1
Fair Work Act 2009
s.157–FWC may vary etc. modern awards if necessary to achieve modern awards objective
Award flexibility–Hospitality and Retail Sectors
(AM2020/103)
JUSTICE ROSS, PRESIDENT MELBOURNE, 10 DECEMBER 2020
Industrial relations reform working groups – letter from Minister – award flexibility – loaded
rates – exemption rates – classification structures – General Retail Industry Award 2020 –
Hospitality Industry (General) Award 2020 – Restaurant Industry Award 2020 – Registered
and Licenced Clubs Award 2010.
Background
[1] On 9 December 2020, I received a letter from the Minister for Industrial Relations. A
copy of the letter is attached. The Minister expresses the Government’s view that:
‘…in the extraordinary circumstances that have been caused by the COVID pandemic
that it would be in Australia’s economic best interest for the Fair Work Commission to
use its powers under s.157(3)(a) of the Fair Work Act 2009 (the Act) to undertake a
process to ensure several priority modern awards in sectors hardest hit by the
pandemic be amended. The process would be envisaged, if you considered it
appropriate, to maintain a focus on key changes that could potentially support
Australia’s economic recovery. The Government would obviously provide every
available assistance to ensure the timely and comprehensive conduct of this process.’
[2] The awards identified by the Minister as the key awards in distressed industry sectors
(“priority modern awards”) are:
General Retail Industry Award 2020
Hospitality Industry (General) Award 2020
Restaurant Industry Award 2020
Registered and Licenced Clubs Award 2010
[3] Three of the priority modern awards fall within the Accommodation and food services
industry, the other modern award falls within the Retail trade industry.
[4] Section 157(3)(a) of the Fair Work Act 2009 (Cth) provides, relevantly, that the
Commission may make a determination varying a modern award ‘on its own initiative’.
[2020] FWC 6636
STATEMENT
E AUSTRALIA FairWork Commission
[2020] FWC 6636
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[5] In my Statement of 31 August 2020, I noted that it is likely the direct economic and
social impacts of the pandemic will be felt for some time to come and that there will be a
continuing need for flexible work arrangements to assist employers and employees in
adapting to the changed conditions and to support the recovery. A draft award flexibility
schedule was attached to the statement which included provisions for:
an agreement between an employer and an employee for the employee to work from
home.
full time or part time employees to request to compress their working week so that
their usual weekly ordinary hours are worked over a reduced number of their usual
work days.
employees to take twice as much annual leave at half pay with the agreement of their
employer.
employees to purchase additional leave with the agreement of their employer.
a change in the span of hours in a workplace or section of a workplace with the
agreement of 75% of employees.
an agreement to share a reduction in working hours in a workplace or section of a
workplace with the agreement of 75% of employees, in circumstances where an
employer cannot usefully employ all of the full time and part time employees in a
workplace or section of a workplace.
an employer direction to an employee to perform all duties within their skill and
competency.
an employer direction to an employee to work at a different workplace (including the
employee’s home).
an employer direction to employees to stagger starting and finishing times of work.
[6] The Minister’s letter identifies the following additional award related flexibility
measures that ‘could prove critically important for providing businesses in the most distressed
part of the economy with the confidence to increase hiring during the recovery’:
Potentially simplified pay arrangements in the form of ‘loaded rates’ and/or
‘exemption rates’ designed to reduce the cost of administrative burden and address
concerns about perceived risks arising from existing pay rate complexities and
complexity risks that may lead to, particularly small business, mistakenly
underpaying employees.
Further streamlining of present classification structures so that they are clearer,
easier to understand and simpler to apply. This might involve reducing the number
of classifications through a broad-banding exercise with no reductions in pay and
minimal increases in pay accompanied by greater variety and higher value work.
