[2013] FWCFB 4539
The attached document replaces the document previously issued with the above code on 18
July 2013.
Schedule B of the Decision has been amended.
Nathan Hill
Associate to Vice President Hatcher.
Dated 18 July 2013.
1
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 5, Item 6 - Review of all modern awards (other than modern enterprise and State PS
awards) after first 2 years
Sch. 5, Item 7 - Review of transitional arrangements in modern awards
Review of all modern awards (other than modern enterprise and State PS awards) after first 2
years
Modern Awards Review 2012 - Transitional Provisions
(AM2012/41, AM2012/45, AM2012/139, AM2012/142 and AM2012/186)
VICE PRESIDENT HATCHER
SENIOR DEPUTY PRESIDENT ACTON
COMMISSIONER JOHNS SYDNEY, 18 JULY 2013
Modern Awards Review 2012 - Transitional Provisions.
Introduction
[1] This Full Bench has been constituted to hear and determine a number of applications
to vary transitional provisions in modern awards. Those applications have been advanced
under items 6 and 7 of Schedule 5 to the Fair Work (Transitional Provisions and
Consequential Amendments) Act 2009 (Transitional Act). Under item 6 of Schedule 5, the
Commission is required to undertake a review of modern awards as soon as practicable after
the second anniversary of their commencement. In that review, the Commission must
consider whether modern awards achieve the modern awards objective and are operating
effectively without anomalies or technical problems arising from the award modernisation
process, and may vary the awards in any way considered appropriate to remedy any issues
identified in the review. Item 7 of Schedule 5 empowers the Commission to review
transitional provisions in modern awards in accordance with review terms in those awards
and, if considered necessary, vary modern awards as a result of that review.
[2] Four modern awards are the subject of applications before us requiring determination:
the Pastoral Award 2010, the Restaurant Industry Award 2010, the Children’s Services
Award 2010 and the Educational Services (Teachers) Award 2010.
Background - the Development of Transitional Provisions in Modern Awards
[3] Modern awards are the outcome of an award modernisation process which began as a
result of the statutory requirements found in Part XA of the former Workplace Relations Act
1996 (WR Act) and a Ministerial request made pursuant to s.576C of the WR Act and which
continued after the commencement of the Fair Work Act 2009 (FW Act) by virtue of item
[2013] FWCFB 4539
DECISION
AUSTR FairWork Commission
[2013] FWCFB 4539
2
2(5) of Schedule 5 to the Transitional Act. A fundamental objective of the award
modernisation process as mandated by the WR Act was the achievement within the area of
employment covered by each modern award of a nationally uniform safety net of terms and
conditions of employment within a five year period. Section 576T of the WR Act gave effect
to this objective in the following terms:
“576T Terms that contain State-based differences
(1) A modern award must not include terms and conditions of employment that:
(a) are determined by reference to State or Territory boundaries; or
(b) do not have effect in each State and Territory.
(2) Despite subsection (1), a modern award may include terms and conditions of
employment of the kind referred to in subsection (1) for a period of up to 5 years
starting on the day on which the modern award commences.
(3) If, at the end of the period of 5 years starting on the day on which a modern award
commences, the modern award includes terms and conditions of employment of the
kind referred to in subsection (1), those terms and conditions of employment cease to
have effect at the end of that period.”
[4] In the course of the award modernisation process, a Full Bench of the former
Australian Industrial Relations Commission considered at various stages of the process how
best to give effect to s.576T. In the Award Modernisation Decision of 3 April 20091, the Full
Bench identified the need for transitional provisions as an adjunct to the establishment of a
uniform safety net, saying:
“[19] ...Most modern awards will contain terms which involve changes in minimum
terms and conditions for many employees. That is because modern awards will replace
a number, in some cases many, pre-reform awards and NAPSAs and establish a
uniform safety net for employees and employers formerly covered by those pre-reform
awards and NAPSAs. The effect of s.576T is that while modern awards must not
include terms and conditions of employment that are determined by reference to State
or Territory boundaries, a modern award may include such terms for an initial period
of five years. It is no doubt the legislature’s intention to permit the Commission to
include transitional provisions in modern awards to cushion the impact of changes in
wages and other conditions. In the case of employees such provisions might deal with
any reductions in their terms and conditions. In the case of employers the focus might
be on increases in costs.”
[5] After determining to establish a separate programme to deal with transitional
provisions, the Full Bench then stated two principles to apply to its process of determination
in that respect:
“[25] There are two important matters of principle which deserve emphasis. First, we
remain of the view, expressed by the Commission in its 19 December 2008 decision,
that transitional provisions are better considered after the terms of modern awards are
known. There are some cases in which it may be possible to deal with transitional
1 [2009] AIRCFB 345
[2013] FWCFB 4539
3
provisions at the same time as the award is being made but these cases will be rare and
likely to be limited to particular conditions. As the Commission indicated in its
19 December 2008 decision we shall also consider the overall economic impact of the
move to modern awards. The actual cost impact will also be relevant. Secondly, we are
concerned that there is a potential for transitional provisions in some awards to be
overly-complicated. This is a danger in particular where the modern award is to
replace a range of disparate conditions in pre-reform awards and NAPSAs. If
transitional provisions are too complicated they will not serve the award modernisation
objective and their implementation might be compromised. An approach is required
which deals with the net effect of changes in conditions or perhaps which focuses on
the main changes.”
[6] The Full Bench next gave significant consideration to s.576T and transitional
provisions in its Award Modernisation Decision of 2 September 2009.2 In that decision, the
Full Bench firstly identified the problem required to be addressed by transitional provisions in
the following terms:
“[5] Various parties have pointed to the impact of modern award provisions. The parties
largely addressed this matter on the basis of a comparison between existing and
proposed award obligations rather than the impact of the modern award on actual terms
and conditions. Even so, it is clear that some award conditions will increase, leading to
cost increases, and others will decrease, leading to potential disadvantage for
employees, depending upon the current award coverage. The creation of modern
awards which will constitute the award elements of the safety net necessarily involves
striking a balance as to appropriate safety net terms and conditions in light of diverse
award arrangements that currently apply. It is in that context that the formulation of
appropriate transitional provisions arises.”
[7] The Full Bench, having considered various alternatives proposed by the parties
making submissions before it, then determined that it would establish model transitional
provisions, stating:
“[18] It was also submitted that we should adopt a uniform approach to transitional
provisions. Some parties suggested that we should adopt a set of general principles for
the guidance of parties. Some also proposed model transitional clauses. While we have
decided not to formulate general principles as such, we nevertheless see benefits in a
uniform approach. It is inevitable that transitional provisions will involve a degree of
mathematical complexity. It is clearly preferable to reduce the potential complexity by
taking steps to ensure that so far as practicable transitional provisions should be of a
similar kind. For these reasons we have decided to adopt model transitional provisions.
Although we have decided not to introduce a statement of principles, the model
provisions will serve a similar purpose. This should minimise the potential for
confusion and promote consistency of outcomes. It is our intention that the model
provisions be applied generally although some modern awards will require special
provisions. While the model provisions can be departed from to meet the
circumstances of a particular case, departures should be limited. We add that the
adoption of model provisions will reduce the amount of regulation that might
otherwise apply to the transition to modern awards. For convenience we shall deal with
2 [2009] AIRCFB 800
[2013] FWCFB 4539
4
the model provisions under two headings: the model commencement and transitional
clause and the phasing schedule ...”
[8] With respect to the model commencement and transitional clause, the Full Bench
formulated three model provisions. The first permitted the absorption of any increases in
payments to employees resulting from a modern award, into overaward payments. The model
provision was in the following terms3:
“The monetary obligations imposed on employers by this award may be absorbed into
overaward payments. Nothing in this award requires an employer to maintain or
increase any overaward payment.”
[9] The second model provision provided protection to existing employees who would
suffer a reduction in take-home pay as a result of the modern award coming into operation,
and provided4:
“Neither the making of this award nor the operation of any transitional provision is
intended to result in a reduction in the take-home pay of employees covered by the
award. On application by or on behalf of an employee who suffers a reduction in take-
home pay as a result of the making of this award or the operation of any transitional
provision, Fair Work Australia may make any order it considers appropriate to remedy
the situation.”
[10] The third model provision provided for the review of transitional provisions, and was
intended to constitute a “review term” for the purpose of item 7 of Schedule 5 to the
Transitional Act. The Full Bench identified the rationale for the model review term in the
following way:
“[22] ...Given the number and diversity of award matters to which the model provisions
are capable of applying, it cannot be assumed that they satisfactorily deal with all of
the issues which might arise during the transition period.”
[11] The model review provision established by the Full Bench was in the following
terms5:
“2.5 Fair Work Australia may review the transitional arrangements in this award and
make a determination varying the award.
2.6 Fair Work Australia may review the transitional arrangements:
(a) on its own initiative; or
(b) on application by an employer, employee, organisation or outworker entity
covered by the modern award; or
(c) on application by an organisation that is entitled to represent the industrial
interests of one or more employers or employees that are covered by the
modern award; or
3 At [19]
4 At [20]
5 At [22]
[2013] FWCFB 4539
5
(d) in relation to outworker arrangements, on application by an organisation
that is entitled to represent the industrial interests of one or more outworkers to
whom the provisions relate.”
[12] With respect to the establishment of a model phasing schedule, the Full Bench firstly
determined to confine the operation of phasing-in to the “main matters effecting pay”, namely
minimum wages, including wages for junior employees, employees to whom training
arrangements apply and employees with a disability, casual and part-time loadings, and
Saturday, Sunday, public holiday, evening and other penalties and shift allowances.6 The
limitation upon the number of matters to be governed by the phasing provision was intended
to “confin[e] the regulatory burden as much as possible” and to “minimise complexity and
reduce the scope for confusion”.7 In this connection, the Full Bench decided not to include
any phasing provision concerning hours of work in the model schedule8, and also determined
that it would not establish model transitional provisions concerning allowances, stating that:
“[46] ...We have decided not to make model transitional provisions relating to
allowances. The differences in the nature and application of allowances across the
award system make it difficult to develop general rules. As we have already indicated,
where industry allowances exist they will normally need to be taken into account in the
phasing arrangements relating to minimum wages. We deal later with some issues
related to allowances when considering whether special provisions are needed in
particular awards. Where significant issues related to allowances remain unresolved, or
unforseen problems arise, the review mechanism is available.”
[13] The Full Bench determined that the transitional provisions would apply uniformly to
employers covered by modern awards, and that there would be no distinction between
employers under a modern award who had been bound by a pre-modern instrument and those
who came into the industry covered by the modern award after 1 January 2010. It said:
“[31] We deal now with the coverage of the transitional provisions. It is desirable that
all employers covered by the modern award in question should be bound by the same
transitional provisions. So far as practicable, the same minimum obligations should
apply to all employers and the same minimum entitlements should apply to all of the
employer’s employees. Employers who are obliged by the transitional provisions to
pay minimum wages, penalties or loadings higher than those in the modern award
during the transition period might be at a significant disadvantage if employers were
permitted to come into the industry after 1 January 2010 and operate under the modern
award conditions. Such a situation might have serious consequences for
competitiveness and perhaps also for employment. There are other examples indicating
why there should be a degree of uniformity. The provisions will apply to three
identifiable groups of employers. First, they will apply to employers covered by a
transitional minimum wage instrument or an award-based transitional instrument
immediately prior to 1 January 2010. Secondly, they will apply to employers which
would have been covered by such an instrument but for the operation of an agreement-
based transitional instrument. Thirdly, they will apply to employers which would have
been covered by a transitional minimum wage instrument or an award-based
6 At [23]-[24]
7 At [23]
8 At [24]
[2013] FWCFB 4539
6
transitional instrument had they been employers in the industry or of the occupations
covered by the award immediately prior to 1 January 2010.”
[14] The Full Bench went on to determine that the phasing process for increases and
reductions should occur in five instalments occurring on 1 July in each year from 2010 to
2014 inclusive, at a flat rate of 20% per instalment. In respect of minimum wages specifically,
the Full Bench said:
“[32] ...it is plain that in some cases minimum wages will have to be increased to reach
the modern award standard and in others they will have to be reduced. The approach
we have adopted will permit employers to phase-in increases in minimum wages over
five years and will require them to phase-in reductions in wages over the same period.
