[2013] FWCFB 5411 |
FAIR WORK COMMISSION |
DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Item 6, Sch. 5—Modern awards review
Modern Awards Review 2012—Apprentices, Trainees and Juniors
JUSTICE BOULTON, SENIOR DEPUTY PRESIDENT |
SYDNEY, 22 AUGUST 2013 |
Review of all modern awards after two years - applications relating to apprentices, trainees and junior rates - common matters - apprentice wages - adult apprentice provisions - terms and conditions of employment for apprentices - competency based wage progression - application for variation of National Training Wage Schedule - insertion and variation of model school-based apprentice schedule.
CONTENTS |
PARA |
A. Introduction
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[5] |
[1] Under Item 6, Schedule 5 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Provisions Act), 1 the Fair Work Commission (the Commission) is required to conduct a review of all modern awards after two years (the Transitional Review). In the review, the Commission must consider whether the modern awards achieve the modern awards objective and are operating effectively, without anomalies or technical problems arising from the award modernisation process conducted under Part 10A of the Workplace Relations Act 1996 (the WR Act).
[2] In a statement of 27 April 2012, 2 the President of Fair Work Australia (FWA) indicated that a Full Bench would be constituted to determine all applications to vary modern awards in relation to apprentices, trainees and juniors as part of the Transitional Review of modern awards. Forty-six applications were originally referred to the Full Bench. Several additional applications were subsequently referred. A full list of the applications referred to the Full Bench is included as Attachment B to this decision.
[3] After hearing from the parties on the issue of how the review should be conducted, the Full Bench decided that it would deal first with four “common matters” relating to multiple modern awards. 3 A fifth common matter was added to the list at the proceedings on 4 March 2013. The common matters are:
1. An application by the Australian Council of Trade Unions (ACTU) and eight of its affiliates 4 to raise apprentice wages. The variations sought are:
2. Applications by the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU), the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) and the Construction, Forestry, Mining and Energy Union (CFMEU) to insert “model clauses” relating to apprenticeship into various modern awards. The model clauses cover a range of matters including:
3. An application by the Australian Industry Group (Ai Group) to vary the National Training Wage Schedule (NTWS), as it appears in many modern awards. The variations sought are to change the wording of references to time spent “to attend” or “in attending” training to more explicitly refer to time spent “in attendance” at training. The variations are intended to make it clear that employers are not required to pay for time spent by trainees in travelling to training, and that the NTWS does not extend the application of general award entitlements.
4. Applications by the AMWU and the CFMEU to insert provisions for competency based wage progression for apprentices into the Sugar Industry Award 2010 (the Sugar Award), the Airline Operations - Ground Staff Award 2010 (the Airline Award), the Graphic Arts, Printing and Publishing Award 2010 (the Graphic Arts Award), the Building and Construction General On-Site Award 2010 (the Building Award), and the Joinery and Building Trades Award 2010 (the Joinery Award).
5. A submission by the Commonwealth of Australia, as represented by the Department of Education, Employment and Workplace Relations (DEEWR), seeking to insert the model schedule dealing with school-based apprentices into seven modern awards, and to vary the schedule in the awards before us to provide for competency based progression.
[4] This decision deals with the abovementioned common matters.
(i) Legislative provisions applicable to the review
[5] The Transitional Review is being conducted under Item 6, Schedule 5 of the Transitional Provisions Act. Item 6 provides:
“6 Review of all modern awards (other than modern enterprise awards and State reference public sector modern awards) after first 2 years
(1) As soon as practicable after the second anniversary of the FW (safety net provisions) commencement day, FWA must conduct a review of all modern awards, other than modern enterprise awards and State reference public sector modern awards.
Note: The review required by this item is in addition to the annual wage reviews and 4 yearly reviews of modern awards that FWA is required to conduct under the FW Act.
(2) In the review, FWA must consider whether the modern awards:
(a) achieve the modern awards objective; and
(b) are operating effectively, without anomalies or technical problems arising from the Part 10A award modernisation process.
(2A) The review must be such that each modern award is reviewed in its own right. However, this does not prevent FWA from reviewing 2 or more modern awards at the same time.
(3) FWA may make a determination varying any of the modern awards in any way that FWA considers appropriate to remedy any issues identified in the review.
Note: Any variation of a modern award must comply with the requirements of the FW Act relating to the content of modern awards (see Subdivision A of Division 3 of Part 2-3 of the FW Act).
(4) The modern awards objective applies to FWA making a variation under this item, and the minimum wages objective also applies if the variation relates to modern award minimum wages.
(5) FWA may advise persons or bodies about the review in any way FWA considers appropriate.
(6) Section 625 of the FW Act (which deals with delegation by the President of functions and powers of FWA) has effect as if subsection (2) of that section included a reference to FWA’s powers under subitem (5).”
[6] The legislative provisions applicable to the Transitional Review were considered in a decision relating to the Modern Awards Review 2012 given on 29 June 2012. 8 In that decision, the Full Bench dealt with various preliminary issues relating to the approach to be adopted in the Transitional Review. In particular, and for the purposes of the present matters, we note and adopt the following conclusions in that decision:
“[23] First, any variation of a modern award must comply with the requirements of the FW Act which relate to the content of modern awards. These requirements are set out in Subdivision A of Division 3 of Part 2-3 of the FW Act...
[25] Any variation to a modern award arising from the Review must comply with s.136 of the FW Act and the related provisions which deal with the content of modern awards (ss.136–155 of the FW Act)...
[34] While s.138 is relevant to the Review there is still the question of the extent of its impact and the circumstances in which it will have on an application to a variation determination...
[35] The other issue which is contentious is whether ss.157–160 are relevant to the Review. A number of parties have suggested that these provisions are “contextually relevant” or “compatible” with Item 6 and the Review...
[38] It seems to us that the Review is quite separate from both the 4 yearly reviews of modern awards provided for in s.156 and from the process of varying awards outside the 4 yearly review, as provided in ss.157 and 158. We are not persuaded that these provisions are relevant to the Tribunal’s task under Item 6 of Schedule 5. If ss.157 and 158 applied the Review would be otiose...
[83] As to the historical context the award modernisation process was conducted by the AIRC under Part 10A of the former WR Act. The process took place in the period from April 2008 to December 2009 and was conducted in accordance with a written request (the award modernisation request) made by the Minister for Employment and Workplace Relations to the President of the AIRC. The award modernisation process was completed in four stages, each stage focussing on different industries and occupations. All stakeholders and interested parties were invited to make submissions on what should be included in modern awards for a particular industry or occupation. Separate processes, including variously, the provision of submissions, hearings and release of draft awards, were undertaken in respect of the creation of each modern award to ensure parties were able to make submissions and raise matters of concern relevant to particular awards. By the end of 2009 the AIRC had reviewed more than 1500 state and federal awards and created 122 industry and occupation based modern awards.
[84] ... The award modernisation process required by Part 10A of the WR Act has been completed.
[85] Two points about the historical context are particularly relevant. The first is that awards made as a result of the award modernisation process are now deemed to be modern awards for the purposes of the FW Act (see Item 4 of Schedule 5 of the Transitional Provisions Act). Implicit in this is a legislative acceptance that the terms of the existing modern awards are consistent with the modern awards objective. The second point to observe is that the considerations specified in the legislative test applied by the Tribunal in the Part 10A process is, in a number of important respects, identical or similar to the modern awards objective which now appears in s.136...
[89] In circumstances where a party seeks a variation to a modern award in the Review and the substance of the variation sought has already been dealt with by the Tribunal in the Part 10A process, the applicant will have to show that there are cogent reasons for departing from the previous Full Bench decision, such as a significant change in circumstances, which warrant a different outcome...
[99] To summarise, we reject the proposition that the Review involves a fresh assessment of modern awards unencumbered by previous Tribunal authority. It seems to us that the Review is intended to be narrower in scope than the 4 yearly reviews provided in s.156 of the FW Act. In the context of this Review the Tribunal is unlikely to revisit issues considered as part of the Part 10A award modernisation process unless there are cogent reasons for doing so, such as a significant change in circumstances which warrants a different outcome. Having said that we do not propose to adopt a “high threshold” for the making of variation determinations in the Review, as proposed by the Australian Government and others.
[100] The adoption of expressions such as a “high threshold” or “a heavy onus” do not assist to illuminate the Review process. In the Review we must review each modern award in its own right and give consideration to the matters set out in subitem 6(2). In considering those matters we will deal with the submissions and evidence on their merits, subject to the constraints identified in paragraph [99] above.”
[7] The modern awards objective is set out in s.134 of the Fair Work Act 2009 (the Act) as follows:
“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
(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).”
[8] The minimum wages objective is set out in s.284(1) of the Act as follows:
“284 The minimum wages objective
What is the minimum wages objective?
(1) The FWC must establish and maintain a safety net of fair minimum wages, taking into account:
(a) the performance and competitiveness of the national economy, including productivity, business competitiveness and viability, inflation and employment growth; and
(b) promoting social inclusion through increased workforce participation; and
(c) relative living standards and the needs of the low paid; and
(d) the principle of equal remuneration for work of equal or comparable value; and
(e) providing a comprehensive range of fair minimum wages to junior employees, employees to whom training arrangements apply and employees with a disability.
This is the minimum wages objective.”
(ii) Background to the review and the making of the applications
[9] A review of apprentice wages and conditions has been in prospect for some years. A review by the Australian Fair Pay Commission was commenced in September 2007, but was cancelled in early 2008 following the establishment of the award modernisation process under new legislative arrangements.
[10] In the award modernisation process, apprentice wages and conditions were the subject of consideration, but there was no in-depth comprehensive review undertaken. In the Award Modernisation decision of 18 December 2008, 9 the Full Bench described the approach taken in relation to junior and apprentice rates as follows:
“[71] The federal awards and NAPSAs with which we are dealing contain a very wide range of rates for junior employees and apprentices. The relevant instruments fix percentages of the adult wage for juniors and apprentices based on a host of historical and industrial considerations, most of which can only be guessed at. It is not possible to standardise these provisions on an economy-wide basis, at least not at this stage. We have adopted the limited objective of developing new rates which constitute a fair safety net for each of the modern awards based on the terms of the relevant predecessor awards and NAPSAs. We have attempted to strike a balance as between, in some cases, wildly varying provisions. In the case of junior employees the rates will be expressed as a percentage of the rate for the relevant adult classification. In the case of apprentices the rates will generally be expressed as a percentage of the relevant trade rate.”
