[2012] FWAFB 5600

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FAIR WORK AUSTRALIA

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Item 6, Sch. 5—Modern awards review

Modern Awards Review 2012
(AM2012/8 and others)

JUSTICE ROSS, PRESIDENT
SENIOR DEPUTY PRESIDENT WATSON
DEPUTY PRESIDENT SMITH
COMMISSIONER GOOLEY
COMMISSIONER HAMPTON





MELBOURNE, 29 JUNE 2012

Review of modern awards - Item 6 of Schedule 5 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 - relevant legislative context - scope of the Review.

1. Introduction

[1] The Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Provisions Act) provides that Fair Work Australia (the Tribunal) must conduct a review of all modern awards 1 as soon as practicable after 1 January 2012 (the Review). The Tribunal has issued two statements dealing with the general conduct of the Review.2

[2] The statement of 17 November 2011 called for applications to be made to vary modern awards as part of the Review. Paragraph 4 of the statement said:

[3] Some 283 applications have been received. These applications include a number directed at common issues as well as a number of applications which are limited to one modern award. The statement of 27 April 2012 identified the following common issues: penalty rates; apprentices, trainees and junior rates; award flexibility; annual leave; and public holidays. These common issues are to be dealt with by Full Benches. The Tribunal as presently constituted is dealing with the various penalty rates applications.

[4] On 9 May 2012, a directions hearing was held to discuss the arrangements for dealing with the applications in relation to penalty rates. Subsequently, directions were issued providing interested parties with an opportunity to file written submissions in relating to the preliminary question as to which legislative provisions are applicable to the Review. A number of written submissions were received and a hearing was held on 21 June 2012. This decision addresses the legislative provisions applicable to the Review and the scope of the Review.

2. The legislative context for the review

[5] It is common ground that the legislative context for the Review is principally set out in Item 6 of Schedule 5 of the Transitional Provisions Act:

[6] Item 7 of Schedule 5 of the Transitional Provisions Act is also relevant. Item 7 allows the Tribunal to review the transitional arrangements included in a modern award in accordance with terms included in the award:

[7] As we have mentioned, Items 6 and 7 of Schedule 5 form part of the Transitional Provisions Act. This raises an issue as to the extent to which the provisions of the FW Act are relevant to the Review. We propose to deal with this issue first before returning to the terms of Item 6.

2.1 Relevant provisions of the Fair Work Act 2009

[8] Section 576 of the FW Act sets out the functions of the Tribunal, which include:

[9] The Review is a function of the type envisaged by s576(2)(d).

[10] As a general proposition, where legislation confers jurisdiction on an established court or tribunal then it may be assumed that the legislature intended to take the court or tribunal as it finds it, with all its incidents. This presumption is clearly stated by the High Court of Australia in Electric Light and Power Supply Corporation Ltd. v. Electricity Commission of N.S.W. (Electric Light and Power) 3:

[11] The proposition set out above is not limited to courts. In Houssain v. Under Secretary of Industrial Relations & Technology (NSW) 4 the High Court was called upon to decide whether the Supreme Court of New South Wales had jurisdiction to make an order in the nature of certiorari quashing a decision of the Industrial Relations Commission of New South Wales (the NSW Commission) given on appeal pursuant to s.76A(7) of the Factories, Shops and Industries Act. Section 76A provided for the registration of small shops, the proprietors of which could then engage in extended trading hours. The registration was effected on the decision of the Under Secretary of the relevant Department. If an application for such registration was refused then the shopkeeper could appeal to the NSW Commission. The application of the appellants had been refused and a subsequent appeal to the NSW Commission had failed. The appellants then sought relief from the NSW Supreme Court on the basis that the orders of the NSW Commission were infected with errors of law appearing on the face of the record. The NSW Court of Appeal held that the Court had no jurisdiction to entertain the proceedings because of a privative clause in s.84 of the Industrial Arbitration Act 1940–1981 (NSW).

[12] The NSW Court of Appeal held that no legislative intent could be discerned from s.76A(7) of the Factories, Shops and Industries Act which removed the protection from judicial review afforded by s.84 of the Industrial Arbitration Act. In a unanimous judgment the High Court dismissed the appeal and applied the decision in Electric Light and Power. The Court went on to state:

[13] The application of the Electric Light and Power presumption and the terms of Item 6 lead us to conclude that a number of the provisions of the FW Act apply to the conduct of the Review. Subitem 6(2) is particularly relevant. It provides that in conducting the Review the Tribunal must consider whether the modern awards “achieve the modern awards objective”. Subitem 6(4) makes it clear that the modern awards objective applies to any variation made by the Tribunal to remedy any issues identified in the Review and, if varying modern award minimum wages, the Tribunal must apply the minimum wages objective.

[14] The reference to the “modern awards objective” in subitems 6(2) and 6(4) is a reference to the modern awards objective in s.134 of the FW Act. Similarly the reference to the minimum wages objective in subitem 6(4) is a reference to the minimum wages objective in s.284 of the FW Act. So much is apparent from Item 4(1)(b) of Schedule 2 of the Transitional Provisions Act, which states:

[15] Subitem 6(6) of Schedule 5 of the Transitional Provisions Act is also relevant in this context. It provides that s.625 of the FW Act, which deals with the delegation by the President of the Tribunal’s functions and powers, has effect as it if includes a reference to the Tribunal’s powers under subitem 6(5).