The phasing applies to the differential amount only and any increases resulting from a
minimum wage review are to be included in minimum wages. We point out again,
however, that the transitional provisions will operate subject to the requirement we
have already mentioned above that employees do not suffer reductions in take-home
pay.”
[15] The model phasing provisions for minimum wages determined by the Full Bench were
in the following form9:
“A.2 Minimum wages – existing minimum wage lower
A.2.1 The following transitional arrangements apply to an employer which,
immediately prior to 1 January 2010:
(a) was obliged,
(b) but for the operation of an agreement-based transitional instrument would
have been obliged, or
(c) if it had been an employer in the industry or of the occupations covered by
this award would have been obliged by a transitional minimum wage
instrument and/or an award-based transitional instrument to pay a minimum
wage lower than that in this award for any classification of employee.
A.2.2 In this clause minimum wage includes:
(a) a minimum wage for a junior employee, an employee to whom training
arrangements apply and an employee with a disability;
(b) a piecework rate; and
(c) any applicable industry allowance.
A.2.3 Prior to the first full pay period on or after 1 July 2010 the employer must pay
no less than the minimum wage in the relevant transitional minimum wage instrument
and/or award-based transitional instrument for the classification concerned.
A.2.4 The difference between the minimum wage for the classification in this award
and the minimum wage in clause A.2.3 is referred to as the transitional amount.
A.2.5 From the following dates the employer must pay no less than the minimum
wage for the classification in this award minus the specified proportion of the
transitional amount:
First full pay period on or after
1 July 2010 80%
9 At [33]
[2013] FWCFB 4539
7
1 July 2011 60%
1 July 2012 40%
1 July 2013 20%
A.2.6 The employer must apply any increase in minimum wages in this award
resulting from an annual wage review.
A.2.7 These provisions cease to operate from the beginning of the first full pay period
on or after 1 July 2014.
A.3 Minimum wages – existing minimum wage higher
A.3.1 The following transitional arrangements apply to an employer which,
immediately prior to 1 January 2010:
(a) was obliged,
(b) but for the operation of an agreement-based transitional instrument would
have been obliged, or
(c) if it had been an employer in the industry or of the occupations covered by
this award would have been obliged by a transitional minimum wage
instrument and/or an award-based transitional instrument to pay a minimum
wage higher than that provided in this award for any classification of
employee.
A.3.2 In this clause minimum wage includes:
(a) a minimum wage for a junior employee, an employee to whom training
arrangements apply and an employee with a disability;
(b) a piecework rate; and
(c) any applicable industry allowance.
A.3.3 Prior to the first full pay period on or after 1 July 2010 the employer must pay
no less than the minimum wage in the relevant transitional minimum wage instrument
and/or award-based transitional instrument for the classification concerned.
A.3.4 The difference between the minimum wage for the classification in this award
and the minimum wage in clause A.3.3 is referred to as the transitional amount.
A.3.5 From the following dates the employer must pay no less than the minimum
wage for the classification in this award plus the specified proportion of the
transitional amount:
First full pay period on or after
1 July 2010 80%
1 July 2011 60%
1 July 2012 40%
1 July 2013 20%
A.3.6 The employer must apply any increase in minimum wages in this award
resulting from an annual wage review. If the transitional amount is equal to or less
than any increase in minimum wages resulting from the 2010 annual review the
transitional amount is to be set off against the increase and the other provisions of this
clause will not apply.
A.3.7 These provisions cease to operate from the beginning of the first full pay period
on or after 1 July 2014.”
[2013] FWCFB 4539
8
[16] The Full Bench adopted a similar model provision for loadings and penalty rates10:
“A.4 Loadings and penalty rates
For the purposes of this schedule loading or penalty means a:
casual or part-time loading;
Saturday, Sunday, public holiday, evening or other penalty;
shift allowance/penalty.
A.5 Loadings and penalty rates – existing loading or penalty rate lower
A.5.1 The following transitional arrangements apply to an employer which,
immediately prior to 1 January 2010:
(a) was obliged,
(b) but for the operation of an agreement-based transitional instrument would
have been obliged, or
(c) if it had been an employer in the industry or of the occupations covered by
this award would have been obliged by the terms of the transitional default
casual loading or an award-based transitional instrument to pay a particular
loading or penalty lower than that in this award for any classification of
employee.
A.5.2 Prior to the first full pay period on or after 1 July 2010 the employer must pay
no less than the transitional default casual loading or the loading or penalty in the
relevant award-based transitional instrument for the classification concerned.
A.5.3 The difference between the loading or penalty in this award and the rate in
clause A.5.2 is referred to as the transitional percentage.
A.5.4 From the following dates the employer must pay no less than the loading or
penalty in this award minus the specified proportion of the transitional percentage:
First full pay period on or after
1 July 2010 80%
1 July 2011 60%
1 July 2012 40%
1 July 2013 20%
A.5.5 These provisions cease to operate from the beginning of the first full pay period
on or after 1 July 2014.
A.6 Loadings and penalty rates – existing loading or penalty rate higher
A.6.1 The following transitional arrangements apply to an employer which,
immediately prior to 1 January 2010:
(a) was obliged,
(b) but for the operation of an agreement-based transitional instrument would
have been obliged, or
10 At [39] and [42]
[2013] FWCFB 4539
9
(c) if it had been an employer in the industry or of the occupations covered by
this award would have been obliged by the terms of an award-based
transitional instrument to pay a particular loading or penalty higher than that in
this award for any classification of employee.
A.6.2 Prior to the first full pay period on or after 1 July 2010 the employer must pay
no less than the loading or penalty in the relevant award-based transitional instrument.
A.6.3 The difference between the loading or penalty in this award and the rate in
clause A.6.2 is referred to as the transitional percentage.
A.6.4 From the following dates the employer must pay no less than the loading or
penalty in this award plus the specified proportion of the transitional percentage:
First full pay period on or after
1 July 2010 80%
1 July 2011 60%
1 July 2012 40%
1 July 2013 20%
A.6.5 These provisions cease to operate from the beginning of the first full pay period
on or after 1 July 2014.”
A.7 Loadings and penalty rates – no existing loading or penalty rate
A.7.1 The following transitional arrangements apply to an employer not covered by
clause A.5 or A.6 in relation to a particular loading or penalty.
A.7.2 Prior to the first full pay period on or after 1 July 2010 the employer need not
pay the loading or penalty in this award.
A.7.3 From the following dates the employer must pay no less than the following
percentage of the loading or penalty:
First full pay period on or after
1 July 2010 20%
1 July 2011 40%
1 July 2012 60%
1 July 2013 80%
A.7.4 These provisions cease to operate from the beginning of the first full pay period
on or after 1 July 2014.”
[17] The Full Bench made it clear that the phasing arrangements dealt with minimum
obligations only, and that employers might already be paying employees in a way which
complied with the modern award or might choose to move employees onto modern award pay
and conditions ahead of the obligation to do so under transitional provisions. In that
connection, the Full Bench adopted an additional model provision to make this clear: “The
provisions of this schedule deal with minimum obligations only”.11
11 At [45]
[2013] FWCFB 4539
10
[18] The actual transitional provisions in the awards the subject of the applications before
us were either determined as part of the 2 September 2009 Award Modernisation Decision (in
the case of the Pastoral Award 2010) or in subsequent Full Bench decisions. We will deal
with the genesis of the transitional provisions in these awards later in this decision. It is
sufficient to note at this point that each of the subject awards contains the model review
provision set out in paragraph [11] above as well as transitional provisions that were included
as part of the award modernisation process conducted under Part XA of the WR Act.
[19] The final major development in the establishment of model transitional provisions
occurred in the Full Bench Award Modernisation - Division 2B State Awards Decision12 of 5
November 2010. That decision concerned the transition of employees from “Division 2B
State awards” to modern awards. Division 2B State awards were notional federal instruments
which came into effect under item 3 of Schedule 3A of the Transitional Act as a result of
States referring to the Commonwealth after 1 July 2009 but on or before 1 January 2010 their
industrial relations powers with respect to employers which were not constitutional
corporations and their employees. Division 2B State awards incorporated the provisions of the
State awards which previously applied to the employer and employees the subject of the
referral, and operated for a period of twelve months only. Since the actual referrals which
took place (from New South Wales, Queensland, South Australia and Tasmania) all took
effect on 1 January 2010, Division 2B State Awards came into operation on that date and
ceased to have effect on 31 December 2010.
[20] The task required to be undertaken by the Full Bench was described in its 5 November
2010 decision in the following way:
“[4] Items 29 and 30 of Schedule 3A provide that during the 12 month life of each
Division 2B State award, Fair Work Australia must consider whether to:
(a) vary a modern award to continue the effect of terms of a Division 2B State
award; or
(b) make orders to continue the effect of terms of a Division 2B State award
relating to long service leave, for a transitional period after the Division 2B
State award terminates.
[5] The enactment of these provisions was intended to facilitate the achievement of a
national system of workplace relations. They require Fair Work Australia to consider
whether additional transitional provisions are necessary for employers and employees
covered by the national system pursuant to a State referral.
…
[8] At the outset it should be emphasised that the Transitional Act provides for the
commencement of Division 2B State awards on 1 January 2010 and their termination
12 months later. It follows that Fair Work Australia is not considering whether the
Division 2B State awards should be terminated. Our task is to consider what
transitional provisions should be made. Division 2B State awards will terminate on
31 December 2010, subject to limited exceptions, by force of the statutory provision.
At that time the employers and employees who have been subject to the Division 2B
State awards other than enterprise awards will commence to be covered by the
12 [2010] FWAFB 8558
[2013] FWCFB 4539
11
relevant modern award as operating at that time, subject only to any transitional
arrangements established by Fair Work Australia for that purpose and the exceptions
we have mentioned above.”
[21] The Full Bench then considered the effect of item 29 of Schedule 3A of the
Transitional Act, which required consideration to be given to the variation of modern awards
to continue in effect terms of Division 2B State awards. It is sufficient for present purposes to
set out the Full Bench’s summary of the effect of item 29:
“[11] As can be seen from the terms of item 29, Fair Work Australia is required to
consider, during the 12 month period commencing on 1 January 2010, whether to
make a determination varying a modern award under the item. It is implicit in the
terms of items 29(1)(a)(i) and (ii) that State-based differences may be maintained. Any
determination takes effect on 1 January 2011 and ceases to have effect five years
thereafter or at such earlier time as is provided for in the variation.”
[22] After reviewing the development of model transitional provisions in the award
modernisation process, the Full Bench determined that it would not depart from the approach
taken in respect of those model provisions for the purpose of Division 2B State awards,
saying:
“[14] We see no reason to question these conclusions. In particular, and with the benefit
of some hindsight, it would not be desirable to alter the scope and nature of the model
transitional arrangements at this stage. While there have been departures from the
model provisions, the departures have been limited and usually have involved the
agreement of the main representatives. Be that as it may, the model arrangements have
been in operation for some time and we would not want to disturb them. For that
reason, if for no other, we would be reluctant to adopt a different approach for
employers and employees presently covered by Division 2B State awards. In addition
there are strong reasons of equity for not doing so. Any proposed arrangements for
employers and employees covered by Division 2B State awards must be considered in
the context of the existing model transitional provisions and the statutory objective that
all parties within an industry will ultimately be subject to the same minimum terms of
the relevant modern award.”
[23] The Full Bench also pointed to the fact that Division 2B State awards were derived
from the same State awards as the transitional minimum wage instruments and State award-
based transitional instruments which were dealt with by the model transitional provisions as a
significant reason not to depart from the approach already established.13 Ultimately, the Full
Bench determined that the standard phasing schedule already established for other national
system employers should apply to employers then covered by Division 2B State awards, but
with some identified exceptions.14 The primary exception was that the first phase in the model
phasing schedule would operate from 1 February 2011. The Full Bench also recognised a
further area of exception:
13 At [15]
14 At [27]
[2013] FWCFB 4539
12
“[29] ...Awards which contain transitional provisions which depart from the model
provisions may also require amendment to include reference to Division 2B State
award employers and employees.”