[11] In relation to the hospitality industry awards, the Full Bench said:
“[134] The diversity in apprentice rates is indicative of broader issues which need to be addressed, in relation to apprentice and other training arrangements across the country. We do not think that the award modernisation process provides a proper opportunity to address those issues. In reaching that conclusion, we have had regard to submissions of training organisations which advocate a fuller review of apprentice wages.”
[12] In the Award Modernisation decision of 2 September 2009, 10 the Full Bench said that “it would be desirable to develop a unified national system of training and employment conditions for apprentices”, and in that respect referred to the annual wage reviews.
[13] There were a series of conferences before the President of FWA in 2010 in relation to the possible timing and scope of a review of apprentice and trainee wages and conditions. Following these conferences, the President indicated in early 2011 that the tribunal would wait for the results of the Apprenticeship Expert Panel report and the government response to it before deciding on a further course of action about the review.
[14] The final report of the Apprenticeship Expert Panel supported a review of apprenticeship and traineeship provisions, wages and conditions by FWA, but did not address the mechanism through which such a review might take place. The ACTU and the unions took the view that the best way to progress the apprenticeship matters is in the form of applications as part of the Transitional Review.
[15] Following a conference with interested parties, the President set out a process by which the parties interested in each application relating to apprentices, trainees and junior rates would meet to identify relevant issues and then to report back. 11 Following the reports to the President, some 46 applications were to be dealt with by the Full Bench. Several applications were subsequently referred to the Full Bench.
[16] The matters were listed by the Full Bench for mention and programming on 26 October 2012 and directions were made for the filing of submissions and evidence. 12 A timetable was established for the presentation of evidence and submissions relating to the common matters, and the ACTU was requested to provide an updated table of the common matters.13
[17] Given this background, we have taken the view that the claims are properly before the Full Bench in the context of the Transitional Review.
The Report of the Apprenticeship Expert Panel
[18] On 31 January 2011, the final report of the Apprenticeship Expert Panel, “A Shared Responsibility: Apprenticeships for the 21st Century”, 14 was released. Under its terms of reference, the Expert Panel was given a wide-ranging brief to examine the economic benefits of the Australian apprenticeship system and to develop options for government on how to sustain and build the system into the future.15
[19] The Expert Panel identified a number of major challenges which need to be addressed if the Australian apprenticeship system is to meet the skills needs of the 21st century economy. These include the need to develop skills in certain sectors of the economy, such as engineering and the traditional trades; unacceptably low apprenticeship completion rates; the complexity of the system; and the misalignment of the apprenticeship system and the workplace relations system.
[20] In considering the way forward, the Expert Panel recognised a need for consistency in wages and conditions for apprentices:
“We believe there is scope for a better approach to support the needs of the apprentices and trainees. This includes facilitating arrangements for the effective implementation of competency‐based training progression (and associated wages progression) for apprentices and trainees. The role of Recognition of Prior Learning (RPL) and Recognition of Current Competencies (RCC) is also significant, given the increased number of mature age Australian Apprentices.
We also note the disparity in Australian Apprenticeship and training arrangements in modern awards with respect to several issues including adult Australian Apprentice rates of pay, recognition of pre-apprenticeship training and part‐time arrangements for Australian Apprentices. We encourage and endorse a broad review conducted by Fair Work Australia (FWA) into apprenticeship and traineeship wages and conditions. We note that a large number of Australian Apprentices appear to be receiving above award rates of pay, which likely means that Australian Apprenticeship wage rates contained in awards do not reflect the current market for those wage rates. Whilst many Australian Apprentices receive above award wage rates, the safety net (or minimum wage rates in modern awards) should reflect the changing demographics of Australian Apprentices. This includes more mature age people, many from diverse backgrounds and with a range of experiences choosing to enter into an Australian Apprenticeship compared to the past.” 16
[21] To address the issues identified, the Expert Panel made recommendations directed towards ensuring that Australia has a high-quality apprenticeship system which responds to the needs of the economy, supports nationally consistent standards for employment and training, focuses on retention and completion, and supports high-quality skill development. 17
[22] Several of the recommendations are of particular relevance to the current review. Recommendation 4 refers to support to assist employers to provide high-quality off-the-job and on-the-job training through support services such as mentoring and pastoral care. Recommendation 11 refers to the implementation of a strategy to raise the status of apprenticeships and traineeships, including promotion as a valued career choice for both males and females. Recommendation 14 proposes a broad review conducted by FWA into apprenticeship and traineeship wages and conditions:
“Support a review of apprenticeship and traineeship provisions, wages and conditions by Fair Work Australia, considering:
[23] The Australian Government, in its response to the Expert Panel’s recommendations in December 2011, agreed that a review by FWA was warranted and indicated that it would actively contribute to the review. This support is also set out in the scoping paper provided to the Full Bench by the Minister for Employment and Workplace Relations regarding the conduct of the review. 18
[24] In the proceedings on 4-6, 19-22 March and 3-4 April 2013, the Full Bench heard opening submissions on the common matters and evidence from a variety of witnesses called by the parties. On 22-24 April and 1-3, 8-9 May 2013, the Full Bench heard the submissions of the parties on the proposed variations relating to the common matters.
[25] There was extensive evidence and material presented in the course of the review proceedings. This included reference to inquiries, research and surveys relating to the apprenticeship system which have been conducted nationally and in various States. We do not seek to summarise or refer to all of the evidence presented, but provide the following overview.
[26] At the outset we refer to the useful statistical and background information regarding apprentices and the apprenticeship system in Australia provided in various publications of the National Centre for Vocational Education Research Ltd (NCVER). In relation to the general position with respect to apprenticeships in Australia, we were referred to the NCVER publication on “Australian vocational education and training statistics” (June quarter 2012). It showed that the number of apprentices and trainees in training as at 30 June 2012 was 514,900, an increase of 11.3% from one year earlier. In relation to overall trends, the publication states that for the 12 months ending 30 June 2012:
● trades commencements increased by 3.2%;
● completions (trades and non-trades) increased by 8.1%; and
● cancellations and withdrawals (trades and non-trades) increased by 2.8%.
[27] The NCVER provided a series of reports to the Apprenticeship Expert Panel, including on “The apprenticeship and traineeship system’s relationships with the regulatory environment”. 19 The report notes that apprenticeships and traineeships are based on a legal contract - the contract of training - between the individual, an employer, and a training provider. However the contract of training is only one part of the legal and regulatory framework that governs apprenticeships and traineeships. The report considers other parts of that framework, in particular, the licensing system, award structures, and legislative and quality assurance arrangements. In relation to award structures, the report notes:
“The apprenticeship model combines a contract of training with a contract of employment and as such involves two regulatory systems: the training system and the industrial relations system. The new Fair Work industrial relations system has consolidated coverage into 122 modern awards, 95 of which contain the Training Wage Schedule and 45 of which provide for the employment of apprentices. Considerable diversity in apprentice pay and conditions remains and it is as yet unclear whether the new framework can be more adaptive in response to issues such as the expansion of apprenticeships and traineeships into new areas, competency based wage progression, and the recognition of previous training and qualifications.” 20
[28] In the course of the proceedings, evidence was given in statements provided by expert witnesses, proprietors and managers of businesses, managers of training providers, union officials, and apprentices. These witnesses provided much useful information about the operation of the apprenticeship system, the challenges and problems in the system, and the implications of the proposed variations from the perspectives of employers, training providers and apprentices. Many of these persons were called for the purposes of cross-examination, which not only allowed their evidence to be tested but also provided an opportunity for the members of the Full Bench to ask questions about their statements and their involvement in the apprenticeship system. We have taken all the evidence into consideration in reaching our conclusions in relation to the matters before us. However, given the large number of statements and witnesses involved, we provide only a general summary of the evidence in this decision.
[29] In support of its claims, the ACTU relied on a report prepared by Dr Phillip Toner, Honorary Senior Research Fellow, University of Sydney, entitled “The Role of Wages and Other Factors in Apprentice Commencements and Completions: A Selected Review of the Literature in Australia” 21 (the Toner Report). The report addresses a range of issues relevant to the ACTU claims, including the extent to which apprenticeship commencement and completion rates are affected by apprentice wages, a comparison of apprentice wage rates with accepted measures of poverty, and the likely impact of granting the union claims on the Australian economy and on business. The Toner Report also refers to a number of major changes to the characteristics of apprentices in Australia that have occurred over the past two decades. In particular, the report notes the significant reduction in the proportion of younger apprentices, aged 19 or under, from over three quarters (77.4%) to less than two thirds (62.1%) and the corresponding increase in the proportion of older apprentices, so that currently more than one in five (21.3%) apprentices is aged 25 or over.22
[30] The unions involved in the proceedings presented evidence from expert witnesses, union officials and apprentices, as well as the results of surveys of apprentices.
[31] CEPU officials gave evidence regarding apprentices in various industries and sectors including in the electrical contracting industry, the transmission, distribution and generation sectors of the power industry, building and construction, the lift industry, telecommunications, black coal mining, and plumbing and fire sprinklers. The CEPU apprentice witnesses gave examples of the types of work undertaken by electrical apprentices in the various industries and sectors, the budget requirements of apprentices and the financial hardships faced by them, and the provision of appropriate supervision and training. The CEPU also relied upon the results of a survey of electrical apprentices conducted from March to July 2012. The survey was about apprentice pay rates and expenses and the ability of apprentices to adequately meet those expenses.
[32] The CEPU called Professor John Buchanan, the Director of the Workplace Research Centre (WRC) and a professor of Work and Organisational Studies at the University of Sydney’s School of Business. The evidence of Professor Buchanan mainly related to a report prepared by the WRC for the Electrical Industry Stakeholder Consortium entitled “The Changing Situation of Electrical Apprentices: Submission to the Modern Award Review”. 23 Key findings of the report include:
● “The assumption that apprentices have lower work value because they are untrained young people who remain marginally or wholly dependent on their parents, and who have limited job-ready experience requires revision. Many apprentices enter their training with deeper cognitive, technical and behavioural skills than their predecessors.” 24
● “There are strong grounds for the structure and contents of these awards to be reviewed to ensure greater consistency in the relativities, adult rates of pay and continuity clauses to reflect the changing demographic situation of electrical apprentices that has occurred over the last ten years.” 25
● “The wage rates contained in modern awards are insufficient to meet community expectations of a reasonable standard of living. The prevalence of financial resource constraints associated with undertaking an adult apprenticeship makes it unattractive and difficult to commence and complete apprenticeship training.” 26
[33] AMWU officials gave evidence relating to apprentices in a range of industries and sectors, including the manufacturing industry, the manufacturing, service and repair sectors of the vehicle industry, and the graphic arts, printing and publishing industries. One AMWU official gave evidence about a survey of apprentices that she conducted in relation to costs associated with travel and accommodation for “block release” training. The AMWU apprentice witnesses gave evidence relating to their personal finances and budgetary situations and the hardships that they experience, and the impacts of apprentice wages and conditions upon their thinking and decision-making regarding their apprenticeships.