[16] Our conclusion as to the application of the FW Act to the Review is reinforced by the legislative note that accompanies subitem 6(3), it states:

[17] Marginal notes do not usually form any part of the statute. At common law this was held to be so because they are “not the product of anything done in Parliament”. 6 Subsection 13(3) of the Acts Interpretation Act 1901 (Cth) now provides that “no marginal note, footnote or endnote to an Act . . . shall be taken to be part of the Act”. Despite the fact that marginal notes do not form part of an act they may be used as an aid to construction.7 While a note cannot govern the text of the Act,8 it should not be disregarded.9

[18] For completeness we acknowledge that there is line of authority which recognises a “new breed” of legislative note, referred to as “Statutory Notes”, to which regard must be had in interpreting the statute in which they appear. 10 No party in the present proceedings contended that the notes accompanying subitems 6(1) and 6(3) of Schedule 5 had the status of statutory notes and in view of the conclusion we have reached it is unnecessary for us to determine that question.

[19] A consequence of all of this is that in conducting the Review the Tribunal is able to exercise its usual procedural powers, contained in Division 3 of Part 5-1 of the FW Act. It is also uncontentious that ss.577 and 578 are relevant to the conduct of the Review.

[20] Section 577 states:

[21] Section 578 states:

[22] Two other aspects of the FW Act need to be mentioned.

[23] First, any variation of a modern award must comply with the requirements of the FW Act which relate to the content of modern awards. These requirements are set out in Subdivision A of Division 3 of Part 2-3 of the FW Act.

[24] Part 2-3 of the FW Act deals with the making, varying and revocation of modern awards. The modern awards objective is set out in Division 2 of Part 2-3. Division 3 of Part 
2-3 deals with the terms of modern awards and s.136 sets out what can be included in a modern award:

[25] Any variation to a modern award arising from the Review must comply with s.136 of the FW Act and the related provisions which deal with the content of modern awards (ss.136–155 of the FW Act). Such an outcome flows from the operation of the presumption referred to earlier and is consistent with the note to subitem 6(3) of Schedule 5.

[26] Section 138 of the FW Act also sits within Subdivsion A of Division 3 of Part 2-3 of the FW Act. The relevance of s.138 to the Review was a matter of some contention in the proceedings and we return to that issue shortly.

[27] The second matter we wish to mention is that, depending on the terms of a variation arising from the Review, certain other provisions of the FW Act will be relevant. For example, Division 3 of Part 2-1 of the FW Act deals with, among other things, the interaction between the National Employment Standards (NES) and modern awards. These provisions will be relevant to any Review application which seeks to alter the relationship between a modern award and the NES. Similarly, to the extent that any Review application seeks to alter the coverage of a modern award, the requirements set out in ss.162–164 in Division 6 of Part 2-3 of the FW Act will be relevant.

[28] We now turn to consider the contentious issues in relation to the interaction of the Review and the FW Act. The first such matter is s.138 of the FW Act, which states:

[29] The Australian Council of Trade Unions (ACTU) submitted that the operation of s.138 means that the discretionary power vested in the Tribunal for the purposes of the Review remains conditioned upon FWA being satisfied that any variation (at any time) is “necessary” to achieve the modern awards objective and (to the extent applicable) the minimum wages objective. It was submitted that the Tribunal must draw a distinction between what is necessary and what is merely desirable. The ACTU relied on the observations of Tracey J in Shop, Distributive and Allied Employees Association v National Retail Association (No 2) (SDAEA v NRA (No. 2)):

[30] The Australian Industry Group (Ai Group) submitted that Division 3 of Part 2-3 (including ss.136, 137 and 138) is directly relevant to the Review as it is referred to in the note to subitem 6(3).

[31] A number of other employer organisations submitted that s.138 was not relevant to the Review or, in the alternative, the ACTU’s characterisation of the effect of s.138 on the Review process was erroneous. 12

[32] We gave leave to parties to file supplementary submissions directed at this issue and submissions were subsequently filed by the ACTU, the Australian Federation of Employers and Industries (AFEI), the National Retail Association (NRA), Master Builders Australia (MBA) and the Restaurant and Catering Association of Victoria (RCAV).

[33] We are satisfied that s.138 is relevant to the Review. The section deals with the content of modern awards and for the reasons given at paragraph [25] of our decision it is a factor to be considered in any variation to a modern award arising from the Review. We also accept that the observations of Tracey J in SDAEA v NRA (No.2), as to the distinction between that which is “necessary” and that which is merely desirable, albeit in a different context, are apposite to any consideration of s.138.

[34] While s.138 is relevant to the Review there is still the question of the extent of its impact and the circumstances in which it will have on an application to a variation determination. The supplementary submissions revealed a diversity of views about these issues. We are not persuaded that these issues have been the subject of sufficient debate at this stage. The precise impact of s.138 is a question best considered in the context of a particular application. We agree with the RCAV’s supplementary submission that “the nature of the evidence and the facts as found arising from that evidence will condition the exercise of power and the ultimate outcome required to be determined by the review”.

[35] The other issue which is contentious is whether ss.157–160 are relevant to the Review. A number of parties have suggested that these provisions are “contextually relevant” or “compatible” with Item 6 and the Review. 13

[36] The Accommodation Association of Australia submitted that ss.157 and 160 form part of the legislative context for the Review. 14 Business SA advances a similar submission.15 The Construction, Forestry, Mining and Energy Union (CFMEU) also submitted that ss.158–161 are relevant to the Review, particularly in regard to who has standing to make an application to vary an award. Master Grocers Australia submitted that s.157 of the FW Act “provides a further contextual context for consideration of the application with respect to penalty rates”. The Victorian Employers Chamber of Commerce and Industry (VECCI) submits that in conducting the Review the Tribunal “can also be guided by s.157 of the Act”.

