the safeguards that need to be in an annualised wage arrangement for the purposes of section 139(1)(f)(iii) is that those safeguards, as well as the arrangement in subparagraph 1, the safeguards need to take into account the nature of the industry or occupation. This is important from the first matter or the first safeguard I'll address, which is the outer limits.

PN360

The outer limits provision we address from paragraph 10 in our submissions in March and the first observation is that the requirement that if you go over an outer limit, at some point throughout a period of 12 months that you pay additional, seems to be at odds with the conclusions of the Full Bench at paragraph 105. I know this paragraph has been read, I won't read it in full, but going down to about four or five lines above the bottom of it, it states:

PN361

That the subject matter is annualised wage arrangements suggests that the issue of disadvantage may be assessed over the course of a year and not necessarily within the pay period prescribed in an award.

PN362

To give an example, if you had an industry or a business which was subject to highly seasonal variations, it may be that a salary was pegged that on the basis that an employee would work say, in the range of up to 50 hours. They hit a busy time, there might be illness of other employees which requires that employee to work in excess of those 50 hours. But then comes the quiet time of the year. They might be rostered for 25 to 30 hours, but still receiving their payment of their salary.

PN363

So, what we say is that that provision or that safeguard unfairly impacts on employers or industries whereby it doesn't give credit for the low parts of the cycle; it only enforces or requires additional payment when they go to the upper or the outer limit. That is particularly the case with the hospitality industry.

PN364

In their submissions in reply to our submissions, United Voice, I think at paragraph 13, said that it would be unfair to require an employee to wait 12 months to get payment if they go over an outer limit. However, they're not necessarily waiting 12 months for a reconciliation or a review, because throughout the course of their working pattern over that year, it may well be that the matter is resolved through a commensurate reduction at some other time.

PN365

There's been a lot said about reconciliation and reviews. As we said in the preceding and earlier submissions that there is a requirement in the Hospitality Award for 27.1 salary arrangements to get that right up front and to ensure that the employee is at least receiving what they would otherwise have received. We note what the Full Bench said in the decision regarding reconciliations and it was said that the - I can't just put my finger on it right at the moment, but the administration associated may obviate the basis for entering into an arrangement.

PN366

What we would say is that if there is a requirement up front for the employer to get that salary to a point where it's sufficient to cover what they would otherwise get, and that a reconciliation should be mandated, but we would accept that a reconciliation can be requested by an employee if there are concerns. We think that strikes a fair balance between the concern that the Full Bench expresses in the decision about the administrative issues, particularly for small business associated with reconciliations, but also giving the employee the option to request a reconciliation once every 12 month period during the period that the arrangement is on foot.

PN367

VICE PRESIDENT HATCHER: How does that ensure that they're not disadvantaged?

PN368

MR RYAN: Well, irrespective your Honour, irrespective of the reconciliation being mandated or not, the first requirement is to ensure that they're being paid sufficiently. That's both in the existing 27.1 and in the model clauses.

PN369

VICE PRESIDENT HATCHER: Can't the hospitality clause - sorry, has a requirement to keep records?

PN370

MR RYAN: Yes, your Honour, that was alluded to earlier in today's proceedings, 27.1(e) and for those employees we're not proposing. If I can just take you to our submissions? For the 27.1 salary arrangements, paragraph 35:

PN371

That the arrangement be in writing, that the employee be provided with a right to request a reconciliation every 12 months requiring the employer to provide a copy of the annualised wage arrangement provision from the award, so that they're aware of those provisions and allowing the parties to terminate the arrangement by agreement on the provision of four weeks' notice.

PN372

VICE PRESIDENT HATCHER: Just going back to the outer limits provision.

PN373

MR RYAN: Yes, your Honour.

PN374

VICE PRESIDENT HATCHER: You've made a submission as to why that shouldn't happen, but putting that to one side for the moment, the model clause for example, model clause 4 leaves open the question of what the outer limit should be. Do you want to make a submission about that?

PN375

MR RYAN: What the - - -

PN376

VICE PRESIDENT HATCHER: If you look at model clause 4 as an example. If you look at paragraph 133 of the decision.

PN377

MR RYAN: Yes, your Honour.

PN378

VICE PRESIDENT HATCHER: Clause X.1(b) is the outer limit requirement.

PN379

MR RYAN: X.1(b), yes.

PN380

VICE PRESIDENT HATCHER: Do you see that?