[34] The AMWU also relied upon the results of the “Better Wage Apprentice Survey”, 27 which was conducted in 2012 and received responses from 545 apprentices who were AMWU members as well as 32 non-members. The survey was about apprentice demographics, work conditions and training arrangements.
[35] Several CFMEU officials gave evidence relating to apprentices in various States, principally in the residential and commercial sectors of the building and construction industry. The officials also gave evidence in relation to disputes with employers regarding apprenticeship issues, and the ways in which apprentice labour is used in some parts of the industry. The CFMEU apprentice witnesses gave evidence relating to their income and expenditure, and the difference in apprentice wages between the commercial and residential sectors of the building and construction industry.
[36] The employer organisations appearing in the proceedings presented evidence from expert witnesses, managers of group training organisations (GTOs) and employers of apprentices, and also relied upon the results of surveys of employers.
[37] The Ai Group called Mr Dean Arundell, the General Manager of Australian Industry Group Training Services Pty Ltd. Mr Arundell gave evidence primarily relevant to the manufacturing industry, relating to the demand for apprentices, current rates of pay, completion rates, and costs of training and travel.
[38] Australian Business Industrial (ABI) filed witness statements from managers and officers of several GTOs, as well as one small business owner. The witnesses gave evidence about the costs to employers associated with employing apprentices, the reasons for non-completion of apprenticeships, the operation of GTOs, and other issues associated with apprenticeships.
[39] ABI also relied on the evidence of Ms Zoe Jenkins, an employed solicitor at Australian Business Lawyers and Advisers, and Mr Nicholas Minto, a Senior Policy Adviser, Employment Education and Training at the NSW Business Chamber. Ms Jenkins designed an online survey that was distributed to members of six State and Territory chambers of commerce. 28 The report of the survey results concluded that “a significant portion of the employer respondents would decrease or cease engaging apprentices should there be an additional burden on their businesses...” created by a number of factors including an increase in minimum wages, introducing travel time payments for apprentices, or removing employers’ capacity to have their apprentices work overtime or shiftwork.29 Mr Minto gave evidence in relation to various matters, including cost barriers to employers engaging in training, the notion of a training wage, and competency based wage progression.
[40] Master Builders Australia (MBA) and the Housing Industry Association (HIA) relied upon a specially commissioned report by the Centre for International Economics entitled “Increasing apprentice and trainee wages and conditions in the building and construction industry: Costing the impact of union applications” (the CIE Report). The central finding of the CIE Report was that:
“Were the CFMEU application accepted, the relative attractiveness of employing apprentices, relative to qualified construction trades workers would fall considerably, leading to the loss of thousands of apprentice positions.” 30
[41] Following cross-examination of the CIE Report’s author, Mr Derek Quirke, some figures in the report were adjusted. An amended version of the report was tendered as a separate exhibit, along with a schedule setting out the differences between the two versions. 31
[42] MBA also relied on the evidence of Mr Omesh Jethwani, the NSW State Manager Apprenticeship Mentoring for the MBA’s Apprenticeship Group Training Scheme, and Mr Dave Callan, the Chairman of the Board of Directors of the Master Builders Group Training Scheme Inc (MBGTS). Both Mr Jethwani and Mr Callan gave evidence in relation to their experience of operating a GTO within the building and construction industry. Mr Callan also attempted to assess the cost of the ACTU and the CFMEU’s claims in relation to the relevant modern awards, and concluded that they would increase the MBGTS apprentices wage bill by approximately 25%. 32
[43] The National Electrical and Communications Association (NECA) called more than 15 witnesses to give evidence. Its witnesses were mainly small and medium business operators in the electrical contracting industry who employ apprentices. These witnesses gave evidence in relation to conditions in the industry, the financial position of their businesses, and their likely response if the union claims were granted. NECA also called Mr Philip Green, the Executive Director of NECA’s Victorian Chapter, and Mr Robert McGuinness, the Membership Development Officer for the same chapter. Mr Green gave evidence in relation the electrical contracting industry generally, while Mr McGuinness gave evidence in relation to Australian Apprenticeship Centres and safety and licensing issues within the industry.
[44] The Electrical Contractors Association (ECA) called Ms Stacey Ozolins, its National Apprenticeship Programs Manager. Ms Ozolins referred to unpublished data collected by the Queensland Government in relation to apprenticeship cancellations, as well as information relating to the electrical industry generally.
[45] The Victorian Automotive Chamber of Commerce (VACC) and the Motor Trade Association of South Australia presented evidence and submissions on behalf of motor trades associations in five States (collectively, the Motor Trades Associations, or MTA). Most of the MTA witnesses were employers in the vehicle industry that employ apprentices and/or act as host organisations for apprentices who are employed by GTOs. These witnesses gave evidence about conditions in the industry, the financial position of their businesses, and their likely response if the union claims were granted. Unlike the employer witnesses called by other employer associations, the MTA witnesses generally supported an increase in apprentice wages in the modern award relevant to their industry, but not an increase of the size sought by the ACTU and the AMWU.
[46] Evidence was also given by the managers responsible for running the MTA group training schemes in South Australia and Victoria, Mr John Chapman and Mr Nigel Muller respectively. Mr Chapman and Mr Muller gave evidence in relation to the operation of their GTOs and set out their views as to the likely effects of granting the ACTU and the AMWU’s claims.
[47] The Master Plumbers and Mechanical Contractors Association of NSW (MPA-NSW) called Mr Paul Naylor, who is the Chief Executive Officer of the organisation. Mr Naylor explained what he saw as the likely impact of the CEPU’s claims in relation to apprenticeship costs, and the Commonwealth’s submissions in relation to competency based wage progression. He also gave evidence in relation to an online survey of members of the MPA-NSW. The survey sought the views of members regarding the union claims in the present proceedings.
[48] The ACTU submitted that there is a strong equity and economic case for improvements to apprentice wages. It was said that report after report, survey after survey, has highlighted the inadequacy of current apprenticeship wages in attracting and retaining apprentices, in responding to the changing profile of apprentices over time in terms of the age, skills and experience, and in providing apprentices with dignity and sufficient income to maintain a reasonable standard of living in line with community standards and expectations. The current situation where apprentices on award rates have to scrape by, often relying on the support of family or friends, is not a fair or sustainable way for the apprenticeship system to continue. It was also said that low wages are a major factor explaining the declining apprenticeship completion rates in recent years, with almost a third of apprentices dropping out in the first year.
[49] It was submitted that a strong apprenticeship system is essential to give young, and older, people a pathway to a secure job, and to meet the skills needs of employers and the economy. Australia has and should continue to set high standards for the way its apprenticeship system operates. This must include a safety net of fair wages and conditions to support apprentices.
[50] The ACTU submitted that the Commission has jurisdiction to consider the various union applications in the Transitional Review and that the claims sought in relation to rates of pay and conditions for apprentices could be granted having regard to the relevant legislative requirements, in particular the modern awards objective and the minimum wages objective. The ACTU submissions with respect to the jurisdiction of the Commission were adopted by the AMWU, the CEPU and the CFMEU, and each of the unions made similar submissions in relation to the wage increases sought.
[51] In relation to its applications, the CEPU submitted that the impact upon businesses and the economy of raising wages was not such as to warrant the claim not being granted, and that on balance the effect on the national economy of granting the claims was likely to be positive. In relation to the proposed clauses regarding apprentice terms and conditions of employment, it was said that the national economy would benefit from improved retention and skills formation. Particularly in relation to the Electrical, Electronic and Communications Contracting Award 2010 (the Electrical Contracting Award), it was said current minimum wages, which are some of the lowest in any modern award, do not meet the needs of apprentices or provide a fair living standard.
[52] The AMWU made detailed submissions with respect to each of the awards that it applied to vary. Generally it submitted that:
“The claim is made at a time when the manufacturing industry faces a shortage of engineering skills’ capacity and at a time when apprenticeships are a less valued option than in previous generations for the cohort of older, more qualified and more experienced school leavers. The claim recognises that there are a plurality of issues impacting on completion rates including apprentice wages and conditions. Modern Award provisions are well placed to make a positive contribution in seeking improved retention outcomes.” 33
[53] The AMWU made detailed submissions with respect to the costs of granting the union claims in relation to the Manufacturing and Associated Industries and Occupations Award 2010 (the Manufacturing Award). It was said that the costs to employers would be relatively modest.
[54] The CFMEU submitted that variations sought to apprentice conditions of employment in the Building Award and the Joinery Award would resolve confusion and ambiguity as to the entitlements of apprentices, particularly with respect to time spent in off-the-job training and in identifying what matters are within the purview of the Commission on one hand and relevant State and Territory training authorities or industrial tribunals on the other. In relation to competency based wage progression, it submitted that all relevant expert reports, government policy and every major employer body have expressed in-principle support, but that employer groups have been slow in taking action to make it a reality. Further, it was said that the introduction of competency based wage progression and higher wages would increase productivity. The CFMEU’s applications to insert competency based wage progression into the modern awards were supported by the Commonwealth. 34
[55] The ACTU and the union applications were generally opposed by the employer parties to the proceedings. Part of the employer opposition was based on whether the union claims could be considered as part of the Transitional Review and on jurisdictional grounds. However the main opposition related to the merits and the implications of the proposed changes.
[56] In relation to what were broadly referred to as “jurisdictional” issues, the employers submitted that some of the variations sought by the ACTU and the unions are terms that cannot be included in modern awards pursuant to Division 3 of Part 2-3 of the Act. It was submitted that some terms could or should not be added to modern awards because of the rules governing the interaction between the Act, modern awards, and State and Territory legislation. It was also submitted that, contrary to the ACTU submission, the Commission must take into account work value considerations in deciding whether to increase minimum wages in the Transitional Review.