[24] Determinations varying modern awards consistently with the principles stated in the
Award Modernisation - Division 2B State Awards Decision of 5 November 2010 were issued
prior to the end of 2010.
General Approach to the Review
[25] We consider that the primary power to review transitional provisions is that found in
item 7 of Schedule 5 to the Transitional Act. Item 7 provides:
“7 Review of transitional arrangements included in modern awards
(1) If:
(a) a modern award includes terms (review terms) under which FWC may
review transitional arrangements included in the award; and
(b) the review terms, and the transitional arrangements, were included in the
award in the Part 10A award modernisation process;
FWC may:
(c) review the award in accordance with the review terms; and
(d) make a determination varying the award in any way it considers necessary,
having regard to that review.
Note: Any variation to the modern award must comply with the requirements
of the FW Act relating to the content of modern awards (see Subdivision A of
Division 3 of Part 2-3 of the FW Act).
(2) The review terms are taken to be terms that are permitted to be included in the
modern award by Subdivision B of Division 3 of Part 2-3 of the FW Act.”
[26] Item 7 authorises the Fair Work Commission to “review the award in accordance with
the review terms”. Apart from prescribing who may make an application for a review, the
model review provision (set out in paragraph [11] above) does not limit the scope or nature of
the review beyond identifying that the subject matter of the review is the “transitional
arrangements in this award”. The action which may be taken arising from the review is
identified in item 7(1)(d) as being to “make a determination varying the award in any way it
[FWC] considers necessary, having regard to that review”, and is therefore not confined to
variation of the transitional provisions.
[27] Where a power is conferred on the basis that it may be exercised as the decision-maker
“considers necessary”, that is a grant of power in wide terms involving the exercise of a
[2013] FWCFB 4539
13
general discretion.15 Here, the general discretion is controlled in only two ways. First, in
considering what award variation may be “necessary”, the Commission must have regard to
the review which it has conducted. A statutory requirement to “have regard” to a matter
signifies that the matter “must be treated as a matter of significance in the decision-making
process”.16 In the context of item 7 of Schedule 5 to the Transitional Act, we consider that this
means that there must be a logical connection between any findings or conclusions reached as
a result of the conduct of the review and any award variations subsequently made. Second, as
the aid to construction in the statutory note in item 7 indicates, any variation must otherwise
comply with the provisions governing the content of awards contained in the FW Act itself.
This includes, importantly, the requirement in s.138 that permitted or mandatory terms may
be included in an award only to the extent necessary to achieve the modern awards objective
in s.134 and, if applicable, the minimum wages objective in s.284.
[28] However, it must not be forgotten that the exercise which the Commission is
empowered to conduct under item 7 and the model provision is a review of the transitional
provisions. That is, the Commission is not starting afresh in its consideration of the relevant
transitional provisions, but re-examining them in the light of circumstances which have
eventuated since the provisions were made in the course of the award modernisation process.
The Full Bench’s stated rationale for the making of the model review provision, which we
have earlier set out, is consistent with this approach since it indicates that the purpose of the
review is to consider whether the transitional provisions have satisfactorily dealt with the
issues which have arisen during the transition period. Thus the justification for any change to
the transitional provisions must ordinarily be to remedy any problems in the operation of the
provisions which are identified as having arisen since they were made. The review is not an
opportunity for parties simply to revisit and re-litigate issues which have already been
determined in the course of the award modernisation process.
[29] The applicants have generally also relied upon item 6 of Schedule 5 to the Transitional
Act in connection with their applications, and a number of parties have referred to what the
Full Bench had to say in Modern Awards Review 201217 about how that provision should
operate. No party contended that item 6 was to be read down by reference to item 7. Item 6
provides:
“6 Review of all modern awards (other than modern enterprise awards and State
reference public sector modern awards) after first 2 years
(1) As soon as practicable after the second anniversary of the FW (safety net
provisions) commencement day, the FWC must conduct a review of all modern
awards, other than modern enterprise awards and State reference public sector
modern awards.
Note: The review required by this item is in addition to the annual wage
reviews and 4 yearly reviews of modern awards that the FWC is required to
conduct under the FW Act.
15 Australian National Airways Pty Ltd v Commonwealth (No 1) (1945) 71 CLR 29 at 67 per Latham CJ; Transport Workers
Union of Australia v Qantas Airways Ltd (2012) 199 FCR 190 at 192 [4] per Gray J and 202 [51]–[52] per Buchanan and
McKerracher JJ.
16 Edwards v Guidice (1999) 169 ALR 89 at 92 [5] per Moore J
17 [2012] FWAFB 5600
[2013] FWCFB 4539
14
(2) In the review, the FWC must consider whether the modern awards:
(a) achieve the modern awards objective; and
(b) are operating effectively, without anomalies or technical problems arising
from the Part 10A award modernisation process.
(2A) The review must be such that each modern award is reviewed in its own
right. However, this does not prevent the FWC from reviewing 2 or more modern
awards at the same time.
(3) The FWC may make a determination varying any of the modern awards in
any way that the FWC considers appropriate to remedy any issues identified in the
review.
Note: Any variation of a modern award must comply with the requirements
of the FW Act relating to the content of modern awards (see Subdivision A of
Division 3 of Part 2-3 of the FW Act).
(4) The modern awards objective applies to the FWC making a variation under
this item, and the minimum wages objective also applies if the variation relates to
modern award minimum wages.
(5) The FWC may advise persons or bodies about the review in any way the
FWC considers appropriate.
(6) Section 625 of the FW Act (which deals with delegation by the President of
functions and powers of the FWC) has effect as if subsection (2) of that section
included a reference to the FWC's powers under subitem (5).”
[30] In Modern Awards Review 201218, the Full Bench considered the proper approach to
be taken to the conduct of a review under item 6 as properly construed, and expressed the
following conclusions:
“[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
18 Ibid.
[2013] FWCFB 4539
15
considering those matters we will deal with the submissions and evidence on their
merits, subject to the constraints identified in paragraph [99] above.”
[31] Insofar as item 6 of Schedule 5 applies to these proceedings, we intend to apply these
principles in our consideration of the applications before us. As with item 7, those principles
make it clear that the required review of award provisions is not simply an opportunity for
parties to revisit issues which have already been determined absent some justification based
upon subsequent circumstances.
Pastoral Award 2010
[32] The Western Australian Shearing Industry Association Inc (WASIA) and the Western
Australian Farmers Federation Industrial Association (WAFFIA) have made applications,
expressed in identical terms, for a variation to the transitional provisions of the Pastoral
Award 201019 (Pastoral Award).
Transitional Provisions in the Pastoral Award
[33] The Pastoral Award applies to all employees throughout the pastoral industry and
their employees in the classification set out in the award.20 “Pastoral industry” is defined to
include a broad range of activities, relevantly including “the shearing and crutching of sheep
and the classing and pressing of wool on farms”.21
[34] Clause 2 of the Pastoral Award contains the model transitional provisions concerning
absorption of overaward payments22, protection of take-home pay23 and review of transitional
provisions24. Schedule A to the award contains all the model phasing provisions concerning
minimum wages, penalties and loadings, and former Division 2B State award employees. It
also contains two additional special transitional provisions, including for relevant purposes
clause A.9, which provides:
“A.9 Shearing Contractors in Western Australia
A.9.1 For the purpose of this clause shearing contractor means an employer that
operates a business as a shearing contractor.
A.9.2 Shearers and Crutchers
(a) Notwithstanding the provisions of clause 48—Hours of work for Shearers and
Crutchers in Part 7—Shearing Operations – the following provisions will apply to
Shearers and Crutchers employed by shearing contractors in Western Australia:
(i) The ordinary hours of work of Shearers and Crutchers employed by a
shearing contractor in Western Australia will be 38 per week.
19 [MA000035]
20 Clause 4.1
21 Clause 4.2
22 Clause 2.2
23 Clause 2.4
24 Clauses 2.5-2.6
[2013] FWCFB 4539
16
(ii) Work will be performed in two hour runs with at least a thirty minute
break between the first and second run and the third and fourth run and with a
one hour break between the second and third run.
(iii) Only in exceptional circumstances, or where there is a desire to finish a
shed, will more than four runs be permitted in any day or the breaks prescribed
reduced and, if reduced, will not be by less than 20 minutes instead of 30 and
45 minutes instead of 60. Any change to the run times or break periods will
only occur by agreement between employer and employees.
A.9.3 Cooks
(a) The ordinary hours of work of Cooks employed by a shearing contractor in
Western Australia will be 38 per week.
(b) Cooks should work the hours necessary to provide the meals as required and to
clean up after such meals.
A.9.4 Shed hands and Woolpresser-shed hands
Notwithstanding the provisions of clause 50—Hours of work and overtime rates for
Shed hands and Woolpresser-shed hands in Part 7—Shearing Operations, the
following provisions will apply to Shed hands and Woolpresser-shed hands employed
by shearing contractors in Western Australia, the working hours of a Shed hand;
Woolpresser or Woolpresser-shed hand (combined duties) will be the same as the
working hours of the Shearer or Crutchers with such additional time each day as may
be necessary to complete their duties for the day.
A.9.5 Clause A.9 ceases to operate on 1 July 2012.”
[35] The provisions in Schedule A to the Pastoral Award, including clause A.9, were
determined by the Full Bench in the Award Modernisation Decision of 2 September 200925.
The Full Bench’s reasons for including clause A.9 in Schedule A to the Pastoral Award were
as follows:
“[108] The Pastoralist & Graziers Association, the NFF, the WAFFIA and the Western
Australian Shearing Contractors Association (WASCA) sought a transitional provision
for shearers and crutchers to ameliorate the impact of the removal of flexibilities
currently available to employers under the Shearing Contractors' Award of Western
Australia 2003 (Shearing Contractors’ Award). The flexibilities were said to include
the capacity for teams to shear on whatever days of the week are required while
maintaining award compliance, without additional costs. Transitional provisions were
sought which would exempt shearing contractors in Western Australia from Part 7 of
the Pastoral Award 2010 for a period of five years. In the alternative they sought
transitional provisions which identify and exclude the operation in respect of Western
Australian shearing contractors of the most problematic modern award provisions until
2015, permitting greater flexibility in hours arrangements in respect of shearers,
25 [2009] AIRCFB 800
[2013] FWCFB 4539
17
crutchers and cooks. The hours of work provision was identified as the major relevant
provision.
[109] We accept that the terms of the Pastoral Award 2010 are less flexible than the
terms of the Shearing Contractors’ Award, particularly in relation to hours of work. It
is nevertheless clear that Western Australian employers have had an advantage over
most employers in the industry nationally and that shearers in Western Australia have
been disadvantaged in relative terms. While we are not prepared to delay the operation
of the totality of the conditions for shearing contractors and their employees in
Western Australia, some relief beyond that provided by the model provisions is
warranted. We intend to delay the implementation of the working hours provisions,
except the requirement for a 38 hour week, until 1 July 2012. That transitional period
should provide employers, employees and their representatives with an opportunity to
assess the potential effect of the modern award on shearing contractors in Western
Australia and to make application to vary the modern award, either on a further
transitional basis or substantively, should that be necessary.
[110] The additional provision will broadly reflect the third alternative provision
advanced in the joint submission of the WAFFIA and the WASCA. It follows that we
have not accepted the primary position of the WAFFIA and the WASCA, which
involved a delay in the operation of all of the new conditions for shearing contractors
in Western Australia, save for the minimum wages provision. It is relevant to point out
again, however, that the model transitional provisions will deal with some of the other
cost increases arising from the modern award.”
The application and evidence and submissions in support
[36] The WASIA and the WAFFIA have both applied for a variation in the following
terms:
“Delete clause A.9.5 in Schedule A - Transitional Provisions and insert in lieu thereof
the following:
A.9.5 Clause A.9 ceases to operate on 31 December 2014.”