[37] The AFEI took a different view and submitted that the Review is independent of any application to vary within Division 5 of Part 2 of the FW Act and is in addition to the 4 yearly review. The Australian Chamber of Commerce and Industry (ACCI) and the ACTU also rejected the proposition that ss.156–160 of the FW Act have any relevance to the Review. 16

[38] It seems to us that the Review is quite separate from both the 4 yearly reviews of modern awards provided for in s.156 and from the process of varying awards outside the 4 yearly review, as provided in ss.157 and 158. We are not persuaded that these provisions are relevant to the Tribunal’s task under Item 6 of Schedule 5. If ss.157 and 158 applied the Review would be otiose.

[39] Section 159 deals with the variation of a modern award to update or omit the name of an employer, an organisation or an outworker entity. Section 160 provides that the Tribunal may vary a modern award to “remove an ambiguity or uncertainty or to correct an error”. The powers in ss.159 and 160 are exercisable on application or on the Tribunal’s own initiative.

[40] There is a degree of overlap between the matters to which ss.159 and 160 are directed and what might be regarded as “anomalies or technical problems” within the meaning of subitem 6(2)(b) of Schedule 5. But in some respects the terms of subitem 6(2)(b) are more limited in that it directs attention to whether modern awards “are operating effectively, without anomalies or technical problems arising from the Part 10A award modernisation process”. [emphasis added] Hence the “anomalies or technical problems” referred to are those which have arisen from the Part 10A process. Sections 159 and 160 of the FW Act are not so confined.

[41] In the event that the Review of a modern award identifies an ambiguity or uncertainty or an error, or there is a need to update or omit the name of an entity mentioned in the award, and there is some doubt as to whether the matter falls within the scope of subitem 6(2)(b), then the Tribunal may exercise its powers under ss.159 or 160, on its own initiative. Of course interested parties should be provided with an opportunity to comment on any such proposed variation.

[42] Having dealt with the interaction between the Review and the FW Act we now return to the terms of Item 6 of Schedule 5 of the Transitional Provisions Act.

2.2 Item 6 of Schedule 5 of the Transitional Provisions Act

[43] Subitem 6(1) provides that the Tribunal must conduct a review of all modern awards (other than modern enterprise awards and State reference public sector modern awards) as soon as practicable after 1 January 2012 (being the second anniversary of the Fair Work (Safety Net Provisions) commencement day). As we have mentioned, the Review is quite separate from both the 4 yearly reviews of modern awards provided for by s.156 of the FW Act and from the process for varying modern awards outside the 4 yearly review (as provided in s.157 of the FW Act).

[44] We note Ai Group’s submissions that the requirement to complete the Review “as soon as practicable” after 1 January 2012 is still likely to be met even if the Review is not completed until 2013, given the large number of review applications and the need for the Tribunal to deal with those applications in a fair and just manner. 17 No other party demurred from this submission.

[45] Subitem 6(2) provides that the Tribunal must consider two questions when conducting the Review:

[46] Subitem 6(2) imposes an obligation on the Tribunal when conducting the Review to consider the matters set out in paragraphs (a) and (b). The requirement to consider these matters means that they are “relevant considerations” in the Peko-Wallsend 18sense of matters which the decision-maker is bound to take into account. As Wilcox J said in Nestle Australia Ltd v Federal Commissioner of Taxation:

[47] The Pharmacy Guild of Australia (PGA) submitted that in conducting the Review the Tribunal was not restricted to taking into account the specific matters mentioned in subitem 6(2):

[48] While it is clear that the Tribunal must consider the specific matters mentioned in subitem 6(2) and those aspects of the FW Act to which we have previously referred, it is not clear to us what other matters may be relevant in the context of a Review. We are not prepared to determine this issue in the abstract, absent any factual context, but it seems to us that a cautious approach should be taken to the consideration of matters others than those mentioned in subitem 6(2) and those aspects of the FW Act we have referred to earlier in this decision. It is an error of law for the Tribunal to rely on irrelevant material. 20

[49] Subitem 6(2A) requires that each modern award be reviewed in its own right. However, as the subitem notes, this does not prevent the Tribunal from reviewing two or more awards at the same time.

[50] Ai Group submitted that the approach of dealing with similar applications together was not contrary to subitem 2A but that “it is important that any decision arising out of the Review addresses each individual award on its merits, taking into account the industry and occupations covered by the award”. 21 Similarly, VECCI submitted:

[51] The ACTU also submitted that the approach adopted by the Tribunal of grouping certain applications together is consistent with the legislative provisions and does not preclude industry or award-specific submissions being made.

[52] The RCAV took a different view and submitted that:

[53] In its reply submission ACCI broadly supported the RCAV’s submission:

[54] The NRA went further and submitted that the process proposed by the Tribunal, to examine the penalty rate provisions in isolation, is outside the jurisdiction of the Tribunal and the provisions of the Transitional Provisions Act which requires awards to be viewed in their own right:

[55] In its submission in reply the ACTU submitted that Item 6(2A) does not preclude examination of issues separately and the Shop, Distributive and Allied Employees’ Association (SDAEA) submitted that the objections taken by various employer organisations are said to merely indicate a preference to how one application should be dealt with.

[56] We reject those submissions which contend that each modern award must be reviewed “holistically” by the same member or by the same Full Bench. Contrary to those submissions, we are satisfied that Review applications in respect of a modern award are capable of being dealt with in separate proceedings, provided that each modern award is reviewed in its own right.