[57] In relation to the merits of the claims for increased wages, the submissions of the Ai Group were broadly representative of the employer organisations as a whole. The Ai Group submitted that apprentice wages in modern awards already provide a fair and relevant safety net, satisfying the modern awards and minimum wages objectives. It was said that the increases sought were not justified by work value principles, and that it is not appropriate to standardise apprentice wages across all modern awards given the differences between industries and the skills required of apprentices. Further, on the basis of NCVER research about the costs of training apprentices, 35 it was submitted that the proposed increases would be a disincentive for employers to take on apprentices:
“The abovementioned findings suggest that the Unions’ applications will distort the careful balance between the cost of training an apprentice and the productivity of an apprentice. The Unions’ applications would simply give employer[s] a disincentive to invest in apprenticeships.” 36
[58] With respect to the AMWU, CEPU and CFMEU applications, the Ai Group submitted generally that the variations were not necessary for the relevant modern awards to meet the modern awards objective or to rectify anomalies or technical difficulties arising from the award modernisation process. It was said that the unions had not demonstrated cogent reasons or put on a sufficient evidentiary case to justify the Full Bench departing from the outcomes of the award modernisation process.
[59] The ACCI submitted that the approach of the ACTU and the unions in seeking a common wage rate for first year apprentices across a multiplicity of awards is inappropriate and will substantially reduce the number of opportunities offered by employers. The ACCI submitted that the ACTU claim for a general wage increase for first year apprentices should be refused and applications for changes in wages and conditions should be examined on an award-by-award basis, taking into account apprenticeship and industry circumstances.
[60] ABI submitted that apprentice rates of pay are only one factor influencing commencement and completion rates, and that the ACTU and the unions overstated their impact. It was said that the unions are asking the Commission to discard the long-held view that apprentice rates are intended to provide a training wage, not necessarily a living wage. It was submitted that the variations sought by the unions should be refused as they are not necessary to ensure that the modern awards objective is met or to rectify anomalies or technical problems, and that in fact some of the variations sought would offend the modern awards objective.
[61] MBA opposed the CFMEU applications to insert provisions for competency based wage progression into the two building awards. It submitted that State and Territory laws do not currently provide an adequate framework for competency based progression, and that adequate systems for quantifying and assessing competency should be put in place before any change is made. Generally MBA argued that no work value case has been made out and that granting the union claims would result in the loss of apprentice positions in the building and construction industry.
[62] The HIA submitted that granting the ACTU and the CFMEU claims would have significant adverse consequences for the residential construction sector, which differs in many respects from the commercial sector, and is much more reliant on award rates of pay. It said there was no convincing evidence that higher wages would lead to higher completion rates. It made submissions similar to those of MBA in relation to competency based wage progression.
[63] The NECA submitted that there has been no change in the demographic profile of apprentices since award modernisation, and that there has been no increase in the work value of apprentices such as to justify the increases in wages sought. It was said that all of the CEPU’s claims would lead to increased costs to employers, with the result that employing apprentices would be less attractive to employers.
[64] The ECA submitted that the Transitional Review was never intended as the vehicle for a review of apprentice wages and conditions. It was submitted that the ACTU and union submissions did not take into account the existence of all-purpose allowances in several relevant awards or government financial support available to apprentices, which creates a misleading impression of electrical apprentices’ remuneration and financial circumstances. The ECA submitted that if the union applications are granted, the Full Bench should put in place transitional arrangements to phase in any increases.
[65] The MTA supported an increase in apprentice wages on the basis that apprentice wages in the vehicle industry are comparatively low. However it opposed an increase of the size sought by the ACTU and AMWU, and submitted an alternate proposal for smaller increases in the Vehicle Manufacturing, Repair, Services and Retail Award 2010 (the Vehicle Award) that would bring apprentice wages into the mid range for modern awards. The MTA generally submitted that the AMWU’s claims in relation to apprentice conditions of employment should not be granted for reasons similar to those given in submissions by the other employer associations, although for historical reasons its position differed somewhat with regard to travelling time and payment of fares.
[66] The MPA-NSW submitted that the proposed wage increases sought by the unions are contrary to the modern awards objective as they would place an unreasonable burden on employers. It generally opposed the claims of the CEPU as unnecessary and contrary to the modern awards objective.
[67] The Coal Mining Industry Employer Group (CMIEG) made a short submission with respect to the AMWU’s application to vary the Black Coal Mining Industry Award 2010 (the Black Coal Award). It submitted that the application does not fall within the scope of the Transitional Review, and that none of the evidence presented shows any problem with respect to the black coal mining industry that needs to be addressed through variations to the award. It further submitted that the intent of several of the variations is unclear, that some provisions could not be included in a modern award because they seek to fix actual rather than minimum wages, and that some of the provisions sought by the AMWU would act as disincentives for employers who might take on apprentices.
[68] A number of employer bodies only made written submissions with regard to the applications, and did not appear and/or did not present evidence in the hearing proceedings. These bodies included the Australian Chamber of Commerce and Industry (ACCI), the Australian Federation of Employers and Industry (AFEI), the Australian Mines and Metals Association (AMMA), Ports Australia, the Australasian Railway Association (ARA), the Printing Industries Association of Australia (PIAA), the Australian Meat Industry Council (AMIC) and the Local Government Association of NSW and Shires Association of NSW (LGA). Generally these organisations submitted that the Transitional Review was not the appropriate vehicle for the review of apprentice wages and conditions sought by the ACTU and the unions, that the proposed variations are not necessary to meet the modern awards objective or to rectify anomalies or technical difficulties, and that the unions have not made out a sufficient evidentiary case for the variations. The Master Plumbers and Mechanical Services Association of Australia (MPA) appeared in the proceedings and cross-examined several witnesses but did not make oral closing submissions. Four State Chambers of Commerce and Industry 37 made joint written submissions, and the Chamber of Commerce and Industry of Western Australia Inc (CCIWA) made additional oral closing submissions.
[69] In relation to its application to vary the NTWS, the Ai Group submitted that the variation was necessary to correct an ambiguity, uncertainty or error in the awards in relation to travel by trainees to attend training. The variation was said to be necessary in order to refute an interpretation that the CEPU has sought to place on the existing clauses in a recent series of cases. 38 It was said that the CEPU’s interpretation is inconsistent with the understanding of the provisions on which the relevant part of the NTWS is based, and that:
“The unreasonableness and unfairness of the interpretation being pressed by the CEPU and other unions is obvious. If the unions’ interpretation prevailed, major costs would be imposed on employers with consequent major reductions in employment for trainees.” 39
[70] The Ai Group’s application and submissions were generally supported by the other employer organisations. The ACTU and the unions submitted that the variation should be rejected on the basis that requiring trainees to meet significant travel and accommodation costs does not provide a fair and relevant safety net.
[71] The Commonwealth was essentially in the position of an applicant with respect to the model school-based apprentice schedule. It submitted that the Award Modernisation Full Bench intended to insert the schedule into all modern awards under which apprenticeships are available, that its absence from five awards was an oversight, and that in accordance with the same principal the schedule should be added into another award into which Group Training Australia seeks to insert apprenticeship provisions. It further submitted that a provision missing from the schedule as it appears in the Black Coal Award and the Hospitality Industry (General) Award 2010 (the Hospitality Award) was a technical anomaly that should be corrected in the Transitional Review. In line with the Commonwealth’s support for the principle, it also submitted that the schedule should be amended to allow for competency based wage progression.
Consideration
[72] We now turn to consider the various matters raised in the applications and submissions before us. Firstly we deal with the jurisdictional issues raised in relation to the review. Secondly, we consider the merits of the applications for the variation of the relevant modern awards.
B. JURISDICTION AND RELATED ISSUES
[73] The employers raised objections, described as jurisdictional, to a number of the variations sought by the unions. With the exception of one issue we later refer to relating to wage rates, these objections did not concern the wages and allowances claims. They concerned the claims relating to the training contract, recognition of service and dispute resolution. The employers submitted that the provisions sought to be included in the awards are not terms which, consistent with s.136 of the Act, are either permitted or required to be included in the awards. The ACTU submitted that the Commission has power to include in awards all of the variations contained in both its applications and those of its affiliates. All of the unions appearing before us, and the Commonwealth, supported the submissions of the ACTU.
[74] We have earlier reproduced the provisions of Item 6, Schedule 5 of the Transitional Provisions Act. A note contained after Item 6(3) provides that any variation of a modern award that may be made as part of the Transitional Review “must comply with the requirements of the FW Act relating to the content of modern awards ...” The provisions that can be contained in modern awards are addressed in Part 2-3 of Chapter 2 of the Act. Section 136 provides that a modern award must only include terms that are permitted or required by Subdivisions B and C (i.e. ss.139 to 149), s.55, or Part 2-2 (which contains the National Employment Standards (NES)). Section 136 also refers to terms that are not to be contained in modern awards, which we do not need to address. Section 138 provides that a modern award may include terms 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.”
(i) Terms that may be included in a modern award
[75] The terms that may be included in modern awards are addressed in s.139 and this section received a significant amount of attention in the submissions before us. It reads 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;
(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.”
[76] Section 12 of the Act defines training arrangement as meaning “a combination of work and training that is subject to a training agreement, or a training contract, that takes effect under a law of a State or Territory relating to the training of employees.”
[77] Section 142 was also the subject of submissions by the parties. It deals with incidental and machinery terms which may be included in an award. The power in s.142(1) to include incidental terms was given particular attention by the employers. That subsection reads as follows:
“142 Incidental and machinery terms
Incidental terms
(1) A modern award may include terms that are:
(a) incidental to a term that is permitted or required to be in the modern award; and
(b) essential for the purpose of making a particular term operate in a practical way”.
[78] As we have earlier indicated the ACTU submitted that each of the claims made were about matters which could be included in modern awards. This submission addressed the terms of s.139 and various other sections of the Act, as well as regulations which deal with the way in which the Act interacts with certain State and Territory laws. Before we turn to those provisions of the Act we should first deal with an issue concerning wages rates.
[79] In so far as the claims made concern increases to the minimum wages to be paid to apprentices there is no basis for any jurisdictional objection to our entertaining such claims. Any challenges that are made are more appropriately dealt with by reference to the considerations that guide this Transitional Review, namely, whether the awards the subject of applications before us are achieving the modern awards and minimum wages objectives. Those considerations are addressed later in this decision. However, there is an issue which arises out of the wording of a number of claims relating to the wage to be paid to an employee, either a junior or an adult, who is in employment with an employer prior to entering into an apprenticeship. The claims are expressed in a number of ways. They include a requirement that the existing rate of pay is to continue; that the minimum wage applying to the classification in which the person was engaged immediately prior to entering the training contract is to continue; and the wage they were receiving immediately prior to entering into the training contract is to continue. The particular concern raised by the employers relates to any wording in these clauses which has the effect of obliging an employer to continue to pay an actual rate that an employee may be receiving. They submit that such a provision is not consistent with either the modern awards objective of providing a fair and relevant minimum safety net or the minimum wages objective of establishing and maintaining a safety net of fair minimum wages. We agree that the insertion of a new provision to require the continuation of the actual rate of pay upon commencement of an apprenticeship would not be consistent with those objectives. Any application we consider is justified on the merits to allow an existing employee to retain a particular rate upon entering into a contract of training will be referable to a minimum wage rate for a classification in the award.