[37] The joint submissions of the WASIA and the WAFFIA contended that the period of
time allowed by clause A.9.5 to Western Australian shearing contractors to transition to the
modern award hours provisions was insufficient to allow employers, employees and their
representatives to “disseminate the necessary information in ways that effectively penetrate to
rural and remote workplaces”, to give the “opportunity for adequate assessment of the
potential effects of the Award on operational matters”, and “to make necessary adjustments to
operational practices”. It was further submitted that the variation would not disadvantage shed
employees covered by the Pastoral Award, would not disadvantage shearing contractors
outside Western Australia because they do not compete with Western Australian shearing
contractors, and would assist Western Australian incorporated shearing contractors who
compete with unincorporated Western Australian shearing contractors covered by a State
common rule award. It was also submitted that the variation sought would allow employers
covered by the award more time to enter into enterprise agreements based on the existing
hours provisions.
[2013] FWCFB 4539
18
[38] The applicants relied upon evidence given by two witnesses. The first was Ms Vikki
Gates, who is the Executive Officer of the WASIA. In her statement of evidence dated 12
February 201326, she said:
“(5) During the hearings conducted for the development of the modern Pastoral
Award 2010, both WASIA and WAFFIA submitted to the Commission that the
greater bulk of shearing (and crutching) done in Western Australia is done by
shearing contractors. Very little of this work is done directly by farmers and it
would be exceptionally unusual for farmers to actually employ shed staff.
(6) Under the application we have made to vary the Award, what WASIA is
essentially saying is that the industry needs more time to adjust to the
substantial changes required of the industry in Western Australia due to the
impact of the Pastoral Award 2010.
(7) Mr Beechey acknowledges, rightly, that the provisions of the Pastoral Award
2010 have changed the “arrangements they used to have in place in WA”. He
also acknowledges that those arrangements still exist in the State based
jurisdiction.
(8) These are certainly factors that have been identified within the grounds in
support of our application.
(9) Further factors are:
(a) a high resistance to change after more than 100 years of operating in
the same manner within the industry in Western Australia;
(b) long-entrenched methods of operation and individuals’ understanding
of how the industry operates in Western Australia, including making of
Federl and State Awards that endorsed these operations and established
a “level competitive playing field” for the development of business
models to maximise benefits under these conditions;
(c) a desire by workers to keep the flexibilities (from a survey);
(d) limited penetration of information produced by relevant authorities
about the changes reaching individual company operators in Western
Australia; and
(e) the priorities of day-to-day operations take priority and a greater focus
over what are often seen to be abstract matters of industrial relations.
(10) WASIA has undertaken efforts to provide information and guidance to its
members about the Award changes, including:
(a) numerous circulars and newsletters;
26 Exhibit WA2
[2013] FWCFB 4539
19
(b) website information and links;
(c) presentations at Annual and Half Yearly General Meetings; and
(d) regional industry meetings.
(11) Despite these efforts I am still confronted with members and other industry
participants who do not understand or who remain unaware of the changes
invoked under the Award. In the past this has been reported to me to have been
exacerbated by Mr Beechey telling workers in Western Australia, that they are
not being paid appropriately under the Pastoral Award 2010 when in fact those
workers were actually covered under the State award conditions.
(12) In my opinion, the vast majority of shearing contractors, their workers and
wool grower clients (farmers) have little understanding of the conditions
within the Pastoral Award 2010 or the difference between this Award and the
State award.”
[39] Ms Gates also made reference in her oral evidence to a survey of 54 employees in the
shearing industry which she maintained demonstrated that employees value the opportunity to
work weekends and flexibility in hours of work.
[40] The second was Mr Darren Spencer, a shearing contractor and current President of the
WASIA, who said in his statement of evidence dated 12 February 201327:
“(3) Prior to the introduction of the Pastoral Award 2010 (PA2010), I engaged my
workers under the Shearing Contractors Award of Western Australia 2003 (84
WAIG 1350), the common rule State award covering the industry in Western
Australia. Now, as a shearing contractor operating under a company structure,
the PA2010 applies to my business.
(4) Unfortunately, it has not been an easy task to understand why I have to change
my business operations and practices when other non-company businesses
operating in the industry in Western Australia do not. This is a sentiment that
has been expressed to me by employees, clients (farmers) and other
contractors, personally and in my role within WASIA, on a number of
occasions since the introduction of the PA2010.
(5) The comments made by others to me tend to focus on several key points:
(a) changes required to a lifetime of habits and methods of operating to
become compliant with PA2010 cannot be made overnight;
(b) the restrictions and inflexibilities of the PA2010 go against the flexible
and workable industry practices that have been operating in Western
Australia since long before the memory of current industry businesses
and workers; and
27 Exhibit WA1
[2013] FWCFB 4539
20
(c) that the flexible and workable industry practices still applying to non-
corporate businesses disadvantages company-run contracting
businesses.”
Evidence and submissions in opposition to the applications
[41] The applications were opposed by the Australian Workers’ Union (AWU). The AWU
submitted that the applicants had had more than three years since the commencement of the
Pastoral Award to prepare for the changes to hours of work effected by that award, and the
evidence was that the applicants had only begun a campaign educating their members
concerning the changes in the last six months. A reversion to the transitional hours
arrangements a year after they expired would, the AWU submitted, be contrary to the modern
awards objective, cause confusion, add to the regulatory burden and raise issues concerning
award enforcement.
Consideration
[42] The starting point for our consideration of this application to vary the Pastoral Award
is the fact that hours of work provisions in modern awards were generally not subject to any
transitional period or arrangements, so that employers and employees under modern awards
were in most cases required to adjust immediately to any changes in hours of work on 1
January 2010. In the case of shearing contractors in Western Australia, they were given a
special opportunity, until 1 July 2012, to prepare themselves for the changes in hours of work
effected by the Pastoral Award. If shearing contractors have not made appropriate use of that
special opportunity, that would not in the circumstances seem to us to be a proper basis to
further extend it.
[43] It cannot be said that at least the applicant organisations, which represent shearing
contractors, have failed to make use of the opportunity afforded by the special transitional
provision granted by the Full Bench. The evidence, we conclude, demonstrates that the
WASIA in particular has been assiduous in its efforts to inform and educate its members
about the changes to working hours effected by the Pastoral Award on 1 July 2012. This has
included the provision of numerous circulars and newsletters, website information and links,
presentations at Annual and Half Yearly General Meetings, and the conduct of regional
industry meetings occurring from three to eight times a year over the transitional period to
date. Contrary to the AWU’s submission, the evidence of Ms Gates indicates that this has not
simply occurred over the last six months, but has been occurring since the award
modernisation process began. The WASIA considered further educational strategies at its
annual general meeting held on 19 January 2013, but that by no means represented the start of
its activities in that area.
[44] However, we do not consider that that factual conclusion assists the applicants. Having
regard to the efforts made by the WASIA to inform its members about the changed hours
arrangements in the modern award, we find it difficult to discern a justification for a further
extension of time to transition to the new provisions on the basis that shearing contractors
need to be provided with further information and educational opportunities. The period of
time which has passed since the Pastoral Award was made in September 2009, together with
the information which the WASIA has provided to the industry in Western Australia over that
period, means that employers covered by the modern award have had every reasonable
opportunity to familiarise themselves with the new hours provisions before they came into
[2013] FWCFB 4539
21
effect on 1 July 2012. The fact that, as the applicants submitted, a number of shearing
contractors representing about 10% of the industry in Western Australia have been
sufficiently aware of the changes such as to be able to enter into enterprise agreements
preserving the flexibilities in working hours which they enjoyed under the previous pre-
modern award shows that adequate information and educational support have not been
lacking. The applicants were unable to identify clearly anything additional of substance they
could do in this area which they have not already done.
[45] Indeed, we detect in the evidence an undercurrent of resistance to change by shearing
contractors rather than a simple lack of knowledge about that change. Mr Spencer’s evidence
in particular which we have set out above is indicative of this, and Ms Gates also made
explicit reference in her evidence to “a high resistance to change” as being a relevant factor.
This resistance appears to be motivated partly by a simple preference for the previous hours
provisions, and partly by a concern that those shearing contractors which are not incorporated
have obtained a competitive advantage because they operate under a State award which
contains hours provisions the same as in the previous pre-modern award. Neither of those
matters represents any new development that has occurred since the issue of transitional
provisions for the Pastoral Award was considered and determined by the Full Bench in 2009,
nor would those matters be resolved by an extension of the operation of the transitional
provisions.
[46] We also cannot ignore the fact that the transitional provisions sought to be extended in
operation actually ceased to have effect on 1 July 2012, more than a year ago, and therefore
that the modern award hours provisions have had legal effect with respect to shearing
contractors in Western Australia since that time. There was no evidence before us, nor were
the applicants otherwise able to inform us, as to what the practical position “on the ground”
has been since 1 July 2012. We do not know whether the new hours provisions are generally
being complied with, and if so what the operational effect of those provisions has been, or
whether there has been widespread non-compliance. For those who have complied, a
reversion to the previous provisions for the period until 1 December 2014, when the modern
award provisions would have to apply again, would be likely to be disruptive and confusing.
For the non-compliant, it is not the purpose of transitional provisions to validate or reward
non-compliance.
[47] The Full Bench decision of 2 September 2009 did state that a purpose for its grant of a
transitional period until 1 July 2012 was to provide the parties with an opportunity to assess
the potential effect of the modern award on shearing contractors in Western Australia and to
make further applications of a transitional or substantive nature to vary the Pastoral Award on
that basis. However, beyond general statements of concern about restrictions on weekend
work and alleged loss of flexibility in working hours, we have been provided with no
evidence or other tangible information about the actual or potential effects of the modern
award provisions upon shearing contractors, such as any effect upon their capacity to service
their clients, their costs of business or their ability to attract labour. Accordingly we have no
foundation upon which to conduct a review of the type envisaged by the Full Bench in 2009.
It of course remains open to the applicants to seek a substantive change to the hours of work
provisions in the Pastoral Award either in the four-yearly review of the award required to be
conducted under s.156 of the FW Act in 2014 or by applying to vary the award under s.157 of
the FW Act. In either context the applicants would have the opportunity to adduce evidence
concerning any relevant effects upon shearing contractors produced by the current hours of
work provisions in the modern award.
[2013] FWCFB 4539
22
[48] Finally, we reject the submission that an extension to the period of operation of the
transitional provisions should be granted on the basis that it will allow employers more time
to enter into enterprise agreements on terms more favourable to them than would otherwise be
the case. That is not the purpose for which transitional provisions have been placed into
modern awards.
[49] We do not consider that a proper basis has been demonstrated for the claimed variation
to clause A.9.5 of the Pastoral Award. On the material before us, we cannot conclude that the
transitional provisions are not achieving the modern awards objective, or are not operating
effectively without anomalies or technical problems arising from the award modernisation
process. We dismiss the application.
Children’s Services Award 2010
Educational Services (Teachers) Award 2010
[50] It is convenient to deal with these two awards together, since they are both the subject
of applications made by Falcan Pty Ltd trading as the Rainbow Early Learning Centre
(Falcan) which raise an issue common to both awards.
Transitional Provisions in the Children’s Services Award 2010
[51] The Children’s Services Award 201028 (Children’s Services Award) covers employers
in the children services and early childhood education industry and their employees in the
classifications listed in the award.29 The “children services and early childhood education
industry” is defined in clause 3.1 to mean “the industry of long day care, occasional care
(including those occasional care services not licensed), nurseries, childcare centres, day care
facilities, family based childcare, out-of-school hours care, vacation care, adjunct care, in-
home care, kindergartens and preschools, mobile centres and early childhood intervention
programs.”
