1
Fair Work Act 2009
s.156—4 yearly review of modern awards
4 yearly review of modern awards—Plain language—Shutdown provisions
(AM2016/15)
VICE PRESIDENT HATCHER
DEPUTY PRESIDENT ASBURY
COMMISSIONER HUNT SYDNEY, 25 AUGUST 2022
4 yearly review of modern awards – plain language – shutdown provisions.
DECISION OF VICE PRESIDENT HATCHER AND DEPUTY PRESIDENT ASBURY
1. Background
[1] During the annual leave common issue proceedings conducted as part of the 4 yearly
review of modern awards, an issue arose in relation to the Black Coal Mining Award 2010
(Black Coal Award) regarding annual leave shutdown. This triggered a wider review of annual
leave shutdown clauses in modern awards generally in the circumstances described below.
[2] In decisions issued on 11 June 20151 (June 2015 decision) and 15 September 20152
(September 2015 decision), the Annual Leave Full Bench determined model clauses in respect
of taking excessive annual leave, the cashing out of annual leave, electronic funds transfer and
paid annual leave, and granting annual leave in advance. In the June 2015 decision, the Annual
Leave Full Bench also considered a model “close-down” clause proposed by a group of
employer parties to be placed into 65 modern awards. This proposed clause had three features
of present relevance:
it would apply to the close-down of an enterprise, or part of it, for the purpose of
allowing paid annual leave to all or a majority of employees in the enterprise or part
of it;
subject to the provision of notice, it would require employees to take paid annual
leave for the full period of closing where they have sufficient accrued annual leave
to do so; and
1 [2015] FWCFB 3406
2 [2015] FWCFB 5771
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DECISION
AUSTRALIA FairWork Commission
http://www.fwc.gov.au/documents/decisionssigned/html/2015fwcfb3406.htm
http://www.fwc.gov.au/documents/decisionssigned/html/2015fwcfb5771.htm
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where employees had insufficient or no accrued annual leave to cover the full period
of the closing, they would be required to take leave without pay for the relevant
period.3
[3] The Full Bench was not persuaded to grant the employers’ claim for three reasons:
(1) Section 93(3) of the Fair Work Act 2009 (FW Act) empowers award terms
requiring an employee to take paid annual leave only if the requirement was
reasonable. The Full Bench was not satisfied that the clause was reasonable
because of the breadth of its expression; in particular, there was no restriction on
the number of times a close-down can occur in a 12-month period, no restriction
on the duration of the close-down, and the four-week notice period was not
reasonable given the breadth of the provision.
(2) While it was desirable that provisions dealing with the taking of annual leave be
uniform across modern awards, close-down provision were an exception to this
general proposition and warranted consideration on an award-by-award basis.
(3) The employer proponents of the claim had not established a merit case sufficient
to warrant granting the claim.4
[4] The Full Bench left open the capacity for parties to seek variations of individual modern
awards to vary an existing shutdown provision or to insert an appropriate provision.5
[5] In a decision issued on 22 September 20166 (September 2016 decision), the Annual
Leave Full Bench dealt with the issue of whether the excessive leave model term should be
included in the Black Coal Award. This was opposed by the Coal Mining Industry Employer
Group (CMIEG). The Full Bench decided that the broad right for an employer to direct the
taking of annual leave without other considerations and requirements, as was the case in
clause 25.4(c) of the Black Coal Award (as at 22 September 2016), was not consistent with
s 93(3) of the FW Act.7 Therefore it was not a term that could be included in a modern award.8
The Full Bench determined to delete clause 25.4 of the Black Coal Award in its entirety and
replace it with the excessive leave model term it had earlier determined, subject to one
modification which is not presently relevant.9 The Full Bench recognised that this variation
might have a consequential effect on the operation of the annual leave shutdown clause then
contained in clause 25.10 of the Black Coal Award, in that there might be a question as to
whether an employee could be directed to take annual leave during a shutdown. In a draft
variation determination published in conjunction with the September 2016 decision, the Full
3 [2015] FWCFB 3406 at [336]
4 Ibid at [370]-[381]
5 Ibid at [382]
6 [2016] FWCFB 6836
7 Ibid at [83]
8 Ibid
9 Ibid at [84]
http://www.fwc.gov.au/documents/decisionssigned/html/2015fwcfb3406.htm
https://www.fwc.gov.au/documents/decisionssigned/html/2016fwcfb6836.htm
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Bench proposed a modification to clause 25.10 to address this issue and invited interested
parties to comment upon this.10
[6] In response to the draft variation determination for the Black Coal Award, the CMIEG
proposed a new shutdown clause to replace the existing clause 25.10. Under its proposed clause,
an employer could require an employee to take annual leave during the period of the shutdown,
subject to the capacity of the employee to elect to take leave without pay during the period of
the shutdown. Employees who were not yet entitled to sufficient annual leave to cover the
shutdown could elect to take annual leave in advance or could otherwise be placed onto unpaid
leave.11
[7] This proposed clause, which was opposed by the Construction, Forestry, Mining and
Energy Union, as it then was (CFMMEU), and the Australian Manufacturing Workers’ Union
(AMWU), was considered by the Annual Leave Full Bench in a decision issued on 27 March
201712 (March 2017 decision). The Full Bench observed that a provision permitting different
arrangements for annual leave during a period of shutdown or close-down may be consistent
with the statutory framework, depending on its terms. It considered that there was some merit
in the CMIEG proposal, but concluded that it was capable of being applied in a manner
inconsistent with s 93(3) of the FW Act and therefore it would be appropriate to impose some
limitations upon the scope of the provision.13 The Full Bench stated the provisional view that a
revised shutdown provision should be inserted into the Back Coal Award in the following terms:
“25.10 Shutdown
(a) Clause 25.10 applies if an employer intends to shutdown all or part of its operation
for a particular period (temporary shutdown period); and wishes to require affected
employees to take leave during that period.
(b) The employer must give the affected employees one month’s written notice of a
temporary shutdown period.
(c) The employer must give immediate written notice of a temporary shutdown period
to any employee who is engaged after the notice is given under paragraph (b) and
who will be affected by that period.
(d) The following applies to any affected employee during a temporary shutdown
period:
(i) if the employee has accrued an entitlement to paid annual leave the employee
may elect to take some or all of the leave during the temporary shutdown period
and may also elect to take unpaid leave to cover any part of the temporary
shutdown period;
10 Ibid at [85]-[86]; draft variation determination
11 [2017] FWCFB 959 at [13]
12 Ibid
13 Ibid at [29]-[33]
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/schedule-draft-determinations-october-2016.pdf
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(ii) if the employee does not elect to take paid annual leave or unpaid leave to cover
the whole of the temporary shutdown period, then the employer may direct the
employee to take a period of accrued paid annual leave or unpaid leave to cover
the whole of the temporary shutdown period;
(iii)if the employee has not accrued an entitlement to any paid annual leave, the
employer may direct the employee to take leave without pay to cover the whole
of the temporary shutdown period.
(e) A direction by the employer under clause 25.10(d)(ii):
(i) must be in writing; and
(ii) must be reasonable.
(f) The employee must take paid annual leave or unpaid annual leave in accordance
with a direction under clause 25.10(d)(ii)
(g) In determining the amount of paid annual leave to which an employee has accrued
an entitlement, any period of paid annual leave taken in advance by the employee,
in accordance with an agreement under clause 25.9, to which an entitlement has not
been accrued is to be taken into account.
(h) When an employer shuts down all or part of its operation under this provision,
clauses 25.4 to 25.6 do not apply to employees directly affected by the shutdown
and this clause will apply.”
[8] The Full Bench also said:
“[39] As observed by the CFMEU, this is the first occasion on which we have given
detailed consideration to the need for a stand down term to be consistent with s.93(3) of
the FW Act. It is for that reason that we have only expressed a provisional view in
respect of this issue. We also acknowledge that the adoption of the provisional views
expressed is likely to have implications for existing shutdown terms in other modern
awards. There are some 81 modern awards which presently contain shutdown (or
closedown provisions). The relevant provisions are set in Attachment A and we note
that there are a variety of approaches including some modern awards where the
provisions operate more narrowly than the clause under consideration here. We propose
to invite submissions from the parties interested in the Black Coal Award and those
interested in the other 80 modern awards which contain shutdown provisions.”
[9] Interested parties were invited to provide submissions in response to the provisional
view. A number of submissions were subsequently received, including from the CMIEG, the
CFMMEU, the AMWU and the Australian Industry Group (Ai Group). Relevantly for the
present proceedings, the submissions of the CFMMEU and the AMWU both contended, among
other things, that the capacity of an employer to direct the taking of leave without pay in
proposed clauses 25.10(d)(ii) and (iii) amounted to a right to stand down the employee and, as
such, was not permitted to be included in a modern award. The AMWU in particular submitted
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that stand down was not included in the list of matters permitted to be the subject of award
terms in s 139 of the FW Act, and stand down was specifically dealt with in s 524 of the FW
Act.
[10] The Annual Leave Full Bench conducted a hearing on 5 May 2017 to receive further
submissions concerning the provisional views expressed in the March 2017 decision. In a
Statement14 issued by the President on 15 May 2017 it was noted that, at the hearing, parties
were directed to file submissions “clarifying their position with respect to the inclusion of a
power to direct employees to take unpaid annual leave”. The Statement further noted that the
CMIEG had filed a revised proposed shutdown clause. This revised proposal omitted any
capacity for the employer to require an employee to take unpaid annual leave during a
shutdown. The Statement invited interested parties to make submissions in response to the
CMIEG proposal. However, after the CFMMEU stated its opposition to the proposal, the
CMIEG withdrew it and the parties reverted to their original positions in respect of the
provisional views stated in the March 2017 decision.
[11] Directions were issued on 4 August 2017 to finalise the matter, including by way of the
receipt of evidence and the listing of a hearing on 9 October 2017. The parties were also directed
to consider a revised draft of clause 25.10 which, relevantly, omitted any capacity for the
employer to direct an employee to take leave without pay but retained an entitlement for the
employee to elect to take leave without pay instead of taking annual leave during a shutdown
period.
[12] Submissions from the CMIEG, the CFMMEU and the AMWU were received in
response. The CMIEG proposed a further draft clause 25.10 which relevantly provided that an
employer could direct an employee to take annual leave during a shutdown and, where the
employee has an insufficient annual leave accrual, the employee would be taken to be on leave
without pay for the relevant period. In response, both the CFMMEU and the AMWU submitted
that it remained the case that a provision of this nature deeming the employee to be on leave
without pay amounted to a stand down, which was not permitted by the FW Act to be included
in a modern award. The unions accepted that an employee could elect to take leave without pay
during a shutdown, but the CFMMEU in particular submitted that any such leave without pay
should count as service. Both unions also opposed the inclusion in the Black Coal Award of a
provision under which employees could be required to take annual leave during a shutdown
subject only to a constraint of reasonableness.
[13] In a decision issued on 19 October 201715 (October 2017 decision) the Annual Leave
Full Bench finalised the form of the revised shutdown clause to be included in the Black Coal
Award. It determined, subject to one modification, to adopt the revised 4 August 2017 proposal.
In respect of the capacity to direct the taking of accrued paid annual leave during a shutdown,
the Full Bench determined that the revised clause met the reasonableness requirement of s 93(3)
in that:
“(i) The term only applies to temporary shutdowns.
14 [2017] FWC 2662
15 [2017] FWCFB 5394
https://www.fwc.gov.au/documents/decisionssigned/html/2017fwc2662.htm
https://www.fwc.gov.au/documents/decisionssigned/html/2017fwcfb5394.htm
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(ii) The employer must give affected employees 28 days’ written notice of a temporary
shutdown period.
(iii) The power to direct an employee to take a period of accrued paid annual leave only
arises if the employee does not elect to take paid annual leave or leave without pay to
cover the whole of the temporary shutdown period.
(iv) A direction to take a period of accrued paid leave must be in writing and must be
reasonable.”16
[14] The Full Bench also rejected the CMIEG proposal in respect of employees being “taken
to be” on leave without pay if they did not have sufficient accrued annual leave to cover the
period of the shutdown. The Full Bench accepted, without giving any reasons, that the
CMIEG’s proposed provision was capable of falling within the scope of s 139(1)(h) as being a
matter about “leave”.17 However, it rejected the proposition on the merits, determining that it
was not apparent why it was necessary, in order to meet the modern awards objective, to insert
such a term in the Black Coal Award, and it rejected the proposition that the absence of such a
provision would render a shutdown clause nugatory.18 The Full Bench declined to deal with the
issue raised by the CFMMEU as to whether any leave without pay should count as service,
saying:
“[67] We are not satisfied that it is appropriate to deal with the issue of service at this
time. The issue raised may have implications in the review of all shutdown terms in
modern awards. It is appropriate that it be considered in the context of a broader review
of shutdown terms.”
[15] The Black Coal Award was ultimately varied in accordance with the October 2017
decision on 9 November 2017.19
[16] In a Statement20 issued on 9 November 2017, 81 identified modern awards containing
shutdown provisions, and the continuity of service issue referred to in the October 2017
decision, were referred to the Plain Language Full Bench for determination of the final form of
a shutdown clause in each award.
[17] The Plain Language Full Bench issued a Statement on 28 February 201921 (February
2019 statement) containing, in Attachment C, an updated list of modern awards (not including
the Black Coal Award) containing shutdown provisions. These awards were, at the date of the
February 2019 statement, 2010 awards. As at the date of this decision all these awards except
for the Children’s Services Award 2010 (Children’s Award) have been consolidated as 2020
awards and we refer to them as such in this decision unless stated otherwise. Attachment A to
this decision sets out a further updated list of the 78 modern awards (excluding the Children’s
16 Ibid at [29]
17 Ibid at [32]; we note that the reference in the decision to s 139(1)(b) is a typographical error.
18 Ibid at [33]-[62]
19 Ibid at [76]; PR597595
20 [2017] FWC 5861
21 [2019] FWCFB 1255
https://www.fwc.gov.au/documents/awardsandorders/html/pr597595.htm
https://www.fwc.gov.au/documents/decisionssigned/html/2017fwc5861.htm
https://www.fwc.gov.au/documents/decisionssigned/html/2019fwcfb1255.htm
[2022] FWCFB 161
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Award, which is dealt with separately in chapter 6 of our decision) that currently contain
shutdown provisions.
[18] In the February 2019 statement, the Plain Language Full Bench asked interested parties
to make submissions on the following matters:
1. Whether the modern awards that currently contain shutdown provisions should be
varied to include the following model term:
XX.XX Shutdown
(a) Clause XX.XX applies if an employer intends to shut down all or part of its
operation for a particular period (temporary shutdown period) and wishes
to require affected employees to take leave during that period.
(b) The employer must give the affected employees 28 days’ written notice of
a temporary shutdown period, or any shorter period agreed between them
and the employer.
(c) The employer must give written notice of a temporary shutdown period to
any employee who is engaged after the notice is given under clause
XX.XX(b) and who will be affected by that period, as soon as reasonably
practicable after the employee is engaged.
(d) The following applies to any affected employee during a temporary
shutdown period:
(i) the employee may elect to cover the temporary shutdown period by
doing one, or a combination of 2 or more, of the following:
taking paid annual leave if the employee has accrued an entitlement
to such leave;
taking leave without pay;
taking annual leave in advance in accordance with an agreement
under clause XX.XX;
(ii) if the employee does not make an election under clause XX.XX(d)(i)
that covers the whole of the temporary shutdown period, then the employer
may direct the employee to take a period of paid annual leave to which the
employee has accrued an entitlement.
(e) A direction by the employer under clause XX.XX(d)(ii):
(i) must be in writing; and
(ii) must be reasonable.
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(f) The employee must take paid annual leave in accordance with a direction
under clause XX.XX(d)(ii).
(g) In determining the amount of paid annual leave to which an employee has
accrued an entitlement, any period of paid annual leave taken in advance by
the employee, in accordance with an agreement under clause XX.XX, to
which an entitlement has not been accrued, is to be taken into account.
(h) If a temporary shutdown period includes a day or part-day that is a public
holiday and would have been a working day for the employee had the
employee not been on leave in accordance with clause XX.XX, then the
employee is taken not to be on leave on that day or part-day.
(i) Clauses XX.XX to XX.XX do not apply to a period of annual leave that an
employee is required to take during a temporary shutdown period in
accordance with clause XX.XX.
2. Any award-specific variations that should be made; and
3. Whether unpaid leave taken during a shutdown period counts as service.
[19] It may be noted the proposed model term reproduces the shutdown provision inserted in
the Black Coal Award by the Annual Leave Full Bench (except for some introductory words in
what is now clause 24.9(a) of the 2020 version of the Black Coal Award). The Full Bench stated
in the February 2019 statement that the above matters would be decided on the papers unless
any party requested a formal hearing. No such requests were received.
[20] Submissions were received from:
Australian Business Industrial & New South Wales Business Chamber (ABI);22
Australian Manufacturing Workers’ Union (AMWU);23
Australian Hotels Association (AHA);24
Australian Workers’ Union (AWU);25
Australian Industry Group (Ai Group);26
Australasian Meat Industry Employees Union (AMIEU);27
Construction, Forestry, Maritime, Mining and Energy Union – Mining and Energy
Division (CFMMEU – M&E);28
Construction, Forestry, Maritime, Mining and Energy Union – Manufacturing
Division (CFMMEU – MD);29
22 Submission, ABI & NSWBC, 1 April 2019
23 Submission, AMWU, 27 March 2019
24 Submission, AHA, 22 March 2019
25 Submission, AWU, 25 March 2019
26 Submission, Ai Group, 22 March 2019
27 Submission, AMIEU, 22 March 2019
28 Submission, CFMMEU – M&E, 22 March 2019
29 Submission, CFMMEU – MD, 8 April 2019
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-abinswbc-010419.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201815-17-sub-draftsch-amwu-270319.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201516-sub-hospitality-aha-220319.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-awu-250319.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-aig-220319.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-amieu-220319.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-cfmmeu-220319.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-cfmmeu-md-080419.pdf
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Construction, Forestry, Maritime, Mining and Energy Union – Construction and
General Division (CFMMEU – C&G);30
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and
Allied Services Union of Australia (CEPU);31
CPSU, the Community and Public Sector Union (CPSU);32
Flight Attendants’ Association of Australia (FAAA).33
Housing Industry Association (HIA);34
Master Builders Australia (MBA);35 and
United Voice (now the United Workers Union) (UWU).36
[21] Submissions in reply were received from:
Ai Group;37
AMIEU;38 and
CFMMEU – C&G.39
[22] This decision deals with the outstanding matters in respect of shutdown terms. The Full
Bench was reconstituted on 6 July 2022 for the purpose of finalising the shutdown provisions
in the awards identified in the February 2019 statement.
[23] We propose to first set out the legislative framework and the history of shutdown
provisions before we turn to the submissions made in respect of the three questions in [18]
above.
2. The legislative framework
[24] Section 93(3) of the FW Act prescribes the circumstances in which an employee may
be required to take annual leave as follows:
(3) A modern award or enterprise agreement may include terms requiring an employee,
or allowing for an employee to be required, to take paid annual leave in particular
circumstances, but only if the requirement is reasonable.