[7] The Minister requests that I consider the above matters in the exercise of the
Commission’s powers. He notes that a Commission process would provide parties and the
Commonwealth with an opportunity to make submissions focussing on the need for:
changes to be made in the first instance to key awards in distressed industry sectors -
namely the General Retail Industry Award 2020, the Hospitality Industry (General)
https://www.fwc.gov.au/documents/documents/resources/covid-19-information/presidents-statement-fwc-covid-19-response-2020-08-31.pdf
[2020] FWC 6636
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Award 2020, the Restaurant Industry Award 2020, and the Registered and Licenced
Clubs Award 2010 - to maximise the benefits of increased flexibility as the economy
recovers.
any changes to simplify pay arrangements or classifications being available on an
'opt in' basis, to avoid imposing unnecessary changes on businesses that do not wish
to adopt them.
providing that payment by loaded rates are subject to agreement between employers
and employees as a protection against disadvantage; and
administrative simplicity, and the need to avoid the complex process requirements
that have caused significant difficulty in relation to annualised salary arrangement.
[8] The Minister has requested that any changes arising out of a Commission process
should be made as expeditiously as possible, preferably no later than 31 March 2021.
[9] It is appropriate that the Commission properly consider the Minister’s request.
Ultimately, it will be a matter for the Commission to determine the process by which the
issues raised in the request are considered and whether any variations to modern awards are
necessary having regard to the provisions of the Act.
[10] Loaded rates in modern awards have been considered by the Commission in the 2012
Transitional Review and again in the Penalty Rates Case in the 4 yearly review of modern
awards.1 In both of these cases, the Full Bench noted that there was merit in considering the
insertion of loaded rates into the Hospitality and Retail awards. In the Penalty Rates Case the
Full Bench indicated that it envisaged the development of loaded rates to be an iterative
process undertaken in consultation with interested parties once the transitional arrangements
in respect of the reductions in Sunday penalty rates was complete. The transitional
arrangements have now been completed. Consistent with the view expressed in the Penalty
Rates Case it is appropriate that consideration now be given to the insertion of loaded rates
into the Hospitality and Retail Awards.
[11] I propose to commence a process on the Commission’s own motion to consider the
inclusion of loaded rates and exemption rates clauses in the priority modern awards identified
at [2] above. The process will also consider whether any changes can be made to simplify the
classification structures in the priority modern awards and any other changes proposed by any
interested party.
[12] The process will commence with conferences of interested parties on 17 and 18
December 2020.
[13] A conference in respect of the three hospitality sector awards will take place at 1:00
pm on Thursday 17 December 2020. A conference in respect of the Retail Award will take
place at 10:00 am on Friday 18 December 2020.
[14] The purpose of each of these conferences will be to:
1 [2017] FWCFB 1001
https://www.fwc.gov.au/documents/decisionssigned/html/2017fwcfb1001.htm
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1. Canvass the issues raised in the Minister’s letter and examine (in broad terms)
any proposals for variations to the key modern awards.
2. Explore whether there is any consensus about the nature of any award
variations relating to loaded rates, exemption rates or classification structures.
3. Discuss whether there is any additional data or research the parties might
require to properly consider these issues.
4. Discuss future programming.
[15] Any party who wishes to attend the conference should send an email to
Chambers.Ross.j@fwc.gov.au specifying a name and contact telephone number by 4pm on
Tuesday 15 December 2020.
[16] The Minister has advised that if the Commission determines to undertake the process
requested in its letter, the Government would be able to support the process by sourcing
evidence, economic data and other material the Commission needed. The Attorney-General’s
Department is therefore asked to advise the Commission and the parties by 4pm on Tuesday
15 December 2020 as to the data and evidence that it may be able to access to support the
process, and to attend the conferences on 17 and 18 December 2020.
Impact of COVID-19 and the Priority Awards
[17] The impact of the COVID-19 Pandemic was set out in a Statement issued on 31
August 2020. Further detailed and updated information is provided in the Commission’s
COVID-19 situation update information note2 and Information note-Government responses to
COVID-19 pandemic.
[18] On 1 December 2020, the Reserve Bank of Australia (RBA) governor noted that ‘In
Australia, the economic recovery is under way and recent data have generally been better than
expected. This is good news, but the recovery is still expected to be uneven and drawn out and
it remains dependent on significant policy support.’3
[19] Further information including industry profiles and the impact of COVID-19 on the
Accommodation and food services industry and the Retail trade industry is provided in the
following documents.