PN381

MR RYAN: I see that yes, your Honour.

PN382

VICE PRESIDENT HATCHER: One of the purposes of inviting submissions was that understanding what your primary position is that the parties might suggest what that outer limit should be, that is we haven't fixed upon a number either generally or in respect to any particular award.

PN383

MR RYAN: We haven't - we don't have a view on what a number would be because of our primary position, but it's something I could take on notice.

PN384

VICE PRESIDENT HATCHER: That is if it was a larger rather than smaller number, that might accommodate the concerns that you expressed.

PN385

MR RYAN: There may be a consequential impact of that your Honour, in the sense that whether the salary figure is sufficient from the outset to cover an inflated outer limit number.

PN386

VICE PRESIDENT HATCHER: It raises the issue about whether a salary which encompasses the overtime should in effect, be without limit. That is, you can put as many hours on the employees you like in a given week, provided it balances out over the year. Do you accept that there should be some limit upon that?

PN387

MR RYAN: Well, there would only be pockets in terms of the industry or periods across the year where that occurs. Certainly in our experience, it's not something that's happening day-in-day-out, week-in-week-out across the board. Bearing in mind your Honour, that the 27.1 salary arrangements in the Hospitality Award are generally concentrated to chefs.

PN388

VICE PRESIDENT HATCHER: Yes, fine.

PN389

MR RYAN: In terms of the last point I just wanted to address your Honours, Commissioner, is exemption. This was whether or not an amount above a base rate could be provided for to exempt certain employees out of particular obligations under the award. We would support that. 27.2 in the Hospitality Award for managers is an example of one such exemption provision. That provides a base plus 25 per cent loading to exempt out of certain conditions. There are similar exemption provisions for senior employees in the Registered and Licensed Clubs Award. I think they have a two-tier system, one at 20 per cent, one at 50 per cent. There may well be others.

PN390

But in terms of 27.2 salary arrangements - - -

PN391

VICE PRESIDENT HATCHER: Well, Mr Ryan if you're talking about provisions which are not annualised wage arrangement provisions, it's really outside the purview of this review, I think.

PN392

MR RYAN: Well, 27.2 is annualised wage arrangements.

PN393

VICE PRESIDENT HATCHER: That's right. I thought you were talking about something different, that is an exemption provision would not be, as I understand Mr Ferguson was raising, it's not necessarily an annualised wage arrangement provision. It would just be an exemption from the requirement to pay overtime, which is a provision of a different nature.

PN394

MR RYAN: I suppose your Honour, that the 27.2 is somewhat of a hybrid. It's a salary absorption mechanism that if you pay an amount in excess of the minimum, it absorbs various terms and conditions of the award, including penalty rates and overtime. What we said in the proceedings and in our further submissions in March is that the employees that are classified in that managerial classification are one level under award free; they're senior employees.

PN395

They're often paid well in excess of that amount - market forces and market rates determine that and as Mr Bull just alluded to with an example of someone in a mining sector earning $100,000, it's not uncommon for these managers in bigger venues to be earning in excess of $100,000 on a salary absorption rate. We would submit that the Bench give consideration to maintaining that annualised salary arrangement for those employees.

PN396

There is, in our submissions we've detailed some alternative arrangements if our primary submission is not accepted. One of the differences between 27.1 and 27.2 is we haven't included the provision for the parties to terminate on the provision of four weeks' notice because it's often coupled with a common law contract and is a very senior employee generally in the venue.

PN397

Unless there's anything further, your Honours, Commissioner, they're the submissions for the AHA and the Accommodation Associations.

PN398

VICE PRESIDENT HATCHER: Thank you. Mr Clarke, do you want to go next?

PN399

MR CLARKE: Sure yes, thank you.

PN400

For our part, we accept the construction of section 139 in the decision and we submit that all other parties must. In discussions between the Bench and Mr Ferguson earlier today, he relevantly conceded that he could not get what he wanted, which was an absence of a mathematical reconciliation with records unless that construction was revisited. In any event, we see that a reconciliation exercise is vital to meet the requirements of the clause and you just can't do that without records.

PN401

The idea that some broad review judgment of disadvantages sufficient in this context is simply at odds with the construction of the relevant provision of the Act. It's taking the view that the annualised salary arrangement is some broad bargain that some impressionistic judgment should be reached about. The Act is very clear - the objective is very clear about just which type of bargaining ought to be encouraged under the Act and by modern awards and that's collective bargaining by enterprise bargaining.