[25] The Explanatory Memorandum to the Fair Work Bill 2008 provides guidance regarding
the intention of subclause 93(3) of the Bill and what factors may be considered when
determining if a requirement is “reasonable”:
30 Submission, CFMMEU – C&G, 2 April 2019
31 Submission, CEPU, 28 March 2019
32 Submission, CPSU, 29 March 2019
33 Submission, FAAA, 3 May 2019
34 Submission, HIA, 22 March 2019
35 Submission, MBA, 22 March 2019
36 Submission, United Voice, 4 April 2019
37 Submission in Reply, Ai Group, 18 April 2019
38 Submission in Reply, AMIEU, 17 May 2019
39 Submission in Reply, CFMMEU – C&G, 17 April 2019
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-cfmmeu-020419.pdf
https://www.fwc.gov.au/sites/awardsmodernfouryr/am201615-sub-cepu-290319.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-cpsu-290319.pdf
https://www.fwc.gov.au/sites/awardsmodernfouryr/am201615-sub-faaa-030519.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-hia-220319.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-mba-250319.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-uv-040419.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-aigroup-180419.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-amieu-170519.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-cfmmeu-170419.pdf
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“Subclause 93(3) permits terms to be included in an award or agreement that require an
employee, or that enable an employer to require or direct an employee, to take paid
annual leave in particular circumstances, but only if the requirement is reasonable. This
may include the employer requiring an employee to take a period of annual leave to
reduce the employee’s excessive level of accrual or if the employer decides to shut
down the workplace over the Christmas/New Year period.
In assessing the reasonableness of a requirement or direction under this subclause it is
envisaged that the following are all relevant considerations:
the needs of both the employee and the employer’s business;
any agreed arrangement with the employee;
the custom and practice in the business;
the timing of the requirement or direction to take leave; and
the reasonableness of the period of notice given to the employee to take leave.”40
[26] In relation to the continuity of service issue, “service” and “continuous service” are
defined in s 22 of the FW Act in the following way:
22 Meanings of service and continuous service
General meaning
(1) A period of service by a national system employee with his or her national system
employer is a period during which the employee is employed by the employer, but
does not include any period (an excluded period) that does not count as service
because of subsection (2).
(2) The following periods do not count as service:
(a) any period of unauthorised absence;
(b) any period of unpaid leave or unpaid authorised absence, other than:
(i) a period of absence under Division 8 of Part 2-2 (which deals with
community service leave); or
(ii) a period of stand down under Part 3-5, under an enterprise agreement
that applies to the employee, or under the employee’s contract of
employment; or
(iii) a period of leave or absence of a kind prescribed by the regulations;
(c) any other period of a kind prescribed by the regulations.
40 Fair Work Bill 2008: Explanatory Memorandum at [381]-[382]
http://parlinfo.aph.gov.au/parlInfo/download/legislation/ems/r4016_ems_929eaf6c-f4aa-44dc-b9e1-e0a6786a7cff/upload_pdf/321247.pdf;fileType=application/pdf
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(3) An excluded period does not break a national system employee's continuous
service with his or her national system employer, but does not count towards the
length of the employee’s continuous service.
Meaning for Divisions 4 and 5, and Subdivision A of Division 11, of Part 2-2
(4) For the purposes of Divisions 4 and 5, and Subdivision A of Division 11, of Part
2-2:
(a) a period of service by a national system employee with his or her national
system employer is a period during which the employee is employed by the
employer, but does not include:
(i) any period of unauthorised absence; or
(ii) any other period of a kind prescribed by the regulations; and
(b) a period referred to in subparagraph (a)(i) or (ii) does not break a national
system employee’s continuous service with his or her national system
employer, but does not count towards the length of the employee’s
continuous service; and
(c) subsections (1), (2) and (3) do not apply.
Note: Divisions 4 and 5, and Subdivision A of Division 11, of Part 2-2 deal,
respectively, with requests for flexible working arrangements, parental leave and
related entitlements, and notice of termination or payment in lieu of notice.
(4A) Regulations made for the purposes of subparagraph (4)(a)(ii) may prescribe
different kinds of periods for the purposes of different provisions to which
subsection (4) applies. If they do so, paragraph (4)(b) applies accordingly.
[27] Section 136(1) of the FW Act deals with what terms may or must be included in modern
awards as follows:
136 What can be included in modern awards
Terms that may or must be included
(1) A modern award must only include terms that are permitted or required by:
(a) Subdivision B (which deals with terms that may be included in modern
awards); or
(b) Subdivision C (which deals with terms that must be included in modern
awards); or
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(c) section 55 (which deals with interaction between the National Employment
Standards and a modern award or enterprise agreement); or
(d) Part 2-2 (which deals with the National Employment Standards).
Note 1: Subsection 55(4) permits inclusion of terms that are ancillary or incidental
to, or that supplement, the National Employment Standards.
Note 2: Part 2-2 includes a number of provisions permitting inclusion of terms about
particular matters.
[28] In respect of s 136(1)(a), s 139(1)(a) provides:
139 Terms that may be included in modern awards--general
(1) A modern award may include terms about any of the following matters:
(a) minimum wages (including wage rates for junior employees, employees
with a disability and employees to whom training arrangements apply), and:
(i) skill-based classifications and career structures; and
(ii) incentive-based payments, piece rates and bonuses;
(b) type of employment, such as full-time employment, casual employment,
regular part-time employment and shift work, and the facilitation of flexible
working arrangements, particularly for employees with family
responsibilities;
(c) arrangements for when work is performed, including hours of work,
rostering, notice periods, rest breaks and variations to working hours;
(d) overtime rates;
(e) penalty rates, including for any of the following:
(i) employees working unsocial, irregular or unpredictable hours;
(ii) employees working on weekends or public holidays;
(iii) shift workers;
(f) annualised wage arrangements that:
(i) have regard to the patterns of work in an occupation, industry or
enterprise; and
(ii) provide an alternative to the separate payment of wages and other
monetary entitlements; and
(iii) include appropriate safeguards to ensure that individual employees are
not disadvantaged;
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(g) allowances, including for any of the following:
(i) expenses incurred in the course of employment;
(ii) responsibilities or skills that are not taken into account in rates of pay;
(iii) disabilities associated with the performance of particular tasks or work
in particular conditions or locations;
(h) leave, leave loadings and arrangements for taking leave;
(i) superannuation;
(j) procedures for consultation, representation and dispute settlement.
[29] Section 524(1) of the FW Act deals with circumstances in which an employer can stand
down employees, and s 524(3) provides that the employer is not required to pay the employee
for a period of stand down authorised by s 524(1). Section 524(2) provides:
(2) However, an employer may not stand down an employee under subsection (1)
during a period in which the employee cannot usefully be employed because of a
circumstance referred to in that subsection if:
(a) an enterprise agreement, or a contract of employment, applies to the
employer and the employee; and
(b) the agreement or contract provides for the employer to stand down the
employee during that period if the employee cannot usefully be employed
during that period because of that circumstance.
Note 1: If an employer may not stand down an employee under subsection (1), the
employer may be able to stand down the employee in accordance with the enterprise
agreement or the contract of employment.
Note 2: An enterprise agreement or a contract of employment may also include terms
that impose additional requirements that an employer must meet before standing down
an employee (for example requirements relating to consultation or notice).
[30] Section 156 of the FW Act previously dealt with the conduct of 4 yearly reviews of
modern awards. Section 156 was repealed by the Fair Work Amendment (Repeal of 4 Yearly
Reviews and Other Measures) Act 2018 (Cth) effective retrospectively from 1 January 2018,
but cl 26 of Sch 1 to the Act (which was added by the amending Act) requires the Commission
to continue to apply s 156 to the current 4 yearly review as if it had not been repealed.
Accordingly, for present purposes, s 156 must be applied as if it remains in force.
[31] Section 156(2) provides that the Commission must review all modern awards and may,
among other things, make determinations varying modern awards. In this context, “review” has
its ordinary and natural meaning of “survey, inspect, re-examine or look back upon”.41 The
41 Shop, Distributive and Allied Employees Association v The Australian Industry Group [2017] FCAFC 161, 253 FCR 401 at
[38]
http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/fwa2009114/s789gc.html#employee
[2022] FWCFB 161
14
discretion in s 156(2)(b)(i) to make determinations varying modern awards in a 4 yearly review,
is expressed in general, unqualified, terms.
[32] If a power to decide is conferred by a statute and the context (including the subject
matter to be decided) provides no positive indication of the considerations by reference to which
a decision is to be made, a general discretion confined only by the subject matter, scope and
purposes of the legislation will ordinarily be implied.42 However, a number of provisions of the
FW Act which are relevant to the 4 yearly review operate to constrain the breadth of the
discretion in s 156(2)(b)(i). In particular, the review function in Part 2-3 of the FW Act involves
the performance or exercise of the Commission’s “modern award powers” (see s 134(2)(a)). It
follows that the “modern awards objective” in s 134 applies to the 4 yearly review.
[33] Section 138 (achieving the modern awards objective) and a range of other provisions of
the FW Act are also relevant to the 4 yearly review: s 3 (object of the Act); s 55 (interaction
with the National Employment Standards (NES)); Part 2-2 (the NES); s 135 (special provisions
relating to modern award minimum wages); Division 3 (terms of modern awards) and
Division 6 (general provisions relating to modern award powers) of Part 2-3; s 284 (the
minimum wages objective); s 577 (performance of functions etc by the Commission); s 578
(matters the Commission must take into account in performing functions etc); and Division 3
of Part 5-1 (conduct of matters before the Commission).
[34] The modern awards objective is in s 134 of the FW Act:
134 The modern awards objective
What is the modern awards objective?
(1) The FWC must ensure that modern awards, together with the National
Employment Standards, provide a fair and relevant minimum safety net of terms
and conditions, taking into account:
(a) relative living standards and the needs of the low paid; and
(b) the need to encourage collective bargaining; and
(c) the need to promote social inclusion through increased workforce
participation; and
(d) the need to promote flexible modern work practices and the efficient and
productive performance of work; and
(da) the need to provide additional remuneration for:
(i) employees working overtime; or
(ii) employees working unsocial, irregular or unpredictable hours; or
42 O’Sullivan v Farrer (1989) 168 CLR 210 at [216] per Mason CJ, Brennan, Dawson and Gaudron JJ
[2022] FWCFB 161
15
(iii) employees working on weekends or public holidays; or
(iv) employees working shifts; and
(e) the principle of equal remuneration for work of equal or comparable value;
and
(f) the likely impact of any exercise of modern award powers on business,
including on productivity, employment costs and the regulatory burden; and
(g) the need to ensure a simple, easy to understand, stable and sustainable
modern award system for Australia that avoids unnecessary overlap of
modern awards; and
(h) the likely impact of any exercise of modern award powers on employment
growth, inflation and the sustainability, performance and competitiveness of
the national economy.
This is the modern awards objective.
When does the modern awards objective apply?
(2) The modern awards objective applies to the performance or exercise of the FWC’s
modern award powers, which are:
(a) the FWC’s functions or powers under this Part; and
(b) the FWC’s functions or powers under Part 2-6, so far as they relate to
modern award minimum wages.
Note: The FWC must also take into account the objects of this Act and any
other applicable provisions. For example, if the FWC is setting, varying or
revoking modern award minimum wages, the minimum wages objective also
applies (see section 284).
[35] The modern awards objective is to “ensure that modern awards, together with the NES,
provide a fair and relevant minimum safety net of terms and conditions”, taking into account
the particular considerations identified in ss 134(1)(a)-(h) of the FW Act (the s 134
considerations).
[36] The modern awards objective is very broadly expressed.43 It is a composite expression
which requires that modern awards, together with the NES, provide “a fair and relevant
43 Shop, Distributive and Allied Employees Association v National Retail Association (No 2) [2012] FCA 480, 205 FCR 227
at [35]
[2022] FWCFB 161
16
minimum safety net of terms and conditions”, taking into account s 134 considerations.44
“Fairness” in this context is to be assessed from the perspective of the employees and
employers covered by the modern award in question.45
[37] The obligation to take into account the s 134 considerations means that each of these
matters, insofar as they are relevant, must be treated as a matter of significance in the decision-
making process.46 No particular primacy is attached to any of the s 134 considerations47 and not
all of the matters identified will necessarily be relevant in the context of a particular proposal
to vary a modern award.
[38] It is not necessary to make a finding that the modern award fails to satisfy one or more
of the s 134 considerations as a prerequisite to the variation of a modern award.48 Generally
speaking, the s 134 considerations do not set a particular standard against which a modern award
can be evaluated; many of them may be characterised as broad social objectives.49 In giving
effect to the modern awards objective the Commission is performing an evaluative function
taking into account the matters in ss 134(1)(a)-(h) of the FW Act and assessing the qualities of
the safety net by reference to the statutory criteria of fairness and relevance.
[39] Further, the matters which may be taken into account are not confined to the s 134
considerations. As the Full Court of the Federal Court observed in Shop, Distributive and Allied
Employees Association v The Australian Industry Group:50
“What must be recognised, however, is that the duty of ensuring that modern awards,
together with the National Employment Standards, provide a fair and relevant minimum
safety net of terms and conditions itself involves an evaluative exercise. While the
considerations in s 134(a)-(h) inform the evaluation of what might constitute a ‘fair and
relevant minimum safety net of terms and conditions’, they do not necessarily exhaust
the matters which the FWC might properly consider to be relevant to that standard, of
a fair and relevant minimum safety net of terms and conditions, in the particular
circumstances of a review. The range of such matters ‘must be determined by
implication from the subject matter, scope and purpose of the’ Fair Work Act (Minister
for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 at 39-
40).”51
44 4 Yearly Review of Modern Awards—Penalty Rates (Hospitality and Retail Sectors) Decision [2017] FWCFB 1001, 256
IR 1 at [128]; Shop, Distributive and Allied Employees Association v The Australian Industry Group [2017] FCAFC 161,
253 FCR 401 at [41]-[44]
45 [2018] FWCFB 3500 at [21]-[24]
46 Edwards v Giudice (1999) 94 FCR 561 at [5]; Australian Competition and Consumer Commission v Leelee Pty Ltd [1999]
FCA 1121 at [81]-[84]; National Retail Association v Fair Work Commission (2014) 225 FCR 154 at [56]
47 Shop, Distributive and Allied Employees Association v The Australian Industry Group [2017] FCAFC 161, 253 FCR 401 at
[33]
48 National Retail Association v Fair Work Commission (2014) 225 FCR 154 at [105]-[106]
49 Ibid at [109]-[110]; though the Court was considering a different statutory context, this observation is applicable to the
Commission’s task in the Review.
50 [2017] FCAFC 161, 253 FCR 401 at [161]
51 Ibid at [48]
[2022] FWCFB 161
17
[40] Section 138 of the FW Act emphasises the importance of the modern awards objective:
138 Achieving the modern awards objective
A modern award may include terms that it is permitted to include, and must include
terms that it is required to include, only to the extent necessary to achieve the modern
awards objective and (to the extent applicable) the minimum wages objective.
[41] What is “necessary” to achieve the modern awards objective in a particular case is a
value judgment, taking into account the s 134 considerations to the extent that they are relevant
having regard to the context, including the circumstances pertaining to the particular modern
award, the terms of any proposed variation and the submissions and evidence.52
[42] In Shop, Distributive and Allied Employees Association v National Retail Association
(No 2)53 the Federal Court (Tracey J) considered what it meant for the Commission to be
satisfied that making a determination varying a modern award (outside a 4 yearly review) was
“necessary to achieve the modern awards objective” for the purposes of s 157(1) as follows:
“The statutory foundation for the exercise of FWA’s power to vary modern awards is to
be found in s 157(1) of the Act. The power is discretionary in nature. Its exercise is
conditioned upon FWA being satisfied that the variation is ‘necessary’ in order ‘to
achieve the modern awards objective’. That objective is very broadly expressed: FWA
must ‘provide a fair and relevant minimum safety net of terms and conditions’ which
govern employment in various industries. In determining appropriate terms and
conditions regard must be had to matters such as the promotion of social inclusion
through increased workforce participation and the need to promote flexible working
practices.
…
The question under this ground then becomes whether there was material before the
Vice President upon which he could reasonably be satisfied that a variation to the Award
was necessary, at the time at which it was made, in order to achieve the statutory
objective.
…
In reaching my conclusion on this ground I have not overlooked the SDA’s subsidiary
contention that a distinction must be drawn between that which is necessary and that
which is desirable. That which is necessary must be done. That which is desirable does
not carry the same imperative for action. Whilst this distinction may be accepted it must
also be acknowledged that reasonable minds may differ as to whether particular action
is necessary or merely desirable. It was open to the Vice President to form the opinion
that a variation was necessary.”54
[43] The above observation, in particular the distinction between that which is “necessary”
and that which is merely “desirable” is apposite to s 138, including the observation that
52 See generally: Shop, Distributive and Allied Employees Association v National Retail Association (No 2) [2012] FCA 480,
205 FCR 227
53 Ibid
54 Ibid at [35]-[37] and [46]
[2022] FWCFB 161
18
reasonable minds may differ as to whether a particular award term or proposed variation is
necessary, as opposed to merely desirable. What is “necessary” to achieve the modern awards
objective in a particular case is a value judgment, taking into account the s 134 considerations
to the extent that they are relevant having regard to the context, including the circumstances
pertaining to the particular modern award, the terms of any proposed variation and the
submissions and evidence.55
[44] In the 4 Yearly Review of Modern Awards—Penalty Rates (Hospitality and Retail
Sectors) Decision56 the Full Bench summarised the general propositions applying to the
Commission’s task in the 4 yearly review, as follows:
“1. The Commission’s task in the Review is to determine whether a particular modern
award achieves the modern awards objective. If a modern award is not achieving the
modern awards objective then it is to be varied such that it only includes terms that are
‘necessary to achieve the modern awards objective’ (s.138). In such circumstances
regard may be had to the terms of any proposed variation, but the focal point of the
Commission’s consideration is upon the terms of the modern award, as varied.
2. Variations to modern awards must be justified on their merits. The extent of the merit
argument required will depend on the circumstances. Some proposed changes are
obvious as a matter of industrial merit and in such circumstances it is unnecessary to
advance probative evidence in support of the proposed variation. Significant changes
where merit is reasonably contestable should be supported by an analysis of the relevant
legislative provisions and, where feasible, probative evidence.
3. In conducting the Review it is appropriate that the Commission take into account
previous decisions relevant to any contested issue. For example, the Commission will
proceed on the basis that prima facie the modern award being reviewed achieved the
modern awards objective at the time it was made. The particular context in which those
decisions were made will also need to be considered.
4. The particular context may be a cogent reason for not following a previous Full Bench
decision, for example:
the legislative context which pertained at that time may be materially
different from the Fair Work Act 2009 (Cth);
the extent to which the relevant issue was contested and, in particular, the
extent of the evidence and submissions put in the previous proceeding will
bear on the weight to be accorded to the previous decision; or
the extent of the previous Full Bench’s consideration of the contested issue.
The absence of detailed reasons in a previous decision may be a factor in
considering the weight to be accorded to the decision.”57
55 Ibid
56 [2017] FWCFB 1001, 256 IR 1 at [269]
57 Ibid at [269]
[2022] FWCFB 161
19
[45] Where an interested party applies for a variation to a modern award as part of the 4
yearly review, the proper approach to the assessment of that application was described by a Full
Court of the Federal Court in CFMEU v Anglo American Metallurgical Coal Pty Ltd as
follows:58
“[28] The terms of s 156(2)(a) require the Commission to review all modern awards
every four years. That is the task upon which the Commission was engaged. The
statutory task is, in this context, not limited to focusing upon any posited variation as
necessary to achieve the modern awards objective, as it is under s 157(1)(a). Rather, it
is a review of the modern award as a whole. The review is at large, to ensure that the
modern awards objective is being met: that the award, together with the National
Employment Standards, provides a fair and relevant minimum safety net of terms and
conditions. This is to be achieved by s 138 – terms may and must be included only to
the extent necessary to achieve such an objective.
