[2011] FWAFB 2633

Download Word Document


FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.242—Application for a low-paid authorisation

United Voice
(B2010/2957)
The Australian Workers' Union of Employees, Queensland
(B2010/ 3116)

JUSTICE GIUDICE, PRESIDENT
VICE PRESIDENT WATSON
COMMISSIONER GAY



MELBOURNE, 5 MAY 2011

[1] This decision relates to applications by United Voice (UV) and the Australian Workers’ Union - Queensland Branch (AWUQ) (jointly the applicants), lodged on 10 May 2010 and 17 June 2010 respectively, for a low-paid authorisation under s.242 of the Fair Work Act 2009 (Fair Work Act). The applications are made in relation to employees in the residential aged care sector in specified areas of Australia performing work described in the Aged Care Award 2010 and enrolled nurses in the aged care sector in Western Australia. 1 As we understand the position, the applicants seek one authorisation which, if granted, would permit the applicants to bargain for a multi-enterprise agreement covering all of the employers named in the two applications.

[2] On 29 June 2010 the President directed that the applications be dealt with by a Full Bench, pursuant to s.615 of the Act. On 21 July 2010 directions were made for the filing of outlines of submissions, witness statements and other material. In the week commencing 22 November 2010 we sat to hear evidence from a number of witnesses and to deal with other evidentiary matters. The parties subsequently filed written submissions and the applications were listed for final oral argument on 3 March 2011. We reserved our decision on that day.

The Proceedings

[3] The UV application, as amended, is in the following terms:

[4] At the time the application was lodged UV was known as the Liquor, Hospitality and Miscellaneous Union (LHMU). The AWUQ application for an order is in similar terms but restricted to employees in Queensland. The AWUQ adopted and relied upon the case put by UV.

[5] In each case the application includes a list of employers to which the authorisation would apply. We were told that the list is comprised of all of the employers funded by the Australian Government for the provision of residential aged care in the area covered by the applications.

[6] A large number of witness statements were relied upon by UV. These included statements from 7 union officials, 17 employees in the aged care industry, an academic and researcher, Dr I Watson, and the Managing Director of Lonergan Research, Mr C Lonergan. UV also relied on a range of awards, agreements and other documents.

[7] Many employer bodies and individual employers opposed the application. Aged Care Employers (ACE) relied upon 12 witness statements from employers in the residential aged care industry and persons involved in the provision of advice to such employers. The Chamber of Commerce and Industry Western Australia (CCIWA) relied upon witness statements by the chief executive officer of Aged and Community Services WA and employers engaged in the provision of residential aged care services in Western Australia. The Aged and Disabled Persons Hostel and Welfare Association (ADPA), representing 20 employers in Queensland, relied on statements from three of those employers and a statement by Mr Shonhan in relation to an annual national aged care survey. A number of other individual employers opposed the application.

[8] Others to make submissions included the Australian Council of Trade Unions (ACTU), the Australian Nursing Federation (ANF), the Health Services Union (HSU), the Australian Chamber of Commerce and Industry (ACCI), the Australian Federation of Employers & Industries (AFEI), the Catholic Commission for Employment Relations (CCER) and the Combined Pensioners and Superannuants Association of NSW Inc.

The statutory provisions

[9] At the outset it is important to describe the low-paid authorisation provisions and their statutory context. Section 242, under which these applications are made, is in Division 9–Low-paid bargaining, of Part 2–4 of the Act. Part 2–4 deals with enterprise agreements. The objects of Part 2–4 are found in s.171. It reads:

[10] Section 171(a) refers to the provision of a framework for collective bargaining for agreements that deliver productivity benefits. While there is no specific reference to low-paid authorisations, Division 9 contains its own objects in s.241. That section reads:

[11] It can be seen that these objects include the encouragement of enterprise bargaining for low-paid employees which improves productivity and service delivery and which also takes account of the needs of individual enterprises. The term enterprise bargaining is extended to include bargaining for an enterprise agreement which covers more than one employer – referred to in s.242 as a “multi-enterprise agreement”. The terms of s.241 are to be read in the context of the enterprise agreement provisions in the rest of Part 2–4. When the provisions as a whole are considered, it is apparent that the legislative policy underlying the low-paid authorisation provisions is that while bargaining on a single enterprise basis is the preferred approach, multi-enterprise bargaining is permitted “to assist and encourage low-paid employees ... to make an enterprise agreement that meets their needs”. The other provisions of Division 9 set out the means by which these objects are to be carried into effect. In particular, s.243 specifies the matters which the tribunal is to take into account in dealing with an application under s.242. Because s.243 is critical to our task, but also quite lengthy, we have set it out in full as Attachment A.

[12] Section 243(1) provides that if an application of the required kind has been made Fair Work Australia must make a low-paid authorisation if it is satisfied that it is in the public interest to do so taking into account the matters in ss.243(2) and (3).

Should an authorisation be made?

[13] It is not disputed that the applicants are capable of making the applications under s.242(1). Subject to some definitional issues, the applications specify the employers and employees that will be covered by the proposed multi-employer agreement, as required by s.242(2). The applications are consistent with s.242. We next deal with the public interest, referred to in s.243(1)(b).

[14] Some initial observations should be made about the nature of the public interest test. The controlling criterion is satisfaction in the public interest. That criterion is a broad one and is confined only by the limits of the scope and purpose of the Act, as the following passage from the decision of the High Court of Australia in O’Sullivan v Farrer indicates:

[15] While the tribunal is required to take into account the matters specified in ss.243(2) and (3) in applying the public interest criterion, we do not think it was intended that those matters are the only ones capable of being relevant to the public interest. Other matters potentially affecting the public interest can also be taken into account. The public interest is distinguishable from the interests of the parties, although it is clear from the matters specified that there is a substantial overlap where these provisions are concerned.

[16] We turn now to a consideration of each of the matters specified in ss.243(2) and (3) including some questions of interpretation.

[17] There were a number of submissions relating to the concept of low-paid employees. We have no doubt that in the context of the provisions of Division 9 the phrase is intended to be a reference to employees who are paid at or around the award rate of pay and who are paid at the lower award classification levels. The combined employers (ACE, ADPA, CCIWA, ACCI and AFEI) submitted, however, that we should take account of salary packaging arrangements which are widely available to employees in the aged care sector. The term salary packaging refers to methods of reducing after tax income which are legitimately available to employees of charitable or not-for-profit employers. The combined employers submitted that, even where employees are paid at the award rate, salary packaging can result in a level of after tax income much higher than enjoyed by employees in other areas of employment. Many employees in the residential aged care sector have access to salary packaging.

[18] It is apparent that after tax income varies on an individual basis depending on the prevailing taxation regime and the personal circumstances of the taxpayer. It is not clear how the benefit of salary packaging could be taken into account on an aggregate basis. And, if we were to take it into account, it might equally be argued that other matters which have a bearing on after tax income should also be taken into account in deciding whether employees are low-paid. Furthermore, as the applicants pointed out, there is no indication in Division 9 that we should interpret references to low pay as equivalent to low income. For these reasons we do not think that our assessment of the level of pay in the aged care sector should take salary packaging into account.

[19] We do not think it can be disputed that a very significant proportion of the employees in the aged care sector are low-paid in that they are paid at or around the award rate of pay and at the lower award classification levels. The applicants also relied on a report by Dr I Watson which compared levels of pay in the aged care sector with levels of pay for workers in comparable occupations working in other industries. Although various employer parties sought to criticise the report and submitted that we should reject it, we found the report useful. The following extract from the executive summary of the report indicates that aged care employees are low-paid in a relative sense:

[20] We accept that in general terms employees in the aged care sector are low-paid. On the other hand there are many employers who are included in the schedule of respondents to whom an enterprise agreement under the Act, or its predecessor, applies. For that reason it is not possible to conclude that employees of those employers have not had access to collective bargaining. We consider that the existence of enterprise agreements is a matter to be taken into account in deciding the scope of any authorisation we decide to make.