[57] We note at the outset that Item 6 does not prescribe how the Tribunal is to be constituted for the purpose of conducting the Review. This may be contrasted with the 4 yearly reviews of modern awards provided for in s.156 of the FW Act and the award modernisation process under Part 10A of the Workplace Relations Act 1996 (WR Act). The legislation relating to those proceedings provides that the Tribunal must be constituted by a Full Bench. The flexibility as to the constitution of the Tribunal for the Review is an indication that the legislature did not intend to limit the way in which the Tribunal conducts the Review.

[58] Further, as we have already mentioned, the Tribunal’s usual procedural powers apply to the conduct of the Review. The FW Act provides the Tribunal with considerable flexibility as to how, when and where a matter is to be dealt with (for example see ss.589, 591, 593, 599 and 600). Sections 612(1) and 615(1) provide that a Tribunal function may be performed by a single member or a Full Bench, as directed by the President.

[59] It is also important to note that the Tribunal is required to deal with the Review expeditiously (see Item 6(1) of Schedule 5 of the Transitional Provisions Act and s.577(b) of the FW Act) and efficiently (s.581 of the FW Act).

[60] If the “holistic” approach proposed by the RCAV was adopted then all of the applications relating to a particular award would have to be dealt with together, either by the same single member or by the same Full Bench. Such a process is simply unworkable.

[61] Some 283 Review applications have been received seeking to vary the terms of one or more modern awards. Some of these applications propose common variations to a large number of modern awards. For example one application 25 deals with public holidays and seeks to insert the same model clause into 111 modern awards. It is impractical and inefficient to deal with such an application on an award by award basis. It is a much more efficient use of the resources of both the Tribunal and the parties to have a Full Bench deal with such an application. Yet if the submissions of the RCAV and the NRA were accepted the same Full Bench would be obliged to then review each of the 111 modern awards to avoid the review of a particular award being conducted on a “piecemeal” basis. This is simply impractical and does not efficiently utilise the Tribunal’s resources.

[62] We are not persuaded that there is any substance in the point advanced by the RCAV and the NRA. In our view it is a matter for the Tribunal to determine the most appropriate procedure for conducting the Review having regard to its obligations under ss.577 and 578 of the FW Act. While each modern award must be reviewed in its own right there is no impediment to aspects of that review being conducted by a Full Bench and other aspects by a single member. Accordingly, the Tribunal as presently constituted, will continue to deal with those aspects of the matters before us which seek changes to penalty rates and related issues. However, we note that the taking of evidence in relation to one or more of these applications could be delegated to individual members of the Tribunal as contemplated by s.590(2)(e) of the FW Act.

[63] Under subitem 6(3) of Schedule 5, the Tribunal has a broad discretion to vary any of the modern awards in any way that it considers necessary to remedy any issues identified in the Review. However, subitem 6(4) provides that in making such a variation the Tribunal must take into account the modern award objective in s.134 of the FW Act, and, if varying modern award and minimum wages, the minimum wages objective in s.284.

[64] Any variation of a modern award arising from the Review must also comply with the provisions of the FW Act which deal with the content of modern awards (see ss.136–155 of the FW Act). To the extent that any application seeks to alter the coverage of a modern award, then the requirements set out in ss.162–164 within Division 6 of Part 2-3 of the FW Act are relevant. Similarly Division 3 of Part 2-1 will be relevant if an application seeks to alter the relationship between a modern award and the NES.

[65] We now turn to the most contentious issue in these proceedings, the scope of the Review.

2.3 The Scope of the Review

[66] The Australian Government submitted that the Review is primarily intended to remove anomalies and technical problems arising from the award modernisation process, rather than providing an avenue for significant changes to award entitlements. It notes that a number of the applications before the Tribunal seek broad changes in modern awards and to revisit matters canvassed and determined in the award modernisation process. In that regard it was submitted that the Tribunal should exercise its discretion to adopt a “high threshold” for making such changes and adopt an approach whereby an application seeking a broad change to a modern award is rejected if it is seeking to re-litigate a matter that was dealt with by the Australian Industrial Relations Commission (AIRC) in the award modernisation process, unless the evidence established that there had been a significant change in circumstances that warranted revisiting the matter.

[67] The ACTU supported the Australian Government’s submission that the Tribunal should exercise its discretion to adopt a high threshold for making any changes which revisit matters canvassed and determined during the Part 10A award modernisation process.

[68] The ACTU also submitted that the Review does not provide parties with an opportunity to re-agitate claims which were properly considered as part of the Part 10A process. It argued that the fact that the Part 10A process has been exhausted under the Transitional Provisions Act does not, of itself, justify any re-balancing of considerations made in the award modernisation process. It was submitted that this approach is consistent with the deeming provision in Item 4 of Schedule 5 of the Transitional Provisions Act under which modern awards made under the Part 10A process are modern awards within the meaning of the FW Act, and therefore are taken to have met the statutory requirements of the FW Act.

[69] United Voice also supported the submissions put by the Australian Government and the ACTU in relation to the scope of the Review. The CFMEU went further and submitted that the Review should not be used as a vehicle to re-agitate matters determined since the modern award was made, particularly where the modern award objective was a consideration. 26

[70] A number of other parties contended that the Review was not confined in the manner submitted by the Australian Government, the ACTU and other union parties.

[71] ACCI submitted that the proposition advanced by the Australian Government is “manifestly unreasonable and contrary to a proper statutory construction of the provisions”. It submitted that a plain reading of the requirements of Item 6 does not suggest that the legislature intended that the 2 year Review should “focus on removing anomalies or technical problems arising from the award modernisation process, rather than revisiting issues that were properly considered and determined during that process”. 27 Nor does it suggest that “broader changes that seek to re-litigate matters dealt with in the award modernisation process should instead be considered as part of the ongoing system of four yearly reviews of modern awards”.28 ACCI submitted that had it been so intended, it would have been open to the legislature to provide such limitations.