[29] Viewing the statutory task in this way reveals that it is not necessary for the
Commission to conclude that the award, or a term of it as it currently stands, does not
meet the modern award objective. Rather, it is necessary for the Commission to review
the award and, by reference to the matters in s 134(1) and any other consideration
consistent with the purpose of the objective, come to an evaluative judgment about the
objective and what terms should be included only to the extent necessary to achieve the
objective of a fair and relevant minimum safety net.”
[46] In the same decision the Full Court also said: “...the task was not to address a
jurisdictional fact about the need for change, but to review the award and evaluate whether the
posited terms with a variation met the objective.”59
[47] We will adopt these principles in this decision.
3. The history of shutdown provisions
[48] There is a long history of shutdown provisions being included in awards prior to the
commencement of the FW Act. Such provisions were usually included in awards to facilitate
the taking of annual leave entitlements. For example, clause 21 of the Metal Trades Award
195260 contained the following provision relating to annual shutdowns:
Annual Close Down
(m) Where an employer closes down his plant, or a section or sections thereof, for the
purposes of allowing annual leave to all or the bulk of the employees in the plant,
or section or sections concerned, the following provisions shall apply:—
58 CFMEU v Anglo American Metallurgical Coal Pty Ltd [2017] FCAFC 123, 252 FCR 337
59 Ibid at [46]
60 [1952] CthArbRp 11, 73 CAR 324 at 446
[2022] FWCFB 161
20
(i) He may by giving not less than one month’s notice of his intention so to do
stand off for the duration of the close down all employees in the plant or
section or sections concerned, and allow to those who are not then qualified
for two full weeks’ leave paid leave on a proportionate basis of one-sixth of
a week’s leave for each completed month of continuous service.
(ii) An employee who has then qualified for two full weeks’ leave, and has also
completed a further month or more of continuous service shall be allowed
his leave, and shall subject to sub-clause (f) hereof also be paid one-sixth of
a week’s wages in respect of each completed month of continuous service
performed since the close of his last twelve-monthly qualifying period.
(iii) The next twelve-monthly qualifying period for each employee affected by
such close down shall commence from the day on which the plant, or section
or sections concerned is reopened for work. Provided that all time during
which an employee is stood off without pay for the purposes of this sub-
clause shall be deemed to be time of service in the next twelve-monthly
qualifying period.
(iv) If in the first year of his service with an employer an employee is allowed
proportionate annual leave under paragraph (i) hereof, and subsequently
within such year lawfully leaves his employment or his employment is
terminated by the employer through no fault of the employee, he shall be
entitled to the benefit of sub-clause (1) of this clause subject to adjustment
for any proportionate leave which he may have been allowed as aforesaid.
[49] Three observations may be made about the above provision: first, the provision is
concerned only with shutdowns for the purpose of allowing annual leave; second, insofar as an
employee does not have a sufficient accrued annual leave entitlement, the employee is “stood
off without pay”; and, third, the period the employee is “stood off” is deemed to be part of the
employee’s service for the next twelve month qualifying period for annual leave. These three
features remained in clause 7.1.12 of the Metal, Engineering and Associated Industries Award
199861 as it was immediately before the commencement of the FW Act.
[50] Another example of a pre-modernisation award provision concerning shutdowns is
clause 32.9 of the National Building and Construction Industry Award 2000,62 which provided:
32.9 Annual close down
32.9.1 Notwithstanding anything contained in this award an employer giving any leave
in conjunction with the Christmas - New Year holidays may, at the employer’s option,
either:
32.9.1(a) stand off without pay during the period of leave any employee who has
not yet qualified under 32.1 hereof, or
61 AP789529CRV
62 AP790741CRV
[2022] FWCFB 161
21
32.9.1(b) stand off for the period of leave any employee who has not qualified
under 32.1 hereof and pay the employee (up to the period of leave then given) at
a rate of one-twelfth of an ordinary week’s wages in respect of each 38 hours’
continuous service (excluding overtime).
32.9.2 Provided that where an employer at their option decides to close down their
establishment at the Christmas - New Year period for the purpose of giving the whole
of the annual leave due to all, or the majority of their employees then qualified for such
leave, the employer shall give at least two months’ notice to their employees of their
intention so to do.
[51] The above provision has the first two of the three characteristics of the provision in the
two metal industry awards identified above, but not the third. Clause 32.3 of the National
Building and Construction Industry Award 2000 provided for employers to allow employees to
take leave prior to their right to take leave accruing, and a formula for employees who had
worked for 12 months in the industry with a number of different employers, to be paid a pro
rata amount for leave based on each completed five working days of continuous service with
the current employer.
[52] A third pre-modernisation example is clause 29.11 of The Coal Mining Industry
(Production and Engineering) Consolidated Award 1997,63 which is solely concerned with the
taking of annual leave during, and notice to be provided for, shutdowns:
29.11 Shutdown
29.11.1 An employer who shuts down all or any part of its operation must give
employees at least 28 days[’] notice of the shutdown or such shorter
period as agreed between the employer and the affected employees.
29.11.2 Employees directly affected by the shutdown who have annual leave
credits may take all or part of those credits during the shutdown period.
29.11.3 Employees directly affected by the shutdown who are not yet entitled
to annual leave, may take leave during the shutdown period calculated
using the formula in 29.9.
[53] Clause 29.9 of The Coal Mining Industry (Production and Engineering) Consolidated
Award 1997 provided a formula for calculating the amount of paid leave to which an employee
with less than a full year’s entitlement to leave or who had not reached an anniversary of
employment, was entitled. Clause 29.10 of that award also provided for an employer to allow
employees to take annual leave before it was credited. Clearly, these provisions dealt with paid
annual leave. The award did not provide for employees to be stood aside without pay if they
did not have sufficient paid leave accrued to cover the period of the shutdown.
63 AP774609
[2022] FWCFB 161
22
[54] A minority of pre-modernisation awards containing shutdown clauses stated that such
provisions were for the purpose of allowing the closedown of the employer’s business or
operations during specified holiday periods or to meet the employer’s operational requirements,
rather than simply to facilitate the taking of annual leave. A number of pre-modernisation
awards containing shutdown clauses referred to employees taking leave without pay, rather than
being “stood off” or “stood down” if they did not have sufficient accrued paid annual leave
entitlements to cover the period of a shutdown.
[55] Statutory shutdown provisions were introduced in the Workplace Relations Amendment
(Work Choices) Act 2005 (Cth) (Work Choices Act), but only in connection with the taking of
annual leave. The Australian Fair Pay and Conditions Standard established by the Work
Choices Act gave an employer the right to direct employees to take leave during a shutdown
for the whole, or part, of its business. These provisions, set out below, only applied to annual
leave that was credited to employees and employees were required to take at least that amount
of annual leave during a period an employer shut down a business:
92H Rules about taking annual leave
Shut downs
(5) An employee must take an amount of annual leave during a particular period if:
(a) the employee is directed to do so by the employee’s employer because,
during that period, the employer shuts down the business, or any part of the
business, in which the employee works; and
(b) at least that amount of annual leave is credited to the employee.64
[56] As a result of amendments made to the Workplace Relations Act 1996 subsequent to the
Work Choices Act, the then-Australian Industrial Relations Commission (AIRC) was required
to conduct an award modernisation process and, in the course of this process, the AIRC Full
Bench gave consideration to existing annual leave provisions relating to shutdowns. In a
decision issued on 19 December 2008,65 the Full Bench considered annual leave generally and
said:
“[95] As we noted in our statement of 12 September 2008, it has not been possible to
develop a single model clause for annual leave. While some parties have sought greater
uniformity in the area, there is a wide range of differing provisions in the awards and
NAPSAs that we are dealing with. In many cases the provisions are more generous to
employees than the provisions of the NES. Areas in which this can be observed are the
quantum of holiday pay, leave loading and the definition of shift worker. In considering
what should be included in the modern award on each of these matters we have
attempted to identify or formulate a standard entitlement in the area covered by the
modern award rather than preserving a range of differing entitlements. This involves a
64 Workplace Relations Act 1996 (Cth) s 236(5)
65 [2008] AIRCFB 1000
http://www.airc.gov.au/legislation/wr_act/wrwc1-07.htm
https://www.fwc.gov.au/document-search/view/aHR0cHM6Ly9zYXNyY2RhdGFwcmRhdWVhYS5ibG9iLmNvcmUud2luZG93cy5uZXQvZGVjaXNpb25zLzIwMjIvMDIvM0M1RTNCRjMxOTlBMDdGQ0UxRjhFRUU2NTc4QUU1NjIxNTQ2MTE1NTNjNjNmMWQtYzg1MS00ZTBiLTllNzItMGMwZDlkOWI1YmQ2LnBkZg2/1/f6a3a7df-bb23-487a-86e5-5f417294daa9/%5B2008%5D$$AIRCFB$$1000
[2022] FWCFB 161
23
degree of rationalisation at the award level only and will not result in standard
provisions across all awards.”
[57] As part of this consideration, the Full Bench said in relation to shutdowns:
“[97] The provisions in awards and NAPSAs governing annual close-downs vary
significantly. It is preferable that we do not alter provisions which have been
specifically developed for particular industries. We have adopted the approach of
attempting to identify an industry standard in each case. This means there may be some
variation in the close-down provisions.”
[58] Notwithstanding the above statement, shutdown provisions in the modern awards
created during the award modernisation process did change in a relevantly significant respect
in particular industries compared to the predecessor awards. References in the pre-existing
clauses to employees being stood down or stood off during annual closedowns where they did
not have sufficient annual leave accrued were in most cases removed and replaced with
references to the employee taking unpaid leave. This can be seen, for example, in clause 34.7(c)
of the Manufacturing and Associated Industries and Occupations Award 2020 (Manufacturing
Award)66 and clause 31.3(a) of the Building and Construction General On-Site Award 2020
(Building Award).67 In the former case, the provision that the period of the shutdown counts as
service was retained.68 However, there are some cases where (presumably due to an oversight),
reference to employees being stood down or stood off remains – for example, clause 25.8(d) of
the Meat Industry Award 2020 (Meat Award) and clause 24.6(a)(iv) of the Mobile Crane Hiring
Award 2020 (Mobile Crane Award).
[59] These alterations appear to have been made because, while s 139(1)(h) of the FW Act
authorises the Commission to include in modern awards terms about leave and arrangements
for taking leave, the FW Act does not authorise award terms about the stand down of employees
– a matter to which we will return later in this decision. It is also notable that clause 31.3 of the
Building Award limits the operation of annual close down provisions to the Christmas/New
Year holidays, thereby limiting the ability for an employer to direct an employee to take unpaid
leave. Further, clause 31.4 of the Building Award provides for annual leave to be taken in
advance by agreement and sets out mutual rights and obligations in this regard. In contrast, the
Clerks—Private Sector Award 2020 simply provides that an employer could require an
employee to take annual leave as part of a close-down of its operations, by giving at least 4
weeks’ notice, and makes no reference to a direction being given for employees to take unpaid
leave.69
66 Previously clause 41.8(c) of the Manufacturing and Associated Industries and Occupations Award 2010
67 Previously clause 38.3(a) of the Building and Construction General On-Site Award 2010
68 Previously clause 41.8(d), now clause 34.7(d)
69 Clerks—Private Sector Award 2020 clause 32.5
[2022] FWCFB 161
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4. Submissions
4.1 Submissions on whether all modern awards that currently contain shutdown
provisions should be varied to include the model term
[60] The following parties filed general submissions regarding insertion of the model term
in all modern awards that currently contain a shutdown provision70 (listed at Attachment A to
this decision):
ABI;
Ai Group;
AMIEU;
CFMMEU – C&G;
CFMMEU – MD; and
United Voice (as it then was, now UWU).
(i) ABI
[61] ABI opposes the insertion of the model term in the awards that currently contain
shutdown provisions and invites the Commission to conclude:
shutdown provisions have been common in the industrial relations sphere for a
significant period of time;
the existing shutdown provisions are based on broad industrial standards that
applied in various industries prior to 2009;
when awards were modernised in 2010 and the current awards created, the
shutdown provisions in each of the awards satisfied the modern awards objective;
and
the current shutdown provisions are regularly used by businesses.
[62] ABI submits that substantive changes should only be made to the existing shutdown
provisions where there is a cogent basis to do so, as expressed by the Full Bench in the June
2015 decision.71 It contends that the model term differs from the existing shutdown provisions
in material respects:
(1) None of the existing shutdown provisions require an employer’s direction to an
employee pursuant to a shutdown to be “reasonable”, whereas the model term
does – which amounts to a substantive change.
(2) The model term allows an employee to elect to take unpaid leave during a
shutdown even if they have paid annual leave accrued. This would increase the
70 Other than the Black Coal Mining Industry Award 2020
71 [2015] FWCFB 3406 at [382]
[2022] FWCFB 161
25
regulatory burden on employers by removing a legitimate way that they are able
to reduce the liabilities associated with accrued annual leave.
(3) The model term requires employers to implement new procedures that are not
simple or easy to implement.
(4) Currently, 14 awards do not require employers to give a minimum notice period
before implementing a shutdown. The model term does contain that requirement
and therefore this is a substantive change. ABI does not object to the inclusion of
a minimum notice period in the model term provided it remains at 28 days.
(5) Currently, 55 awards do not require employers to give a written direction to
employees prior to implementing a shutdown. The model term contains this
requirement, which amounts to a substantive change. However ABI does not
oppose the model term being inserted subject to the minimum notice period
remaining at 28 days.
(6) Currently, 52 awards allow employers to direct employees take a period of unpaid
leave during a shutdown period, which is an essential clause because it gives
employers the ability to actually shut down their business. ABI submits that if this
ability were removed, it would result in practical and financial difficulties for
employers. This part of the model term is inconsistent with that part of the modern
awards objective in ss 134(1)(f) and (g) of the FW Act.
[63] Should we be minded to insert the model term, ABI submits that it should be amended
in two respects. First, ABI submits that the provisions that enable an employee to elect to take
a period of unpaid leave should be removed or varied so that employees cannot choose to take
unpaid leave instead of accrued annual leave, or if a period of election is given, it should be
limited to seven days. Following those seven days, employers should be able to direct an
employee take accrued leave where no election has occurred. Second, ABI submits that existing
provisions in awards which give employers the ability to direct employees to take unpaid leave
should be retained.
(ii) Ai Group
[64] The Ai Group opposes the variation of those awards in which it has an interest to insert
the model term. It submits the model term would reduce or remove the ability of employers to
direct an employee to take paid or unpaid leave during a shutdown, undermine employers’
ability to implement a shutdown and/or the benefits associated with it, and the model term
would impose practical and administrative burdens on employers.
[65] Ai Group proposes an alternative model term, which is set out below (proposed changes
marked up):
[2022] FWCFB 161
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“XX.XX Shutdown
(a) Clause XX.XX applies if an employer intends to shutdown all or part of its
operation for a particular period (temporary shutdown period) and wishes to
require affected employees to take leave during that period.
(b) The employer must give the affected employees 28 days’ written notice of a
temporary shutdown period, or any shorter period agreed between them and the
employer.
(c) The employer must give written notice of a temporary shutdown period to any
employee who is engaged after the notice is given under paragraph (b) and who
will be affected by that period, as soon as reasonable practicable after the
employee is engaged.
(d) The following applies to any affected employee during a temporary shutdown
period:
(i) the employer may direct the employee to take a period of paid annual leave
to which the employee has accrued an entitlement.
(ii) (i) subject to the agreement of the employer, the employee may elect to
cover the temporary shutdown period by doing one, or a combination of 2
or more, of the following:
taking paid annual leave if the employee has accrued an entitlement
to such leave;
taking leave without pay;
taking annual leave in advance in accordance with an agreement
under clause XX.XX;
(iii) (ii) if the employee does not make an election under subparagraph (i) that
covers the whole of the temporary shutdown period, and the employee does
not have sufficient accrued entitlement to paid annual leave to cover the
entire duration of the temporary shutdown (or it would not be reasonable to
direct the employee to take such leave), then the employer may direct the
employee to take a period of paid annual leave to which the employee has
accrued an entitlement leave without pay that is necessary to cover the
period of the shutdown that would not otherwise be covered by their taking
of paid annual leave.
(e) A direction by the employer under clause XX.XX(d)(ii):
(i) must be in writing; and
(ii) must be reasonable.
[2022] FWCFB 161
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(f) The employee must take paid annual leave or unpaid leave in accordance with a
direction under clause XX.XX(d)(ii).
(g) In determining the amount of paid annual leave to which an employee has accrued
an entitlement, any period of paid annual leave taken in advance by the employee,
in accordance with an agreement under clause XX.XX, to which an entitlement
has not been accrued is to be taken into account.
(h) If a temporary shutdown period includes a day or part-day that is a public holiday
and would have been a working day for the employee had the employee not been
on leave in accordance with clause XX.XX, the employee is taken not to be on
leave on that day or part-day.
(i) Clauses XX.XX to XX.XX do not apply to a period of annual leave that an
employee is required to take during a temporary shutdown period in accordance
with clause XX.XX.”
[66] The Ai Group submits that many of the current shutdown provisions in the awards at
Attachment A are drafted in a way that imply they will be used only to enable a “significant
proportion” of a business’ employees to take annual leave. The right to direct employees to
take annual leave during a shutdown is “essential” for employers, to allow them to reduce leave
liability and manage employee absences, especially in operations which require large amounts
of employees to attend to ensure efficient or productive performance of work. The Ai Group
submits that awards currently providing for a shutdown period “for the purposes of allowing
leave to employees” should not be varied in such a way that removes this employer right.
[67] The Ai Group also submits that the model term does not give an employer the right to
direct an employee to take unpaid leave during a shutdown period, which is not consistent with
the current shutdown provisions in many awards. This would undermine the benefit of a
shutdown and is a “major deficiency”. Where an award does not give an employer this right,
the employer may be forced to pay full-time or part-time employees who did not have enough
leave accrued for the entire shutdown period. The Ai Group submits this may expose employers
to additional costs. The Ai Group submits that the model term should be amended to give
employers this right, or the model term should not be inserted into any award that currently
provides this right.
[68] The Ai Group submits that the model term only gives an employer the right to direct an
employee to take annual leave after the employee has been afforded the opportunity to elect to
take other types of leave (paid annual leave, leave without pay and annual leave in
advance). The Ai Group submits that this is a substantive change and would overturn the
standard practice in many industries. The Ai Group also submits that, in the majority of
circumstances, it is likely that employees would prefer to take paid leave rather than unpaid
leave. The Ai Group contends that many existing awards do not impose this election
requirement on employers and if adopted, the requirement would impose a substantial and
significant administrative burden on employers. The Ai Group submits that this change would
involve developing a system for obtaining and processing employee preferences which is
particularly burdensome for large or geographically diverse employers.
[2022] FWCFB 161
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[69] The Ai Group submits that the model term should be amended to give employers the
ability to make a direction to its workforce to take annual or unpaid leave for all or part of a
shutdown period. This direction should not be subject to employee choice to take unpaid leave
in circumstances where they have paid annual leave accrued. The Ai Group acknowledges that
this direction should be subject to mechanisms that ensure the direction is reasonable. The Ai
Group also accepts that the requirement a direction be reasonable negates the need for additional
complex rules relating to shutdowns and aligns with s 93(3) of the FW Act which provides:
“(3) A modern award or enterprise agreement may include terms requiring an employee,
or allowing for an employee to be required, to take paid annual leave in particular
circumstances, but only if the requirement is reasonable.”