[52] Clause 2 of the Children’s Services Award contains the model provisions concerning
absorption into overaward payments30, protection of take-home pay31 and review of
transitional provisions32. Schedule A of the award contains transitional provisions. Clause A.2
of Schedule A contains the model provision concerning phasing-in of minimum wages where
the existing minimum wage is lower, and within clause A.3 of the schedule, subclauses A.3.1-
A.3.6 reproduce the model provision concerning phasing-in of minimum wages where the
existing minimum wage is higher. However, clause A.3 then goes to contain two further
subclauses which are not part of that model provision. Subclauses A.3.7 and A.3.8 provide as
follows:
“A.3.7 New South Wales, Western Australia and Tasmania – Other than Division
2B State award employers
28 [MA000120]
29 Clause 4.1
30 Clause 2.2
31 Clause 2.4
32 Clauses 2.5-2.6
[2013] FWCFB 4539
23
The following transitional arrangements apply to an employer in New South Wales,
Western Australia and Tasmania which, immediately prior to 1 January 2010:
(a) was obliged,
(b) but for the operation of an agreement-based transitional instrument or an
enterprise agreement would have been obliged, or
(c) if it had been an employer in the industry or of the occupations covered by
this award would have been obliged by a transitional minimum wage
instrument and/or an award-based transitional instrument to pay a minimum
wage higher than that in this award for an employee engaged in a classification
lower than Children’s Services Employee Level 3.1 and all classifications of
Support Worker in Tasmania and Western Australia, and for all classifications
in New South Wales.
The employer must:
(i) continue to pay no less than the minimum wage in the transitional minimum
wage instrument and/or award-based transitional instrument; and
(ii) apply any increase in minimum wages in this award resulting from an
annual wage review.
A.3.8 New South Wales and Tasmania – Division 2B State award employers
The following transitional arrangements apply to an employer in New South Wales
and Tasmania which, immediately prior to 1 January 2011:
(a) was obliged,
(b) but for the operation of a Division 2B State employment agreement or an
enterprise agreement would have been obliged, or
(c) if it had been an employer in the industry or of the occupations covered by
this award would have been obliged by a Division 2B State award to pay a
minimum wage higher than that in this award for an employee engaged in a
classification lower than Children’s Services Employee Level 3.1 and all
classifications of Support Worker in Tasmania and for all classifications in
New South Wales.
The employer must:
(i) continue to pay no less than the minimum wage in the Division 2B State
award and
(ii) apply any increase in minimum wages in this award resulting from an
annual wage review.”
[53] Subclause A.3.9 then provides:
[2013] FWCFB 4539
24
“These provisions cease to operate from the beginning of the first full pay period on or
after 1 July 2014.”
It is evident that subclause A.3.9 applies to all of the provisions in clause A.3, including
subclauses A.3.7 and A.3.8.
[54] The Children’s Services Award as first made arose in a direct sense from the Full
Bench Award Modernisation Decision of 4 December 200933. In that decision the Full Bench
considered and finalised a number of awards (categorised in the overall award modernisation
programme as “Stage 4 Awards”) in the light of submissions and consultations on the
“exposure draft” of the award which had earlier been issued. The decision records a
conclusion by the Full Bench that transitional provisions proposed by the parties which
departed from the model provisions should be included in the Children’s Services Award:
“[70] We have taken into account the views of the parties with respect to the
transitional provisions. This has resulted in some modification of the model clause. We
have also taken into account the position of non-teaching staff in pre-schools who
currently work according to the same provisions, with respect to school vacations, as
teachers. The exposure draft has been altered in some other respects to make the
conditions of teachers and children’s services employees in the same workplace more
consistent.”
[55] The above passage does not record what the nature of the special transitional
provisions to be adopted was. However an examination of the record of the proceedings
before the Full Bench prior to the issuing of the 4 December 2009 decision makes the position
clear. On 20 October 2009 the Liquor Hospitality and Miscellaneous Union (LHMU, now
United Voice) filed a submission for the purpose of the proceedings in which it proposed a set
of transitional provisions which included the following provisions which departed from the
model provisions:
“A.3.7 The following transitional arrangements apply to an employer in New South
Wales, Western Australia and Tasmania which, immediately prior to 1 January 2010:
(a) was obliged, or
(b) but for the operation of an agreement-based transitional instrument would
have been obliged, or
(c) if it had been an employer in the industry or of the occupations covered by
this award would have been obliged by an award-based transitional instrument
to pay a minimum wage for an employee engaged in a classification below that
equivalent to the first year of Certificate III qualified Children Services
Employee and Children’s Services Support employee in Tasmania and Western
Australia and all classifications for Children’s Services Support Employee and
Children’s Services Employees in New South Wales, the employer must:
33 [2009] AIRCFB 945
[2013] FWCFB 4539
25
(i) continue to pay no less than the minimum wage in the relevant
award based transitional instrument; and
(ii) apply any increase in minimum wages in this award resulting from
an annual wage review.”
[56] The submission said in respect of the proposed transitional provisions:
“The major parties also agree to the following transitional provisions. The intention of
the following provisions is that there will be a preservation of the existing wage rates
(no phasing out) for Children’s Services Support Employees and Children Services
Employee (below Certificate III qualified) in Western Australia and Tasmania and
preservation of the higher rates in New South Wales for all classifications. It is also
intended that there would be no absorption for those preserved rates by way of the
National Minimum Wage increases applying in July each year.”
[57] The “major parties” referred to were identified elsewhere in the submission (by their
acronyms) as the Australian Childcare Centres Association (ACCA) and the Australian
Community Services Employers Association (ACSEA).
[58] The Chamber of Commerce and Industry WA (CCIWA) filed a submission which
responded to the proposed modifications to the model transitional provisions. This submission
was filed on 16 October 2009, before the LHMU submission referred to above, but the
CCIWA submission makes it clear that the CCIWA was aware of the proposal. The
submission stated:
“5. The CCIWA submits that the standard Transitional provision as determined by the
Full Bench of the AIRC of the 2nd September 2009 in matter [2009] AIRCFB 800 be
incorporated into the Award with no modification.
6. The CCIWA are aware of a proposal by the LHMU to modify the Full Bench's
model clause and effectively prevent WA employers from accessing the provisions if
they are bound by the Child Care Long Day Care Award and the Child Care Out of
School Playleaders Award.”
7. The effect of any amendment as outlined in Clause 14 would be to deny the WA
employers to the possibility of defraying and costs that could be payable to them as
and from 1st January 2010. This is manifestly unfair and inconsistent with the
Ministers Consolidated Request at paragraphs 1 (c) and 2(d).”
[59] When the matter came on for hearing before the Full Bench on 27 October 2009, Mr
W Ash appeared for the LHMU. Shortly after he commenced his submission, he addressed
the CCIWA submission, saying34:
“In relation to the submissions of the Chamber of Commerce and Industry Western
Australia, the chamber states in their submission that they were aware of the
submission of the LHMU in relation to modifying or proposing to modify the
transitional provisions.
34 Transcript PNs 868-869
[2013] FWCFB 4539
26
This is not the submission of the LHMU but rather an industry submission of the
LHMU and those registered employer associations. The industry agreement in relation
to the modified transitional provisions only affects Western Australian employers in
respect of their unqualified employees. The COAG changes will be mean that before
the completion of the transitional period certificate III will be the minimum
qualification and the preservation of the unqualified childcare employees rates will be
of no practical effect.”
[60] The transcript of the hearing subsequently records the following exchange concerning
the proposed transitional provisions between the presiding member of the Full Bench, Justice
Giudice, and Mr Ash35:
“JUSTICE GIUDICE: Mr Ash, are you in a position to say whether there is any
significant dissent among the other employers from the agreed transitional provisions
that you have noted in your submission?
MR ASH: As the other employers have mentioned today, we did not directly involve
them in those negotiations.
JUSTICE GIUDICE: I understand that.
MR ASH: Although I didn't hear anything, we've had the benefit of reading those
submissions, I didn't hear any significant dissent voiced this morning.
JUSTICE GIUDICE: No. Well you're in no better position than us it seems, is that
right?
MR ASH: It's my understanding that there's wide general agreement to that balanced
agreed industry approach.
JUSTICE GIUDICE: Yes.”
[61] It is apparent from the transcript that no other party to the proceedings appearing at the
hearing made any submission against the transitional provisions proposed in the LHMU
submission or contradicted what Mr Ash submitted about that matter. The CCIWA did not
appear at the hearing on 27 October 2009.
[62] It is plain therefore that when in its decision of 4 December 2009 the Full Bench said
that it had “taken into account the views of the parties with respect to the transitional
provisions” and that this would result in “some modification of the model clause”, it was
referring to the transitional provisions proposed in the LHMU submission, including the
proposed subclause A.3.7, which the ACCA and the ACSEA had supported and which no
party other than the CCIWA had opposed. In short, the Full Bench adopted the LHMU
proposal.
[63] The Children’s Services Award was made by way of an order also issued on 4
December 2009.36 That version of the award did not contain sub-clause A.3.7 as proposed by
35 Transcript PNs 875-881
[2013] FWCFB 4539
27
the LHMU or anything similar, notwithstanding what the Full Bench had said in its decision
of the same day. That was evidently an error, since on 11 December 2009 the Full Bench
issued a correction order which inserted subclause A.3.7 in its current form, and renumbered
subclause A.3.7 (relating to the expiry date of the transitional provisions) as A.3.8. Subclause
A.3.7 is drafted somewhat differently than the LHMU proposal set out above, but is to the
same effect.
[64] On 17 December 2010, a determination37 was issued varying the Children’s Services
Award to add transitional provisions applying to employers then covered by Division 2B State
awards arising from the Award Modernisation - Division 2B State Awards Decision of 5
November 2010. In respect of minimum wages the current subclause A.3.8 was added, which
provided for a transitional provision consistent with the pre-existing subclause A.3.7. The pre-
existing subclause A.3.8 was re-numbered as A.3.9, with the effect was that the new
subclause A.3.8, was as well as the other phasing provisions (including A.3.7) were to cease
to operate on 1 July 2014.
Transitional Provisions in the Educational Services (Teachers) Award 2010
[65] The Educational Services (Teachers) Award 201038 (Educational Services (Teachers)
Award) covers employers in the school education industry and the children’s services and
early childhood education industry and their employees.39 The industries so described are
defined in clause 3.1. The “school education industry” is defined to include “preschool or
early childhood education”, and the “children’s services and early childhood education
industry” is defined to mean:
“the industry of long day care, occasional care (including those occasional care services
not licensed), nurseries, childcare centres, day care facilities, family based childcare,
out-of-school hours care, vacation care, adjunct care, in-home care, kindergartens and
preschools, mobile centres and early childhood intervention programs.”
[66] The model provisions concerning absorption into overaward payments40, protection of
take-home pay41 and review of transitional provisions42 are contained in clause 2 of the award.
Clause A.2 of Schedule A contains the model provision concerning phasing-in of minimum
wages where the existing minimum wage is lower, and subclauses A.3.1-A.3.6 contain the
model provision concerning phasing-in of minimum wages where the existing minimum wage
is higher. Subclause A.3.7 however contains the following non-standard transitional
provision:
“A.3.7 Notwithstanding clause A.3.5, the following transitional arrangements apply to
an employer in New South Wales which immediately prior to 1 January 2010:
(a) was obliged,
36 PR991088
37 PR503637
38 [MA000077]
39 Clause 4.1
40 Clause 2.2
41 Clause 2.4
42 Clause 2.5-2.6
[2013] FWCFB 4539
28
(b) but for the operation of an agreement-based transitional instrument or an
enterprise agreement would have been obliged, or
(c) if it had been an employer in the industry or of the occupations covered by
this award would have been obliged by the Teachers (Non-Government Pre-
Schools (State) Award 2006 (AN120546) or the Teachers (Non-Government
Early Childhood Service Centres Other Than Pre-Schools) (State) Award 2006
(AN120545) (together, NSW Awards) to pay a minimum wage higher than
that in this award for an employee in New South Wales.
During the period commencing with the first full pay period after 1 January 2011
and 1 July 2014 the employer must
(i) pay no less than the minimum wage in the relevant NSW Award
immediately prior to 1 January 2010; and
(ii) apply any increase in minimum wages in this award resulting from an
annual wage review, including the 2010 annual wage review.”