PN402

The idea advanced by the Ai Group that some other comparison is involved that allows the employer to say well, you might say you're underpaid, but I just wouldn't have given you those hours unless you'd agreed to this annualised salary arrangement, provides no protection at all to an employee, whatsoever. It denies them the tools required to ever challenge that. How do you challenge that, the expression of opinion? I just wouldn't have given you those hours unless you agreed to an annualised salary provision, so you're better off.

PN403

In our submission, you need to appreciate that the lack of disadvantage under 139, which we say is a mathematical one, and a fair and relevant provision under section 134, taking other provisions of the Act into account, points in the direction of needing to have some kind of record in order to be able to enforce and verify what the entitlement is. You simply cannot efficiently assert and enforce an entitlement without that.

PN404

If you look at the Act more broadly, not only do the regulations say that in the normal course of events employers need to keep all types of records that relate to the way that employees work. Yes, they're the particular records in relation to overtime work and penalty rate work, but there's also payslips, there's records identifying superannuation payments and so forth.

PN405

The employer is made responsible under the Act for making those records. They would face some pretty serious penalties for failing to do so. They face penalties for falsifying them and by recent amendments to the Act, the absence of those records, the absence of keeping those records can lead to a presumption that an employee launching a claim for an underpayment - lead to a presumption that the underpayment they assert is factually correct in the absence of records. That's section 557(c). The catch is that relates to the records that the Act requires you to keep.

PN406

It's a longstanding proposition that the employer needs to keep the records that verify the entitlement. Why would you undermine that - how could you undermine that and say that this provision is still fair and relevant. How could you bring about a situation where an employee is placed at a forensic disadvantage in asserting their entitlement, merely because they're on an annualised salary arrangement? We would say that that's not only inconsistent with the standards of protection that's required to ensure no disadvantage, but also the overall assessment of what's fair and relevant in the context.

PN407

The awards become a lesser standard of protection for people on annualised salaries. That's certainly not an outcome that we say would be fair or relevant.

PN408

VICE PRESIDENT HATCHER: Mr Clarke, if under a framework clause you could enter into an arrangement which fixed the number of working hours covered by the annualised wage, so that any hours run above that fixed number of hours was paid at penalty rates. Say you've got a salary which covers 50 hours of work a week, Monday to Friday.

PN409

MR CLARKE: Yes.

PN410

VICE PRESIDENT HATCHER: And it contains a method of calculation which shows that the salary ensures that you're getting more than what the award would get for the same 50 hours. If you had all those safeguards built into it, would you need a reconciliation in that circumstance?

PN411

MR CLARKE: You ought to have a reconciliation and records. Reconciliation and records would make a lot more sense and I'll tell you why. Because if you're crafting the provision together with a safeguard that says, if by some reason you happen to exceed the number of hours that this is contemplated by, we will pay you the overtime and we will pay you the penalty rate. What's going to happen is the employer is going to flip flop in and out of being required to comply with regulation 3.34, depending on whether or not for that pay period or that they were required to pay overtime or required to pay a penalty rate for that employee.

PN412

I'd suggest that it would be much less risky for the employer to be bound by a record keeping requirement that covered the entirety of the period rather than having to flip-flop in and out of one or the other.

PN413

VICE PRESIDENT HATCHER: I'm just trying to understand how regulation - what is it - 3.34 would operate in that circumstance?

PN414

MR CLARKE: Well, if the employee has exceeded the hours that the annualised salary, for want of a better description contemplates for, they're paid for the excess according to the award, which may be overtime or penalty hours. They therefor become an employee for those hours, who is entitled to be paid overtime, or is entitled to be paid a penalty rate and the obligation to keep the record is triggered.

PN415

VICE PRESIDENT HATCHER: All right, but my question was more directed at the reconciliation rather than the record requirement, that is, on the scenario which I posited, leaving aside the question of record keeping, would it be necessary to comply with the safeguard requirement in the Act to have a reconciliation in that scenario?

PN416

MR CLARKE: It's possible that it might not be. But I'd suggest that a fulsome answer to that is probably better given by somebody who is closer to the limits of what's actually happening in the individual awards. I don't say it's impossible.

PN417

VICE PRESIDENT HATCHER: All right.