[70] The Ai Group submits that the model term does not impose a timeframe within which
an employee can make an election to take paid annual leave, leave without pay and annual leave
in advance during a shutdown. The Ai Group contends that this would cause a delay for an
employer in implementing a shutdown and create uncertainty as to when a direction under
subclause (e) can be made. The Ai Group submits that if the Commission decides to adopt the
part of the model term that gives employees the opportunity to elect the type of leave they take
during a shutdown, the term should be amended to include a time limit on the making of that
election.
(iii) AMIEU
[71] The AMIEU submits that where shutdown provisions contain provisions that are
tailored to an industry or go beyond the model term, they should be retained.
(iv) CFMMEU – C&G
[72] The CFMMEU – C&G opposes the insertion of the model term into awards currently
containing shutdown provisions, for the following reasons:
(1) The existing shutdown provisions are tailored to the ways various industries
operate and provide better entitlements than the model clause. For example, the
Building Award and the Joinery and Building Trades Award 2020 (Joinery
Award) both limit the operation of the shutdown provision to the Christmas-New
Year period and require greater notice periods from the employer (e.g. 2 months’
notice) of any such close down.
(2) The shutdown provisions have been in force for many years and are well
understood by the parties, and should not be altered without evidence or
substantive reasoning.
(v) CFMMEU – MD
[73] The CFMMEU – MD opposes the model term being inserted in the awards that currently
contain annual leave shutdown provisions. The CFMMEU– MD submits that existing shutdown
provisions have historically been developed to address particular patterns of work or production
[2022] FWCFB 161
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and reflect industry practice, and each provision needs to be considered in context of other
annual leave terms within a specific award.
[74] The CFMMEU – MD submits that the existing provisions often contain more beneficial
terms than those in the model term and that as a general principle, the plain language re-drafting
process is not intended to alter existing substantive provisions.
(vi) UWU
[75] The UWU opposes the insertion of the model term in the awards that currently contain
shutdown provisions. It submits that a term that allows an employer to direct an employee to
take unpaid leave as part of a shutdown may not be permitted under the FW Act.
[76] The UWU submits that, in the alternative, if the Commission determines that such a
term is permitted, the model term does not contain a number of employee protections that are
currently provided for in a number of modern awards. It refers to clause 21.4(c) of the Cleaning
Services Award 2020, which limits a shutdown period to 4 weeks and clause 21.4(f) which
provides that an employee may be redeployed to another site for the shutdown period, clause
24.4(b) of the Children’s Award which limits a shutdown period to 4 weeks over “Christmas
vacation”; and clauses 25.11(d) and (e) of the Food, Beverage and Tobacco Manufacturing
Award 2020 (FBTM Award) which restricts the number of shutdowns to one or two separate
periods per year and provides that “any leave taken” as a result of a shutdown counts as service.
[77] The UWU submits that subclause (h) of the proposed model term should be re-drafted
to expressly provide that the employee would be taken to be on paid public holiday leave on
any day or part-day that is a public holiday during the shutdown period as follows (proposed
changes marked up):
“(h) If a temporary shutdown period includes a day or part-day that is a public holiday
and would have been a working day for the employee had the employee not been on
leave in accordance with clause XX.XX, the employee is taken not to be on leave on
that day or part-day. will be paid as provided for in this award and the employee is taken
not to be on annual leave or leave without pay on that day or part-day.”
Reply Submissions
(i) CFMMEU – C&G
[78] CFMMEU – C&G submits there is “a consensus of opinion” amongst employer parties
that the model term should not be inserted in the awards with existing shutdown provisions and
notes this is consistent with its own submissions.
(ii) Ai Group
[79] In response to union submissions contending existing provisions that are beneficial to
employees should be retained, the Ai Group submits that “cherry picking” in this way detracts
from the benefits of a model term and would be unfair to employers. It contends that a number
[2022] FWCFB 161
30
of union parties have proposed to retain a number of entitlements that are not currently provided
in existing awards.
4.2 Submissions on whether any award-specific variations should be made
[80] We now turn to the award-specific submissions.
(a) AWU
[81] The AWU has an interest in a large number of awards.72 It does not oppose the variation
of those awards to incorporate the model term, but submits that award-specific variations should
be made to the model term to account for clauses in modern awards that currently contain
express limitations on when shutdown provisions can be applied. AWU submits the awards that
appear to fall into this category are:
Airline Operations–Ground Staff Award 2020
Asphalt Industry Award 2020
FBTM Award
Gardening and Landscaping Services Award 2020
Manufacturing Award
Pharmaceutical Industry Award 2020
Plumbing and Fire Sprinklers Award 2020
Seafood Processing Award 2020 (Seafood Award)
Timber Industry Award 2020 (Timber Award)
Vehicle Repair, Services and Retail Award 2020
Wine Industry Award 2020
(b) AMWU
[82] The AMWU does not oppose variation of the awards set out at Attachment A to
incorporate the model term, provided “existing safeguards” in those awards are maintained.
The AMWU submits that those safeguards are provisions for longer notice periods than those
in the model term and provisions stating that leave taken by an employee during a shutdown
counts as service, as contained in the following awards:
Airline Operations-Ground Staff Award 2020
72 Airline Operations–Ground Staff Award 2020, Alpine Resorts Award 2020, Aluminium Industry Award 2020, Aquaculture
Industry Award 2020, Asphalt Industry Award 2020, Building and Construction General On-site Award 2020, Cemetery
Industry Award 2020, Cement, Lime and Quarrying Award 2020, Cleaning Services Award 2020, Concrete Products Award
2020, Electrical Power Industry Award 2020, Food, Beverage and Tobacco Manufacturing Award 2020, Gardening and
Landscaping Services Award 2020, Gas Industry Award 2020, General Retail Industry Award 2020, Hair and Beauty
Industry Award 2010, Health Professionals and Support Services Award 2020, Horse and Greyhound Training Award 2020,
Hospitality Industry (General) Award 2020, Hydrocarbons Industry (Upstream) Award 2020, Manufacturing and Associated
Industries and Occupations Award 2020, Mining Industry Award 2020, Miscellaneous Award 2020, Nursery Award 2020,
Oil Refining and Manufacturing Award 2020, Pest Control Industry Award 2020, Pharmaceutical Industry Award 2020,
Plumbing and Fire Sprinklers Award 2020, Premixed Concrete Award 2020, Racing Clubs Events Award 2020, Racing
Industry Ground Maintenance Award 2020, Registered and Licensed Clubs Award 2020, Restaurant Industry Award 2020,
Salt Industry Award 2020, Seafood Processing Award 2020, Security Services Industry Award 2020, Silviculture Award
2020, Storage Services and Wholesale Award 2020, Sugar Industry Award 2020, Timber Industry Award 2020, Vehicle
Repair, Services and Retail Award 2020, Water Industry Award 2020, Wine Industry Award 2010 and Wool Storage,
Sampling and Testing Award 2020.
[2022] FWCFB 161
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Building Award
FBTM Award
Graphic Arts, Printing and Publishing Award 2020
Manufacturing Award
Oil Refining and Manufacturing Award 2020
Seafood Award
Sugar Industry Award 2020
Vehicle Repair, Services and Retail Award 2020
(c) Ai Group
[83] The Ai Group submits that under clause 27.11(a) of the Seafood Processing Award
201073 an employer may close down an enterprise or part of an enterprise for the purposes of
allowing annual leave to all or the majority of employees, if 4 weeks’ notice is given. It
disagrees with the AMWU’s submission that one month’s notice is required and it seeks to
retain the 4 weeks’ notice provision.
(d) CFMMEU – MD
[84] The CFMMEU – MD states that it has an interest in the Joinery Award, the
Manufacturing Award, the Timber Award, and the Textile, Clothing, Footwear and Associated
Industries Award 2020 (Textile Award).
[85] The CFMMEU – MD opposes the model term being inserted in the Joinery,
Manufacturing, Timber and Textile Awards. The basis of the objection is:
(1) The current provisions reflect the practices developed in each industry and
address particular patterns of work;
(2) The current provisions must be considered in the context of other annual leave
provisions within an award;
(3) The current provisions contain more beneficial provisions than the model term;
and
(4) The plain language re-drafting process is not intended to make substantive
changes to existing award entitlements.
[86] The CFMMEU – MD submits that the shutdown provisions in each of these awards
contain more beneficial provisions than the model term. Using the Textile Award74 as an
example, it identifies the following differences:
73 Clause 27.11(a) of the Seafood Processing Award 2010 appears as clause 21.11(a) of the Seafood Processing Award 2020,
which operated from 4 February 2020.
74 The submission refers to the 2010 version of the award, current at that time. The Textile, Clothing, Footwear and
Associated Industries Award 2020 has since become operative, but the wording of the equivalent clauses is the same in the
current version.
[2022] FWCFB 161
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(1) the award requires an employer to give at least three months’ notice of its intention
to shut down (compared to 28 days’ notice under the model term);
(2) the award requires all or a bulk of employees of a plant or section be subject to
the shutdown (compared to “a part” under the model term);
(3) the award restricts the amount of leave that can be taken pursuant to a shutdown
period to one year of NES accrual;
(4) the interaction of clauses 41.3 and 41.775 of the award means an employer may
implement a shutdown but there are restrictions on the maximum length and
number of periods of annual leave, which means employers cannot use shutdown
provisions in a manner that is unfair to employees;
(5) the award provides that unpaid leave taken during a shutdown period counts as
continuous service, whereas the model term is silent on the issue of continuity of
service.
[87] The CFMMEU – MD submits that the Manufacturing Award and the Timber Award
also contain more beneficial provisions, being the purpose of a shutdown, service, a restriction
on the number of shutdowns that may be implemented within a 12 month period, minimum
shutdown periods, and facilitative provisions that allow for the shutdown provisions to be varied
by agreement. In relation to the Joinery Award, the CFMMEU – MD supports and adopts the
submissions of the CFMMEU – C&G.
(e) MBA
[88] The MBA states that it has an interest in the Building Award and the Joinery Award.
MBA opposes the inclusion of the model term in these awards. The basis of MBA’s opposition
is:
(1) It has had no feedback that its members do not understand the existing shutdown
provisions or that the provisions are working inefficiently; and
(2) The Commission has no material before it which requires the inclusion of the
model term in these awards.
(f) HIA
[89] The HIA states that it has an interest in the Building Award and the Joinery Award and
opposes the inclusion of the model term in those awards. It submits that no party has expressed
the need for change in the shutdown provisions and that the provisions are well understood,
meaning there is no need to insert the model term.
(g) CEPU
75 Clauses 32.2 and 32.6 in the Textile, Clothing, Footwear and Associated Industries Award 2020
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[90] The CEPU states that it has an interest in the Electrical Power Industry Award 2020 (the
Electrical Power Award) and the Electrical, Electronic and Communications Contracting
Award 2020 (the Electrical Contracting Award). The CEPU supports the following
submissions:
(1) CFMMEU – M&E submissions dated 22 March 2019;
(2) AWU submissions dated 25 March 2019; and
(3) AMWU submissions dated 27 March 2019.
[91] The CEPU does not oppose the model clause being included in the Electrical Power
Award because, currently, it does not make sufficient provision for shutdown.
[92] The CEPU does oppose the model clause being inserted into the Electrical Contracting
Award. The CEPU states that the model clause would leave those covered by the award worse
off than the current shutdown provision. The basis of the CEPU’s objection is the model clause
has:
a shorter notice period of 28 days’ written notice by the employer;
a broad spectrum when the shutdown can occur (i.e. not specific to Christmas-
New Year Period);
no provision for identifying that unpaid leave taken during shut down does not
break service of an employee; and
no definition of a shutdown to cap the duration of shutdown period.
(h) FAAA
[93] The FAAA has an interest in the Aircraft Cabin Crew Award 2020.
[94] The FAAA does not agree that the model term should be included in modern awards
with shutdown provisions and submits that award-reliant employees will be at a disadvantage
in terms of bargaining power and thus be exploited by an employer into having no choice but
to take leave without pay.
[95] The FAAA submits this amounts to “standing down an employee” which is not
permitted by s 139 of the FW Act and adopts the position of the AMWU (in the AMWU’s
submissions of 11 April 2017 and 3 October 2017) on the relationship between a term allowing
an employer to “direct unpaid leave” and a term “directing stand down”.
[96] The FAAA also places emphasis on the need for “bargaining position” to be considered
when providing options for an agreement between employer and employee.
[2022] FWCFB 161
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[97] If the Commission determines that the model term should be included, the FAAA
highlights a flaw in subclause (d)(i) of the model term. It submits that the model clause is
unclear as to what would happen if an employee refuses to elect any option available for the
shutdown period. A scenario whereby the employee wishes to work but the employer refuses
to allow this could arise. The FAAA submits this may lead to tension between employee and
employer and the employee seeking an underpayment order to resolve the issue, which is unfair
on the employee.
[98] The FAAA submits the model term should be amended to allow the employee to attend
work and be paid during the shutdown period, or if the employer is unable to provide work, the
employee be paid the ordinary rate.
(i) CPSU
[99] The CPSU does not oppose variation of the Broadcasting, Recorded Entertainment and
Cinemas Award 2020, the Contract Call Centres Award 2020, the Miscellaneous Award 2020
and the Telecommunications Services Award 2020 to incorporate the model term, subject to the
retention of any current provisions that are more beneficial than the model term and that are
tailored to a particular industry. It supports the submissions of the CFMMEU – M&E.
(j) CFMMEU – M&E
[100] The CFMMEU – M&E supports the variation of the Mining Industry Award 2020
(Mining Award) and the Coal Export Terminals Award 2020 (Coal Export Award) to insert the
model term.
(k) AHA
[101] The AHA has an interest in the Hospitality Industry (General) Award 2020 (the
Hospitality Award) and does not oppose the model term being inserted in awards containing
annual leave shutdown provisions, including the Hospitality Award. The AHA submits:
(1) Sub-paragraph (i) refers to “directions to take excessive leave in accordance with
clause 34.776 of the Hospitality Award.”
(2) Section 22 of the FW Act clearly defines the meaning of service and continuous
service and it is evident “that unpaid leave, whether taken at the request of the
employee or as a result of a close-down at the initiative of the employer, does not
count as service.”
(l) AMIEU
[102] The AMIEU submits the model term would address a number of issues with the
shutdown provisions in the Meat Award but it requires amendments to retain the particular
76 Clause 34.8 in the Hospitality Industry (General) Award 2010
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conditions of the current clause. Clause 25.8 of the Meat Award provides for shutdowns and is
set out as follows:77
“25.8 Annual close-down
(a) Where an employer closes down a plant or a section of a plant for the purpose of
allowing annual leave to all or the bulk of the employees in the plant or sections
concerned, the employer should, where possible, give the employees concerned
not less than three months’ notice of the employer’s intention to stand down for
the duration of the close-down all employees in the plant or sections concerned.
(b) For those employees who have not qualified for annual leave in accordance with
clause 37—Annual leave, paid leave on a proportionate basis at the appropriate
rate of wage and loading prescribed by clauses 25.3 and 25.5 will be granted.
(c) An employee who has then qualified for annual leave in accordance with
clauses 25.1 or 25.2 and has also completed a further month or more of continuous
service will be allowed leave and will also be paid leave on a proportionate basis
for the period worked since the close of the employee’s last 12 monthly qualifying
period.
(d) The next 12 month qualifying period for each employee affected by the close-
down will commence from the day on which the plant or section concerned is
reopened for work. Provided that all time during which an employee is stood off
without pay for the purposes of this clause will be deemed to be time of service
in the next 12 monthly qualifying period.
(e) If in the first year of service with an employer an employee is allowed
proportionate annual leave under clause 25.8(b), and subsequently within such
year leaves employment or employment is terminated by the employer through no
fault of the employee, the employee will be entitled to the benefit of clause 25.6
subject to the adjustment for any proportionate leave which may have been
allowed.”
[103] The AMIEU submits the model term should be amended to “protect” the current
provisions of the Meat Award. The AMIEU’s amended model term is set out below (proposed
changes marked up):
“25.8 Shutdown Annual close-down
(a) Clause XX.XX applies if an employer intends to shutdown all or part of its operation
for a particular period (temporary shutdown period) and wishes to require affected
employees to take leave during that period.
(a) Where an employer closes down a plant or sections of a plant for the purpose of
allowing annual leave to all or the bulk of the employees in the plant or sections
77 Clause 25.8 is in the same terms as clause 37.8 of the 2010 Award.
[2022] FWCFB 161
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concerned, the employer should, where possible, give the employees concerned
not less than three months’ written notice of the employer’s intention to stand
down for the duration of the close-down all employees in the plant or sections
concerned.
(b) The employer must give the affected employees 28 days’ written notice of a
temporary shutdown period written notice of an annual close-down to any
employee who is engaged after the notice is given under paragraph (a) (b) and
who will be affected by that period, as soon as reasonable (sic) practicable after
the employee is engaged.
(c) The employer must give written notice of a temporary shutdown period to any
employee who is engaged after the notice is given under paragraph (b) and who will be
affected by that period, as soon as reasonable practicable after the employee is engaged.
(c) (d) The following applies to any affected employee during a temporary shutdown
period an annual close-down:
(i) the employee may elect to cover the temporary shutdown period annual
close-down by doing one, or a combination of 2 or more, of the following:
taking paid annual leave if the employee has accrued an entitlement
to such leave;
taking leave without pay;
taking annual leave in advance in accordance with an agreement
under clause 25.7;
(ii) if the employee does not make an election under subparagraph (i) that
covers the whole of the temporary shutdown period annual close-down,
then the employer may direct the employee to take a period of paid annual
leave to which the employee has accrued an entitlement.
(d) (e) A direction by the employer under clause 25.8(c)(ii):
(i) must be in writing; and
(ii) must be reasonable.
(e) (f) The employee must take paid annual leave in accordance with a direction under
clause 25.8(c)(ii).
(f) (g) In determining the amount of paid annual leave to which an employee has
accrued an entitlement, any period of paid annual leave taken in advance by the
employee, in accordance with an agreement under clause 25.7, to which an
entitlement has not been accrued is to be taken into account.
(g) (f) If an temporary shutdown period annual close-down includes a day or part-day
that is a public holiday and would have been a working day for the employee had
[2022] FWCFB 161
37
the employee not been on leave in accordance with clause 25.8, the employee is
taken not to be on leave on that day or part-day.
(h) All time during which an employee is stood off without pay for the purposes of
clause 25.8 will be counted as service.
(i) Clauses 25.10 to 25.12 do not apply to a period of annual leave that an employee
is required to take during an annual close-down in accordance with clause 25.8.”
[104] Specifically in reply to the AMIEU’s submissions concerning the Meat Award, the Ai
Group opposes the AMIEU’s proposal to retain the three-month written notice requirement. It
contends that the requirement is excessive and would constitute a substantive change if the
requirement for notice to be written (as set out in the model term) is adopted. Ai Group disagrees
with the AMIEU’s submission that the Meat Award does not allow a shutdown period to exceed
the amount of annual leave accrued by an employee. In reply, the AMIEU contends that the
three-month notice period is derived from the current award and its predecessor awards and is
a long-standing condition in the industry. It submits the requirement for written notice is not a
substantive amendment and is normal practice in the industry.
[105] The Ai Group also opposes the retention of the term “stand down” which it submits
would create a misunderstanding that leave taken under a shutdown provision is the same as
that taken under s 524 of the FW Act, which gives an employer the ability to “stand down” an
employee in specific circumstances. The AMIEU agrees with this proposition and is not
opposed to such an amendment.