[72] AFEI submitted that where an application raises substantive issues the Tribunal has broad power to vary the modern award and should give full consideration to the modern award objective in s.134 of the Act. 29 AFEI submitted that:

[73] AFEI relied on the terms of Item 6 of Schedule 5 of the Transitional Provisions Act and the revised supplementary Explanatory Memorandum relevant to that provision. AFEI rejected the Australian Government’s characterisation of the employer applications as an attempt to ‘re-litigate’ matters already settled in the establishment of modern awards:

[74] The extract from the revised supplementary explanatory memorandum relied on by the AFEI is set out below:

[75] The Housing Industry Association also opposed the submissions by the Australian Government and the ACTU in relation to the scope of the Review and submitted that “the proximity of an award variation application and the award modernisation process should not be a relevant consideration for the purpose of the two yearly review . . . to apply a narrow construction of the modern awards objective would defeat that purpose”.

[76] The Australian Retailers Association (ARA) submitted that the Review “must be undertaken on the basis that it represents a fresh assessment of whether the awards under review are achieving that objective”, 33 although noting that aspects of the Part 10A process are relevant in determining whether there are any anomalies or technical problems arising from award modernisation.34 The PGA adopted the ARA’s submission in this regard.

[77] In reply, the ACTU submitted that the approach advocated by the ARA “is misconceived” and submitted:

[78] The NRA rejected the proposition that the Tribunal “should adopt a narrow approach to the review process and deem matters which were extensively dealt with during the award review process as exhausted”. The NRA submitted that:

[79] MBA submitted that the constraints on the conduct of the Review are “for the tribunal to be satisfied that the modern awards objective is being met or that awards are operating effectively without anomalies or technical problems that arise from the original process . . . evidence as to these matters must be led by those seeking modern award changes save where there is a clear anomaly on the face of the modern award”. 36

[80] MBA also submitted that in conducting the Review the Tribunal should eschew any consideration of the industrial history of a modern award:

[81] In reply, the ACTU submitted that the proposition advanced by MBA must be rejected and submitted:

[82] The starting point in our consideration of this issue is to construe Item 6 according to the language of the provisions, having regard to their context and legislative purpose. The context includes the legislative history.

[83] As to the historical context the award modernisation process was conducted by the AIRC under Part 10A of the former WR Act. The process took place in the period from April 2008 to December 2009 and was conducted in accordance with a written request (the award modernisation request) made by the Minister for Employment and Workplace Relations to the President of the AIRC. The award modernisation process was completed in four stages, each stage focussing on different industries and occupations. All stakeholders and interested parties were invited to make submissions on what should be included in modern awards for a particular industry or occupation. Separate processes, including variously, the provision of submissions, hearings and release of draft awards, were undertaken in respect of the creation of each modern award to ensure parties were able to make submissions and raise matters of concern relevant to particular awards. By the end of 2009 the AIRC had reviewed more than 1500 state and federal awards and created 122 industry and occupation based modern awards.

[84] The award modernisation request and variations were issued in accordance with s.576C of Part 10A of the WR Act. Part 10A was repealed on 1 July 2009 (Item 2 of Schedule 1 to the Transitional Provisions Act). Despite that repeal, Part 10A was preserved by Item 2 of Schedule 5 to the Transitional Provisions Act in order to allow the award modernisation process to be completed. The award modernisation process required by Part 10A of the WR Act has been completed.

[85] Two points about the historical context are particularly relevant. The first is that awards made as a result of the award modernisation process are now deemed to be modern awards for the purposes of the FW Act (see Item 4 of Schedule 5 of the Transitional Provisions Act). Implicit in this is a legislative acceptance that the terms of the existing modern awards are consistent with the modern awards objective. The second point to observe is that the considerations specified in the legislative test applied by the Tribunal in the Part 10A process is, in a number of important respects, identical or similar to the modern awards objective which now appears in s.136. In its submission Ai Group observed that the two provisions were ‘very similar’, a point illustrated by the table below.

FW Act

WR Act

Section 134

The modern awards objective

What is the modern awards objective?

(1) FWA must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:

(a) relative living standards and the needs of the low paid; and

(b) the need to encourage collective bargaining; and

(c) the need to promote social inclusion through increased workforce participation; and

(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and

(e) the principle of equal remuneration for work of equal or comparable value; and

(f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and

(g) the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards; and

(h) the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.

This is the modern awards objective.

When does the modern awards objective

apply?

134(2) …

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

Section 576B

Commission's award modernisation function

(2) In performing its functions under this Part, the Commission must have regard to the following factors:

(a) promoting the creation of jobs, high levels of productivity, low inflation, high levels of employment and labour force participation, national and international competitiveness, the development of skills and a fair labour market;

(b) protecting the position in the labour market of young people, employees with a disability and employees to whom training arrangements apply;

(c) the needs of the low-paid;

(d) the desirability of reducing the number of awards operating in the workplace relations system;

(e) the need to help prevent and eliminate discrimination on the grounds of race, colour, sex, sexual preference, age, physical or mental disability, marital status, family responsibilities, pregnancy, religion, political opinion, national extraction or social origin, and to promote the principle of equal remuneration for work of equal value;

(f) the need to assist employees to balance their work and family responsibilities effectively, and to

improve retention and participation of employees in the workforce;

(g) the safety, health and welfare of employees;

(h) relevant rates of pay in Australian Pay and Classification Scales and transitional awards;

(i) minimum wage decisions of the Australian Fair Pay Commission;

(j) the representation rights, under this Act or the Registration and Accountability of Organisations Schedule, of organisations and transitionally registered associations.