Subclause A.3.8 provides that the transitional provisions in clause A.3 cease to operate from
1 July 2014.
[67] Subclause A.3.7 did not appear in the Educational Services (Teachers) Award when it
was first made on 4 September 200943, nor when it was varied to include transitional
provisions on 4 December 200944, nor when the transitional provisions were varied by a
correction order on 11 December 2009.45 The provision was the result of a decision by Vice
President Lawler in Independent Education Union of Australia issued on 29 December 201046
and an associated order issued on the same day.47 The decision and order concerned an
application by the Independent Education Union of Australia (IEU) to vary the Educational
Services (Teachers) Award to include a transitional provision consistent with subclause A.3.7
of Schedule A to the Children’s Services Award. The basis of the IEU’s application was
identified in the decision as follows:
“[6] It is common ground that the NSW NAPSAs covered teachers who are now
covered by a combination of the Children’s Services Award 2010 and the Educational
Services (Teachers) Award 2010. For practical purposes, the Children’s Services
Award 2010 covers teachers in ‘stand alone’ preschools and early childhood centres
while the Educational Services (Teachers) Award 2010 covers preschool and early
childhood teachers working in schools that also have pre-school or early childhood
programs.
[7] A consequence of the inclusion of the special transitional provision in the
Children’s Services Award 2010 but not the Educational Services (Teachers) Award
2010 is that teachers previously covered by one of the NSW NAPSAs who are now
covered by the Educational Services (Teachers) Award 2010 will have their minimum
wage entitlements reduced whereas those covered by the Children’s Services Award
2010 will not. This has led to anomalies. For example, if the existing transitional
43 PR988937
44 PR991179
45 PR991784
46 [2010] FWA 10092
47 PR505582
[2013] FWCFB 4539
29
provisions remain in place the modern award rates of pay for two-year trained child
care workers exceed those of four-year trained teachers who, in the majority of cases,
will be supervising them.
[8] The present application seeks to address this issue by the inclusion of similar
special transitional arrangements in the Educational Services (Teachers) Award 2010
to ensure that all teachers in NSW previously covered by one of the NSW NAPSAs
who are not covered by either modern award will be treated in the same way in so far
as their transitional wage entitlements are concerned.”
[68] Vice President Lawler determined that the application should be granted. He placed
significance on the fact that Community Connections Solutions Australia Inc. (CCSA), an
industry association with the largest membership of preschool and early childhood centre
operators in NSW48, supported the application49, and concluded that the failure to include a
special transitional provision in the award similar to that included in the Children’s Services
Award was an oversight.50 Vice President Lawler expressed his conclusion that the
application should be granted in the following terms:
“[15] In all the circumstances I am satisfied that the Educational Services (Teachers)
Award 2010 should be varied to include a special transitional provision similar to that
included in the Children’s Services Award 2010 and that such variation is necessary to
achieve the modern awards objective.”
Falcan’s applications and submissions in support
[69] Falcan operates the Rainbow Early Learning Centre in Singleton NSW. It has applied
to vary the transitional provisions in both the Children’s Services Award and the Educational
Services (Teachers) Award. In the case of the former award, the variations it seeks are as
follows:
“2.1 By deleting the provisions of clause A.3.7 and replacing it with the following
clause:
A.3. 7 New South Wales, Western Australia and Tasmania- Other than
Division 2B State award employers
Any employee in receipt of a rate of pay higher than the transitional rate
resulting from the application of this award’s transitional provisions must
remain in receipt of that rate until such time as the transitional rate payable
under this award equals or exceeds the employee’s rate of pay.
2.2 By deleting the provisions of clause A.3 .8 (i) and (ii) and replacing it with the
following clause:
A.3.8 New South Wales and Tasmania- Division 2B State award employers
48 See [9]
49 At [13]
50 At [13]
[2013] FWCFB 4539
30
The employer must:
(i) continue to pay no less than the wage in the transitional minimum
wage instrument and/or award-based transitional instrument that is
higher than or equal to the modern award rate; or
(ii) the transitional rate that results from the application of clause A. 2
and A. 3 of this award being applied to the rate payable from 1 January
2011 including the transitional variation that applied on 1 July 2010.”
[70] In respect of the Educational Services (Teachers) Award, the variation sought by
Falcan is:
“2.1 By deleting the provisions of clause A.3.7 and replacing it with the following
clause:
A.3.7
(a) Any employee in receipt of a rate of pay higher than the transitional rate
resulting from the application of this award’s transitional provisions must
remain in receipt of that rate until such time as the transitional rate payable
under this award equals or exceeds the employee’s rate of pay.
(b) Any new employee of an employer bound by this award will be entitled to
receive the applicable transitional rate at the time of employment however that
rate must be maintained at level in the event that further transitions reduce the
employee’s base rate of pay. In this circumstance the employee’s rate of pay
will be fixed until such time as the minimum rate of pay under the modern
award for the employee equals or exceeds the employee’s rate of pay.”
[71] Falcan made two main points in its submissions in support of the variations it sought:
“(1) The effect of subclause A.3.7 and A.3.8 of Schedule A to the Children’s
Services Award and subclause A.3.7 of Schedule A to the Educational Services
(Teachers) Award was that a State-based anomaly in the awards was being
preserved, in that the majority of classification rates for NSW employees was not
transitioning to the modern award rates but rather continuing to increase. Falcan
provided tables setting out comparative rates of pay for employees on the modern
award rates, on rates under the model transitional rates, and on rates in NSW for
incorporated and unincorporated business to demonstrate this point.
(2) The award modernisation process was not intended to result in employees
engaged in the same industry and in the same classification of work with the same
qualifications being entitled to different minimum wages based solely on the state or
territory in which they are employed. The award modernisation process was intended
to resolve this issue and bring about consistency and fairness to all parties by 1 July
2014.”
[72] Falcan’s applications were supported by Australian Business Industrial (ABI). ABI
submitted that the transitional provisions in the two awards the subject of Falcan’s application
[2013] FWCFB 4539
31
were not meeting the modern awards objective in s.134 of the FW Act, in that they added to
administrative and regulatory burden upon employers, added unnecessary complexity, have
added to “instability, uncertainty and wages volatility”, and have the practical effect of
maintaining significant State-based differences until the end of the transition period.
Submissions in opposition to the Falcan applications
[73] Falcan’s application to vary the Children’s Services Award was opposed by United
Voice, the ACSEA and the CCSA, and its application to vary the Educational Services
(Teachers) Award was opposed by United Voice, the IEU and the CCSA. The latter
application was also opposed in its current form by the South Australian Employers’ Chamber
of Commerce and Industry Inc. trading as Business SA (Business SA). It is fair to say,
broadly speaking, that the submissions in opposition to the application made the common
point that the relevant transitional provisions were the product of the earlier decisions we have
earlier referred to, that they were operating as they were intended to operate, and that Falcan
had not adduced any evidence of changed circumstances nor pointed to any cogent reason
why the Commission would now effectively reverse those earlier decisions. However, the
CCSA also made the following submission:
“CCSA agrees with Falcan Pty Ltd that earlier FWA decisions on NSW rates have
effectively deferred 100% of the wage adjustment resulting from the introduction of
the Modern Awards to 2014, rather than the gradual adjustment over the period 2010-
2014 that has been available across most other states. A definitive statement now from
the Commission on how the current Modern Award wording would affect NSW pay
rates from 1 July 2014 would be invaluable to all parties in developing their approach
to the 2014 reviews of both Modern Awards.
For example, the issue of differential pay rates in NSW on and after 1 July 2014 might
be managed by the Fair Work Commission utilising Part 3A (sic) of Schedule 5 of the
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009,
dealing with avoiding reductions in take-home pay from modern award or transitional
arrangements, during its 2014 review of the Children’s Services Award and the
Educational Services (Teachers) Award. It would be open to the Commission to
include a term that provided for employees employed by NSW employers to not suffer
a reduction in take home pay until increased pay rates provided for in those Modern
Awards and subsequent Annual Wage Reviews exceeded the rates applying at 30 June
2014.
Deferring such a statement of intent until the 2014 versions of the Modern Awards are
approved by the Commission, presumably in the first half of 2014, will not give NSW-
based ECEC services sufficient time to effectively budget for any changes to pay
arrangements. This is exacerbated by the fact that, due to funding arrangements and
the school year being based on the calendar rather than financial year, many ECEC
services operate their finances on a calendar year basis. Significant changes to wage
setting arrangements that take effect from 1 July 2014, therefore, ideally need to be
known by at least October 2013.”
Consideration
[2013] FWCFB 4539
32
[74] There was no dispute between the parties that, at least during the course of the
transitional period, the effect of subclauses A.3.7 and A.3.8 of Schedule A to the Children’s
Services Award and subclause A.3.7 of Schedule A to the Educational Services (Teachers)
Award is and will be as was contended by Falcan - that is, in the majority of classifications,
higher minimum rates for NSW employees are not transitioning downwards towards the
standard modern award rates, but are in fact continuing to increase. However, that does not
represent any changed circumstance which would cause us to review and perhaps vary those
provisions. The effect complained of, having regard to the history of the making of those
provisions which we have recited above, was clearly the intended effect. In its Award
Modernisation Decision of 4 December 2009, the Full Bench determined to act upon an
agreement between the “major parties” to depart from the model transitional provisions for
the Children’s Services Award and to adopt an alternative proposal. That alternative proposal,
which became subclause A.3.7 of Schedule A, self-evidently did not provide for any
downwards transition of higher pre-existing rates in (inter alia) New South Wales during the
transition period, but in terms required those rates to be maintained and increased in
accordance with minimum wage increases. The Full Bench in adopting that proposal
necessarily determined that that was the appropriate course to be taken. That approach was
deliberately extended to Division 2B State award employers under the Children’s Services
Award by the Full Bench’s determination of 17 December 2010, and then applied to the
Educational Services (Teachers) Award by Vice President Lawler in his decision in
Independent Education Union of Australia issued on 29 December 2010.
[75] Accordingly, it appears to that Falcan’s applications do no more than seek to revisit
issues which have already been determined in the earlier decisions and orders we have
identified. As we have stated earlier in setting out our general approach to these applications,
this review does not represent an opportunity for parties to revisit issues which have already
been determined absent some demonstration of changed circumstances. In its oral
submissions, Falcan submitted that the introduction of the National Quality Framework for
Early Childhood Education and Care, which requires that by 1 January 2014 all educators at
child care centres must have a Certificate III level qualification and 50% of them must have or
be working towards a diploma level qualification, was a relevant changed circumstance in that
it required a higher proportion of employees to be paid at higher classification levels under the
awards. There was no evidence about this matter, and its connection with the transitional
provisions the subject of Falcan’s applications is unclear. We do not consider it warrants any
revisiting of the transitional provisions in the awards.
[76] The suggestion in Falcan’s submissions that the relevant transitional provisions will
preserve State based anomalies and not achieve the objective of having a nationally uniform
safety net of minimum wages by the end of the transitional period is simply incorrect. It is
clear that the effect of subclause A.3.9 of Schedule A to the Children’s Services Award is that
subclauses A.3.7 and A.3.8 cease to have effect from 1 July 2014, as do all the other
transitional provisions in Schedule A except for subclause A.9, which ceases to have effect
from 1 December 2014. Similarly, subclause A.3.7 of the Educational Services (Teachers)
Award also ceases to have effect from 1 July 2014 by virtue of subclause A.3.8. There can be
no doubt therefore that by the end of 2014 both awards will conform to the requirements of
s.576T of the WR Act. That is, again, the result intended when the transitional provisions
were first made. The provisions are in our view achieving the modern awards objective and
are operating effectively without any anomalies or technical problems that we can identify.
[2013] FWCFB 4539
33
[77] There is therefore no proper basis to grant Falcan’s applications to vary the transitional
provisions in the Children’s Services Award and the Educational Services (Teachers) Award.
The applications are therefore dismissed.
[78] As to the matters raised by the CCSA, all that we can usefully say at this point is that
from 1 July 2014 the Children’s Services Award and the Educational Services (Teachers)
Award will, with respect to wage rates, establish minimum rates only, and will not operate to
regulate wage payments above those minimum rates. Whether in any particular case
overaward payments must continue to be maintained by the employer after 1 July 2014 will
depend upon the terms of the contract of employment between that employer and each
individual employee; it is not a matter in relation to which the awards impose any
obligations.51 It is of course open to employers and employees and their representatives to
address issues of the type raised by CCSA through enterprise bargaining. To the extent that
the expiry of the transitional provisions from 1 July 2014 leads to in any reduction in take-
home pay for employees, there may also be remedies available under Part 3 of Schedule 5 of
the Transitional Act, as the CCSA has submitted. However the making of take-home pay
orders requires an application to be made by a person eligible to do so.52 No such application
has yet been made.