[106] The Ai Group disagrees with the submission that clause 25.8(b) of the Meat Award does
not permit a shutdown period to exceed the annual leave accruals available to employees. The
Ai Group submits that clause 25.8(d) “clearly” provides that an employee may take leave
without pay for the purposes of a shutdown. The Ai Group contends that clause 25.8(b) provides
for annual leave to be paid on a proportionate basis and contemplates the period of leave taken
pursuant to clause 25.8, being extended further than an accrued annual leave entitlement.
[107] In reply, the AMIEU submits that a shutdown is for the purpose of allowing annual leave
to all or the bulk of employees in the plant or sections concerned, which “represents an
important limitation on the duration of an annual close-down”. Therefore, the AMIEU submits,
a shutdown period cannot exceed four weeks for day workers, and five weeks for shiftworkers.
[108] The AMIEU agrees with the Ai Group’s submission concerning 25.8(b), but contends
it applies to annual leave entitlement of an individual employee and does not permit an annual
close down which exceed the annual leave entitlement of the “greater workforce” for the sole
purpose of allowing employees to take annual leave.
[109] The AMIEU is agreeable to the inclusion of the annual leave shutdown model clause in
the Poultry Processing Award 2020 (Poultry Award), but submits the model term should be
amended to “protect” the current provisions. The AMIEU’s amended term is set out below
(proposed changes marked up):
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“21.5 Shutdown Annual close-down
(a) Notwithstanding s.88 of the Act and clause 21.5 an employer may close down an
enterprise or part of it during any period of pre-planned maintenance or the
installation of machinery, subject to the provisions of this clause.
(a) Clause XX.XX applies if an employer intends to shutdown all or part of its operation
for a particular period (temporary shutdown period) and wishes to require affected
employees to take leave during that period.
(b) The employer must give the affected employees not less than one month’s 28
days’ written notice of a temporary shutdown period, or any shorter period agreed
between them and the employer.
(c) The employer must give written notice of an annual close-down a temporary
shutdown period to any employee who is engaged after the notice is given under
paragraph (b) and who will be affected by that period, as soon as reasonable
practicable after the employee is engaged.
(d) A close-down must not occur on more than one occasion per year, unless
otherwise agreed between an employer and the majority of employees concerned.
(e) (d) The following applies to any affected employee during an annual close-down:
a temporary shutdown period:
(i) the employee may elect to cover the annual close-down temporary
shutdown period by doing one, or a combination of 2 or more, of the
following:
taking paid annual leave if the employee has accrued an entitlement
to such leave;
taking leave without pay;
taking annual leave in advance in accordance with an agreement
under clause 21.10;
(ii) if the employee does not make an election under subparagraph (i) that
covers the whole of the annual close-down temporary shutdown period,
then the employer may direct the employee to take a period of paid annual
leave to which the employee has accrued an entitlement.
(f) (e) A direction by the employer under clause 21.5(e)(ii):
(i) must be in writing; and
(ii) must be reasonable.
(g) (f) The employee must take paid annual leave in accordance with a direction under
clause 21.5(d)(ii).
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(h) (g) In determining the amount of paid annual leave to which an employee has
accrued an entitlement, any period of paid annual leave taken in advance by the
employee, in accordance with an agreement under clause 21.10, to which an
entitlement has not been accrued is to be taken into account.
(i) (h) Any unpaid leave taken under clause 21.5(e)(i) counts as service.
(j) If an annual close-down a temporary shutdown period includes a day or part-day
that is a public holiday and would have been a working day for the employee had
the employee not been on leave in accordance with clause 21.5, the employee is
taken not to be on leave on that day or part-day.
(k) (i) Clauses 27.5 to 27.7 do not apply to a period of annual leave that an employee
is required to take during an annual close-down a temporary shutdown period in
accordance with clause XX.XX.”
[110] Ai Group disagrees with the AMIEU’s proposal to replace “temporary shutdown
period” with “annual close-down”. It submits “annual” may confuse readers if the requirement
for employers to agree with the majority of employees to implement more than one shutdown
per year is retained. In reply, the AMIEU submits the words “annual close-down”, and the
ability to reach agreement in relation to a second or subsequent close-down, are long-standing,
and are not confusing.
4.3 Submission on whether unpaid leave taken during a shutdown period counts as
service
[111] The following parties filed submissions in relation to this matter:
ABI;78
Ai Group;79
AMWU;80
AWU;81
CFMMEU – C&G;82
CFMMEU – MD;83
CFMMEU – M&E;84
CPSU;85
FAAA;86
78 Submission, ABI & NSWBC, 1 April 2019
79 Submission, Ai Group, 22 March 2019
80 Submission, AMWU, 27 March 2019
81 Submission, AWU, 25 March 2019
82 Submission, CFMMEU–C&G, 2 April 2019; Submission in Reply, CFMMEU – C&G, 17 April 2019
83 Submission, CFMMEU – MD, 8 April 2019
84 Submission, CFMMEU – M&E, 22 March 2019
85 Submission, CPSU, 29 March 2019
86 Submission, FAAA, 3 May 2019
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-abinswbc-010419.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-aig-220319.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201815-17-sub-draftsch-amwu-270319.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-awu-250319.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-cfmmeu-020419.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-cfmmeu-170419.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-cfmmeu-md-080419.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-cfmmeu-220319.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-cpsu-290319.pdf
https://www.fwc.gov.au/sites/awardsmodernfouryr/am201615-sub-faaa-030519.pdf
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HIA;87 and
UWU.88
[112] The HIA submits that s 22 of the FW Act defines service for the purposes of a shutdown
period. Unless expressly dealt with by the award, unpaid leave does not count as a service and
HIA submits that the Building Award should adopt this approach, as it is currently silent. HIA
submits that the Joinery Award (clause 27.9(d)) provides that unpaid leave during a shutdown
counts as service and provides employees with a greater entitlement than the model term.
[113] ABI submits that s 22 determines what is counted as service for the purposes of a number
of entitlements under the FW Act. It contends that under s 22, unpaid leave periods generally
do not count as service but periods of unpaid leave that are not unauthorised, which includes
leave during shutdowns, do count as service for the purposes of entitlements relating to flexible
working arrangement requests, unpaid parental leave and notice of termination.
[114] The Ai Group submits that absent any award provision dealing with this issue, s 22 of
the FW Act applies and unpaid leave taken pursuant to a shutdown provision counts as service.
However, for the purposes of the general meaning of “service”, any leave that is not captured
by the exceptions in s 22(2)(b)(i)-(iii) is excluded and does not count as service.
[115] The CFMMEU – M&E submits that unpaid leave taken during a shutdown period does
count as service with respect to the Black Coal Award, the Mining Award and the Coal Export
Award. It submits it is fair and reasonable that where an employee takes the leave “at the
unilateral discretion of the employer” to accommodate the shutdown, the employee should not
incur a further penalty. It is submitted that this is in contrast to an employee requesting unpaid
leave at their initiative.
[116] The CFMMEU – M&E further submits that the denial of payment to an employee when
they are ready to work is “acutely unfair”. An employee’s readiness and willingness to perform
work is not disturbed by the fact that there is no work to perform. The common law has
established that where an employee is available to work, they shall receive the benefits of
employment, regardless of the performance of work. The CFMMEU – M&E relies on Curro
and Another v Beyond Productions Pty Ltd89 in support of this contention.
[117] The CFMMEU – M&E submits that s 22 of the FW Act excludes from service unpaid
leave that is “taken exclusively at the initiative of an employee”, or where an employee
voluntarily withdraws their service. In contrast, the shutdown provisions in the Black Coal
Award and the model term are different – it is leave taken as a result of an employer direction
and does not involve any withdrawal of service by the employee. The CFMMEU – M&E
submits that there is no basis to mandate that unpaid leave taken during a shutdown not count
as service.
[118] CFMMEU – M&E submits that the Commission should look to the legislature’s
approach in respect of this issue. They submit that the legislation contains a clear intention to
87 Submission, HIA, 22 March 2019
88 Submission, United Voice, 4 April 2019
89 Curro and Another v Beyond Productions Pty Ltd (1993) 30 NSWLR 337
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-hia-220319.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-uv-040419.pdf
[2022] FWCFB 161
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differentiate between unpaid leave taken (a) at the direction of an employer, and (b) at the
initiative of the employee. Unpaid leave taken pursuant to a shutdown is taken in circumstances
where the employee cannot perform work and would not otherwise be taken. Allowing
employers to direct employees take leave at their discretion, which benefits the employer and
results in a negative effect on the employee’s service record, does not meet the modern awards
objective of providing a fair and relevant safety net.
[119] The UWU supports the CFMMEU – M&E’s submission that unpaid leave taken during
a shutdown counts as service.
[120] The CFMMEU – C&G likewise submits unpaid leave taken during a shutdown period
should count as service. It refers to the Mobile Crane Award and the Joinery Award, which it
submits explicitly address this issue and provide that leave taken during a shutdown period does
count as service. CFMMEU – C&G submits that all awards that contain a shutdown clause
should contain such a provision. It supports the submissions of the CFMMEU – M&E on this
point.
[121] MBA submits that whether unpaid leave taken during a shutdown counts as service in
the Building Award is determined by the definition of “continuous service” in clause 2 of the
Building Award. “Continuous service” under that definition means a period of service of an
employee regardless of the employee’s absence from work for any of the following reasons:
Annual leave, personal leave, or parental leave;
Illness or accident up to a maximum of four weeks after the expiration of paid sick
leave;
Jury service;
Injury received during the course of employment and up to a maximum of 26
weeks for which the employee received worker’s compensation;
Where called up for military service for up to three months in any qualifying
period;
Long service leave; and
Any reason satisfactory to the employer, provided the employee has informed the
employer within 24 hours of the time when the employee was due to attend for
work, or as soon as practicable thereafter, of the reason for the absence and
probable duration.
[122] The CFMMEU – MD submits that the Joinery, Manufacturing, Timber and Textile
Awards provide that unpaid leave taken pursuant to shutdown provisions counts as service,
which is the “correct and appropriate” position. It further adopts and relies on the submissions
of the CFMMEU – C&G.
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[123] The CPSU submits that if an employee is required to take unpaid leave during a
shutdown period it should count as service for all purposes, because employees should not be
disadvantaged by the employer’s decision to implement the shutdown.
[124] The AMWU submits that unpaid leave taken during a shutdown (where directed by an
employer) is a benefit for an employer and a detriment to an employee. It relies on its
submissions made in matter no. AM2014/47 – Annual leave common issue. It submits that s 22
of the FW Act does not permit a break in accrual of service-related entitlements where an
employee takes leave approved by their employer.
[125] The FAAA supports the submissions of the CFMMEU – M&E. It submits it is inherently
unfair for an employer to be “penalised” as a result of an employer’s decision to implement a
shutdown.
[126] The AWU submits the model term should be amended to provide that all leave taken
pursuant to a shutdown clause counts as service for all purposes. It supports the submission of
the CFMMEU – M&E dated 22 March 2019 on this point. It submits that this is an explicit
feature of the current shutdown provisions in six awards.90
[127] In relation to the Poultry Award, the AMIEU proposes an additional clause be inserted
into the model shutdown provision:
“(x) Any unpaid leave taken under XX.X(d)(i) counts as service.”
[128] Submissions in reply were filed by the following parties:
MBA;91
the CFMMEU – C&G;92
the Ai Group;93 and
the AMIEU.94
[129] MBA submits CFMMEU – C&G’s position that unpaid leave taken during a shutdown
period counts as service should be rejected. MBA submits that the CFMMEU – C&G adopts
its position based on the assumption that because that is the entitlement in the Joinery Award
and the Mobile Crane Award, the entitlement should be extended to all other awards which
contain shutdown provisions, even if they are silent on the matter. MBA submits this is a flawed
and incorrect assumption.
[130] The CFMMEU — C&G submits that the submissions of the Ai Group, the HIA and
ABI rely on s 22 of the FW Act, but the Joinery Award and the Mobile Crane Award include
express provisions that recognise unpaid leave taken pursuant to a shutdown is recognised as
90 Food, Beverage and Tobacco Manufacturing Award 2020; Manufacturing and Associated Industries and Occupations
Award 2020; Pharmaceutical Industry Award 2020; Seafood Processing Award 2020; Timber Industry Award 2020; and
Wine Industry Award 2020
91 Submission in Reply, MBA, 24 April 2019
92 Submission in Reply, CFMMEU – C&G, 17 April 2019
93 Submission in Reply, Ai Group, 18 April 2019
94 Submission, AMIEU, 17 May 2019
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-mba-240419.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-cfmmeu-170419.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-aigroup-180419.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201615-sub-amieu-220319.pdf
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service, with similar provisions having been identified by the AMWU, AWU, CEPU and
CFMMEU – MD.
[131] The Ai Group contends that the majority of existing shutdown clauses contain “checks”
which prevent an employer from making the unilateral decisions as claimed by the CFMMEU
– M&E. Section 93(3) of the FW Act also prevents this by importing the requirement that an
employer direction to take annual leave be reasonable. It maintains its proposed clause does not
give employers an excessive ability to direct an employee to take unpaid leave.
[132] Ai Group submits that the common law is well settled that where work is not performed
pursuant to a contract of employment, an employee has not earned money for the period. The
Ai Group relies on the authorities of Automatic Fire Sprinklers Pty Ltd v Watson95 and Byrne v
Australian Airlines Ltd96 in support of this proposition and contends this position is reflected in
s 323(1) of the FW Act, which requires an employer to pay an employee for work performed.
[133] The Ai Group disagrees with the CFMMEU M&E’s interpretation of s 22 of the FW
Act that it allows exclusions from “service” only where an employee is unwilling to work. The
Ai Group submits the correct interpretation is that unpaid authorised absences are excluded,
and the exceptions are then applied to that starting position. It submits that the CFMMEU –
M&E’s position invites the reading in of a provision that does not exist; if the legislature
intended for unpaid leave taken pursuant to a shutdown and exclusively at the direction of an
employer to be a period of “service”, it would have included such a provision. In response to
the contention that unpaid leave taken pursuant to a shutdown provision involves the absence
of any voluntary withdrawal of service, Ai Group submits this mischaracterises the nature of
the categories of unpaid leave which count as service under the exceptions at s 22(2)(b)(i)-(iii).
Further, the Ai Group submits that the submission that the stand down provisions under s 524
of the FW Act are of the same character as shutdown provisions has no weight when s 22(2)(b)
excludes stand down periods from the definition of service. This contention is also contrary to
s 525 of the FW Act which states an employee is not taken to be on a stand down under s 524
where they are taking authorised paid or unpaid leave or are absent for another reason as
authorised by the employer.
[134] The Ai Group opposes the AWU’s submission that the model term should be amended
to expressly provide that all leave taken pursuant to a shutdown clause is to be treated as service
for all purposes. It contends the Commission should reject the CFMMEU – M&D’s
submissions and those made by union parties of a similar nature or rely on the CFMMEU –
M&D’s submissions.
5. Consideration
[135] We propose in our consideration to address the three questions posed in [18] above
jointly because, as will be apparent, they are interrelated in important respects. In particular,
the question of whether leave without pay counts as service under s 22 of the FW Act, or
whether by award prescription it should count as service, overlaps with the question of whether
95 Automatic Fire Sprinklers Pty Ltd v Watson [1946] HCA 25; (1946) 72 CLR 435 at 450 (per Latham CJ), 465 (per Dixon
J)
96 Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 428
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any model clause for shutdowns should provide for an employee right of election to take leave
without pay or permit the employer to direct the taking of leave without pay.
[136] As our earlier analysis of the history of shutdown provisions demonstrates, shutdown
provisions were originally designed principally to facilitate an employer having their employees
take annual leave during the same period in the year. As an incident to this, employees who had
not accrued sufficient annual leave to cover the period of the shutdown might, in some cases,
be stood down without pay or be required to take leave without pay. Over time, a range of
variants in shutdown provisions emerged: some provisions allowed shutdowns to occur in a
wider range of circumstances; some required minimum periods of notice for shutdowns; some
constrained the period in the year in which any shutdown occurred or, alternatively, allowed
for more than one shutdown per year; and some provided that any period during which an
employee was stood down without pay or took leave without pay during a shutdown counted
as service for specified purposes while others did not or were silent about this.
[137] Five aspects of the FW Act are of particular relevance to our consideration of shutdown
provisions in modern awards:
(1) Section 22 defines “service” in a way which, by s 22(2)(b), excludes “any period
of unpaid leave or unpaid authorised absence” subject to the exceptions specified
in subparagraphs (i)-(iii). The exception in s 22(b)(ii) is for “a period of stand
down under Part 3-5, under an enterprise agreement that applies to
the employee, or under the employee's contract of employment”; thus, such stand
down periods count as service under s 22.
(2) Section 93(3) (read together with s 136(1)(d)) permits (relevantly) a modern
award to include terms requiring an employee, or allowing for an employee to be
required, to take paid annual leave in particular circumstances “but only if the
requirement is reasonable”. By contrast, this was not an “allowable award
matter” under s 513(1) of the Workplace Relations Act 1996 as it was immediately
prior to the commencement of the FW Act (although award entitlements about
annual leave that were allowable award matters immediately before the main
provisions of the Work Choices Act took effect were preserved by s 527(1) and
(2)(a)).
(3) Section 139 of the FW Act does not include the shutdown of the employer’s
business, or part thereof, for any period as a matter which may be the subject of a
term in a modern award.
(4) Section 139 does not include stand down as a matter which may the subject of a
term in a modern award, and s 524 discloses a legislative intention that the stand
down of employees without pay may only occur in the circumstances prescribed
in s 524(1), or in any wider circumstances as authorised by an enterprise
agreement or a contract of employment (s 524(2)). There is no contemplation that
a modern award may make any prescription about stand down. By contrast, s
513(1)(l) of the Workplace Relations Act 1996 as it was immediately prior to the
commencement of the FW Act provided that an award could include terms about
“stand-down provisions”.
[2022] FWCFB 161
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(5) Section 142(1) provides that modern awards may include terms that are incidental
to a term that is permitted or required to be in the award or essential for the purpose
of making a particular term operate in a practical way.
[138] Five basal propositions may be derived from the above matters. First, to the extent that
awards contain provisions referring to shutdowns, they may only do so as an incident of terms
which relate to a subject matter expressly permitted by s 139(1) (or some other provision of the
FW Act authorising concerning award terms about specific matters). The provisions currently
concerning shutdowns to be found in modern awards are contained within the annual leave
clauses of those awards, and thus may be regarded as provisions incidental to or necessary for
the practical operation of terms concerning the circumstances in which annual leave may be
taken or may be required to be taken (and thus empowered by 142(1)(a) operating in
conjunction with s 93(3) and/or s 139(1)(h)). It may be noted in this connection that the
Explanatory Memorandum for the Fair Work Bill 2008 contemplated that an award might deal
with annual shutdowns as an incident of a provision concerned with the taking of annual leave
made pursuant to s 93(3):
“Subclause 93(3) permits terms to be included in an award or agreement that require an
employee, or that enable an employer to require or direct an employee, to take paid
annual leave in particular circumstances, but only if the requirement is reasonable. This
may include the employer requiring an employee to take a period of annual leave to
reduce the employee’s excessive level of accrual or if the employer decides to shut
down the workplace over the Christmas/New Year period.”97 (underlining added)
[139] Second, consistent with the reasoning in the September 2016 decision, a shutdown
provision which enables an employer to direct the taking of annual leave merely on the
notification of a shutdown period without any other considerations or requirements does not
satisfy the criterion of reasonableness in s 93(3) and is therefore not permitted to be included
in a modern award. As an example, we consider that clause 31.3 of the Building Award is a
provision of the nature described and accordingly is not permitted to be included in a modern
award.