[86] Although the Tribunal is not, as a non-judicial body, bound by principles of stare decisis, as a matter of policy and sound administration it has generally followed previous Full Bench decisions relating to the issue to be determined, in the absence of cogent reasons for not doing so. In another context three members of the High Court observed in Nguyen v Nguyen:

[87] While the Tribunal is not a court, the public interest considerations underlying these observations have been applied with similar, if not equal, force to appeal proceedings in the Tribunal. 40 In Re Dalrymple Bay Coat Terminal Pty Ltd a Full Bench summarised the position in relation to single members sitting at first instance as follows:

[88] These policy considerations tell strongly against the proposition that the Review constitutes a “fresh assessment” unencumbered by previous Tribunal authority.

[89] In circumstances where a party seeks a variation to a modern award in the Review and the substance of the variation sought has already been dealt with by the Tribunal in the Part 10A process, the applicant will have to show that there are cogent reasons for departing from the previous Full Bench decision, such as a significant change in circumstances, which warrant a different outcome.

[90] A number of other considerations have also led us to reject the proposition that the Review should proceed on the basis of a fresh assessment of modern awards unencumbered by previous Tribunal authority.

[91] It is important to recognise that we are dealing with a system in transition. Item 6 of Schedule 5 forms part of transitional legislation which is intended to facilitate the movement from the WR Act to the FW Act. The Review is a “one off” process required by the transitional provisions and is being conducted a relatively short time after the completion of the award modernisation process. The transitional arrangements in modern awards continue to operate until 1 July 2014. The fact that the transition to modern awards is still occurring militates against the adoption of broad changes to modern awards as part of the Review. Such changes are more appropriately dealt with in the 4 year review, after the transition process has completed. In this context it is particularly relevant to note that s.134(1)(g) of the modern awards objective requires the Tribunal to take into account:

[92] Two other textual considerations are also relevant. The first is that subitem 6(2)(b) of Schedule 5 directs specific attention to whether modern awards “are operating effectively, without anomalies or technical problems arising from the Part 10A award modernisation process”. No such legislative direction is reflected in the provisions which deal with the 4 yearly review of modern awards (s.156 of the FW Act).

[93] The second textual consideration is that, as we have noted previously, Item 6 does not prescribe how the Tribunal is to be constituted for the purpose of conducting the Review. This may be contrasted with the 4 yearly reviews provided in s.156 and the award modernisation process under Part 10A of the WR Act, both of which are to be conducted by a Full Bench. The fact that the Review of a modern award may be conducted by a single member also suggests that the legislature contemplated that the Review would be more confined in scope that the 4 yearly reviews in s.156.

[94] The above considerations have led us to conclude that the Review is intended to have a narrower scope than the 4 yearly reviews provided in the FW Act. This conclusion is also supported by the relevant extrinsic material.

[95] The Australian Government submitted that the intent of the Review was made clear in the second reading speech to the Fair Work (Transitional Provisions and Consequential Amendments) Bill 2009 when the Hon. Julia Gillard said:

[96] Clauses 213 and 214 of the revised supplementary explanatory memorandum relevant to Item 6, as set out earlier in our decision at paragraph [74], are particularly relevant:

[97] It seems to us that these parts of the explanatory memorandum are somewhat ambivalent about the scope of the Review. On the one hand clause 213 speaks of the Tribunal considering a “range of issues” including the need to encourage collective bargaining and the principle of equal remuneration for work of equal or comparable value. This was relied upon by the AFEI in support of the proposition that a broad review was envisaged. Yet, clause 213 does nothing more than refer to two of the matters identified in the modern awards objective at s.134(1)(b) and (e) of the FW Act. It is also pertinent to note that clause 214 describes the Review as “[t]he interim review”.

[98] For completeness we note that the Australian Government also relied on a speech made by the then Minister for Employment and Workplace Relations to the National Press Club. 43 In our view reference to material of this type is of no real assistance in arriving at the proper construction of the relevant provisions. The language of the provision and its context are much surer guides to its proper construction.

[99] To summarise, we reject the proposition that the Review involves a fresh assessment of modern awards unencumbered by previous Tribunal authority. It seems to us that the Review is intended to be narrower in scope than the 4 yearly reviews provided in s.156 of the FW Act. In the context of this Review the Tribunal is unlikely to revisit issues considered as part of the Part 10A award modernisation process unless there are cogent reasons for doing so, such as a significant change in circumstances which warrants a different outcome. Having said that we do not propose to adopt a “high threshold” for the making of variation determinations in the Review, as proposed by the Australian Government and others.

[100] The adoption of expressions such as a “high threshold” or “a heavy onus” do not assist to illuminate the Review process. In the Review we must review each modern award in its own right and give consideration to the matters set out in subitem 6(2). In considering those matters we will deal with the submissions and evidence on their merits, subject to the constraints identified in paragraph [99] above.

2.4 Part 10A of the Workplace Relations Act and the Review

[101] The award modernisation request and variations were issued in accordance with s.576C of Part 10A of the WR Act. Part 10A was repealed on 1 July 2009 (Item 2 of Schedule 1 to the Transitional Provisions Act). Despite that repeal, Part 10A was preserved by Item 2 of Schedule 5 to the Transitional Provisions Act in order to allow the award modernisation process to be completed. The award modernisation process required by Part 10A of the WR Act has been completed. Modern awards made in the course of that process are now deemed to be modern awards for the purposes of the Act (see Item 4, Schedule 5 Transitional Provisions Act).