[80] We turn now to consider s.139 of the Act. The ACTU submitted that the construction of this section should be informed by a number of decisions of the Australian Industrial Relations Commission (AIRC) in which the provisions of s.89A of the WR Act were considered. That section provided that industrial disputes which the AIRC could deal with were “normally limited to allowable award matters.” An award made in settlement of a dispute could only contain matters which were in s.89A. Section 89A(2) listed the matters which were allowable award matters. A number of those matters were described in terms which are the same as or similar to those now contained in s.139 of the Act.
[81] We refer first to the Full Bench decision in Re Commonwealth Bank of Australia Officers Award 1990 40 and its consideration of s.89A of the WR Act. The Full Bench had before it an application by the Finance Sector Union to vary an award concerning the employer’s obligation to provide workers compensation accident make-up pay, allowances and other benefits. The Full Bench referred to a number of the demands contained in the log of claims which had given rise to the dispute in respect of which the award variation was sought. The employer argued that the matters sought were outside the ambit of the dispute and, in any event, not matters referred to in s.89A which could be contained in any award in settlement of the dispute. About s.89A the Full Bench said:
“The list of allowable award matters is comprised of concepts of particular kinds of award benefits and conditions of employment. The construction of section 89A(2) demands that each concept be given a meaning consistent with the use of the concept in industrial relations practice in Australia. In its context, section 89A is not a provision for which there is need for either a restrictive or a generous construction. The terms in it are to be given their ordinary meaning having regard to industrial relations usage. Most of the allowable award matters listed are industrial concepts formulated around entitlements and conditions of employment ubiquitously the subject of award provisions in State and federal industrial jurisdictions. Even within the standard award concepts, the formulation of an award provision covering employment entitlements and conditions has long allowed room for craft and drafting skills. Conceivably, some conditions of employment could be formulated in sufficiently various ways to bring the condition within one, another, or more than one of the allowable award matters. The categories of allowable award matters are not mutually exclusive. We accept Mr Cairns' submission to the effect that some conditions of employment will combine or imply elements from special specific allowable award matters. Thus, a higher duty allowance or the once standard ‘mixed functions’ provision combines elements of allowances and rates of pay. However, it is generally the case that established award provisions are of a sufficiently standard content and form to be identifiable as coming within one or, occasionally, more of the allowable award categories, or as not coming within the category at all.” 41
[82] This extract was adopted by a Full Bench in Re The Hospitality Industry -Accommodation, Hotels, Resorts and Gaming Award 1995 42 (Hospitality Decision) when it was required to construe the terms of s.89A. That decision was what was described as an award simplification decision.43 The Full Bench was required to consider the terms of the award and, amongst other things, ensure that it concerned only allowable award matters.
[83] The AMWU next took us to a decision of Senior Deputy President Marsh in 1998 in Re Metal Industry Award 1984 - Part 1. 44 It submitted that this decision supported its contention that “training and apprenticeships are matters that fall within or are incidental to matters in s.139”.45 We observe that this decision was also an award simplification decision. In it her Honour decided that clauses dealing with probationary employment (both generally and for apprentices), apprentices (including adult apprentices), the training contract and State laws relating to apprentices, the cancellation or suspension of the contract of apprenticeship, the reimbursement of training college fees, constraints on apprentices under 18 years old working overtime or shifts, the making up of lost time and the payment of training costs including travel costs associated with training were all allowable under s.89A of the WR Act.46 We accept the AMWU submission that the range of provisions there considered by her Honour raised considerations similar to those before this Full Bench. We note that in arriving at her decision heavy reliance was placed on the findings in the Hospitality Decision where comparable clauses had been found to be either allowable or incidental and necessary. An important exception however was to a claim made concerning training of apprentices. Senior Deputy President Marsh considered that claim in detail, noting that the Hospitality Decision had not exhaustively dealt with a comparable claim.
[84] We note that many of the provisions being considered in that case were supported by both the unions and the principal employer party to the award. Those which were opposed were generally challenged by the Commonwealth and ACCI. However the award made following her Honour’s decision, then called the Metal, Engineering and Associated Industries Award 1998, contained clauses dealing with apprentices and the training contract which today remain in the Manufacturing Award. That award was made by a Full Bench which was obliged to consider the terms of s.576J of the WR Act, which is the predecessor to s.139 of the Act and in the same terms.
[85] We next refer to decisions which gave particular attention to the term “type of employment” which was one of the allowable matters in s.89A of the WR Act. Section 89A(2) relevantly provided as follows:
“89A Scope of industrial disputes
...
Allowable award matters
(2) For the purposes of subsection (1) the matters are as follows:
...
(r) type of employment, such as full-time employment, casual employment, regular part-time employment and shift work...”
[86] The ACTU submitted that the term “type of employment” in s.139(1)(b) is sufficiently broad to encompass the claims sought by the unions. We note that the ACTU submitted that if we did not accept that term was sufficiently broad then, in the alternative, it was clear that all of the claims were encompassed within one or other of the various matters referred to in s.139(1) and by s.142 and s.55(4) of the Act. 47
[87] In support of its submission about the construction we should place on the term “type of employment” in s.139(1)(b), the ACTU referred to the Full Bench decision in Re National Tertiary Education Union (the HECE Award Case). 48 That decision concerned the content of a new award the AIRC was considering and the employer’s challenges to certain of the proposed clauses on a number of bases, one being they were not about any of the allowable award matters in s.89A of the WR Act. When commenting upon a clause that might be awarded to deal with duties on an employer to use specified types of employment, the Full Bench said:
“Clause 2 of the [Higher Education Contract of Employment Award 1998] links the duty on the employer to use the specified types of employment with the notion of contract of employment. Perhaps that clause could provide to similar effect and be entitled ‘Types of Employment’. In the past, awards have almost generally included a contract of employment clause. Despite that, the list of allowable award matters makes no reference to contract of employment provisions as a distinct class of allowable matter. We are unable to conceive how the allowable matter “types of employment” could be effectively dealt with by an award that did not purport to impinge directly on the contract of employment to be entered into between an employer and an employee subject to the award. Indeed, a ‘type’ or ‘category’ of employment may be conceived to be an elliptical expression covering a type of contract of employment. For that, and other reasons, we conclude that some provision about contract of employment is incidental to the allowable award matters dealt with and sufficiently necessary to their effective operation for it to be appropriate for the award in this instance. We have formulated the substantive award provisions as far as practicable in terms of duties on the employer, or rights of employees...” 49
[88] A further relevant extract from the HECE Award Case is referred to in the next Full Bench decision we were taken to. In Qantas Airways Ltd v Australian Municipal, Administrative, Clerical and Services Union 50 (Qantas v ASU) a Full Bench of the AIRC considered an appeal against a decision that a dispute about job sharing was one which the AIRC could arbitrate and that it was about an allowable matter in terms of s.89A of the WR Act. The Full Bench said that it was not persuaded that Commissioner Whelan was in error in ruling that job sharing was a type of employment in the same way as regular part-time employment was a type of employment and was therefore allowable under s.89A. The ACTU submitted that apprenticeships are no different to job sharing and that this decision should guide us in our approach to interpreting what is encompassed by “type of employment”. The Full Bench in Qantas v ASU said:
“[56] As the Full Bench observed in the HECE Award Case, “a ‘type’ or ‘category’ of employment may be conceived to be an elliptical expression covering a type of contract of employment”. The industrial connotations of types of employment were explained in several passages which are relevantly applicable to the issue raised by this appeal:
‘It is clear also that included within the allowable award matters is the stipulation in awards of “type of employment”, or, more commonly, “categories of employment”. The latter expression has a well established use in relation to Commonwealth industrial legislation. It describes different classes of employment arranged in categories based upon the incidents or the terms and conditions of the employment. We read the reference to type of employment as meaning much the same thing. In section 89A(2)(r), the Act envisages award provision for different types of employment based in particular upon the term of employment and the hours worked...
However the identification of “a particular type of employment” can in practice be more of an exercise of a judgment formed around inferences and assessment of relative conditions than an outcome derived by the application of definitional precision...
Any category or type of employment acquires meaning from the rights, duties and privileges incidental to inclusion in the category. Thus, continuing employment, or “tenure” as a distinguishable form of it, is constituted by an assemblage of rights and privileges. Some of them may be common to other categories of employment. Essentially the Commission and the parties in a case of this nature must address the differential rights in each of the categories.’”
[89] The ACTU next referred to the Full Bench decision in AMWU re application to vary the Metal, Engineering and Associated Industries Award 1998, 51 a decision which it submitted made similar observations about the construction to be placed on the term “type of employment” in s.89A(2)(r) of the WR Act. In that matter the Full Bench of the AIRC was considering variations to the award in respect to casual and part-time employees. The extract from the decision relied upon by the ACTU is as follows:
“2.2 The function and incidents of casual employment as a type or category of employment under the Award:
[9] Types of employment provided for in an award are foundational to the award's regime, and therefore to the award safety net. The expressions ‘categories of employment’ and ‘types of employment’ in industrial jargon refer to types of contract of employment. A type of employment specified in an award is the subject to which the terms and conditions for that type of employment are awarded. Usually an award applies to one or more main or primary types of employment; each other type, in concept at least, is exempt from some or all of the conditions awarded to apply to the primary category or categories. For purposes of the Award, weekly hire, in effect a form of continuing employment for standard hours, has long been the primary category provided for under the Award's predecessors. Each other type of employment may be seen as a response to operational, employment market, or perhaps special case needs. Those needs have been met by making provision as the need arose for the extra type of employment contract to which specific exemptions or peculiar conditions were then awarded. The reasons for having a category of employment should be distinguished from the reasons for awarding exemptions or differential conditions to apply to the supplementary category. Aspects of the use later made of a category in the industry can also be distinguished from each of those reasons. Those distinctions appear not always to have been kept in mind in some of the cases or analysis dealing with particular types of employment.” 52
[90] The Full Bench returned again to these considerations at paragraph [69] and said:
“[69] As we have noted at paragraph 9 above, type or category of employment is a concept that goes to the regulatory role of awards. The types of employment provided for in an award may vary over time. Moreover, a type of employment, for instance hourly hire employment, may at one stage be sparsely used. Or, at times it may have well understood operational characteristics extrinsic to the award provisions about it. However, the concept is the type of employment: the incidents of the legal relationship under contracts of service in that category. Type of work requirement, or the kind of circumstances in which a type of employment may be used initially or eventually, are not definitive of the type of employment. Such requirements, circumstances or even type of demand for a particular categories [sic] of employment may explain or justify its existence, or be relevant to the determination of some of its incidents. However, unless imported into the terms constituting the category itself, such considerations do not define the category, or even limit its use under the Award.”