Restaurant Industry Award 2010
The application and submissions in support
[79] Sixteen individual employers, ABI and the Restaurant and Catering Association of
Victoria (RCAV) have jointly applied to vary the Restaurant Industry Award
201053(Restaurant Industry Award). The Restaurant Industry Award contains all the model
transitional provisions in clause 2, and all the model phasing provisions in Schedule A. The
variation that is sought by the applicants is as follows:
“By deleting clause A.4 and inserting a new clause A.4 in lieu thereof:
A.4 Loadings and penalty rates
For the purposes of this schedule loading or penalty means a:
casual or part - time loading;
Saturday, Sunday, public holiday, evening or other penalty;
allowance/penalty.
Where a pre-modern award penalty rate is deemed not equivalent to a modern award
penalty the new penalty rate shall be phased-in from zero in five instalments of 20%
commencing from 1 July 2010 and the pre-modern award penalty shall be phased out
from and no longer apply from 1 July 2010.”
51 The position in this respect is similar to that stated by the Full Bench in Manufacturing and Associated Industries Award
2010 [2010] FWAFB 4488 at [19] in relation to the operation of the model absorption provision.
52 Item 9(3) of Part 3 of Schedule 5 of the Transitional Act.
53 [MA000119]
[2013] FWCFB 4539
34
[80] A retrospective operative date of 1 July 2010 is sought for the above variation.
[81] The applicants submitted in support of this application that the variation they seek is
necessary to remedy anomalies and technical problems that have arisen in respect of the
model provisions concerning the phasing of loadings and penalty rates. They identified three
particular interpretational problems in this connection which, they contended, have arisen
from advice issued by the Fair Work Ombudsman - in particular, from a document entitled
“Guidance Note 7”54 concerning “Transitional arrangements in modern awards”. The first
problem was said to be that Guidance Note 7 at paragraphs 9.12-9.14 contained a method of
calculation for the phasing of “non-equivalent” penalties and loadings which did not accord
with what the applicants understood to be the correct approach, and which if applied in
practice required different and higher transitional payments to be made by employers. The
second was that the applicants disagreed with a statement in paragraph 6.3 of Guidance Note
7 that the model transitional provisions “also apply to new employees that commenced
employment on or after 1 January 2010 (including after 1 July 2010)”; the applicants
contended that such “new employees” were not entitled to the benefit of the transitional
provisions. The third was that the Fair Work Ombudsman had “erroneously deemed” that the
“split shift allowance’ provided for in subclause 24.2 of the Restaurant Industry Award was
not a shift allowance subject to the phasing provisions in Schedule A.
Submissions against the application
[82] The application was opposed by United Voice, which submitted that there was no
incongruence, ambiguity or technical difficulty in the current phasing provisions, and that the
advice provided by the Fair Work Ombudsman was consistent with the proper meaning and
effect of the transitional provisions.
Consideration
[83] In order for the applicants to persuade us that any type of variation to the model
transitional provisions concerning loadings and penalties rates in the Restaurant Industry
Award was justified, it would have to demonstrate that the interpretational advice given by the
Fair Work Ombudsman was at odds with other reasonably available interpretations of those
transitional provisions such as to give rise to an ambiguity requiring clarification. This is
consistent with the approach taken by the Full Bench in Manufacturing and Associated
Industries Award 201055 concerning an application to vary the model absorption provisions:
“[15] The different interpretations adopted by employers, unions and the Fair Work
Ombudsman in relation to the interpretation of clause 2.2 establish that an ambiguity
exists as to its meaning and effect. It is desirable that this ambiguity be resolved so that
employers, employees, their representatives and regulatory authorities can readily
ascertain the nature of award entitlements and obligations.”
[84] We are not satisfied that there is any relevant ambiguity requiring clarification in the
case of the applicants’ first point concerning the calculation of the amounts payable by
employers under the phasing provisions for loadings and penalties. The provisions themselves
54 The first edition of Guidance Note 7 was issued on 31 May 2010, and the most recent edition on 21 December 2012.
55 [2010] FWAFB 4488
[2013] FWCFB 4539
35
are expressed in clear terms, and we are not aware of any employer or organisation covered
by any other award containing the same model provisions raising any difficulty concerning
the interpretation or operation of those provisions or the content of the Fair Work
Ombudsman’s Guidance Note 7 in that connection. In that connection, we note and place
weight upon the Australian Industry Group’s general submission that it “has not identified
any problems with the model transitional provisions in so far as they operate in other modern
awards”.
[85] The applicants attempted to demonstrate that the method of calculation described in
paragraphs 9.12-9.14 of Guidance Note 7 produced different outcomes in terms of amounts
payable compared to a proper application of the transitional provisions. However, while that
part of Guidance Note 7 involves a mathematical method which is not the only and perhaps
not the most direct method of calculation, we are not satisfied that in fact it produces any
results which were not intended to be produced by the model provisions.
[86] One example of a mathematical calculation advanced by the applicants is sufficient to
demonstrate why we were not satisfied by the applicants’ case on this point. In the applicants’
written submissions, they propounded an example concerning employees graded at Level 4
under the modern award required to work in the evening, Monday to Friday, from 7 pm to 12
midnight. Under the pre-modern Liquor and Accommodation Industry - Restaurants - Victoria
Award 199856, an additional amount of $1.60 per hour was payable for each hour worked in
this period (subject to a maximum daily payment for three hours). Under the modern award, a
loading of 10% of the standard hourly rate per hour is payable, but only for work performed
in the hours 10 pm to 12 midnight. As became clear from the applicants’ oral submissions,
there was no issue that for work performed from 7 pm to 10 pm, the $1.60 was to be phased-
down in 20% increments in accordance with clause A.6 of Schedule A. However, the
applicants contended that for the period 10 pm to 12 midnight, when a phasing-up from the
$1.60 to the 10% was required in accordance with clause A.5, the Fair Work Ombudsman’s
method produced differing and incorrect results.
[87] To make good this contention, the applicant produced a table which set out, side by
side, the differing calculation methods and their allegedly differing results. That table is
reproduced in Schedule A to this decision. It should be emphasised that the calculation in the
left-hand side of that table under the heading “Fair Work Ombudsman ‘Phase out, phase in
method’” was produced by the applicants based on their understanding of the method set out
in paragraphs 9.12-9.14 of Guidance Note 7, and is not an actual calculation by the Fair Work
Ombudsman.
[88] It has become apparent to us that the applicants’ calculations in Schedule A contain a
number of simple mathematical errors which skew the results. Once these are corrected, and
additional calculations are carried out based on award rates as known up to 1 July 2013, it is
apparent that the two methods produce the same results for the period 10 pm to 12 midnight.57
Attached at Schedule B to this decision is a corrected version of Schedule A, with the
corrections identified in track changes.
56 AP787213
57 Differences of one cent may be produced depending upon whether amounts are rounded up or down to the nearest cent; we
regard this as being de minimis.
[2013] FWCFB 4539
36
[89] To the extent that the right-hand column in the applicants’ table in Schedule A omits
the applicants’ results for the period 7 pm to 10 pm, we assume that the applicants considered
that unnecessary, since as earlier stated the applicants did not dispute that there was to be a
phase-down of the $1.60 amount for this period as required by clause A.6 of Schedule A.
[90] After we raised some concerns about Schedule A with the applicants’ representative at
the hearing of this matter, we gave the applicants the opportunity to file a further submission
about the matter. The applicants subsequently filed a further submission which included an
amended version of its earlier calculation appearing in Schedule A. We attach this amended
calculation as Schedule C. It can be seen that the applicants have themselves picked up the
mathematical errors in the calculation based on the Fair Work Ombudsman’s method in the
left-hand column, and that it has now been amended in a way that produces results for the 10
pm to 12 midnight period which are the same as in the applicants’ original calculation using
their own method set out in the right-hand column of Schedule A. The results in the left-hand
column of Schedule C are also the same as the results we have produced in both columns of
Schedule B, except that for one result there is a one cent difference. This difference, which we
regard in any event as de minimis, appears to have been produced by a rounding error in the
applicants’ calculations.
[91] In their new version of the calculation, however, the applicants have changed their
own method of calculation of the transitional amounts for the 10 pm to 12 midnight period.
The surprising result of this is that the amounts which the applicants calculate are payable by
employers, set out in the right-hand column of Schedule C, are now higher than those they say
are produced by the Fair Work Ombudsman’s method as set out in the left-hand column of
Schedule C. The applicants’ further submission contains no explanation as to the nature of or
rationale for the change to its own method of calculation. The change appears to be in the
quantification of the “transitional percentage” upon which the transitional provisions in
subclause A.5.4 operate. It is sufficient for us to say that the applicants’ original method of
calculation in Schedule A (leaving aside rounding errors), which produced the same results as
the Fair Work Ombudsman’s method of calculation in Schedule B, is correct, and the
applicants’ new method is incorrect. For completeness, we also note that the right-hand
column of Schedule C continues the omission which we earlier identified in the right-hand
column of Schedule A of the transitional amounts for the 7 pm to 10 pm period required to be
paid under clause A.6 of Schedule A.
[92] Our conclusion therefore is that the applicants’ stated concerns about paragraphs 9.12-
9.14 of Guidance Note 7 are without practical substance. The mathematical method of
calculation used by the Fair Work Ombudsman produces results which are consistent with
Schedule A, are consistent with the applicants’ original method of calculation, and are correct.
There is no anomaly or technical problem requiring resolution.
[93] The second issue raised by the applicants is without substance. Each of the model
phasing provisions makes it clear that it applies not only to employers which immediately
before 1 January 2010 had relevant obligations under a relevant provision of a transitional
minimum wage instrument and/or an award-based transitional instrument, but also to those
employers which, if they had been an employer in the industry or occupations covered by the
modern award, would have had such obligations. The model provisions do not discriminate
between employees of such employers on the basis of whether they were employed before or
after 1 January 2010; they operate indiscriminately with respect to all employees of employers
to which the provisions apply. The rationale for this approach was clearly stated in paragraph
[2013] FWCFB 4539
37
[31] of the Award Modernisation Decision of 2 September 2009, which we have earlier set
out. Paragraph 6.3 of the Fair Work Ombudsman’s Guidance Note 7 is entirely consistent
with this. No alternative interpretation of the type contended for by the applicants is
reasonably available on the text of the model provisions. The applicants’ submission that
there is an interpretational issue requiring resolution is rejected.
[94] As to the applicants’ third issue, it was not made clear to us how or in what
circumstances the Fair Work Ombudsman “deemed” the “split shift” allowance in clause 24.2
of the Restaurant Industry Award not to be covered by the phasing provisions for penalties
and loadings in Schedule A of the award. We cannot identify any statement in Guidance Note
7 about that matter. In any event, if the Fair Work Ombudsman gave advice that the
transitional provisions did not apply to that allowance, we consider that such advice was
correct.
[95] Subclause 24.2 of the Restaurant Industry Award, which is part of clause 24,
Allowances, provides:
“24.2 Split shift allowance
Full-time and part-time employees who have a broken work day will receive an
additional allowance of 0.5% of the weekly standard rate for each separate work
period of two hours or more.”
[96] It is clear that subclause 24.2, despite its heading, does not operate with respect to shift
work as such. Indeed, the Restaurant Industry Award does not provide for any system of shift
work; instead it has a highly flexible regime for the working of ordinary time which is
adapted for the specific characteristics of the restaurant industry. The allowance applies to any
“broken work day” - that is a day which is broken into different components of paid working
time (of two or more hours each), separated by periods of unpaid non-working time. Those
working hours may be ordinary time hours paid at the ordinary rate of pay. The allowance is
properly characterised as a disability allowance intended to compensate for the inconvenience
associated with having to work a broken work day.