[102] It is common ground that by virtue of the operation of Item 2 of Schedule 5 of the Transitional Provisions Act, Part 10A of the WR Act no longer has any work to do and consequently does not form part of the legislative framework governing the Review. The Ministerial award modernisation request is, similarly, not directly relevant.

[103] However, we accept that the award modernisation request, Part 10A of the WR Act and the award modernisation decisions of the AIRC are relevant insofar as they provide a historical context for the Review and because the Review must look at any anomalies or technical problems arising from that award modernisation process.

2.5 Take-home pay orders

[104] Part 3 of Schedule 5 of the Transitional Provisions Act deals with “take-home pay orders”. An employee’s “take-home pay” is the pay the employee actually receives, including wages, incentive-based payments and additional amounts such as allowances and overtime (but disregarding the effect of any permitted deductions). 44 Item 8(1) of Schedule 5 provides that the Part 10A award modernisation process is not intended to result in a reduction in the take-home pay of employees or outworkers. Item 9 provided that the Tribunal could make a take-home pay order to remedy the situation where an employee or class of employees to whom a modern award applies has suffered a “modernisation-related reduction in take-home pay”. The kind of take-home pay orders that could be made included:

[105] The Tribunal’s power to make take-home pay orders pursuant to Item 8 of Part 3 of Schedule 5 of the Transitional Provisions Act is limited to “modernisation-related” reductions in take-home pay. That is, the power was only exercisable in relation to reductions which occurred when a modern award was made as a result of the Part 10A modernisation process. It is common ground that these provisions have no application to the current Review.

[106] The AFEI and RCAV contended that as Item 6 of Schedule 5 of the Transitional Provisions Act makes no reference to take-home pay issues “they cannot be relevant to determining these applications for variations”. It was submitted that such an omission is so stark that it must be regarded as intentional.

[107] The Australian Government submitted that if variations are made as part of the Review that result in reductions in employee entitlements (e.g. the reduction or removal of penalty rates) then appropriate transitional arrangements should be put in place to ensure that employees do not have their take-home pay reduced. It further submitted that Regulation 3B.04 of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 provides a legislative basis for the Tribunal to put such arrangements in place.

[108] The ACTU opposed any Review application which would have the effect of reducing the take-home pay of any worker. 46 It submitted that Parts 3 and 3A of the Transitional Provisions Act are relevant to the extent that they evince a general parliamentary intention that the Tribunal should be cautious not to make any decision which has the effect of reducing any worker’s take-home pay. The ACTU supported the submissions made by the Australian Government in relation to take-home pay orders and submitted that if variations are made which result in reductions in employee entitlements, the Tribunal can and should utilise Regulation 3B.04 to introduce appropriate transitional arrangements to ensure that employees do not have their take-home pay reduced.

[109] We agree with the proposition that consideration will need to be given to appropriate transitional arrangements in the event that variations are made that result in reductions in employee entitlements. In considering such arrangements the modern awards objective will need to be taken into account, particularly the “needs of the low paid” (s.134(1)(a)) and the likely impact of regulatory burden on business of such arrangements (s.134(1)(f)).

[110] The scope of Regulation 3B.04 was not the subject of much debate in the proceedings and we do not propose to express a view on that issue at this stage. The matter can be the subject of further consideration if and when required.

[111] We now turn to deal with two other issues raised in the course of the proceedings: the operative date of any variation determinations made as part of the Review; and the issue of transitional arrangements.

2.6 Retrospectivity

[112] Subitem 6(3) confers a broad discretion on the Tribunal to vary any of the modern awards in any way it considers necessary to remedy any issues identified in the Review. Specifically the provision does not impose any restrictions upon the Tribunal as to the operative date of any variation determination made as part of the Review.

[113] Ai Group submitted that, in the context of the Review, the Tribunal should apply long standing past practice and only grant a retrospective operative date if “satisfied that there are exceptional circumstances”. 47

[114] We accept the proposition that it has been a long standing practice of the Tribunal and its predecessors that retrospectivity is not granted except in special and exceptional circumstances. 48 This general approach now finds legislative expression in ss.165, 166 and 167 of the FW Act. The ACTU submitted that, in the context of the Review, the Tribunal “should also be guided by the operational provisions in ss.165, 166 and 167 regarding retrospectivity”.

[115] For our part, we accept that as a general principle, variation determinations arising out of the Review should operate prospectively, unless there are exceptional circumstances which warrant a retrospective operative date.

2.7 Transitional arrangements

[116] The ACTU noted that very few parties have made submissions in relation to transitional arrangements, even where applications made have proposed significant variation of award content and requests that hearing and submission dates be established towards the end of the Review process so that the parties can give further consideration to transitional matters once the content of modern awards has been finalised. It was submitted that the model provision contained in modern awards enables the Tribunal to initiate this process.

[117] We accept the ACTU’s submission in this regard and toward the end of the Review process the Tribunal will provide parties with an opportunity to give further consideration to transitional issues once the content issues have been determined.

PRESIDENT

Appearances:

G Hatcher on behalf of Australian Business Industrial and the Restaurant and Catering Association of Victoria.

D Mammone on behalf of the Australian Chamber of Commerce and Industry and the Pharmacy Guild of Australia.

E McCoy on behalf of the Australian Council of Trade Unions.

M Mead on behalf of the Australian Industry Group.