Accommodation and food services
Retail trade industry
Other background documents
[20] Commission staff have also prepared a number of background documents to provide
context and facilitate the discussion at the conference. The following documents set out some
background to both loaded rates and exemption rates including previous consideration of
these provisions in modern awards:
Loaded rates
2 Last updated on 23 November 2020.
3 Statement by Philip Lowe, Governor: Monetary Policy Decision, 1 December 2020.
https://www.rba.gov.au/media-releases/2020/mr-20-32.html
https://www.fwc.gov.au/documents/sites/award-flexibility-hospitality-retail/background/am2020-103-loaded-rates.pdf
https://www.fwc.gov.au/documents/sites/award-flexibility-hospitality-retail/background/am2020-103-information-note-retail-trade-2020-12-10.pdf
https://www.fwc.gov.au/documents/sites/award-flexibility-hospitality-retail/background/am2020-103-information-note-accommodation-food-services-2020-12-10.pdf
https://www.fwc.gov.au/documents/resources/covid-19-information/information-note-government-responses-covid-19-2020-12-09.pdf
https://www.fwc.gov.au/documents/resources/covid-19-information/information-note-government-responses-covid-19-2020-12-09.pdf
https://www.fwc.gov.au/documents/resources/covid-19-information/information-note-covid-19-situation-update-2020-12-09.pdf
https://www.fwc.gov.au/documents/documents/resources/covid-19-information/presidents-statement-fwc-covid-19-response-2020-08-31.pdf
mailto:Chambers.Ross.j@fwc.gov.au
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Exemption rates
[21] The following documents set out the classification structures in each of the priority
modern awards, including consideration of the classification structures during award
modernisation:
Classification structure in the Hospitality Award
Classification structure in the Restaurant Award
Classification structure in the Clubs Award
Classification structure in the Retail Award
[22] The following documents provide some analysis of the types of loaded rates contained
in enterprise agreements:
Enterprise agreements in the Hospitality sector
Enterprise agreements in the Retail trade industry
Next Steps – keep informed
[23] The Commission has established a dedicated Major Cases webpage for this matter.
[24] The Commission’s award subscription service will be used to notify interested parties
of updates during this matter such as deadlines for the filing of submissions and evidence,
notices of listing and when any decisions or statements are issued. A dedicated subscription
service called ‘Award flexibility–Hospitality and Retail Sectors’ has been established.
Interested parties are encouraged to subscribe to receive notifications on the subscription
services page on our website. Any questions about the subscription service can be sent to
amod@fwc.gov.au.
PRESIDENT
Printed by authority of the Commonwealth Government Printer
PR725301
mailto:amod@fwc.gov.au
https://www.fwc.gov.au/about-us/reports-publications/subscribe-updates
https://www.fwc.gov.au/about-us/reports-publications/subscribe-updates
https://www.fwc.gov.au/documents/sites/award-flexibility-hospitality-retail/background/am2020-103-enterprise-agreements-in-retail-sector.pdf
https://www.fwc.gov.au/documents/sites/award-flexibility-hospitality-retail/background/am2020-103-enterprise-agreements-in-hospitality-sector.pdf
https://www.fwc.gov.au/documents/sites/award-flexibility-hospitality-retail/background/am2020-103-classification-structure-general-retail.pdf
https://www.fwc.gov.au/documents/sites/award-flexibility-hospitality-retail/background/am2020-103-classification-structure-clubs.pdf
https://www.fwc.gov.au/documents/sites/award-flexibility-hospitality-retail/background/am2020-103-classification-structure-restaurants.pdf
https://www.fwc.gov.au/documents/sites/award-flexibility-hospitality-retail/background/am2020-103-classification-structure-hospitality.pdf
https://www.fwc.gov.au/documents/sites/award-flexibility-hospitality-retail/background/am2020-103-exemption-rates.pdf
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OFFICIAL
The Hon Christian Porter MP Attorney-General Minister for Industrial Relations 9 DEC 2020 Leader of the House The Hon Justice Iain Ross AO President Fair Work Commission
PO Box 1994 MELBOURNE VIC 3001 Dear Justice Rose Following the conclusion of the industrial relations reform working group process, as discussed with you on 17 November 2020, I am writing to express the Government's view that in the extraordinary circumstances that have been caused by the COVID pandemic that it would be in Australia's economic best interest for the Fair Work Commission to use its
powers under s.157(3)(a) of the Fair Work Act 2009 (the Act) to undertake a process to ensure several priority modern awards in sectors hardest hit by the pandemic be amended. The process would be envisaged, if you considered it appropriate, to maintain a focus on key changes that could potentially support Australia's economic recovery. The Government would obviously provide every available assistance to ensure the timely and comprehensive conduct of this process. The role of the Commission in considering evidence from employees, employers and other parties against the modern award objectives in the Act is essential to maintaining a fair and relevant modern award system. Together with temporary changes to the Fair Work Act 2009