[140] Third, a shutdown clause cannot include a provision to the effect that the employer can
stand down an employee without pay during a shutdown period which is for the purpose of
facilitating annual leave if the employee does not have sufficient accrued annual leave
entitlements. The FW Act does not directly authorise award terms about the stand down of
employees without pay, and such a provision could not, under s 142(1), be regarded as
incidental to or necessary for the practical operation of a provision which is about the taking of
paid annual leave.
[141] Fourth, an award entitlement to leave without pay may be established pursuant to s
139(1)(h) and, in that context, award provisions may deal with arrangements for the taking of
such leave. However, in the absence of any award entitlement to leave without pay (or even any
entitlement to request such leave), we do not consider that there is power under the FW Act to
include in an award a provision by which the employer may require an employee to take leave
97 Fair Work Bill 2008: Explanatory Memorandum at [381]
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without pay during a shutdown period where the employee does not have sufficient annual leave
entitlements to cover the period (e.g. clause 21.8(c)(iii) of the Asphalt Industry Award 2020).
Such a provision is, in our view, not about leave at all and, as such, is not authorised by
s 139(1)(h). The concept of “leave” in the FW Act, including in s 139(1)(h), is a beneficial
entitlement for employees to be absent from work. It is clearly distinct from the concept of
stand down without pay dealt with in s 524. In this context, leave without pay may be sought
by an employee who seeks the employer’s permission to be absent from work at a time when
the employee wishes to be absent or whose personal circumstances prevent attendance at work.
It is a benefit to the employee which may or may not be agreed to by the employer. A provision
by which an employee may be required to take “leave” without pay is, in our view, no different
in substance to the standing down of the employee without pay, since it occurs on the
employer’s initiative and without the employee’s consent and leads to the same result of the
employee being deprived of work and pay. Labelling a stand down as “leave” taken by
employer direction does not make it leave for the purpose of s 139(1)(h). This is particularly so
in the absence of award provisions entitling an employee to apply for leave without pay and to
be granted such leave. By application of the aphorism that one cannot do indirectly what one
cannot do directly, this would seem to us to be a provision which the Commission is not
empowered to include in modern awards.
[142] In this regard, we respectfully depart from the view, not supported by reasons, in
paragraph [32] of the October 2017 decision, and accept the submissions made on this point in
2017 by the CFMMEU and the AMWU and, in 2019, by the UWU and the FAAA. We note
that the view of the Full Bench in the October 2017 decision was made in the context of the
Black Coal Award, which did not specifically provide for employees to be directed to take
unpaid leave. The parties did not take issue in relation to the taking of unpaid leave in close
down periods and the Full Bench in that case refused on merit grounds, to vary the Award to
provide employers with the right to give such a direction.98 We also note that the comment of
the Full Bench in the October 2017 decision was framed in the form of an observation that the
provision proposed by the CMIEG was “capable” of falling within the scope of terms that may
be included in modern award as provided in s 139. For the reasons set out above it may be the
case that a modern award can provide for an employee entitlement to leave without pay,
although we express no concluded view about this. Finally, the provision the Full Bench was
commenting on provided for employees to be “taken to be on leave without pay” in certain
circumstances, and not for employees to be directed to take such leave.
[143] There are also a number of award provisions which refer to employees being “given”
(without seeking or agreeing to) unpaid leave during a shutdown period; for example, clause
34.7(c) of the Manufacturing Award provides that where an employer has closed down its
enterprise or part of it for the purpose of employees taking annual leave:
“(c) an employee who has not accrued sufficient leave to cover part or all of the close
down, is allowed paid leave for the period for which they have accrued sufficient leave
and given unpaid leave for the remainder of the closedown;” (italics added)
[144] With the benefit of arguments directed to this issue in the present proceedings, this,
again, does not appear to us to be any different in substance to a stand down without pay: the
98 [2017] FWCFB 5394 at [61]-[62]
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employer has initiated a situation whereby the employee is deprived of work and pay without
their consent. In respect of the Manufacturing Award and its predecessors, the historical
position earlier outlined whereby an employer right to “stand off” employees during a shutdown
period was altered to “giving” them leave without pay in the award modernisation process,
shows that while the labelling was changed, the substance was not.
[145] Fifth, to the extent that shutdown provisions in awards currently provide for an
employee to be required to take leave without pay, the plain effect of s 22(2), read with s 22(4),
is that such “leave” does not count as service for the purpose of the NES entitlements to annual
leave, personal/carer’s leave and redundancy pay, but by virtue of s 22(3) such leave does not
break continuity of service. While we do not consider such “leave” to be, in truth, leave within
the conception of the FW Act, it would nonetheless constitute an “unpaid authorised absence”
to which s 22(2) applies. Therefore, an award provision (such as clause 34.7(d) of the
Manufacturing Award) which provides that a period of leave does count as service only has
effect with respect to these NES entitlements if it can be characterised as provision which
supplements the NES and is accordingly authorised by s 55(4)(b).
[146] Having regard to these five propositions, we turn to the consideration of whether we
should establish a model term in respect of shutdowns. Our preference remains for the
establishment of a model term, so far as is practicable. Where awards make provision for a
common entitlement or obligation, this should be expressed in the same terms in each award so
as to promote clarity of understanding and aid compliance. Most shutdown provisions have the
same fundamental purpose, so there is significant room for model terminology to be developed.
Further, it is apparent to us that a number of the current shutdown provisions may offend the
FW Act insofar as they:
are primarily concerned with authorising the shutdown of the employer’s
business rather than the taking of annual leave (e.g. clause 21.5 of the Poultry
Award);
allow for the employer to direct employees to take annual leave during a
shutdown without requiring that this be reasonable either in terms or in substance
(virtually all existing shutdown clauses); and
require employees to take leave without pay during a shutdown (e.g. clause
21.8(c)(iii) of the Asphalt Industry Award 2020).
[147] Rather than engage in a piecemeal review of each shutdown provision in each award,
we consider a preferable approach is to develop a model term and then adapt it to the
circumstances of each award. In respect of the model term proposed in the February 2019
statement, no submissions are in favour of inserting that model term to replace all existing
shutdown provisions without some modification to the model term or certain award-specific
variations. A common thread running through the many of the submissions is that a model term
should only be inserted if the existing entitlements, or more beneficial entitlements than those
provided for in the model term, can be preserved.
[148] The principal differences between shutdown clauses that currently exist in awards may
be identified as follows:
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(1) Circumstances in which shutdowns occur: Many award clauses apply to any case
in which the employer intends to close down its operations, or part thereof, for a
particular period, such as clause 28.4(a)(i) of the General Retail Industry Award
2020 (Retail Award). However other clauses place restrictions on the shutdown
circumstances to which they apply. Such restrictions may apply to the time of year
during which the shutdown occurs and the purpose of the shutdown. In the first
category, for example, clause 31.3(a) of the Building Award applies to shutdowns
“in conjunction with the Christmas/New Year holidays”. In the second category,
clause 21.5 of the Poultry Award applies to a shutdown “during any period of pre-
planned maintenance or the installation of machinery”. In other cases, the
shutdown must be for the purpose of allowing annual leave to be taken (e.g. clause
34.7 of the Manufacturing Award).
(2) Frequency and length of shutdowns: Some award provisions apply to any
shutdown (such as clause 28.4 of the Retail Award), but others limit the number
of shutdowns per year or prescribe a minimum period for shutdowns. Clauses
34.7(e)-(g) of the Manufacturing Award allow for two shutdowns per year, one of
which must be for 14 consecutive days or, by agreement with a majority of
employees, three shutdowns, one of which must be for 14 consecutive days.
Clause 21.5(b) of the Poultry Award allows for only one close down per year
unless otherwise agreed with a majority of employees.
(3) Notice period for shutdowns: The notice requirements for shutdown periods vary
greatly. A period of four weeks is common: e.g. clause 34.7(a) of the
Manufacturing Award and clause 28.4(b) of the Retail Award. Some awards
provide for a greater period of notice; e.g. clause 25.8(a) of the Meat Award
provides for not less than three months’ notice, although this is qualified by
“where possible”. Some awards contain no notice requirement: e.g. clause 24.7 of
the Mobile Crane Award in relation to partial shutdowns.
(4) Provision for taking leave without pay: Many provisions make no reference to
taking leave without pay in connection with shutdowns, such as clause 28.4 of the
Retail Award. However, as discussed earlier, some awards require an employee
to take leave without pay or refer to the employer “giving” leave without pay,
where the employee’s accrued annual leave entitlements are insufficient to cover
the period of the shutdown.
(5) Whether leave taken counts as service: Many awards, particularly (but not only)
those that make no reference to taking leave without pay, do not address this issue
at all. Those that do address the issue do so in a variety of ways. Several provide
that any leave taken by an employee as a result of a shutdown will count as service:
e.g. clause 34.7(d) of the Manufacturing Award. Other awards take a different
approach, both in terms of the type of leave that is counted, and what it counts
towards. For example: clause 21.5(e) of the Poultry Award provides that “any
annual leave taken by an employee as a result of a close-down” counts as service;
clause 24.6(a)(iv) of the Mobile Crane Award provides that all time during which
an employee is “stood off without pay” under a shutdown is counted as service
[2022] FWCFB 161
49
“for the purpose of annual leave accrual”; and clause 32.6(g) of the Textile Award
provides that “[a]ny period during which an employee is stood off without pay
will count as service in calculating 12 months’ continuous service.”
[149] Having regard to these matters, our provisional conclusions in respect of the
establishment of a model term as proposed in the February 2019 statement are as follows. First,
we will delete any reference in the model term to the employee having a right to elect to take
leave without pay in lieu of accessing accrued annual leave entitlements during a shutdown.
We accept the submissions made by a number of employer groups that to allow this would be
to vitiate the purpose of a shutdown that occurs in order for accrued annual leave to be taken.
Further, and more fundamentally, employees do not have any general entitlement to take leave
without pay either under the NES99 or any award, and the establishment “by the backdoor” of
an undefined entitlement to take such leave in a clause that is concerned with the taking of
annual leave would not be appropriate.
[150] We have already stated our view that the Commission has no power to include a
provision in an award by which an employer may require an employee to take leave without
pay. For this reason, we will not accede to the submissions made by a number of employer
groups that the right of the employee to elect to take leave without pay should be replaced with
a right of the employer to require that leave without pay be taken (or that existing provisions to
this effect should be retained). This would amount, in substance, to the stand down of the
employee without pay – a matter which may not be the subject of an award term. Any stand
down of an employee during a shutdown period would therefore have to occur in accordance
with s 524(1) of the FW Act or pursuant to authorisation in an enterprise agreement or contract
of employment (s 524(2)).
[151] Even if power existed under the FW Act to make an award provision of the nature sought
by the employer groups, we would not include a provision of this nature in a clause which is
concerned with the taking of paid annual leave during a shutdown of an enterprise or part of it
(and not with facilitating business shutdowns simpliciter, as suggested by ABI) in the absence
of the employee otherwise having an entitlement to take leave without pay. It appears to us to
be logically fallacious, unfair and unreasonable that an employee could be required to take
“leave” to which the employee has no entitlement in the first place with the result that the
employee’s right to take leave with pay, at a time suitable to the employee, would be impacted.
[152] This conclusion disposes of any need to further consider whether leave without pay
should, by award prescription, count as service for the purpose of NES entitlements to annual
leave, personal leave or redundancy. There is no dispute that, under s 22, paid annual leave
taken during a shutdown counts as part of an employee’s service for the purpose of the FW Act,
so no award prescription is required for this.
[153] Second, the model clause will be adapted in individual awards to incorporate existing
prescriptions which limit the application of shutdown provisions by reference to the
circumstances in which the shutdowns occur, as identified in [148](1) above. We emphasise
that this is for the purpose of retaining existing limitations in particular industries and
occupations concerning the circumstances in which employees may be directed to take annual
99 NES entitlements to unpaid leave in Pt 2-2 of the Act are only for specific purposes: parental and maternity leave (Div 5);
unpaid carer’s leave (Div 7, Subdiv B); and family and domestic violence leave (Div 7, Subdiv CA).
[2022] FWCFB 161
50
leave; it is not intended to constitute regulation of when employers may choose to temporarily
shut down their businesses.
[154] Third, the model clause will retain a minimum requirement for 28 days’ notice (subject
to agreement as to a lesser period) of a shutdown, which we consider to be fair and reasonable,
but in individual awards the clause will be adapted to retain existing prescriptions for a greater
period of notice to be given.
[155] Fourth, the model clause will not be adaptable to take into account the differing
prescriptions identified in [148](2) above, since these amount in substance to the regulation of
shutdowns. The requirements that the shutdown must be “temporary” and that any direction to
take annual leave must be reasonable will ensure that the model clause cannot be abused in
respect of the frequency or length of shutdowns.
[156] Consistent with these conclusions, our provisional view is that the proposed model
clause will be modified so that, in an award which requires no adaptation (such as the Retail
Award), it will provide as follows:
“XX.XX Direction to take annual leave during shutdown
(a) Clause XX.XX applies if an employer:
(i) intends to shut down all or part of its operation for a particular period
(temporary shutdown period); and
(ii) wishes to require affected employees to take paid annual leave during that
period.
(b) The employer must give the affected employees 28 days’ written notice of a
temporary shutdown period, or any shorter period agreed between them and the
employer.
(c) The employer must give written notice of a temporary shutdown period to any
employee who is engaged after the notice is given under clause XX.XX(b) and
who will be affected by that period, as soon as reasonably practicable after the
employee is engaged.
(d) The employer may direct the employee to take a period of paid annual leave to
which the employee has accrued an entitlement.
(e) A direction by the employer under clause XX.XX(d):
(i) must be in writing; and
(ii) must be reasonable.
(f) The employee must take paid annual leave in accordance with a direction under
clause XX.XX(d).
[2022] FWCFB 161
51
(g) An employee may take annual leave in advance during a temporary shutdown
period in accordance with an agreement under clause XX.XX.
(h) In determining the amount of paid annual leave to which an employee has accrued
an entitlement, any period of paid annual leave taken in advance by the employee,
in accordance with an agreement under clause XX.XX, to which an entitlement
has not been accrued, is to be taken into account.
(i) Clauses XX.XX to XX.XX do not apply to a period of annual leave that an
employee is required to take during a temporary shutdown period in accordance
with clause XX.XX.”
[157] We have not included subclause (h) of the model clause proposed in the February 2019
statement because it merely repeats the effect of s 89(1) of the FW Act and is therefore
unnecessary.
[158] We will give two examples of the adaptation of the clause in accordance with the
provisional conclusions expressed above. In the Building Award, the clause would provide as
follows:
“31.3 Direction to take annual leave during shutdown
(a) Clause 31.3 applies if an employer:
(i) intends to shut down all or part of its operation for a particular period in
conjunction with the Christmas/New Year holidays (temporary shutdown
period); and
(ii) wishes to require affected employees to take paid annual leave during that
period.
(b) The employer must give the affected employees two months’ written notice of a
temporary shutdown period.
(c) The employer must give written notice of a temporary shutdown period to any
employee who is engaged after the notice is given under clause 31.3(b) and who
will be affected by that period, as soon as reasonably practicable after the
employee is engaged.
(d) The employer may direct the employee to take a period of paid annual leave to
which the employee has accrued an entitlement.
(e) A direction by the employer under clause 31.3(d):
(i) must be in writing; and
(ii) must be reasonable.
[2022] FWCFB 161
52
(f) The employee must take paid annual leave in accordance with a direction under
clause 31.3(d).
(g) An employee may take annual leave in advance during a temporary shutdown
period in accordance with an agreement under clause 31.4.
(h) In determining the amount of paid annual leave to which an employee has accrued
an entitlement, any period of paid annual leave taken in advance by the employee,
in accordance with an agreement under clause 31.4, to which an entitlement has
not been accrued, is to be taken into account.
(i) Clauses 31.6 to 31.8 do not apply to a period of annual leave that an employee is
required to take during a temporary shutdown period in accordance with clause
31.3.”
[159] In the Poultry Award, the clause would provide:
“21.5 Direction to take annual leave during shutdown
(a) Clause 21.5 applies if an employer:
(i) intends to shut down all or part of its operation for a particular period of
pre-planned maintenance or the installation of machinery (temporary
shutdown period); and
(ii) wishes to require affected employees to take paid annual leave during that
period.
(b) The employer must give the affected employees one month’s written notice of a
temporary shutdown period.
(c) The employer must give written notice of a temporary shutdown period to any
employee who is engaged after the notice is given under clause 21.5(b) and who
will be affected by that period, as soon as reasonably practicable after the
employee is engaged.
(d) The employer may direct the employee to take a period of paid annual leave to
which the employee has accrued an entitlement.
(e) A direction by the employer under clause 21.5(d):
(i) must be in writing; and
(ii) must be reasonable.
(f) The employee must take paid annual leave in accordance with a direction under
clause 21.5(d).
[2022] FWCFB 161
53
(g) An employee may take annual leave in advance during a temporary shutdown
period in accordance with an agreement under clause 21.10.
(h) In determining the amount of paid annual leave to which an employee has accrued
an entitlement, any period of paid annual leave taken in advance by the employee,
in accordance with an agreement under clause 21.10, to which an entitlement has
not been accrued, is to be taken into account.
(i) Clauses 21.7 to 21.9 do not apply to a period of annual leave that an employee is
required to take during a temporary shutdown period in accordance with clause
21.5.”
[160] Our provisional view is that the variation of the 78 awards which currently contain
shutdown provisions (including the Black Coal Award, but excluding the Children’s Award,
which is dealt with separately below) in the terms identified above is necessary to meet the
modern awards objective in s 134 of the FW Act. In reaching this conclusion, we have taken
into account the matters specified in s 134 into account in the following way (using the
paragraph designations in the subsection):
(a) The variations will not affect relative living standards or the needs of the low
paid. This is a neutral consideration.
(b) It cannot positively be said that the variations will encourage collective
bargaining, so this weighs against the variations to a minor degree.
(c) It cannot positively be said that the variations will promote social inclusion
through increased workforce participation, so this weighs against the
variations to a minor degree.
(d) It cannot positively be said that the variations will promote flexible modern
work practices and the efficient and productive performance of work, so this
weighs against the variations to a minor degree.
(da) This is not a relevant consideration.
(e) This is not a relevant consideration.
(f) The variations will not have any positive or negative effect on productivity,
employment costs or the regulatory burden. Although we have not included
provisions empowering employer directions to employees to take unpaid
leave, which may currently be found in some awards, for the reasons we
have earlier set out we do not consider that such directions are matters that
can be included in modern awards. Therefore, we do not consider that their
removal can properly be viewed as relevant to the issue of any impact on
productivity, employment costs or the regulatory burden.
[2022] FWCFB 161
54
(g) The establishment of model, plain language shutdown provisions which are
largely common across awards will assist in ensuring that the modern award
system is at least simple, easy to understand, stable and sustainable. This
weighs in favour of the variations.
(h) The variations will not have any discernible impact on employment growth,
inflation and the sustainability, performance and competitiveness of the
national economy. This is a neutral consideration.
Next steps
[161] Draft determinations varying the 78 awards in a manner consistent with the provisional
views and conclusion stated above will be published in due course. Interested parties will be
provided with a period of 21 days from the date the draft determinations are published to lodge
any submissions:
(1) in response to the provisional views and conclusions stated in paragraphs [149]-
[160] above;
(2) concerning the terms of the draft determinations.