I Warren on behalf of the Australian Federation of Employers and Industries.

J Kovacic on behalf of the Australian Government.

M Adler on behalf of the Housing Industry Association.

R Calver on behalf of Master Builders Australia.

A Borg on behalf of the Construction, Forestry, Mining and Energy Union.

A Ross on behalf of Master Grocers Australia.

G Sharpe on behalf of the National Retail Association.

S Burnley on behalf of the Shop, Distributive and Allied Employee’s Association.

J Nolan on behalf of United Voice.

Hearing details:

2012.
Melbourne:
21 June.

Further written submissions:

22 and 26 June 2012.

 1   The Review does not include modern enterprise awards or State Reference Public Sector Awards.

 2   The statements are dated 19 November 2011 ([2011] FWA 7975) and 27 April 2012 ([2012] FWA 3514).

 3   (1956) 94 CLR 554 at 7.

 4   (1982) 148 CLR 88.

 5   (1982) 148 CLR 88 at 583. Also see Australian National Railways Commission and Rutjens Print N1939 (27 May 1996).

 6   R v Schildkamp [1971] AC 1 at 10 per Lord Reid.

 7   See s.15AB(2)(a) of the Acts Interpretation Act 1901 (Cth); Wong v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 204 ALR 722 at 745.

 8   Re The News Corp Ltd (1987) 15 FCR 227 at 240; Transport Workers Union v School Bus Contractors Pty Ltd [2011] FMCA 28 at paras 22–36.

 9   Shuster v Minister for Immigration and Citizenship (2008) 167 FCR 186 at 189.

 10   One.Tel Limited (in liquidation) v John David Rich and Ors [2005] NSWSC 226 at paras 45–54 per Bergin J.

 11   [2012] FCA 480 at 46.

 12   For example, see the Restaurant and Catering Association reply submission at paras 9–10; ACCI reply submission at paragraph [7] and the NRA reply submission at para. 113.

 13   See for example Business SA Preliminary Issues Submission, 4 June 2012, [2.5]; Master Grocers Australia Preliminary Issues Submission, 4 June 2012, [4]; Accommodation Association of Australia Preliminary Issues Submission, 4 June 2012, [22]-[24]; VECCI Preliminary Issues Submission, 4 June 2012 at para. 8.

 14   Accommodation Association of Australia submission at paras 22–4.

 15   Business SA submission at paragraphs 2.4-2.6. The Baking Manufacturers Industry Association generally supports the submissions of Business SA.

 16   ACCI reply submission at para. 5; ACTU reply submission at para. 29.

 17   Ai Group submission of 4 June 2012 at para. 4.3.

 18   Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24.

 19   (1987) 16 FCR 167 at 184; cited with approval by Hely J in Elias v Federal Commissioner of Taxation (2002) 123 FCR 499 at 62 and by Katzmann J in CFMEU v FWA (2011) 195 FCR 74 at 103.

 20   Craig v State of South Australia (1995) 184 CLR 163 at 179 per Brennon, Deane, Toohey, Gaudron and McHugh JJ.

 21   Ai Group submission at para. 8.2.

 22   VECCI submission at para.10.

 23   RCA submission of 4 June 2012 at para. 7.

 24   ACCI submission in reply at para. 10.

 25   Matter no. AM2012/134.

 26   CFMEU submission at para. 2.

 27   Commonwealth written submission (6 June) at para 1.3.

 28   Commonwealth written submission (6 June) at para. 5.8.

 29   AFEI submission 4 June 2012 at para. 18.

 30   AFEI submission in reply 18 June 2012 at para. 4.

 31   See for example [2010] FWAFB 305.

 32   AFEI submission in reply 18 June at paras 9–10.

 33   Australian Retailers Association, Preliminary Issues Submission, 4 June 2012 at para. 7.

 34   ibid. at paras 9–10.

 35   NRA reply submission at paras 14–16.

 36   MBA submission at para. 3.8.

 37   [2009] AIRCFB 800 at para. 5.

 38   [2008] AIRCFB 1000 at para. 9.

 39   [1990] HCA 9; (1990) 169 CLR 25 at 21. Also see R v Moore; ex parte Australian Telephone and Phonogram Officers’ Association [1982] HCA 5; (1982) 148 CLR 600 (11 February 1982).

 40   Re Furnishing Industry Association of Australia (Queensland) Limited Union of Employers Section 111AAA application, print Q9115, 27 November 1998 per Giudice J, Watson SDP, Hall DP, Bacon C and Edwards C.

 41   See The Australian Workers Union and others v the Commonwealth Railways Commissioner (1920) 14 CAR 496 at 567, Printing and Kindred Industries Union and Vista Paper Products Pty Ltd and others, print K1039, The Federated Miscellaneous Workers Union of Australia and Esseltye Dymo Australia Pty Ltd, print J9986, The Federated Engine Drivers’ and Firemen’s Association of Australasia and others and F.G. Araldi Earthmoving and others, print K5885 and The Amalgamated Society of Carpenters and Joiners of Australia and others v. John Parker, Print K5699.

 42   Print N0224 at p. 7.

 43   The Hon. Julia Gillard MP, Introducing Australia’s New Workplace Relations System, 17 September 2008.

 44   Item 8(2), Part 3 Schedule 5, Transitional Provisions Act.

 45   See reg. 2.07 of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 (Cth).

 46   ACTU submission 4 June 2012 at para. 11.

 47   AiGroup submission in reply, 18 June 2012 at para. 7.2.

 48   Ship Painters and Dockers 94 CAR 579 at 619-620.

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