[21] There was a deal of evidence from employers that the applicants and other unions had not been particularly active in pursuing enterprise bargaining. On the other hand the evidence of the applicants’ witnesses was that bargaining is hampered by a number of factors. The main factor appears to be the commonly held employer position that wage increases cannot be granted without government funding and that the level of government funding does not permit bargained increases. Other factors are that the nature of residential aged care makes it difficult for employees to take protected industrial action, the existence of a large number of small enterprises and that wage increases have been offset with changes in other wages and conditions leading to only marginal outcomes. It was also submitted, relying on evidence from Dr Cooper, Equity Research Fellow, Work and Organisational Studies, Faculty of Business and Economics, The University of Sydney, that employees in the aged care sector are in a weak bargaining position for a number of reasons including structural factors in the labour market, the nature of the work and the characteristics of the workforce.

[22] It is clear from the aggregate data concerning the level of aged care employees’ pay, the evidence from union officials about difficulties in bargaining and the evidence and submissions concerning funding arrangements, that many employees in the aged care sector have not had access to collective bargaining or face substantial difficulty in bargaining at the enterprise level, or both. We have no doubt that granting the authorisation would assist those employees by providing a framework for negotiation across the sector which will enable the applicants and potentially other bargaining representatives to make better use of resources and will simplify the bargaining process. We deal with some related issues later in considering the matters to be taken into account under s.243(3).

[23] In dealing with s.243(2)(a) we expressed some conclusions about bargaining in the aged care sector all of which are also relevant under s.243(2)(b). The applicants’ final submission included a survey of wages in approximately 20 agreements. The survey showed that on average the agreement rates are 4% above the relevant award rates. The combined employers disputed the validity of the survey. They submitted that when comparisons are made at the appropriate level the margin above the award rates is closer to 10%. The applicants’ case is that even where enterprise agreements are made which increase wages, they also contain trade-offs in conditions which can counterbalance the wage increase.

[24] Although there does not appear to be any measure of the proportion of the employers and employees in the sector covered by enterprise agreements, we have concluded that where agreements do exist they result in margins somewhere between 5% and 10% over the award rate but that in many cases there are negotiated alterations in other award conditions which have an offsetting effect on the agreement rates.

[25] It might be concluded from pay levels in the sector that the employees have relatively low bargaining power. Employees may have low tolerance for negotiation and industrial action for a range of reasons such as: a high commitment to those in their care, they may work part-time, they may be conflict averse or they may not be disposed to challenge the commonly held view that the funding arrangements do not leave their employers any room for discretionary increases above the award rates. Most of the indications are that, as a general rule, employers in the sector are in a stronger position than employees when it comes to negotiations on pay and conditions.

[26] The minimum terms and conditions of employees in the sector are in most respects no less beneficial than the minimum terms and conditions applying in other sectors. They are covered by a modern award and protected by the NES in Part 2–2 of the Act. When it comes to actual terms and conditions it is clear that with the exception of employees to whom an enterprise agreement applies, the minimum terms and conditions generally constitute the actual terms and conditions. It follows that earnings in the sector tend to be below earnings in the sectors in which enterprise bargaining is more prevalent, as indicated by Dr Watson’s evidence.

[27] It appears that the list of respondents has been compiled from the residential aged care provider list maintained by the Australian Government. The respondents therefore have common characteristics in terms of operations, service and care provision and employee functions and duties. Although the details of funding arrangements may differ we assume that funding is administered in a consistent manner across the sector. Terms and conditions of employment may differ where enterprise agreements operate, but otherwise there is a high degree of commonality.

[28] We deal now with the matters which we must take into account under s.243(3).

[29] There was not a great deal of evidence relevant to this matter. It involves a prediction about the likely course of events with reference to one of the objects in s.241. If the prediction is positive, clearly that favours the granting of the application. The applicants submitted that opportunities for improvements in labour productivity are very limited. It was also noted that the Productivity Commission is currently considering funding and other arrangements in the aged care sector with a view to making recommendations for improvement. The combined employers submitted that it could not be in the public interest to grant the application where the applicants have failed to identify potential productivity improvements, particularly when granting the application might have a negative impact on productivity because of some of the claims, including various “union privileges”, which are sought.