[91] Relying on the above decisions, the ACTU submitted there could be little doubt that employment as an apprentice is a type of employment. It also followed that the claims made relating to disputes concerning the training contract, restricting, suspending, limiting or extending the training contract, probation and the obligation to provide training are all intrinsically bound up in the notion of the category of apprentice employment. If the training contract is removed (terminated or cancelled) or if there is no training there can be no category of apprentice employment. Those things, it submitted, are fundamental. The purpose of the provisions concerning these matters is to define and maintain the integrity of the terms of the modern awards in question that provide for apprentice employment. 53
[92] The ACTU submitted that if we had any doubt about the breadth of the term “type of employment” or that it was not a sufficient source of power, then any one or combination of the following provisions in the Act would provide power. It identified ss.139(1)(a)(i), 139(1)(c), 139(1)(g), 139(1)(h) and 139(1)(j). Additionally it relied on s.142 to the extent any provision was incidental to a permitted term and essential to make the particular term operate in a practical way. Finally, it relied on s.55(4) which allows a term which is ancillary or incidental to the operation of an entitlement under the NES or that supplements the NES.
[93] The employer submissions were wide ranging, some taking objection to all clauses other than those dealing with minimum wages and some allowances and others challenging only some of the particular clauses dealing with and relating to the training contract. We do not propose to refer separately to each individual employer submission. We think the matters raised can be fairly summarised in the following way:
● It was submitted that apprentices are not encompassed by s.139(1)(b). The specific references there to full-time, part-time and casual employment qualify the meaning of “type of employment”. The use of the words “such as” means that they form a particular class or genus. They are all categories which are defined by the amount and frequency of the hours worked. Accordingly, it was submitted, the term “type of employment” should be limited to categories of work which are defined by reference to working hours. An apprenticeship is not so defined. It is characterised by the existence of a training contract.
● The construction the ACTU places on the term “type of employment” in s.139(1)(b) is too broad and goes beyond the ordinary meaning of the words. To adopt the ACTU construction would have the effect of rendering many of the remaining provisions of s.139(1) pointless.
● If the Commission was satisfied that the term “type of employment” encompassed apprenticeships, then nonetheless the Commission may not proceed to regulate any matters which may potentially be relevant to or impact upon an apprenticeship.
● A distinction is to be drawn between an apprentice’s training contract and the contract of employment. A modern award can deal with the apprentice’s contract of employment but not the training contract. Provisions which relate to the operation of the training contract or training arrangements do not come within any of the matters which ss.136-139(1) allow to be included in an award. In this respect the union claims that concern probation, mentoring and supervision, provision of relevant work, suspension, cancellation or termination of the training contract and constraints on the type of work that can be done are terms which modern awards may not include.
● Insofar as the ACTU relies on s.139(1)(j), that section only relates to procedures for consultation etc and it should not be read broadly so as to permit the inclusion of provisions in an award which would not otherwise be permitted for the purposes only of allowing the matter to be the subject of consultation and/or dispute settlement.
● Section 142 should be read as providing a relatively narrow basis for the inclusion of award terms. It only allows a term to be included if it is incidental to, and essential for, the operation of another term of the award that is within power.
[94] We have carefully considered all the submissions relating to whether the various clauses sought by the ACTU and the unions can be included in modern awards.
[95] We accept the ACTU submissions as to the approach that we should take to the interpretation of s.139 of the Act. The terms of the section are to be given their ordinary meaning and there is no warrant for a restrictive construction to be placed on any of them. In our opinion, the Commission’s powers being to include “terms about” the matters listed in s.139(1) gives no support to approaching the construction of the section in any other manner.
[96] We are not persuaded that the term “type of employment” in s.139(1)(b) should be constrained or read down in the manner that some employers contend. We do not accept that the categories which may come within that term are defined or qualified by the hours of work persons in them undertake. The examples given in s.139(1)(b) are just that, only examples, and provide no basis to constrain the potential scope of the term. In fact, even the examples given are not confined to categories of employment which might have suggested that the hours worked by such persons was intended to be the defining characteristic of the type of award terms that s.139(1)(b) allows to be made. Section 139(1)(b) refers to facilitation of flexible working arrangements, which clearly allows for terms in an award dealing with matters beyond just hours of engagement. In any event, hours of work is specifically dealt with in ss.139(1)(c) and (e), suggesting that hours worked is not the defining characteristic of the breadth of categories of employment which s.139(1)(b) may envisage.
[97] In our opinion, “type of employment” in s.139(1)(b) is to be read as describing different kinds or classes of employment that may be arranged into categories based upon the incidents, terms or conditions of the employment in question. Each type of employment will take its character from the rights, duties, obligations and privileges that attach to it. In the case of apprenticeship, which we accept is a type of employment, the rights, duties and obligations will involve the existence of a training contract and obligations on an employer associated with the provision of training to the employee. There can be no real or legal category of apprentice employment if the provision of training is not involved. Award clauses dealing with the circumstances in which training is to be provided to apprentices, and will continue, are terms about that type of employment. Putting to one side issues relating to the drafting of the clauses, which can give rise to argument as to whether a term remains in or falls outside of those envisaged by s.139, it is open to us, in the sense we have jurisdiction, to consider the subject matters referred to in the common claims. As we have earlier indicated, those common claims deal with the need for a training contract and provision of appropriate training and other obligations of both parties under it, disputes about the training contract, suspending, limiting or extending the training contract and probation of an apprentice.
[98] Some of the employers submitted that if we were to adopt the ACTU’s construction of the relevant provisions of the Act, it will deprive other provisions of the Act of work to do. We do not agree, and in this respect adopt the ACTU’s observations about that submission. There will remain many matters affecting training that would not properly be dealt with in a modern award. Provisions in State and Territory legislation that concern a number of aspects of training arrangements would not be capable of inclusion within modern awards because they do not define or regulate what employment as an apprentice is and what rights or obligations attach to it. Examples given include “training standards established nationally, the identity of the training provider [and] the availability of a traineeship itself”. 54
[99] We have earlier observed that many of the terms used in s.139 were contained in s.89A of the WR Act and have been considered in a number of AIRC decisions. Unless we are persuaded that the interpretation of the relevant provisions given in those decisions was clearly wrong it is appropriate that we follow them. In this case we have not been persuaded that the approach taken in the decisions relied upon by the ACTU was wrong. It is also relevant that following those decisions, particularly of Full Benches, the Parliament chose to use in legislation replacing the WR Act, namely the Act, similar, and in some cases the same words and terms.
[100] The ACTU submitted that if there was any doubt that the provisions sought to be included in the various modern awards were not terms about a type of employment, then such provisions were able to be included by virtue of the other provisions of s.139 which we have listed earlier in paragraph [92]. We do not propose to deal with this submission here. Should it be necessary to consider those other provisions when dealing with particular claims, we refer to them in that part of this decision which addresses the particular provision. Similarly, and if necessary, we refer there to any provisions which may be justified on the basis they are incidental and essential to matters in s.139.
[101] We should, however, say something about s.142(1), which allows terms to be included in an award that are incidental to a term that is permitted or required to be in an award and which is essential to make the particular term operate in a practical way. The terms of this section are to be contrasted with s.89A(6) of the WR Act. That section provided that the AIRC “may include in an award provisions that are incidental to the matters in subsection (2) and necessary for the effective operation of the award”. We agree with the submission of the employers that s.142(1) provides only a relatively narrow basis for the inclusion of award terms. It is not in itself an additional power for the inclusion of any terms that cannot be appropriately linked back to a term that is permitted by s.139(1). The use of the word “essential” suggests that the term needs to be “absolutely indispensable or necessary” for the permitted term to operate in a practical way. The wording of the section suggests that it provides a more limited power to include terms than that of its earlier counterpart in s.89A(6).
[102] The ruling in this section of our decision should not be taken to have endorsed as being within power all of the terms contained in the many variations sought. In this part of the decision, we are only dealing with whether the subject matter of those variations can be included in a modern award. If necessary, we will deal with the terms of any variation that we are prepared to make when we deal with the particular application. Finally, we note that the ACTU submitted that the claims made may be supportable as being, in terms of s.55(4), ancillary, incidental or supplementary to the NES. It did not make any further submission aligning particular provisions sought with corresponding provisions of the NES. There is no need to say more about s.55(4) in this part of the decision. If s.55(4) is relevant to a particular claim, we refer to it when dealing with that claim.
(ii) Applicability of s.135 to the review
[103] Although it is not strictly correct to describe the challenge made by some of the employers, relying upon the provisions of s.135 of the Act, as a jurisdictional challenge, it is appropriate to deal with it in this part of our decision. Section 135 is contained within Part 2-3 of the Act, which is titled “Modern Awards”. It is s.135(1) in particular that is relevant to this challenge. That subsection is in these terms:
“135 Special provisions relating to modern award minimum wages
(1) Modern award minimum wages cannot be varied under this Part except as follows:
(a) modern award minimum wages can be varied if the FWC is satisfied that the variation is justified by work value reasons (see subsections 156(3) and 157(2));
(b) modern award minimum wages can be varied under section 160 (which deals with variation to remove ambiguities or correct errors) or section 161 (which deals with variation on referral by the Australian Human Rights Commission).
Note 1: The main power to vary modern award minimum wages is in annual wage reviews under Part 2-6. Modern award minimum wages can also be set or revoked in annual wage reviews...”
[104] The employers submitted that we must take s.135 into account insofar as the applications before us seek to vary the minimum award wages of apprentices. As the unions were seeking a comprehensive review of modern award wages it was submitted that we must be satisfied that the variations are justified by work value reasons. It was said that the ACTU and the unions had not addressed the issue of work value and there was little evidence that justified any increases on that basis.
[105] For the reasons given by the ACTU 55 we are not persuaded that s.135 applies to the Transitional Review. That section relates to variations of awards under Part 2-3 of the Act. This decision relates to the review of the various awards required by Item 6, Schedule 5 to the Transitional Provisions Act. The considerations we must take into account are contained in that schedule; s.135 is not referred to.56
(iii) Interaction with State and Territory laws
[106] We next refer to what is described in the Act and the Fair Work Regulations 2009 (the Regulations) 57 as interaction provisions. They are ss.26 to 29 of the Act and regulations 1.13 to 1.15. They concern the way in which provisions in the Act and identified provisions in State and Territory legislation are to operate. The employers submitted that the provisions operated to constrain or limit the terms which the Commission is empowered to include in modern awards. We are not persuaded that they operate in such a manner. They do not limit either the jurisdiction or the power of the Commission to include the terms in an award as sought by the unions. However, they are very relevant for us to consider when exercising any discretion we have about whether a particular term should be included. We should refer to the relevant provisions of the Act and the regulations.