PN418

MR CLARKE: Certainly, the record keeping is very important and we would say essential. We'd also say moving away from those general submissions, that on the issue of tailoring the modern award model clauses to deal with issues in particular industries, we think that some of the specific issues raised by some of the parties are worthy of some consideration, may be beyond - within the group of awards that these proceedings are considering generally, rather than just - no that would include giving careful consideration around how you deal with the questions of leave loading and how you deal with a question of a definition of the base rate.

PN419

I think this was a matter that was raised both by the AMWU and United Voice. I don't think anybody of us would like to see, particularly given the nature of the types of submissions made in the annual leave case, nobody really wants to see an employee not take their annual leave. If you have a situation where the base rate of pay for the purposes of the NES goes down to something that's 25 per cent or more less than the rate of pay that the person is ordinarily paid for paying work, taking leave is a bit of a problem for them. A requirement to take excessive leave becomes even more punitive than it otherwise might be and that's particularly a problem if there is no leave loading because the leave loading has been annualised into all other periods other than the actual period when they're on leave.

PN420

I'd suggest there are plenty of awards that say particular all purpose allowances and these sorts of things ought to be paid when they're on leave, but it's something I'd suggest in the award specific stage bears some - should be given some careful consideration to in relation to just - disincentivising taking leave and subjecting employees effectively through financial penalty if they choose to take their annual leave.

PN421

In particular industries the issue about information in appropriate languages may be more pressing than in others. There's been some accommodation as I understand it between United Voice and the hoteliers around a reduced period for termination of annual leave - of annualised salaries, and also there was a proposition, the detail of which we had not seen yet in Melbourne around the Rail Industry Award which also provided for a notice period of less than 12 months.

PN422

I think the various proposals and the submissions were between three to four weeks. We suggest that they're meritorious proposals for shorter termination periods and we would support those as we would support employees having accessing to their employment records as they do when they're required to be kept under the Act.

PN423

One final point I'd make on the general expression that comes up again and again in these proceedings about accidents of history, and I'm not sure the extent to which this was realised in the proceedings that that went before. But I've got to say, I've got a lot of sympathy for the ASU's position around employee agreement in the Clerks Award, having had some peripheral involvement in that over the last 10 years.

PN424

I'd just point out that at paragraph 14 of your decision, you extracted paragraph 25 of the first of those award modernisation decisions. That was the paragraph that immediately - so that's an extract of 2009 AIRCFB 922. That paragraph 25 is the penultimate paragraph before the clause is set out. It relevantly says:

PN425

In all the circumstances, we consider that the exemption provision should be removed but the flexible working arrangements should be available with respect to clerical employment and these should be subject to its appropriate safeguards and processes to ensure that employees clearly understand and agree to any arrangements which may differ from base award entitlements.

PN426

So, right back at that point 10 years ago, there was an accident of history in that the form of the order that the Full Bench gave, didn't actually reflect what they said they were going to do. Now, I don't want to contradict myself in terms of the scope of these proceedings. But I do just point out that to the extent that you're allowing people to tailor provisions in awards, that you bear that historical accident in mind.

PN427

Those are all the submissions I wish to make.

PN428

VICE PRESIDENT HATCHER: Well, it depends where the accident is Mr Clarke - whether it was in the clause or whether it was in paragraph 25.

PN429

MR CLARKE: Yes.

PN430

VICE PRESIDENT HATCHER: Thank you. Mr Nucifora?

PN431

MR NUCIFORA: Thank you, your Honour. I'm just wanting to make sure you can hear me okay. A little earlier I tried to.

PN432

VICE PRESIDENT HATCHER: We can hear you clearly.

PN433

MR NUCIFORA: Thanks for that. Your Honour, the ASU supports the submissions made by Mr Clarke on behalf of the ACTU and in particular, in relation to what we would call the clerical related awards, that is the Clerks Private Sector Award, Contract Call Centre Award and the Legal Services Award. In particular, we support the submissions made by the other unions and might I refer to the submissions made by Mr Bull on behalf of United Voice. His sentiments and the position of the United Voice in relation to annualised salaries and certainly is very similar to the ASU's.

PN434

We have had a long concern about annualised salary in awards, and in particular, modern award. If there is a place for annualised salaries, then it should be in enterprise agreements where we're dealing with actual rates of pay, not minimum based rates of pay. We put that position consistently and we would continue to do that. I might add that the Award Modernisation Full Bench back in 2009 had reservations about annualised salaries and we all know that. If when you go back to those reservations, they are the same ones that we are referring to now.