[30] The applicants’ submissions may suggest that they are positioning themselves in relation to the negotiations which will occur should the application be granted. The employers, being opposed to the application, were themselves predictably reluctant to express optimism that the identification of productivity and service delivery improvements would be assisted by multi-enterprise bargaining. It seems likely that where enterprise agreements have been reached in the sector they may have included improvements in productivity and service delivery, although enterprise bargaining has been limited. It may be that if negotiations are conducted in one forum opportunities to identify the relevant changes will be greater, but given the submissions we are unable to reach any firm conclusion.

[31] This matter also involves a prediction. It requires some assessment of the likely behaviour of many employers and employees in a bargaining process spread, potentially, across many enterprises in a number of States and Territories. Viewed from the employee perspective, we have no reason to doubt that one or two unions would take the lead in the negotiations and would devote sufficient resources to the task. There is always the possibility of a multiplicity of bargaining representatives being appointed, as there sometimes are in bargaining for enterprise agreements involving large employers operating in more than one State. Whatever issues of this kind do arise, we are confident that solutions can be found if all representatives are committed to reaching a positive outcome. The tribunal also has the ability to assist. 4 From the employer perspective, the degree of coordination between employers exhibited during these proceedings is encouraging. Video-conferencing and web-based communications can be used to reduce travel and other costs.

[32] Employers represented in the proceedings generally oppose the applications, although the applicants pointed to a handful who appear to support the applications. We take the case put by the applicants to be generally representative of the views of the employees. Given our findings about relative bargaining power it is not surprising that employers generally oppose the application and employees generally support it.

[33] There is no doubt that funding plays a pervasive role in workplace relations in the sector. The level of funding is a significant consideration when employers make decisions in relation to wages and conditions to be afforded to their employees. The Australian Government plays a dominant role in the provision of funds. The combined employers submitted that while the tribunal could direct the Government to attend a conference, the Government cannot be compelled to make more funds available and that it is unlikely to do so. While this submission raises relevant considerations, in the present situation s.243(3)(d) requires an examination of the extent to which a person, which is not the employer, has control over the terms and conditions of the employees of the employers who will be covered by the agreement. The dominant role of the Australian Government through the funding arrangements makes it such a person. That fact favours the grant of the application. Whether funding might increase if the authorisation were granted is an important question, but it would not be appropriate to make a finding about it even if we were in a position to do so. Equally, bargaining might identify circumstances in which the overall effect of any improvements in wages might be minimised through improvements in productivity and service delivery.

[34] This paragraph reinforces the importance of single enterprise bargaining in the statutory scheme, even where a low-paid authorisation has been made. While the applicants have submitted that they are prepared to respond reasonably to proposals for single enterprise agreements, the combined employers have submitted that the applicants’ position is “questionable”. We note some evidence that UV has declined to bargain on a single enterprise basis pending the outcome of these applications, nevertheless we are prepared to accept the applicants’ indications of intention. We expect them to be honoured.

[35] The combined employers submitted that, contrary to the applicants’ submission, the purpose of the provisions of Division 9 is not to “lift employees out of low pay”, but to facilitate access to bargaining “where the conventional bargaining mechanisms are ineffective at the single enterprise level.” They referred to a Productivity Commission report which suggested that competitive wages could not be achieved for aged care workers unless the costs and prices for aged care are independently assessed and fixed. They also submitted that the wage rates claimed by the applicants are based on invalid comparisons with manufacturing and other industries. We are not in a position to evaluate the significance of these submissions for the prospects of successful bargaining should the authorisation be made. They clearly raise matters which may be relevant in the bargaining process. In the circumstances overall there is some prospect of bargaining being successful.