[107] Section 26(1) of the Act states as follows:
“26 Act excludes State or Territory industrial laws
(1) This Act is intended to apply to the exclusion of all State or Territory industrial laws so far as they would otherwise apply in relation to a national system employee or a national system employer.”
[108] The section reflects the legislative intention that the Act “cover the field” in relation to industrial laws applicable to national system employees and employers, to the exclusion of State and Territory legislation. Section 26(2) defines the types of laws that are encompassed by the phrase “State or Territory industrial laws”. Section 27 then provides for State and Territory laws that are not excluded by s.26. It saves the operation of laws identified in it. It reads as follows:
“27 State and Territory laws that are not excluded by section 26
...
(1) Section 26 does not apply to a law of a State or Territory so far as:
(b) the law is prescribed by the regulations as a law to which section 26 does not apply; or
(c) the law deals with any non-excluded matters; or
(d) the law deals with rights or remedies incidental to:
(i) any law referred to in subsection (1A); or
(ii) any matter dealt with by a law to which paragraph (b) applies; or
(iii) any non-excluded matters.
Note: Examples of incidental matters covered by paragraph (d) are entry to premises for a purpose connected with workers compensation, occupational health and safety or outworkers.
(2) The non-excluded matters are as follows:
...
(f) training arrangements, except in relation to terms and conditions of employment to the extent that those terms and conditions are provided for by the National Employment Standards or may be included in a modern award;”
[109] The effect of ss.27(1) and 27(2) is to remove matters from the field of the intended exclusive coverage of the Act described in s.26. The Act is not intended to cover the field with respect to the State and Territory laws referred to in s.27(1) and (2).
[110] Section 27(1)(b) allows regulations to be made prescribing additional State and Territory laws that are saved. Regulation 1.13 is a regulation made as envisaged by s.27. It states:
“1.13 State and Territory laws that are not excluded by section 26 of the Act--prescribed laws
For paragraph 27(1)(b) of the Act, each of the following laws of a State or Territory is a law to which section 26 of the Act does not apply:
(a) a law dealing with the suspension, cancellation or termination of a training contract;
(aa) a law dealing with the suspension, cancellation or termination of a contract of employment that is:
(i) associated with a training contract; and
(ii) entered into as part of a training arrangement;
(b) a law dealing with a period of probation of an employee that:
(i) is part of a training arrangement; but
(ii) is not a period of probationary employment; ...
Note Under subsection 27 (1) of the Act, section 26 of the Act does not apply to a law of a State or Territory so far as the law is prescribed by the regulations as a law to which section 26 does not apply.”
[111] The effect of s.27(1)(b) and regulation 1.13 is that State and Territory laws dealing with suspension, cancellation or termination of a training contract; or with the suspension, cancellation or termination of a contract of employment associated with a training contract and entered into as part of a training arrangement; or with or a period of probation under a training arrangement, are not excluded by s.26 and therefore can continue to operate. This is generally consistent with the way in which the effect of s.27 and regulation 1.13 is explained in the Explanatory Statement which accompanied the Regulations. 58
[112] The effect of s.27(1)(c) and s.27(2)(f) is that it is not intended that the Act operate to the exclusion of State and Territory legislation with respect to training arrangements (as qualified by the subsection). State and Territory laws dealing with training arrangements are saved under ss.27(1)(c) and 27(2)(f), but not to the extent that they deal with terms and conditions of employment that are provided for by the NES or may be included in a modern award.
[113] Section 28 of the Act allows for the Regulations to prescribe additional State and Territory laws that are excluded. Regulation 1.14 provides that:
“1.14 Act excludes prescribed State and Territory laws
For subsection 28(1) of the Act, each of the following laws of a State or Territory is prescribed: ...
(b) a law relating to training arrangements, to the extent to which it deals with terms and conditions of employment that:
(i) are provided for by the National Employment Standards; or
(ii) may be included in a modern award; or
(iii) may be included in an enterprise agreement under section 55 of the Act; ...
Note Under subsection 28 (1) of the Act, the Act is intended to apply to the exclusion of a law of a State or Territory that is prescribed by the regulations.”
[114] The effect of s.28 and regulation 1.14 is that the Act applies to the exclusion of State and Territory legislation relating to training arrangements to the extent that it deals with the terms and conditions of employment that may be included in a modern award, where there is a direct inconsistency between the provisions of the Act and State or Territory legislation. If the Commission can provide for something in a modern award relating to training arrangements, a term about the type of employment of apprentices or about other matters that have been identified above, these provisions override any State or Territory law that deals with the same matter.
[115] Section 29 of the Act is in these terms:
“29 Interaction of modern awards and enterprise agreements with State and Territory laws
(1) A modern award or enterprise agreement prevails over a law of a State or Territory, to the extent of any inconsistency.
(2) Despite subsection (1), a term of a modern award or enterprise agreement applies subject to the following: ...
(b) any law of a State or Territory so far as it is covered by paragraph 27(1)(b), (c) or (d).
(3) Despite subsection (2), a term of a modern award or enterprise agreement does not apply subject to a law of a State or Territory that is prescribed by the regulations as a law to which modern awards and enterprise agreements are not subject.”
[116] Regulation 1.15 provides:
“1.15 Interaction of modern awards and enterprise agreements with State and Territory laws
For subsection 29(3) of the Act, each of the following laws of a State or Territory is prescribed: ...
(b) a law relating to training arrangements, to the extent to which it deals with terms and conditions of employment that:
(i) are provided for by the National Employment Standards; or
(ii) may be included in a modern award; or
(iii) may be included in an enterprise agreement under section 55 of the Act;
Note Under subsection 29 (3) of the Act, a term of a modern award or enterprise agreement does not apply subject to a law of a State or Territory that is prescribed by the regulations as a law to which modern awards and enterprise agreements are not subject.”
[117] The effect of ss.29(1) and 29(2) is that a modern award prevails over State and Territory legislation to the extent of any inconsistency. However, State and Territory legislation dealing with suspension, cancellation or termination of a training contract; or with the suspension, cancellation or termination of a contract of employment associated with a training contract and entered into as part of a training arrangement; or with or a period of probation under a training arrangement, is not excluded and therefore can operate alongside modern awards. Modern awards can therefore supplement the laws of a State or Territory insofar as the laws deal with those matters. The explanatory memorandum 59 describes the effect of ss.27 and 29(2) as being “that a modern award or enterprise agreement is subject to any of the State or Territory laws that are saved by clause 27, as well as any State or Territory laws prescribed by the regulations. This means that a modern award or enterprise agreement cannot diminish, but may supplement, rights and obligations under these laws”.
[118] Some of the interaction provisions were considered by a Full Bench in Master Builders Australia Ltd re Award Modernisation Review. 60 That decision arose out of the Transitional Review of the Building Award. A large number of applications to vary the award had been made. One of the applications made by MBA was to remove provisions which regulated OHS on the ground that they were not lawful and accordingly should not be contained in a modern award. The Full Bench described the contention of MBA as being that the Act does not displace OHS laws of the States and Territories and that modern awards do not, and should not, have the function or purpose of directly regulating OHS.61 The Full Bench referred to MBA’s argument relying as it had on the provisions of ss.27 and 29 for its proposal that “... the provisions of a modern award would apply subject to any OHS law of a State or Territory because OHS is mentioned in s.27(2)(c) which is a non-excluded matter as expressed in s.27(1)(c). Hence, the general provisions of the Act clearly do not contemplate that the Act’s jurisdiction will encompass regulation of OHS but that State and Territory laws will prevail.”62 Similarly, a challenge was made to FWA’s power to include consultation, representation and dispute settlement clauses in so far as they related to OHS matters. It was submitted that they cannot be included in modern awards.63 The Full Bench considered the provisions of ss.27 and 29 of the Act and said:
“[55] Provided that a modern award term must or may be included in modern awards under Division 3 of Part 2-3 of the Act, its inclusion is lawful, even if it reduces an entitlement under the relevant State and Territory legislation saved by s.27. Division 2 of Part 1-3 of the Act does not render such a term unlawful, rather it renders the provision to be of no legal effect. Although it is unnecessary, we note for completeness, we are not persuaded that any of the provisions identified by the MBA in the On-site Award or other modern awards reduces an entitlement under the relevant State and Territory legislation saved by s.27.
[56] It is clear that Division 2 of Part 1-3 of the Act does not deal with the lawfulness of the content in modern awards or any other instruments made under the Act. Its purpose is to provide interaction rules to operate in conjunction with ss.109 and 122 of The Constitution, with s.26 providing an express statement of an intention to cover a field and s.27 setting out the exceptions to that exclusivity set out in s.26. Sections 26 to 30 are not directed to nor have the effect of enlarging or confining the matters which may lawfully be contained in a modern award. They are concerned with resolving issues relating to inconsistency of laws under s.109 of The Constitution and have nothing to do with the lawfulness or otherwise of what may be contained in a modern award.”
[119] We agree with those comments. Our interpretation of the various sections of the Act and the Regulations is consistent with them. We observe however that despite our finding that the interaction rules do not operate to preclude jurisdiction or power to entertain the subject matters of the variations sought by the unions, we acknowledge the force of the employers’ submissions that these provisions require attention be given to significant discretionary considerations. We also accept that a cautious approach should be taken before including new terms concerning apprentices in a modern award which may have the effect of overriding State and Territory legislation.
[120] The main claims by the ACTU and the unions seek improvements in wages and conditions of employment for apprentices under the relevant modern awards. 64
[121] The ACTU application was confined to the issue of apprentice wages for apprentices and adult apprentices. The claims are:
● to raise the first year (or stage one) apprentice rate so as to equate to 60% of the C10 or equivalent adult trades classification;
● for adult apprentices - those aged 20 years or older - to be paid no less than the rate for the lowest adult classification in the award or the apprentice rate prescribed for the relevant year or stage, whichever is the greater; and
● for adult apprentices who were employed in their workplace prior to becoming an apprentice not to suffer a reduction in pay.
[122] The AMWU, CEPU and CFMEU supported the ACTU wage claims. 65
[123] The unions also sought to make changes in relation to conditions of employment and training arrangements for apprentices. These related to competency based wage progression, payment for off-the-job training and associated fees and expenses, training requirements, suspension and cancellation of training contracts and recognition of service, probation, and dispute resolution.