[97] As earlier stated, the Full Bench in the Award Modernisation Decision of 2 September
200958 decided not to establish transitional provisions for allowances. However, the
applicants submit that the allowance provided for in subclause 24.2 is a “shift allowance”,
presumably because of the way in which it is described in the subclause heading, and is
therefore a loading or penalty for the purpose of the transitional provisions by virtue of the
reference to “shift allowance/penalty” in subclause A.4 to Schedule A. We disagree. We
consider that the Full Bench, in determining to include any “shift allowance/penalty” in the
list of matters encompassed by the expression “loading or penalty” in the model provision
which is subclause A.4, was referring to allowances or penalties operating upon a shift
worked as part of a shift work system - that is, a system providing for a regular and recurring
pattern of shifts to be worked at specified times during the day and week - provided for in an
award. The expression “shift allowance” is apt to describe a flat dollar payment associated
with working shifts, and “shift penalty” a percentage penalty or loading for working a
particular shift. The allowance in subclause 24.2 Restaurant Industry Award is neither of
those things, and its location in clause 24 within the list of various allowances provided for in
58 [2009] AIRCFB 800
[2013] FWCFB 4539
38
award rather than in an hours of work or shift work clause confirms that it is an allowance
simpliciter of a type not covered by the transitional provisions. To the extent that the
applicants’ submissions have exposed any doubt or ambiguity about this matter, we consider
that to have been resolved by the opinion we have just expressed.
[98] Accordingly, we conclude that the applicants have not made out a case for the
variation they seek to the transitional provisions in the Restaurant Industry Award. For the
reasons we have stated, the claimed anomalies and technical problems do not exist, and we
have no reason otherwise to think that the transitional provisions are not achieving the modern
awards objective or operating effectively. The application must be dismissed.
Conclusion
[99] The applications concerning transitional provisions in matters AM2012/41,
AM2012/45, AM2012/139, AM2012/142 and AM2012/186 are dismissed.
VICE PRESIDENT
Appearances:
P. Brunner, solicitor, for the Western Australia Shearing Industry Association Inc., and
Western Australian Farmers Federation Industrial Association
D. Morphett for Falcan Pty Ltd T/A Rainbow Early Learning Centre
G. Parkes for Restaurant and Catering Association of Victoria
W. Ash for United Voice
Z. Angus for the Australian Workers’ Union
A. Odgers for Independent Education Union of Australia
G. Vaccaro for Australian Industry Group
J. Gunn for Community Connections Solutions Australia Inc.
M. Roucek for Australian Business Industrial
Hearing details:
2013.
Sydney: 9, July.
WORK COMMISSION -- AUSTRALIA THE SEAL OF FA
[2013] FWCFB 4539
39
SCHEDULE A
Fair Work Ombudsman ‘Phase out, phase in method’ RCA interpretation of Schedule A Transitional
Provisions of Restaurant Industry Award [MA000119]
phase in method
Step 1 Determine comparative provisions
- Pre Modern Award Evening Allowance
o $1.60 per hour between 7pm – 12am
- Modern Award Evening Allowance
o 10% per hour between 10pm – 12am
(determined at standard hourly rate)
Step 2 Determine phase out of pre modern award
- $1.60 per hour between 7pm – 12am to be
phased out over 5 years
o July 2010 (80%) = 1.28
o July 2011 (60%) = 0.96
o July 2012 (40%) = 0.64
o July 2013 (20%) = 0.32
o July 2014 (0%) = 0
Step 3 Determine Phase in of Modern Award
- 10% of “standard hourly rate” between 10pm –
12am phased in over 5 years
o July 2010 (20%) = 0.35c
o July 2011 (40%) = 0.80c
o July 2012 (60%) = 6% of 2012 L4
hourly rate
o July 2013 (80%) = 8% of 2013 L4
hourly rate
o July 2014 (100%) = 10% of 2014 L4
hourly rate
Step 4 Determine Phase out + Phase in rates
- Note no equivalent in modern award between
7pm-10pm
- July 2010
o 7pm-10pm = (phase out) 1.28 +
(phase in) 0 = $1.28
o 10pm-12am = (phase out) 1.28 +
(phase in) 0.35c = $1.60
- July 2011
o 7pm-10pm = (phase out) 0.96 +
(phase in) 0 = 0.96c
o 10pm-12am = (phase out) 0.96 +
(phase in) 0.80 = $1.76
- July 2012
o 7pm-10pm = (phase out) 0.64c +
(phase in) 0 = 0.64c
o 10pm-12am = (phase out) 0.64c +
(phase in) 6% of 2012 L4 hourly rate
- July 2013
o 7pm-10pm = (phase out) 0.32c +
(phase in) 0 = 0.32c
o 10pm-12am = (phase out) 0.64c +
(phase in) 8% of 2012 L4 hourly rate
- July 2014
o 10pm-12am = 10%
Step 1 Determine comparative provisions
- Pre Modern Award Evening Allowance
o $1.60 per hour between 7pm –
12am
- Modern Award Evening Allowance
o 10% per hour between 10pm – 12am
(determined at standard hourly rate)
Step 2 Determine if existing loading or penalty rate lower or
higher than Modern Award as per A.5 and A.6
Step 3 As in this example the pre modern award rate is lower
the employer must pay no less than the loading or penalty in
the Modern Award minus the specified proportion of the
transitional percentage as follows:-
- MA $1.74 per hour as at 2010/2011 minus 80% of
0.14 transitional percentage = $1.63 per hour from
1 July 2010
- MA $1.80 per hour as at 2011/12 minus 60% of
0.20 transitional percentage = $1.68 per hour
- MA $1.85 per hour as at 2012/13 minus 40% of
0.25 transitional percentage = $1.75
[2013] FWCFB 4539
40
SCHEDULE B
Fair Work Ombudsman ‘Phase out, phase in method’ RCA interpretation of Schedule A Transitional
Provisions of Restaurant Industry Award [MA000119]
phase in method
Step 1 Determine comparative provisions
- Pre Modern Award Evening Allowance
o $1.60 per hour between 7pm – 12am
- Modern Award Evening Allowance
o 10% per hour between 10pm – 12am
(determined at standard hourly rate)
Step 2 Determine phase out of pre modern award
- $1.60 per hour between 7pm – 12am to be
phased out over 5 years
o July 2010 (80%) = 1.28
o July 2011 (60%) = 0.96
o July 2012 (40%) = 0.64
o July 2013 (20%) = 0.32
o July 2014 (0%) = 0
Step 3 Determine Phase in of Modern Award
- 10% of “standard hourly rate” between 10pm –
12am phased in over 5 years
o July 2010 (20%) = 0.35c
o July 2011 (40%) = 0.8072c
o July 2012 (60%) = 6% of 2012 L4
hourly rate $1.11
o July 2013 (80%) = 8% of 2013 L4
hourly rate $1.53
o July 2014 (100%) = 10% of 2014 L4
hourly rate
Step 4 Determine Phase out + Phase in rates
- Note no equivalent in modern award between
7pm-10pm
- July 2010
o 7pm-10pm = (phase out) 1.28 +
(phase in) 0 = $1.28
o 10pm-12am = (phase out) 1.28 +
(phase in) 0.35c = $1.603
- July 2011
o 7pm-10pm = (phase out) 0.96 +
(phase in) 0 = 0.96c
o 10pm-12am = (phase out) 0.96 +
(phase in) 0.8072 = $1.768
- July 2012
o 7pm-10pm = (phase out) 0.64c +
(phase in) 0 = 0.64c
o 10pm-12am = (phase out) 0.64c +
(phase in) 6% of 2012 L4 hourly rate
$1.11 = $1.75
- July 2013
o 7pm-10pm = (phase out) 0.32c +
(phase in) 0 = 0.32c
o 10pm-12am = (phase out) 0.6432c +
(phase in) 8% of 2012 L4 hourly rate
$1.53 = $1.85
- July 2014
o 10pm-12am = 10%
Step 1 Determine comparative provisions
- Pre Modern Award Evening Allowance
o $1.60 per hour between 7pm –
12am
- Modern Award Evening Allowance
o 10% per hour between 10pm – 12am
(determined at standard hourly rate)
Step 2 Determine if existing loading or penalty rate lower or
higher than Modern Award as per A.5 and A.6
Step 3 As in this example the pre modern award rate is lower
the employer must pay no less than the loading or penalty in
the Modern Award minus the specified proportion of the
transitional percentage as follows:-
- MA $1.74 per hour as at 2010/2011 minus 80% of
0.14 transitional percentage = $1.63 per hour from
1 July 2010
- MA $1.80 per hour as at 2011/12 minus 60% of
0.20 transitional percentage = $1.68 per hour from
1 July 2011
- MA $1.85 per hour as at 2012/13 minus 40% of
0.25 transitional percentage = $1.75 from 1 July
2012
- MA $1.91 per hour as at 2013/14 minus 20% of
0.31 transitional percentage = $1.85 from 1 July
2013
[2013] FWCFB 4539
41
SCHEDULE C
Fair Work Ombudsman ‘Phase out, phase in
method’
RCA interpretation of Schedule A Transitional
Provisions phase in method
Step 1 Determine comparative provisions
- Pre Modern Award Evening Allowance
o $1.60 per hour between 7pm –
12am
- Modern Award Evening Allowance
o 10% per hour between 10pm –
12am (determined at standard
hourly rate)
Step 2 Determine phase out of pre modern award
- $1.60 per hour between 7pm – 12am to be
phased out over 5 years
o July 2010 (80%) = 1.28 o
July 2011 (60%) = 0.96 o
July 2012 (40%) = 0.64 o
July 2013 (20%) = 0.32 o
July 2014 (0%) = 0
Step 3 Determine Phase in of Modern Award
- 10% of “standard hourly rate” between
10pm – 12am phased in over 5 years
o July 2010 (20%) = 0.35 o
July 2011 (40%) = 0.72 o
July 2012 (60%) = 1.11 o
July 2013 (80%) = 1.52
o July 2014 (100%) = 10% of 2014 L4
hourly rate
Step 4 Determine Phase out + Phase in rates
- Note no equivalent in modern award
between 7pm-10pm
- July 2010
o 7pm-10pm = (phase out) 1.28 +
(phase in) 0 hours = $1.28
o 10pm-12am = (phase out) 1.28 +
(phase in) 0.35c = $1.63
- July 2011
o 7pm-10pm = (phase out) 0.96 +
(phase in) 0 hours = $0.96
o 10pm-12am = (phase out) 0.96 +
(phase in) 0.72 = $1.68
- July 2012
o 7pm-10pm = (phase out) 0.64c+
(phase in) 0 = $0.64
o 10pm-12am = (phase out) 0.64c +
(phase in) $1.11 = $1.75
- July 2013
o 7pm-10pm = (phase out) 0.32c+
(phase in) 0 = $0.32
o 10pm-12am = (phase out) 0.64c +
(phase in) $1.52 = $1.84
Step 1 Determine comparative provisions
- Pre Modern Award Evening Allowance
o $1.60 per hour between 7pm –
12am
- Modern Award Evening Allowance
o 10% per hour between 10pm – 12am
(determined at standard hourly rate)
Step 2 Determine if existing loading or penalty rate lower or
higher than Modern Award as per A.5 and A.6 and calculate
transitional percentage. [10% of L4 $16.78 p.h as at 1/1/2010
= $1.68 - $1.60 = $0.08 transitional percentage.
Step 3 As in this example the pre modern award rate is lower
the employer must pay no less than the loading or penalty in
the Modern Award minus the specified proportion of the
transitional percentage as follows:-
- MA $1.74 per hour as at 1/7/2010 [80% of 0.08
transitional percentage = 0.06] $1.74-$0.06 =
$1.68 per hour from 1 July 2010
- MA $1.80 per hour as at 1/7/2011 [60% of 0.08
transitional percentage = 0.05] $1.80-$0.05
=$1.75 per hour from 1 July 2011
- MA $1.85 per hour as at 1/7/2012 [40% of 0.08
transitional percentage = 0.03] $1.85-$0.03 =
$1.82 per hour from 1 July 2012
- MA $1.90 hour as at 1/7/2013 [20% of 0.08
transitional percentage =0.02] $1.90 -$0.02 =
$1.88 per hour from 1 July 2013
Printed by authority of the Commonwealth Government Printer
Price code G, PR538744