PN435

But I might just add a couple of organisational issues that I wanted to put to you is, we did lodge a submission dated 20 March. If I could take you to that, your Honour, there is a mistake in paragraph 17 on page 7.

PN436

there is a mistake in paragraph 17 on page 7.

PN437

VICE PRESIDENT HATCHER: Yes.

PN438

MR NUCIFORA: Your Honour, just on the fourth line, it refers to - sorry, the third line. "Percentage increments in the past have locked in low premiums and in minimum rates awards, typical of industries that are not highly" - now it says non-unionised, that should be unionised. What we're referring to is that was just an amendment there that I wanted to take you to.

PN439

Now we did lodge further submissions on 3 April in reply to AiG's submissions. I do want to later on take you to their most recent written submissions that were lodged, which we haven't had a chance to reply to and I think that was on 15 April. But in the first instance in relation to the Full Bench decision on 20 February, the ASU welcomes the findings that award annualised salary clauses are deficient. That annualised wage arrangements should be in writing with a copy on pay records and a copy for the employee.

PN440

We will come back to - certainly one of the findings is that under no circumstances, should an annualised wage arrangement clause should mean an employee to receive less pay over the course of a year than the terms of the award. The only conclusion that we take issue with out of all of the decisions of course, is in relation to the four model clauses and the clerical related awards only having access to model clauses one and two because of an assumption about stable hours.

PN441

Now we say that as Mr Clarke had indicated that - and we've said this all along on a number of occasions, going back to when the clerical awards were made, that there should be the right for an employee to reach agreement about their annualised salary. If there isn't, then the power and balance that you find in a workplace between an employee and employer is just exacerbated; it's just worse. In fact, we would go so far as to say what's been well recorded around the place now on wage theft, there is the potential to institutionalise wage theft by having an award provision that is imposed on an employee. In fact, you don't get the job; take it or leave it with an annualised salary arrangement. We say that's unfair.

PN442

There are certain assumptions that have been made with the clerical related awards that we believe are not based in evidence. I know that AiG and Mr Ferguson had referred to earlier in their written submissions that this review on annualised salaries, has progressed in an evidentiary vacuum. Well, there never has been any evidence going right back to when this inferior annualised salary clause was inserted in the Clerks Private Sector Award. There was no evidence. It was in response to an amendment to the Ministerial directive at the time, that in fact, exemption clauses be removed from awards where they existed, including the Clerks Private Sector Award and of course the clerical related awards.

PN443

You might recall earlier in these proceedings, I think it was late 2016, we gave some history to exemption clauses and how they burdened clerical awards in the past. Of course, the Minister was referring to that in her amended directive, that exemption clauses were in effect outlawed. So, in response to that amended directive, they were removed and we have of course before us, the most inferior annualised salary clause inserted in the Clerks Private Sector Award with no further submissions by any party. It wasn't even a position that was in fact pursued by any of the employer organisations.

PN444

Now I raise the history of exemption provisions in clerical awards that goes back - it's almost like a hundred year war. But it was something that we had to deal with in the pre-modernised clerical awards and we dealt with it with the Clarks Breweries Award before a Full Bench, where we had to with that particular award, because it actually applied to no employee. Employees were paid that high, that they were paid above an exemption rate. So all the essential terms of the award, actually applied to no one, except for maybe half a dozen juniors.

PN445

The employers maintained that that award, when we were trying to - in the old days before the Australian Industrial Relations Commission, seeking to have that award set aside, so as the state common rule awards applied, the employers were actually - we were in a farcical situation when the employers were maintaining this award should continue to apply in the industry to keep people award free.

PN446

So, we gave that history of exemption provisions for a reason and the very reason is the one that Mr Ferguson has gone to today and of course AiG have gone to in their written submissions. We now have this talk of bringing back exemption rates and exemption provisions.

PN447

VICE PRESIDENT HATCHER: Well, we're not going to grant exemption provisions in this proceeding, I can assure you of that.

PN448

MR NUCIFORA: I understand.

PN449

VICE PRESIDENT HATCHER: Your union had run a specific case to introduce the local government clause into the Clerks Award which would have involved arrangements being by agreement. We've rejected that in paragraph 139 and we've invited submissions as to whether the current clause should be varied in line with model clause one or model clause two, or some other modified clause.

PN450

MR NUCIFORA: Yes, your Honour.

PN451

VICE PRESIDENT HATCHER: As I perceive, the answer to that was that you wanted model clause three, which goes back to where we started because that's by agreement.