(the Act) introduced by the Government as part of the JobKeeper scheme, the Commission's recent expedited response has already provided business and workers with critical short term flexibility to manage the impacts of the pandemic. However, the Government is strongly of the view that the Commission has an important further and immediate role to play to assist in the process of developing reform to assist the future economic recovery which is now underway. As outlined in your Draft Award Flexibility Statement of 31 August 2020, it is likely the direct economic and social impacts of the pandemic will be felt for some time. This means there will be further need for sensible flexible work arrangements to assist employers and
employees in adapting to the changed conditions and to support the recovery. Particularly, in key awards corresponding to those sectors of the Australian economy hardest hit and which require the greatest assistance to survive, grow and employ. This assessment aligns with the feedback the Government has received from stakeholders that businesses continue to need reasonable flexibility to support an increasingly agile approach to their operations as they contribute to the economic recovery in unprecedented dynamic and Parliament House, Canberra ACT 2600 · Telephone (02) 6277 7300
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OFFICIAL still evolving economic conditions. Increasing the flexibility and efficiency of the industrial relations system, while maintaining appropriate safeguards, will help support economic recovery following the COVID-19 pandemic and encourage employment growth as part of the economic recovery.
Stakeholders have identified that a considered pathway to the following award-related measures could prove critically important for providing businesses in the most distressed part of the economy with the confidence to increase hiring during the recovery: 1. Potentially simplified pay arrangements in the form of 'loaded rates' and/or 'exemption rates' designed to reduce the cost of administrative burden and address concerns about perceived risks arising from existing pay rate complexities and complexity risks that may lead to, particularly small business, mistakenly underpaying employees. While ultimately any design of loaded rates would be up to the discretion of the Commission, it is the
Tales lia dy that CIISures workers are not financially worse off over time, that they are available on an opt-in basis by agreement between the employee and employer with either party being able to opt out with appropriate notice. 2. Further streamlining of present classification structures so that they are clearer, easier to understand and simpler to apply. For example, I have been made aware that potential exists in several awards with a high level of award reliance (in key distressed industry sectors), including the General Retail, Hospitality, Restaurants and Registered Clubs Awards for the number of classifications to be reduced substantially by a broad-banding exercise with no reductions in pay and mit nal it creases pay acc bar led by greater
variety and higher value work. As noted in our previous discussions, the Government is able to support the Fair Work Commission in sourcing evidence, economic data and other material it needs in order to properly conduct this process. While the Government is currently preparing legislation to implement measures that were the subject of working group discussions and negotiations, my view is that consideration of these two proposals set out above would be best undertaken by the Commission under its existing authority to vary modern awards.
A Commission process would also provide parties and the Commonwealth with an opportunity to make submissions providing relevant statistical labour market and economic data that support the case for these changes. I envisage that these submissions would focus on the need for: changes to be made in the first instance to key awards in distressed industry sectors - namely the General Retail Industry Award 2020, the Hospitality Industry (General) Award 2020, the Restaurant Industry Award 2020, and the Registered and Licenced Clubs Award 2010 - to maximise the benefits of increased flexibility as the economy
recovers. . any changes to simplify pay arrangements or classifications being available on an 'opt in' basis, to avoid imposing unnecessary changes on businesses that do not wish to adopt them, 2
[2020] FWC 6636
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providing that payment by loaded rates are subject to agreement between employers and
administrative simplicity, and the need to avoid the complex process requirements that have caused significant difficulty in relation to annualised salary arrangement, and changes to be made as expeditiously as possible, preferably no later than 31 March 2021.
The Government continues to see active support to business and workers as an important underpinning of economy recovery. The Commission continues to play an important role in this process. I would be grateful if the above matters could be considered by you in the exercise of the Commission's powers.
Yours sincerely
Attorney-General Minister for Industrial Relations Leader of the House