Conclusions

[36] Leaving out of consideration employers and employees to whom an enterprise agreement applies, we are satisfied that the employees to whom the authorisation would apply are low-paid, that they either have not had access to enterprise bargaining or face substantial difficulty in bargaining at the enterprise level and that making an authorisation would assist them to bargain. Other matters identified in s.243(2) also point to an authorisation being in the public interest: the history of bargaining, the relative bargaining strength of the employers and employees and the high degree of commonality in the nature of residential aged care enterprises and, leaving aside employees to whom enterprise agreements apply, the conditions of the employees.

[37] It is unnecessary to repeat the conclusions in relation to the matters specified in s.243(3). We are satisfied that it is in the public interest to make a low-paid authorisation and intend to do so. Before finalising the authorisation a number of things require attention.

[38] We have made it clear that a number of our conclusions do not extend to employers and employees to whom an enterprise agreement applies. Any employers in that category should be deleted from the list of employers. It appears likely that a number of enterprise agreements do not result on balance in a great improvement in terms and conditions for the employees to whom they apply. In one sense those employees may still be “low-paid” We consider, however, that it would be very difficult to analyse the terms of the agreements operating in the sector and the circumstances in which they were made with a view to deciding whether, despite the agreement, the authorisation should extend to the enterprise concerned. We have decided that employers to whom an enterprise agreement applies should be excluded from the authorisation because of the particular circumstances of the applications we are considering. There may be other cases in which a different approach could be followed consistent with the legislative provisions.

[39] We request the applicants to prepare a draft list, circulate it to the other parties who have appeared and then file the list together with a draft authorisation within 30 days. Should it be necessary to do so we shall seek submissions on the draft prior to making the authorisation.

[40] In conclusion there are two additional observations. The first is that application may be made to delete an employer’s name from the authorisation and an employer’s name is taken to have been deleted if an enterprise agreement applying to the employer comes into operation. 5 These provisions indicate, among other things, that an employer wishing to pursue a single enterprise agreement in bargaining may still do so and, if successful, will not be covered by the multi-enterprise agreement. The terms of s.243(3)(e) reinforce that conclusion. Secondly, Fair Work Australia may provide assistance in relation to a proposed multi-enterprise agreement on its own motion or on application.6 We direct UV to provide a confidential written report to Vice President Watson outlining progress in bargaining by 30 September 2011 with a copy provided to each employer covered by the authorisation and each bargaining representative.

PRESIDENT



Appearances:

J Nolan of counsel with W Ash for United Voice.

D Broanda with Z Angus for the Australian Workers' Union of Employees, Queensland.

G Boyce of counsel with R LeQuesne for the Aged Care Employers and the Catholic Commission for Employment Relations.

T Longwill for the Aged and Disabled Persons Hostel and Welfare Association.

B Gee for Bupa Care Services Pty Ltd.

G McCorry for the Raykon Group.

P Harris with P Reid for the Bethanie Group Inc.

J Auerbach for the Chamber of Commerce and Industry Western Australia.

J Lawrence for Australian Federation of Employers & Industries.

D Mammone for the Australian Chamber of Commerce and Industry.

T Shipstone with J Fetter for the Australian Council of Trade Union.

N Blake for the Australian Nursing Federation.

D King for Buffalo Memorial Homes for the Aged.

S Lucas for Woombye CARE Inc, Cabanda Care Inc, and Clanwilliam Aged Care.

Hearing details:

Before Thatcher C.
2010.
Sydney.
May 28.
Sydney and Perth (by video link).
June 15.

Before Watson VP.
2010.
Sydney and Brisbane, Perth (by video link).
July 6.

Before the Full Bench.
2010.
Sydney and Adelaide, Brisbane, Darwin, Melbourne, Perth (by video link).
November 22–26.

2011.
Sydney and Melbourne, Perth (by video link).
March 3.

 1   MA000018.

 2   (1989) 168 CLR 210, para 13.

 3   Exhibit No. LHMU 5.

 4   See s.246 of the Act.

 5   See ss.244-5.

 6   See s.246.

Attachment A to the Full Bench decision of 5 May 2011




Printed by authority of the Commonwealth Government Printer

<Price code C, PR508904>