PN452

MR NUCIFORA: Sorry, your Honour? I didn't hear that last.

PN453

VICE PRESIDENT HATCHER: I understand from your written submissions that the answer to whether you would have like model clause one or two, was that you wanted model clause three, which is of course by agreement and simply reverts back to your original claim, which we've rejected.

PN454

So, having regard to what we've already found in relation to the case that the ASU ran, I'm just trying to pin you down as to what your response is to the question posed at the last sentence of paragraph 139 of the decision.

PN455

MR NUCIFORA: Your Honour, we believe that model clause three should apply to each of the clerical related awards before you.

PN456

VICE PRESIDENT HATCHER: I was just trying to make the point that that wasn't the choice that was offered to you.

PN457

MR NUCIFORA: No, I understand that, your Honour. We say in terms of the conclusion to the decision, we can't see where option one or two should apply to any modern award, let alone the Clerical Award, other wise they are being treated in a different want to other awards.

PN458

Our preference clearly is model clause three. We don't raise other issues in relation to model clause three, given what I said earlier, that our preference is not to have annualised salary provisions in awards. But not having agreement really is quite inconsistent with other arrangements, as Mr Clarke and the ACTU referred to in their written submissions, other arrangements that we have in not only this award, but covered by the Act.

PN459

In particular, we mention the individual flexibility agreements. There's no reason to have an IFA as we colloquially call them, when that's by agreement, when you've got annualised salary provisions that can be imposed on employees when they start employment and during their employment.

PN460

I understand that there's been a paucity of evidence. We have provided some evidence. It wouldn't have mattered how much evidence we would have provided with a million plus employees covered by the clerical related awards. I don't think any sample would have been sufficient enough for the employees to accept that. But I think we would have to reiterate that there has been a lack of evidence right across the board. We provided some; we provided even further evidence in our submissions here, your Honour, in relation to hours that are not so stable in a number of enterprise agreements that we have.

PN461

So, that assumption we believe is unfair. There's two assumptions made in the decision and we need to raise that. That is, one is that agreements not required for the clerical related awards and the other is that office workers and clerical administrative employees in the private sector necessarily work more stable hours than other workers. There's no evidence of that. There are assumptions and there have been assertions and assumptions that have been made from the Bar table, but really, there is absolutely no evidence.

PN462

The only evidence that we really have that is comprehensive, is the pre-modernisation awards. The pre-modernisation clerical awards, the greater majority of employees did not have exemption or annualised salary arrangements, particularly annualised salary arrangements without agreement. Victoria alone, the Commercial Clerks Award originally and then later the Clerical Administrative Employees Award which is the second largest state and you would assume the most populous state with clerical employees, had no exemption provision and no annualised salary provision. That's just prior to 2010, that wasn't so long ago.

PN463

When the employers say this would be burdensome, we say the annualised salary provisions are burdensome in modern awards. They are a burden and an extra burden on the 19 awards that are affected by them, but particularly the clerical related awards where there's no agreement.

PN464

Your Honour, we mentioned - sorry, I just want to say in relation to the Rail Industry Award, that my friend earlier gave submissions on behalf of employers and a written submission dated 19 March. We would just ask that if there was extra time provided to the ASU to reply to that, maybe a week, yes and I think there was a copy of a document - or a document that was handed up today by my friend, we haven't had a chance to look at that. We've had a particular view about the Rail Industry Award and model clause three and parts of model clause three could apply. We just want to have a bit more time to respond to those written submissions. That is the written submission dated 19 March and of course, the verbal submissions today.

PN465

VICE PRESIDENT HATCHER: Right, so seven days, Mr Nucifora?

PN466

MR NUCIFORA: Thank you, your Honour.

PN467

VICE PRESIDENT HATCHER: Mr Woods, can you send the proposed clause to him?

PN468

MR NUCIFORA: I might note the RBTU are not here today but I'll certainly let them know about that position. But I might add, that it seems that ever since we've had modern awards and award modernisation, I can't think of a time when we've reached consent with AiG on any issue. Whereas, at least in other industries, there are at least discussions and some consent is reached. There is none here and I think it's sad that that's the outcome, but it's a reason why we continue to be quite outspoken about what we believe to be burdens on this award, on the Clerks Award and the Clerical related awards in particular.

PN469

I might add, that the Contract Call Centre Award, there were consent positions reached and there were annualised salary arrangements that affected the top of that classification structure, the very top. I understand that some of the employer representatives today have talked about the top classifications. Not the bottom grade one receptionist clerical employee.