6. UWU claim to vary the Children’s Award
6.1 Background
[162] The UWU seeks to vary the annual leave provisions in the Children’s Award to require
employers who direct employees to take annual leave without pay over the Christmas period to
pay ordinary time to those employees if they have not accrued any leave. In the alternative, the
UWU seeks to reduce the maximum amount of leave without pay that an employee can be
directed to take to two weeks and to amend clause 24.4(c) to provide that employees can only
be directed to take paid annual leave.
6.2 The claim
[163] The Full Bench determining the substantive claims in respect of the Children’s Award
(AM2018/18) referred the review of clause 24.4 of the Children’s Award to this Full
Bench.100 A number of submissions were filed in relation to this claim.101
[164] The UWU proposes two possible variations to clause 24.4:
Option 1: delete clause 24.4(c) and amend clause 24.4(b) as follows:
100 [2020] FWCFB 3011 at [446]-[459]
101 Draft determination, United Voice, 7 November 2018; Submission, JAG, 9 November 2018; Submission, United Voice,
15 March 2019; Revised draft determination, United Voice, 15 March 2019; Submission in reply, ACA, ABI, NSWBC,
NOSHSA, JAG, 16 April 2019; Submission in reply, Australian Federation of Employers & Industries, 16 April 2019;
Submission, United Voice, 29 May 2019; Submission, ACA, ABI, NSWBC, NOSHSA, JAG, 29 May 2019; Submission,
Australian Federation of Employers & Industries, 31 May 2019; Submission, United Voice, 9 July 2019; Submission,
Australian Federation of Employers & Industries, 10 July 2019.
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201818-draft-det-uv-071118.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201818-sub-jag-091118.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201818-20-sub-uv-150319.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201818-draft-det-uv-150319.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201818-20-sub-aca-andors-160419.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am201818-20-sub-in-reply-afei-160419.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am2018-20-sub-uv-290519.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am2018-20-sub-aca-ors-290519.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am2018-20-sub-reply-afei-310519.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am2018-20-sub-ieu-090719.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am2018-20-sub-afei-100719.pdf
[2022] FWCFB 161
55
“(b) During the Christmas vacation only, an employee may be directed to take annual
leave. An employee without sufficient accrued leave to maintain their ordinary rate of
pay during the vacation period may be required to take leave without pay for a
maximum of four weeks. Where an employee has insufficient accrued leave to maintain
their ordinary rate of pay during the vacation period, an employee will be paid the
ordinary rate of pay during such a period.”
Option 2: amend clause 24.4(b) as follows:
“(b) During the Christmas vacation only, an employee may be directed to take annual
leave. An employee without sufficient accrued leave to maintain their ordinary rate of
pay during the vacation period may be required to take leave without pay for a
maximum of four two weeks.”
[165] The UWU also seeks to amend clause 24.4(c) to ensure that employees may only be
directed to take paid annual leave as follows:
“(c) Notwithstanding clause 24.4(a) in establishments which operate for more than 48
weeks per year, an employer may require an employee to take paid annual leave by
giving at least four weeks’ notice as part of a close-down of its operations.”
[166] The UWU also seeks to insert a definition of “Christmas vacation” that limits a
Christmas vacation period to a maximum of 4 weeks.
[167] The UWU submits that clause 24.4(c) is redundant because clauses 24.4(a), 24.5, 25.6
and 24.7 deal with excessive leave accruals and employer rights to direct an employee to take
paid annual leave. It contends that 24.4(c) may lead to inefficiencies in the way that annual
leave is managed and displace the FW Act’s provision that paid annual leave is to be taken by
agreement between an employer and an employee. The UWU submits that the clause allows an
employer to direct employees to take annual leave during school holiday periods other than the
Christmas period, in circumstances where there is no excessive leave accrual. Further, an
employer may force an employee to take their accrued leave then enter into an agreement to
take annual leave in advance (pursuant to clause 24.8) which would place the employee in leave
accrual deficit.
[168] The UWU submits that clause 24.4(b) of the Children’s Award gives an employer power
to stand down an employee for up to 4 weeks without pay. Clause 24.4 provides:
24.4 Taking annual leave
(a) Where a workplace is closed during a vacation period, other than Christmas
vacation, and no work is available, an employee will be paid the ordinary rate of
pay during such a period.
(b) During the Christmas vacation only, an employee may be directed to take annual
leave. An employee without sufficient accrued leave to maintain their ordinary
[2022] FWCFB 161
56
rate of pay during the vacation period may be required to take leave without pay
for a maximum of four weeks.
(c) Notwithstanding clause 24.4(a) in establishments which operate for more than 48
weeks per year, an employer may require an employee to take annual leave by
giving at least four weeks’ notice as part of a close-down of its operations.
6.3 Submissions and evidence
[169] The Australian Childcare Alliance Inc, Australian Business Industrial, the New South
Wales Business Chamber, the National Outside School Hours Services Alliance and Junior
Adventures Group (ECEC Employers) oppose the claim. The ECEC Employers submit that the
requirement to pay employees for leave in circumstances where no leave is accrued seems to
be requiring payment of additional annual leave and is not appropriate. The ECEC Employers
submit that this would be a substantive change to the award and is incongruous with the
provisions allowing an employer to direct an employee to take annual leave and for annual
leave to be paid in advance. The current clause, which is aligned with the industry, is permitted
to be in the award by s 139(1)(h) of the FW Act and should not be disturbed.
[170] The Australian Federation of Employers and Industries (AFEI) also opposes the claim.
It submits that the variations, if granted, could have a significant impact on employers’
employment costs and operations and that the evidence filed by the UWU does not demonstrate
that the variations are necessary to achieve the modern award objective. It contends that Option
1, if adopted, would provide a disincentive for employees to accrue enough annual leave to
cover the Christmas vacation period.
[171] Evidence was filed in relation to this claim during proceedings relating to the substantive
issues in the Children’s Award and the Educational Services (Teachers) Award 2020
(AM2018/18 and AM2018/20). Hearings were held on 6, 7, 8 and 9 May 2019.
[172] Katy Paton102 is the Education and Quality Coordinator of Eastwood Early Education
Pty Ltd (Eastwood), a provider of long day-care services in Queensland, across two centres. Ms
Paton gave evidence that one centre, located in Eastwood, closes only the weeks of Christmas
and New Year.103 On cross-examination by UWU, Ms Paton acknowledged that Eastwood does
not require the ability to direct employees to take leave at any time of the year other than
Christmas/New Year.104
[173] Pamela Avril Maclean105 is the Company Director and operator of two long day-care
centres in Queensland (Big Day Out Care & Education). Under cross-examination by UWU,
Ms Maclean acknowledged that because the centres are open for 52 weeks a year, there is no
need for a shutdown provision in the award which gives her the ability to direct employees not
to attend work.106
102 Witness Statement of Katy Paton, 14 March 2019, Exhibit 21
103 Transcript, 7 May 2019 at PN2378
104 Transcript, 7 May 2019 at PN2381-PN2386
105 Amended Witness Statement of Pamela Avril Maclean, 13 March 2019, Exhibit 25
106 Transcript, 7 May 2019 at PN2550-PN2554
[2022] FWCFB 161
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[174] Ann Marie Chemello107 is the Company Director and operator of three companies
providing long day-care services in Western Australia: Warriapendi Early Learning Centre,
Ellenbrook School of Early Learning and Malvern Springs Early Learning. Under cross-
examination by UWU, Ms Chemello gave evidence that the three centres close only on public
holidays and stated there is no need to use the provisions allowing her to direct employees not
to attend work for any period during a year.108
[175] Karthiga Viknarasah109 is the Director and Educational Leader of Choice Childcare
Holdings Pty Ltd and a Director of Lidcome Preschool Kindergarten, both long day care
centres. Both centres operate for 50 weeks a year.
[176] Jae Dean Fraser110 is the Managing Director of The Scholars Group Pty Ltd, Little
Scholars School of Early Learning Pty Ltd and Scholars Consulting Pty Ltd. Mr Fraser’s
companies operate 7 centres providing early childhood and long day care services across
Queensland and New South Wales. Mr Fraser also manages a further 5 centres.
[177] Mr Fraser gave evidence that his centres are closed only on public holidays. Typically,
more staff request leave than can be approved during the Christmas period, due to demand for
childcare from working families. If employees who did not have leave accrued were entitled to
be paid over the period, Mr Fraser would roster them to work.
[178] Under cross-examination by the UWU, Mr Fraser confirmed he does not use the
shutdown provisions and acknowledged that if UWU’s proposed variation were made, it would
not impact his businesses.111
[179] Kristen McPhail112 is the Company Director and operator of two companies providing
long day care and out of hours school care services: Pachamama Early Education and Childcare
and Pachamama Activity Centre. Ms McPhail was cross-examined by UWU. Ms McPhail gave
evidence that the two centres close only on public holidays and accepted there is no need to
utilise the shutdown provisions in the Award.113
[180] Kylie Brannelly114 is the Chief Executive Officer of the Queensland Children’s
Activities Network and has held that position since 2005. Ms Brannelly is also the Chairperson
of the National Outside School Hours Services Alliance. Under cross-examination by UWU,
Ms Brannelly gave evidence that the majority of services close over the Christmas period for 2
weeks and are open for between 48 and 50 weeks each year.115 Ms Brannelly agreed that most
107 Witness Statement of Ann Marie Chemello, 1 March 2019, Exhibit 27
108 Transcript, 7 May 2019, at PN2738-PN2744
109 Amended Witness Statement of Karthiga Viknarasah, 11 April 2019, Exhibit 13
110 Amended Witness Statement of Jae Dean Fraser, 15 April 2019, Exhibit 18
111 Transcript, 7 May 2019, at PN1877-PN1883
112 Amended Witness Statement of Kristen McPhail, 12 April 2019, Exhibit 28
113 Transcript, 7 May 2019, at PN3120-PN3125
114 Amended Witness Statement of Kylie Brannelly, 15 April 2019, Exhibit 34
115 Transcript, 8 May 2019 at PN3504-PN3505
[2022] FWCFB 161
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services would not be impeded by an award provision restricting a shutdown period to two
weeks over the Christmas and New Year period.116
[181] Sarah Elizabeth Tullberg117 has been the Company Director, owner and operator of
Knox Childcare and Kindergarten in Victoria for 7 years. Ms Tullberg is also the Operations
Manager of three Wallaby Childcare Group centres in Victoria, a role she has held since 2011.
Ms Tullberg gave evidence that the centres she owns and manages have demand for services
all year and close only on public holidays. Should a change in demand occur, Ms Tullberg
might consider closing centres but would roster on the employees who had no accrued annual
leave to work, therefore it would not be financially viable.
[182] Under cross-examination by UWU, Ms Tullberg stated that all centres close only on
public holidays, and do not shut down over the Christmas and New Year period. Ms Tullberg
acknowledged that if the award were varied so shutdowns could only be implemented over the
Christmas period, it would not impact on the operation of the centres.118
[183] Kerry Joseph Mahony119 is the owner and operator of 2 long day care centres in the
Western suburbs of Adelaide. Mr Mahony gave evidence that one of the centres operates for 52
weeks per year and only closes on public holidays, and the second closes over the Christmas
period for 2 weeks. Over this period, 25% of enrolled children attend and the centres operate
with a reduced staff roster, therefore there is a need for some employees to take leave. Mr
Mahony gave evidence that if he were required to pay employees who had no leave accrued, he
would roster them for work at the centre that operates for 52 weeks a year and find something
for them to do. Mr Mahony was cross-examined by UWU. Mr Mahony agreed that if the award
were varied so shutdowns could only be implemented over the Christmas period, it would not
impact his centres at all.120
[184] Nicole Louise Llewellyn121 is the franchisee owner of Kool Kidz Mill Park, providing
childcare, early learning and kindergarten services in Victoria. Ms Llewellyn gave evidence
that no issues have arisen in relation to shutdown and annual leave accruals at the centre. Should
an employee wish to take leave but did not have enough accrued, Ms Llewellyn was of the view
that it would not be appropriate for her to pay them regardless of their leave entitlements. She
would allow those with annual leave accrued take leave, and those without leave accrued work.
The centre operates 52 weeks a year.122 While under cross-examination by UWU, Ms Llewellyn
agreed that if the award were varied in a way that limits an employer’s ability to direct
employees to take annual leave over the Christmas and New Year period, it would not affect
how she operates the centre.123
116 Transcript, 8 May 2019 at PN3506
117 Amended Witness Statement of Sarah Elizabeth Tullberg, 9 April 2019, Exhibit 35
118 Transcript, 8 May 2019 at PN3728-PN3734
119 Amended Witness Statement of Kerry Joseph Mahony, 11 April 2019, Exhibit 38
120 Transcript, 8 May 2019 at PN3983-PN3987
121 Amended Witness Statement of Nicole Louise Llewellyn, 9 April 2019, Exhibit 39
122 Transcript, 9 May 2019 at PN4335
123 Transcript, 9 May 2019 at PN4336
[2022] FWCFB 161
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[185] Alexandra Hands124 is the Company Director of two companies providing long day care
services across two centres in Adelaide: Windybanks Pty Ltd trading as Unley Early Learning
Centre and CBF Childcare Pty Ltd trading as Daws Road Early Learning Centre. Both centres
operate 52 weeks per year.125 Under cross-examination by UWU, Ms Hands agreed that if the
award were varied so shutdowns could only be implemented over the Christmas period, it would
not impact her centres.126
[186] The UWU submits that no witness gave any evidence supporting the conclusion that the
current provisions relating to employer abilities concerning shutdowns are used, necessary or
that clause 24.4(b) presents a real problem.127 It submits the Commission is entitled to find that
the current shutdown provisions are “anachronistic”, and that the evidence shows employers
manage leave responsibly – which the variations sought will reinforce. Referring to the
evidence, the UWU contends it reflects the “for profit” nature of the sector and submits that the
evidence of Ms Llewellyn and Ms Paton establishes that employers manage leave “like most
businesses where there are foreseeable reductions in demand over the Christmas/New Year
period”.
[187] Some of the ECEC Employers submit that there are no evidentiary findings that can be
made in relation to this claim. They submit that while some evidence suggested some centres
do not implement a shutdown over the Christmas period or otherwise implement a two-week
shutdown, Ms Brannelly stated that the majority of centres do close for two weeks over the
Christmas holidays.128 AFEI submits there is no basis to make the variations proposed, as no
evidence supporting an evidentiary finding was provided.129
6.4 Consideration
[188] For the reasons stated in [140]-[142] above, we do not consider that clause 24.4(b), to
the extent that it allows an employer to direct an employee to take leave without pay for up to
four weeks, is a provision which is permitted to be included in a modern award because it is, in
substance, a provision authorising the stand down of an employee without pay. Further, for
reasons similar to those stated in [147]-[150] above, we do not consider it appropriate to have
an award provision referring to “leave without pay” when there is otherwise no general
provision for such an entitlement in the NES or the Children’s Award. Accordingly, we
consider, consistent in part with the UWU’s “Option 1”, that the second sentence in clause
24.4(b) must be deleted. This variation would also render moot the UWU’s “Option 2”.
[189] Having regard to this conclusion, we do not consider that it is necessary to vary the
Children’s Award to provide for the other aspect of the UWU’s “Option 1”, namely a positive
requirement for employees to be paid their ordinary rate of pay if they have insufficient annual
leave to cover a Christmas vacation period. The proper management of the taking of employees’
annual leave entitlements consistent with s 88 of the FW Act, employees’ public holiday
124 Witness Statement of Alexandra Hands, 12 March 2019, Exhibit 43
125 Transcript, 9 May 2019, at PN4795-PN4797
126 Transcript, 9 May 2019, at PN4798
127 Submission, United Voice, 29 May 2019
128 Submission in reply, ACA, ABI and NSWBC, 29 May 2019
129 Submission, AFEI, 2 June 2019
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am2018-20-sub-uv-290519.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am2018-20-sub-aca-ors-290519.pdf
https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am2018-20-sub-reply-afei-310519.pdf
[2022] FWCFB 161
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entitlements, the use of accrued rostered days off and accrued time off in lieu of overtime, and
the use of the facility under clause 24.8 to take annual leave in advance by agreement, is likely
to ensure that all employees have sufficient leave to cover any Christmas vacation period. The
evidence before us indicates that many, perhaps most, employers under this award do not even
have Christmas vacation closure periods apart from closure during public holidays and, for
those that do, the closure is usually only for a short period of time. It seems to us therefore that
there is no problem of substance that requires resolution by way of the grant of the second
aspect of the UWU’s “Option 1”.
[190] Clause 24.4 is, in substance, a shutdown provision of the same nature as those in other
awards which have been discussed earlier in this decision. For the same reasons set out in [149]-
[160] above, as relevant, our provisional view is that the Children’s Award should be varied to
include the model term in [156] in substitution for the current clause 24.4, but with adaptations
to incorporate existing specific provisions. The new clause would be as follows:
“24.4 Direction to take annual leave during shutdown
(a) Clause 24.4 applies if an employer:
(i) intends to shut down all or part of its operation for a particular period during
the Christmas vacation (temporary shutdown period); and
(ii) wishes to require affected employees to take paid annual leave during that
period.
(b) Clause 24.4 does not apply to a shut down during any vacation period other than the
Christmas vacation. During any shut down to which clause 24.4 does not apply,
employees will be paid the ordinary rate of pay.
(c) The employer must give the affected employees 28 days’ written notice of a
temporary shutdown period, or any shorter period agreed between them and the
employer.
(d) The employer must give written notice of a temporary shutdown period to any
employee who is engaged after the notice is given under clause 24.4(c) and who will be
affected by that period, as soon as reasonably practicable after the employee is engaged.
(e) The employer may direct the employee to take a period of paid annual leave to which
the employee has accrued an entitlement.
(f) A direction by the employer under clause 24.4(e):
(i) must be in writing; and
(ii) must be reasonable.
(g) The employee must take paid annual leave in accordance with a direction under
clause 24.4(e).
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(h) An employee may take annual leave in advance during a temporary shutdown period
in accordance with an agreement under clause 24.8.
(i) In determining the amount of paid annual leave to which an employee has accrued
an entitlement, any period of paid annual leave taken in advance by the employee, in
accordance with an agreement under clause 24.8, to which an entitlement has not been
accrued, is to be taken into account.
(j) Clauses XX.XX to XX.XX do not apply to a period of annual leave that an employee
is required to take during a temporary shutdown period in accordance with clause
XX.XX.”
[191] Our provisional view is that the above variation is necessary to achieve the modern
awards objective and, in reaching this conclusion, we have taken the s 134(1) considerations
into account in the same way as set out in [160] above.
6.5 Next steps
[192] A draft determination varying the Children’s Award consistent with the provisional
views expressed above will be published in due course. Interested parties will be provided with
a period of 21 days from the date the draft determination is published to lodge any submissions:
(1) in response to the provisional views expressed in [190]-[191] above; and
(2) concerning the terms of the draft determination.
DECISION OF COMMISSIONER HUNT
[193] I have had the benefit of reading the decision of Vice President Hatcher and Deputy
President Asbury (the Majority Decision). Having regard to the provisional view in the Majority
Decision, I am not in agreement to adopt the proposed model clause for the following reasons.
[194] My decision involves a provisional view as to the terms permitted within a modern
award when an employer determines it appropriate to have a shutdown, requiring employees to
not attend for work.
[195] A shutdown may be required in a workplace for various reasons. Those reasons may
include maintenance work to be performed on machinery where production workers are not
required. Another reason may be that the whole business shuts down over the Christmas break,
for example, where it has been determined that no work will be performed.