PN470

So, there were consent discussions. There were never discussions in relation to the clerks, the private sector and Legal Services Award. Those awards, as I say, had at the most inferior annualised clause imposed upon them. Your Honour, we will continue to raise this issue, because it is a question of equity and it is black and white; there's no grey on this. I mentioned before, we are concerned with wage theft occurring across within walking distance of this Commission and the hearing room in Sydney, there is wage theft occurring in offices. To think that it might only be occurring in other industries such as hospitality, particularly hospitality, we say that if you have a clause like this and you don't have agreement and there aren't the safeguards, then you are actually institutionalising wage theft. There is a potential - - -

PN471

VICE PRESIDENT HATCHER: When you say a clause like this, what clause are you talking about?

PN472

MR NUCIFORA: The present one in the Clerks Award.

PN473

VICE PRESIDENT HATCHER: I'll just - Mr Nucifora, I'll give you one more opportunity.

PN474

MR NUCIFORA: Yes.

PN475

VICE PRESIDENT HATCHER: Paragraph 139 invites you to make a submission about whether the awards, including the Clerks Award should be varied to include the proposed model clause one or clause two. So do you want to keep the current clause, or do you want clause one or do you want clause two?

PN476

MR NUCIFORA: Well, our preference would be out of one and two would be the model clause one.

PN477

VICE PRESIDENT HATCHER: One, right, thank you.

PN478

MR NUCIFORA: That's a fall back position. If your Honour pleases.

PN479

VICE PRESIDENT HATCHER: Thank you. All right, Ms Tran?

PN480

MS TRAN: Good afternoon, your Honours, Commissioner. My primary submission that I wish to make today is that the CFMEU Manufacturing Division strongly proposes the inclusion of any term of annualised wage arrangements in the awards in which we have a primary interest. Those awards are the Dry Cleaning and Laundry Industry Award, the Textile Clothing and Footwear and Associated Industry Awards and the Timber Industry Award.

PN481

The reasons put forward for why we oppose the inclusion of any term of annualised wage arrangements in those awards, is set out in our written submissions filed on 16 April. They predominantly relate to the nature of the industries themselves. They are largely award-dependent. They are largely low paid and there is a high rate of non-compliance across all of the industries, especially in relation to record keeping. Our concern is any provision for an annualised wage arrangement in these industries, would allow for continued and increased non-compliance in the circumstances where the workers are already low paid.

PN482

VICE PRESIDENT HATCHER: So Ms Tran, just to be clear by reference to the three awards you've name, you're only speaking on behalf of what I think is now called the Manufacturing Division of the CFMMEU?

PN483

MS TRAN: That's correct. Only that division, your Honour.

PN484

VICE PRESIDENT HATCHER: Yes, thank you.

PN485

MS TRAN: We otherwise support the submissions of the ACTU and the AMWU and generally support the submissions of the other unions in this matter. I don't have anything further to say this morning unless there are questions you wish to ask in relation to our written submissions.

PN486

VICE PRESIDENT HATCHER: No, thank you. Mr Nguyen, what's up?

PN487

MR NGUYEN: Your Honour, may I just add something further to what my colleague addressed earlier?

PN488

VICE PRESIDENT HATCHER: No, I think we're giving second goes here. Mr Rogers, in Canberra.

PN489

MR ROGERS: Thank you, your Honour. We filed submissions on 22 March and we continue to rely on them. In essence, we said that of the two model clauses which the Full Bench considered to be appropriate for the Horticulture and the Pastoral Award, model clause three was better suited to the realities of working in the farming sector. That said, it was our submission that there should be a number of relatively minor changes to those clauses. I won't identify them now; I won't list them now; they're in our written submissions. Really, they were to address concerns about the administrative burden that the model clause would impose which would discourage the pick-up of the clause.

PN490

I think that's our submission, your Honour.

PN491

VICE PRESIDENT HATCHER: All right, thank you.

PN492

MR FERGUSON: Mr Ferguson, just very very quickly.

PN493

VICE PRESIDENT HATCHER: Well, no, we're not giving a general right of reply because there's no leading party here I don't think.

PN494

We thank the parties for their submissions. Subject to the further note we receive from Mr Nucifora, we now propose to adjourn and reserve our decision.

ADJOURNED INDEFINITELY [12.50 PM]