[196] Since the commencement of modern awards made under the Fair Work Act 2009 (the
Act), a significant number of modern awards have contained provisions permitting a shutdown
period, permitting various forms of leave to be taken by employees. In the absence of an
employee willingly requesting annual leave, an employer has, in scores of modern awards made
by the Fair Work Commission (the Commission), been permitted to direct an employee to take
[2022] FWCFB 161
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annual leave during the shutdown period, or in the case of an employee not having sufficient
annual leave to cover the period, requiring the employee to take leave without pay.
[197] The Manufacturing and Associated Industries and Occupations Award 2020 presently
permits this where the clause is as follows:
“34.7 Annual close down
Notwithstanding section 88 of the Act and clause 34.9, an employer may close down an
enterprise or part of it for the purpose of allowing annual leave to all or the majority of the
employees in the enterprise or part concerned, provided that:
(a) the employer gives not less than 4 weeks’ notice of intention to do so; and
(b) an employee who has accrued sufficient leave to cover the period of the close down,
is allowed leave and also paid for that leave at the appropriate rate in accordance with
clauses 34.3 and 34.4; and
(c) an employee who has not accrued sufficient leave to cover part or all of the close
down, is allowed paid leave for the period for which they have accrued sufficient leave
and given unpaid leave for the remainder of the closedown; and
(d) any leave taken by an employee as a result of a close down pursuant to clause
34.7 also counts as service by the employee with their employer; and
(e) the employer may only close down the enterprise or part of it pursuant to
clause 34.7 for one or 2 separate periods in a year; and
(f) if the employer closes down the enterprise or part of it pursuant to clause 34.7 in 2
separate periods, one of the periods must be for a period of at least 14 consecutive days
including non-working days; and
(g) the employer and the majority of employees concerned may agree to the enterprise
or part of it being closed down pursuant to clause 34.7 for 3 separate periods in a year
provided that one of the periods is a period of at least 14 days including non-working
days; and
(h) the employer may close down the enterprise or part of it for a period of at least
14 days including non-working days and allow the balance of any annual leave to be
taken in one continuous period in accordance with a roster.”
[198] Accordingly, for more than a decade, under this particular award, arrangements have
been made between employers and employees to give no less than four weeks’ notice of an
intention to have a closedown. For new employees without a sufficient entitlement to paid
leave, they would be required not to attend for work and would be given unpaid leave for the
remainder of the closedown.
[199] If any longer-serving employee had used their annual leave accrual during the year, if
they did not have a full accrual to cover the length of the closedown, they too would be required
to take unpaid leave for any shortfall.
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[200] A similar provision is within the Road Transport and Distribution Award 2020:
“24.9 Annual close-down
An employer may close down an enterprise or part of the enterprise for the purpose of
allowing annual leave to all or the majority of the employees in the enterprise or part
concerned, provided that:
(a) the employer gives not less than one month’s notice of its intention to do so;
(b) an employee who has accrued sufficient leave to cover the period of the close down is
allowed leave, and is paid for that leave at the appropriate rate;
(c) an employee who has not accrued sufficient leave to cover part or all of the close down is
allowed paid leave for the period for which they have accrued sufficient leave, and given unpaid
leave for the remainder of the close-down; and
(d) any leave taken by an employee as a result of a close down pursuant to clause 24.9 also
counts as service by the employee with their employer.”
[201] In a decision issued on 19 October 2017,130 the Annual Leave Full Bench said the
following in relation to considerations within the Black Coal Mining Industry Award 2010
(Black Coal Award) as it then was:
“[31] As we have noted, there is a dispute as to whether an employer should have the power
to (in effect) direct an employee to take a period of unpaid leave in circumstances where the
employee has not accrued sufficient paid annual leave to cover any part of a temporary shutdown
period.
[32] We accept that CMIEG’s proposed clause 25.10(d)(iii) – in respect of unpaid leave – is
capable of falling within the scope of s.139(1)(b), as being a matter ‘about’ ‘leave’. The central
question is whether such a term is necessary to achieve the modern awards objective.”
[202] It is my view the Full Bench was referring to s.139(1)(h) and incorrectly referenced
s.139(1)(b). Section 139 of the Act is as follows:
“139 Terms that may be included in modern awards—general
(1) A modern award may include terms about any of the following matters:
(a) minimum wages (including wage rates for junior employees, employees with a
disability and employees to whom training arrangements apply), and:
(i) skill-based classifications and career structures; and
(ii) incentive-based payments, piece rates and bonuses;
130 [2017] FWCFB 5394
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(b) type of employment, such as full-time employment, casual employment,
regular part-time employment and shift work, and the facilitation of flexible working
arrangements, particularly for employees with family responsibilities;
(c) arrangements for when work is performed, including hours of work, rostering,
notice periods, rest breaks and variations to working hours;
(d) overtime rates;
(e) penalty rates, including for any of the following:
(i) employees working unsocial, irregular or unpredictable hours;
(ii) employees working on weekends or public holidays;
(iii) shift workers;
(f) annualised wage arrangements that:
(i) have regard to the patterns of work in an occupation, industry or
enterprise; and
(ii) provide an alternative to the separate payment of wages and other
monetary entitlements; and
(iii) include appropriate safeguards to ensure that individual employees are
not disadvantaged;
(g) allowances, including for any of the following:
(i) expenses incurred in the course of employment;
(ii) responsibilities or skills that are not taken into account in rates of pay;
(iii) disabilities associated with the performance of particular tasks or work
in particular conditions or locations;
(h) leave, leave loadings and arrangements for taking leave;
(i) superannuation;
(j) procedures for consultation, representation and dispute settlement.
(2) Any allowance included in a modern award must be separately and clearly identified in
the award.”
[203] The Full Bench ultimately decided against permitting an inclusion to direct an employee
to take unpaid leave in circumstances where the employee did not have sufficient annual leave
accrual on the basis of merit and that the Black Coal Award had not earlier contained such a
provision. Further, the Full Bench stated that it is common ground that shutdowns are an
infrequent event in the industry.
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[204] I am in agreement with the Full Bench that s 139(1)(h), allowing a modern award to
include terms about any of the following matters including ‘leave’, permits consideration of
unpaid leave. I am not satisfied that ‘leave’ or ‘arrangements for taking leave’ is limited only
to accrued annual leave. It is not necessary to discuss other leave provisions such as personal
leave etc. in this context.
[205] Scores of modern awards made by the Commission over the last decade have also
included clauses permitting employees to agree in writing to the employee taking a period of
paid annual leave in advance of an entitlement accruing. It appears to me that the only power
available to the Commission to have included such clauses in modern awards is pursuant to
s.139(1)(h). The modern award clauses include reference to an employee taking a period of
paid annual leave before the employee has accrued an entitlement to the leave.
[206] In my view, if there is power to include in modern awards the provision for employees
to agree to take annual leave in advance, the term ‘leave’ within s.139(1)(h) is not to be narrowly
construed. The Commission has allowed, by agreement, an employee and their employer to
provide for paid leave before an entitlement exists.
[207] The definition of ‘paid annual leave’ within the Act is at s 12 and is as follows:
“‘paid annual leave’ means paid annual leave to which a national system employee is entitled
under section 87.”
[208] The entitlement at section 87 of the Act is for four weeks of paid annual leave or more
in certain circumstances. The employee’s entitlement accrues progressively during a year of
service.
[209] Section 93(3) of the Act provides as follows:
“(3) A modern award or enterprise agreement may include terms requiring an employee, or
allowing for an employee to be required, to take paid annual leave in particular circumstances,
but only if the requirement is reasonable.”
[210] Clearly there exists a power to include within modern awards the ability for an employer
to require an employee to take paid annual leave. The modern award term will, by force of the
Act, state that the requirement needs to be reasonable.
[211] In my view there is no prohibition within the Act preventing a modern award term
permitting the following:
(a) an employer directing an employee to take unpaid leave during a shutdown where the
employee does not have sufficient leave accrual; and
(b) an employer directing an employee to take paid annual leave in advance of the
entitlement accruing.
[212] The limitation, of course, is that on each occasion an employee is directed by their
employer, the requirement must be reasonable.
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[213] Currently, scores of modern awards contain a provision permitting an employer to direct
an employee to take unpaid annual leave during a shutdown where the employee does not have
sufficient leave accrual. In my view, the removal of that term within modern awards has the
potential to cause some economic harm to some employers.
[214] In the situation where an employer decides to shutdown a business for two weeks or so
over the Christmas period to allow for rest and recreation and where supplies to their business
might be limited due to other businesses engaging in a shutdown, employees who have recently
joined the business and who do not have sufficient annual leave accrual should be directed to
either take a limited amount of annual leave in advance or take leave without pay.
[215] Section 134 of the Act describes the modern award objective. It includes the following:
“(1) The FWC must ensure that modern awards, together with the National Employment
Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into
account:
…..
…..
(f) the likely impact of any exercise of modern award powers on business,
including on productivity, employment costs and the regulatory burden; and
……
……”
[216] In my view, if the Majority Decision provisional term is ultimately adopted and inserted
into modern awards, the effect will be that employees without a sufficient annual leave accrual
during a shutdown will, if they elect against taking annual leave in advance or leave without
pay, be paid wages by the employer. For modern awards where an employer has been permitted
to require an employee to take unpaid leave, the proposed change, if adopted, is a direct cost to
the employer not earlier experienced.
[217] Employees with longer service and a leave accrual to cover the whole period of the
shutdown might be understandably disturbed to learn that a new employee without sufficient
leave to cover the period is entitled to wages paid by the employer. For the same absence,
longer-serving employees who might have requested annual leave at other times in the year and
been refused on account of requiring leave to cover an expected shutdown period, will need to
fund that shutdown period from their accrued leave, while new employees are paid wages by
the employer.
[218] It is not uncommon in the building industry, for example, for a shutdown to occur for
two-to-three weeks over late December/early January. Outside of public holidays, the working
days required to fund the whole shutdown period might be up to say, 10 days. A new employee
might only have around five days’ annual leave accrual at the commencement of the shutdown
period. In my view, the employer should not be required to pay the new employee wages for
the balance of the shutdown period for which they do not have accrued leave.
[219] Further, if employees throughout a year understand that if they do not have enough
accrued leave to cover all of the shutdown period, and if they elect against taking annual leave
in advance or unpaid leave, they will become entitled to wages in any event, it is possible
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employees may request annual leave at greater frequency and increased days at other times of
the year. If a request for annual leave is refused by an employer on account of requiring the
employee to have sufficient leave accrual to cover a proposed shutdown, disputation is more
likely.
[220] For all of these reasons, respectfully I am not in agreement with the Majority Decision
provisional term because I do not consider appropriate regard has been had for s 134(f) of the
Act and the potential impact this may have on employers for not only new employees without
sufficient leave accrual, but for existing employees who might wish to utilise their leave more
freely throughout the year, and put into dispute where leave requests are refused by the
employer.
[221] If the Majority Decision provisional term is ultimately inserted into modern awards,
such term will then be used to determine the better off overall test (BOOT) when employers
and employees make an enterprise agreement and require approval of the Commission to
approve the enterprise agreement. If, at an enterprise level employees may be directed to take
unpaid leave if they do not have sufficient leave accrual during a shutdown, or they are directed
to take annual leave in advance, this will then be examined by the Commission against an award
without such provisions. There is risk that such a term in an enterprise agreement may not
satisfy the BOOT.
[222] While I am satisfied that there is no prohibition within the Act, permitting an employer
to require an employee to take leave without pay for a period within a shutdown for which they
do not have sufficient leave accrued, I consider that the bulk of the impact with respect to a new
employee’s employment can be mitigated by requiring the new employee to take up to one
week of paid annual leave in advance. The requirement must, of course, be reasonable, as
required by s 93(3) of the Act.
[223] My provisional view is that the proposed model clause be modified so that, in an award
which requires no adaptation, it will provide as follows:
“XX.XX Direction to take annual leave during shutdown
(a) Clause XX.XX applies if an employer:
(i) intends to shut down all or part of its operation for a particular period (temporary
shutdown period); and
(ii) wishes to require affected employees to take paid annual leave during that period.
(b) The employer must give the affected employees 28 days’ written notice of a temporary
shutdown period, or any shorter period agreed between them and the employer.
(c) The employer must give written notice of a temporary shutdown period to any employee who
is engaged after the notice is given under clause XX.XX(b) and who will be affected by that
period, as soon as reasonably practicable after the employee is engaged.
(d) The following applies to any affected employee during a temporary shutdown period:
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(i) The employee may elect to cover the temporary shutdown period by
taking paid annual leave if the employee has accrued an entitlement to
such leave.
(ii) If the employee does not have sufficient accrued annual leave to cover
part or all of the temporary shutdown period, the employee may elect to
cover the shortfall by:
taking leave without pay;
taking annual leave in advance in accordance with an agreement under
clause XX.XX;
(ii) if the employee does not make an election under clause XX.XX(d)(i) and (ii)
that covers the whole of the temporary shutdown period, then the employer may
direct the employee to take a period of paid annual leave to which the employee
has accrued an entitlement.
(e) A direction by the employer under clause XX.XX(d):
(i) must be in writing; and
(ii) must be reasonable.
(f) The employee must take paid annual leave in accordance with a direction under clause
XX.XX(d).
(g) An employee in their first twelve months of service (calculated on the first day of the
temporary shutdown period) who has not accrued an entitlement to cover all of the temporary
shutdown period may be directed by the employer to take annual leave in advance up to a
maximum of one week. Such direction by the employer:
(i) must be in writing; and
(ii) must be reasonable.
(h) The employee must take paid annual leave in advance in accordance with a direction under
clause XX.XX(g).
(i) In determining the amount of paid annual leave to which an employee has accrued an
entitlement, any period of paid annual leave taken in advance by the employee, in accordance
with an agreement under clause XX.XX, to which an entitlement has not been accrued, is to be
taken into account.”
[224] In my view, the effect of inserting subclauses (g) and (h) will result in employers having
confidence to employ new employees in the months leading up to a proposed shutdown.
Without a provision as proposed, employers may baulk at employing new employees, weighing
up how they will pay for the period of time when they do not require the new employee to
attend for work, at the same time as they are likely to be experiencing an impact to the business
on account of the shutdown.
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[225] To conclude, I am satisfied there is power to insert the terms proposed by me and having
regard to the likely impact on business, including on productivity and employment costs, it is
appropriate to do so. I would seek the views of the parties as proposed by the majority.
[226] With respect to the UWU’s claim to vary the Children’s Services Award 2010, for the
same reasons above I propose the model term at [223] above.
VICE PRESIDENT
OF THE FAIR WORK COMMISSION THE
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Attachment A
1. Aboriginal and Torres Strait Islander Health Workers and Practitioners and Aboriginal
Community Controlled Health Services Award 2020 (clause 22.3)
2. Aircraft Cabin Crew Award 2020 (clause 19.4)
3. Airline Operations–Ground Staff Award 2020 (clause 22.6)
4. Alpine Resorts Award 2020 (clause 25.3)
5. Aluminium Industry Award 2020 (clause 22.4)
6. Ambulance and Patient Transport Industry Award 2020 (clause 22.7)
7. Animal Care and Veterinary Services Award 2020 (clause 22.5)
8. Aquaculture Industry Award 2020 (clause 22.9)
9. Asphalt Industry Award 2020 (clause 21.8)
10. Banking, Finance and Insurance Award 2020 (clause 22.5)
11. Black Coal Mining Industry Award 2020 (clause 24.9)
12. Broadcasting and Recorded Entertainment Award 2020 (clause 18.6)
13. Building and Construction General On-site Award 2020 (clause 31.3)
14. Business Equipment Award 2020 (clause 23.5)
15. Car Parking Award 2020 (clause 24.6)
16. Cemetery Industry Award 2020 (clause 19.3)
17. Cement, Lime and Quarrying Award 2020 (clause 22.8)
18. Cleaning Services Award 2020 (clause 21.4)
19. Clerks—Private Sector Award 2020 (clause 32.5)
20. Coal Export Terminals Award 2020 (clause 20.7)
21. Commercial Sales Award 2020 (clause 20.6)
22. Concrete Products Award 2020 (clause 22.6)
23. Contract Call Centres Award 2020 (clause 22.10)
24. Educational Services (Post-Secondary Education) Award 2020 (clause 22.5)
25. Electrical Power Industry Award 2020 (clause 21.8)
26. Electrical, Electronic and Communications Contracting Award 2020 (clause 21.5)
27. Fitness Industry Award 2020 (clause 21.3)
28. Food, Beverage and Tobacco Manufacturing Award 2020 (clause 25.11)
29. Gardening and Landscaping Services Award 2020 (clause 20.9)
30. Gas Industry Award 2020 (clause 20.7)
31. General Retail Industry Award 2020 (clause 28.4)
32. Graphic Arts, Printing and Publishing Award 2020 (clause 31.12)
33. Hair and Beauty Industry Award 2020 (clause 24.3)
34. Health Professionals and Support Services Award 2020 (clause 26.5)
35. Higher Education Industry—General Staff—Award 2020 (clause 24.4)
36. Horse and Greyhound Training Award 2020 (clause 18.6)
37. Hospitality Industry (General) Award 2020 (clause 30.4)
38. Hydrocarbons Industry (Upstream) Award 2020 (clause 25.7)
39. Joinery and Building Trades Award 2020 (clause 27.9)
40. Journalists Published Media Award 2020 (clause 20.8)
41. Legal Services Award 2020 (clause 22.7)
42. Local Government Industry Award 2020 (clause 23.5)
43. Manufacturing and Associated Industries and Occupations Award 2020 (clause 34.7)
44. Meat Industry Award 2020 (clause 25.8)
45. Mining Industry Award 2020 (clause 22.7)
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46. Mobile Crane Hiring Award 2020 (clause 24.6)
47. Miscellaneous Award 2020 (clause 21.4)
48. Nursery Award 2020 (clause 22.12)
49. Nurses Award 2020 (clause 22.7)
50. Oil Refining and Manufacturing Award 2020 (clause 24.6)
51. Pest Control Industry Award 2020 (clause 23.9)
52. Pharmaceutical Industry Award 2020 (clause 21.5)
53. Plumbing and Fire Sprinklers Award 2020 (clause 24.4)
54. Poultry Processing Award 2020 (clause 21.5)
55. Premixed Concrete Award 2020 (clause 22.8)
56. Professional Employees Award 2020 (clause 18.4)
57. Racing Clubs Events Award 2020 (clause 23.5)
58. Racing Industry Ground Maintenance Award 2020 (clause 21.5)
59. Real Estate Industry Award 2020 (clause 20.5(a))
60. Registered and Licensed Clubs Award 2020 (clause 25.4)
61. Restaurant Industry Award 2020 (clause 25.4)
62. Road Transport (Long Distance Operations) Award 2020 (clause 20.4)
63. Road Transport and Distribution Award 2020 (clause 24.9)
64. Salt Industry Award 2020 (clause 23.10)
65. Seafood Processing Award 2020 (clause 21.11)
66. Security Services Industry Award 2020 (clause 21.4)
67. Silviculture Award 2020 (clause 22.5)
68. Storage Services and Wholesale Award 2020 (clause 24.5)
69. Sugar Industry Award 2020 (clause 31.5)
70. Supported Employment Services Award 2020 (clause 32.3)
71. Surveying Award 2020 (clause 22.7)
72. Telecommunications Services Award 2020 (clause 22.9)
73. Textile, Clothing, Footwear and Associated Industries Award 2020 (clause 32.6)
74. Timber Industry Award 2020 (clause 28.10)
75. Vehicle Repair, Services and Retail Award 2020 (clause 29.6)
76. Water Industry Award 2020 (clause 22.4)
77. Wine Industry Award 2020 (clause 24.9)
78. Wool Storage, Sampling and Testing Award 2020 (clause 23.5)
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