[124] We now turn to deal with the various claims.
[125] The ACTU and the unions seek to increase the first year apprentice rate of pay across all relevant modern awards to 60% of the C10 or equivalent adult trades classification. Following the 2013 adjustments to award rates of pay, 66 this would provide a first year apprentice rate of $434.70 per week or $11.44 per hour.67
[126] The ACTU did not make a specific claim in relation to rates of pay for second, third or fourth year apprentices. It was submitted that the percentages for these apprentices should be adjusted taking into account any increase applied to the first year rate.
[127] A summary of apprenticeship wage provisions in the modern awards covered by the union applications was provided to the Commission. Some of the key features of the provisions are as follows:
● In a majority of awards, apprentice wages are determined as a fixed percentage of the tradesperson’s rate for each year or stage of the apprenticeship;
● Many awards refer to the C10 or equivalent trade classification as the benchmark rate for determining apprentice pay;
● There is a diversity of percentage wage rates for apprentices across awards, although some typical wage structures can be identified (e.g. a four year wage structure of 42% - 55% - 75% - 88% in ten of the 46 awards);
● The first year wage rates for four year apprenticeships range from 35% for apprentices in the first three months of their first year under the Hair and Beauty Industry Award 2010 to a starting rate of 55% in five modern awards; 68
● There is similar diversity in the rates for the subsequent years or stages of a four year apprenticeship, with second year rates ranging from 55% to 65%, third year rates from 75% to 85%, and fourth year rates from 82% to 95%; and
● Some modern awards, particularly those covering the building trades, also provide for three year apprenticeships with rates starting from 45% to 55% in the first year and going through to 90% in the third year.
[128] The ACTU referred to evidence and research relating to the extent of over-award payments to apprentices. This included an examination of over-award payments conducted by the NCVER as part of the research programme underpinning the Expert Panel report. 69 The examination found that most apprentices in trade occupations receive over-award payments, but with substantial variation by occupation. According to the NCVER research, in total 36.3% of apprentices are on award rates with the remaining 63.7% earning above the award. This finding was said by the ACTU to be broadly consistent with the results of an earlier survey by the Australian Chamber of Commerce and Industry in 2005,70 which found that a majority of their employer members paid some or all of their apprentices above-award wages. In relation to first year apprentices, the NCVER research found that only 22.4% were paid the award rate, with the remainder being paid above the award.71
[129] The ACTU also referred to the range of government payments and incentives available for employers of apprentices and trainees and directly to apprentices and trainees. 72 It was noted that some apprentices may also be eligible for other government benefits or allowances, such as Youth Allowance. However the ACTU said that very few apprentices were entitled to Youth Allowance and that the most common form of ongoing assistance received was living away from home allowance.73
[130] It was submitted that there are various grounds on which wage increases for apprentices are warranted. These include:
● to ensure reasonable living standards for apprentices;
● to reflect the changing age profile of apprentices and the broader range of skills, experience and qualifications of apprentices;
● to ensure apprenticeships are competitive as an employment and career choice;
● to address a situation where apprentice wages have failed to keep pace with general community wage movements; and
● to improve the capacity to attract and retain apprentices.
[131] The ACTU and the unions relied upon evidence and research in support of these submissions. We do not refer to all the material relied upon, but would highlight the following.
[132] In relation to living standards of apprentices, a major research report was released by Group Training Australia in 2007. 74 The report found that apprentices were living on the margins of society with nearly all first year apprentices on wages below the Henderson poverty line. The report recognised the general logic behind the apprenticeship wage structure with apprentices, particularly in their early years, being generally less productive and with employers making an investment in their skill development. However, the report states:
“The economic rationale for the first year apprentice to be paid a fraction of a qualified tradesperson’s wage is that the apprentice has the prospect of future income from the skills gained during training and should be expected to invest (in terms of foregone earnings) during training. But it seems perverse to drive the first year apprentice wage down to levels, which in every case in net terms, lie below the poverty line, and to keep second year apprentice wages marginally above the poverty line.” 75
[133] The report found that young apprentices were likely to survive through a mixture of handouts from parents, overtime, second jobs and the cash economy.
[134] The ACTU also referred to key findings in the updated costs of living report by the Workplace Research Centre, including the finding that first year apprentices on award rates are unable to attain a modest but adequate standard of living, even if they are wholly dependent on their parents for accommodation. 76
[135] In relation to improving commencement and completion rates for apprentices, it was acknowledged that a range of factors play a part in influencing the overall apprenticeship experience. These were said to include not only low wages but also factors such as the quality of training, workplace issues, support mechanisms and the costs of undertaking an apprenticeship. 77 However the ACTU submitted that it is clear that low wages are one of the key factors that affect completion rates, as well as commencements. In this regard the ACTU referred to various surveys and research reports. These included the 2007 Active Apprenticeship Survey conducted by the Australian Bureau of Statistics for the South Australian training department,78 the NCVER 2007 survey of students and apprentices,79 the 2008 report prepared by the Huntly Consulting Group on exits from the trades and apprenticeships,80 and the NCVER Apprentice Destinations Survey 2010.81
[136] The ACTU also referred to other research suggesting that it is the wage premium at the end of an apprenticeship that is the significant factor influencing completion, not the training wage on the way through. 82 The ACTU pointed to various differences with the methodology and results of such research and to the different conclusions reached in other studies. However the ACTU argued that, even if there is a premium at the end of an apprenticeship that is sufficient incentive to keep apprentices, this does not justify starting wages being so low. It was said that apprentices are entitled to fair minimum wages throughout their apprenticeship that allow them to participate meaningfully in society, including through being able to meet their basic living expenses.
[137] In relation to the changing age profile of apprentices, the ACTU referred to statistics comparing apprenticeship commencements in 1981-82 and 2011-12. 83 In 1981-82 more than half (56.4%) of commencing apprentices were 16 years or younger and more than 80% were under 18 years. In 2011-12 less than one in seven (13.8%) started an apprenticeship at age 16 or younger. More than 85% were at least 17 or older. It was said that the apprentice wage structures currently in modern awards differ little from those in place over 50 years ago. Those structures were based on the understanding that most apprentices would start at age 15, or even 14, and by around the age of 18 or 19 would be finished their apprenticeship and be receiving the trade rate of pay.
[138] The ACTU also submitted that wage increases for apprentices are necessary to ensure that apprenticeships are competitive as an employment and career choice. It was said that research and survey evidence shows that apprentices are aware of other employment and training options available to them and how favourably they compare with the wages and conditions of apprentices. In this regard, a number of examples were provided regarding an 18 year old Year 12 school leaver. 84 The differential between the first year apprentice rate of pay and the rate for an unapprenticed junior under the same award was between $80 and $150 a week. In the majority of awards, apprentices would receive considerably less, typically $40 to $60 a week, than an 18 year old with Year 12 schooling who takes on a level A traineeship (wage level A). It was said that there is no discernible reason for differences of this magnitude between apprentices, trainees and juniors, even accounting for time spent in training. It was also said that the shortfall in apprentice wages may be even greater when compared with actual rates available above the award in other employment options.85 Reference was also made to the report of the Huntly Consulting Group in its work on apprentice and trade attrition rates. This found that the overwhelming view of a wide range of stakeholders consulted was that wage levels for first and second year apprentices are often so low that young Australians will often prefer to opt for full-time employment where they can command higher entry-level wages, including by leaving their apprenticeship before it is complete.86
[139] It was also submitted that apprentice wages are not keeping pace with general community wage movements. This is because apprentice wages are generally tied to the award rate for a tradesperson. Award-reliant apprentices have not had the benefit of the larger proportionate increases in the National Minimum Wage provided to workers on the lowest rates of pay in the community and also miss out on the over-award payments made to many tradespersons. The ACTU submitted that the erosion in the relative earnings of apprentices is a matter of serious concern with many award rates now falling significantly below the Henderson poverty line of $483.51 per week for a single adult household in the workforce. 87 It was said that this situation is relatively new, as until 2004 a worker paid at 55% of C10 would have had gross earnings greater than the poverty line.
[140] In relation to the impact of the claim, the ACTU submitted that its application is sustainable and affordable, and will not have an adverse impact on employers or the wider economy. In this regard, the ACTU referred to the consideration of the Minimum Wage Panel of the employment effects of increases in minimum wages. Reference was also made to the Toner Report, which reviews numerous studies conducted over the past 20 years on the determinants of apprentice employment. It highlights the relative insensitivity of employer demand for apprentices with respect to apprentice wages, and the fact that the key drivers of apprentice commencements are macroeconomic variables such as growth in demand for the output of the firm, not the level of apprentice wages. It also finds that employers generally recognised the problems of low apprentice wages for equity reasons, and in terms of their ability to attract apprentices and the quality of the apprentice intake. Reference was made to the AMWU submission in relation to the increases in apprentice rates of pay flowing from the Re Metal, Engineering and Associated Industries Award 1998. 88 It was said that in such cases where apprentice wages have been increased as a result of tribunal decisions there has been no discernible adverse impact on commencement numbers, and if anything the impact has been positive.
[141] In relation to the legislative requirements, the ACTU submitted that the current levels of apprentice wages in modern awards do not provide apprentices with a fair and relevant safety net of wages and conditions consistent with the Act. 89 It was said that the current apprenticeship wage provisions in modern awards fail to meet the modern awards objective of providing a fair, relevant minimum safety net of terms and conditions, taking into account the matters in section 134(1). For the award safety net to remain relevant, the apprentice wage rates, wage structure and wage relativities need to better reflect the changing age and demographic profile of apprentices. Further it was submitted that current apprentice wage levels in modern awards fail to take adequately into account relative living standards and the needs of the low paid. By keeping apprentices on such low wages, modern award rates for apprentices fail to promote social inclusion. Improvements to apprentice pay will have a positive impact on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.
[142] The AMWU, CEPU, CFMEU and other unions supported the submissions of the ACTU for an increase in the first year apprentice rate. In particular, the unions submitted that the increase is necessary taking into account relative living standards and needs of the low paid in s.134(1)(a) and s.284(1)(c) of the Act, and to create a comprehensive range of fair minimum wages for employees to whom training arrangements apply (s.284(1)(e)).
[143] The AMWU submitted that metal and vehicle apprenticeship commencements rose by 15.8% between June 2005 and June 2008, following wage increases in 2006. It was said that this is prima facie evidence that even significant wage increases do not necessarily have a negative impact upon the number of employers taking on apprentices. The AMWU Better Apprentice Wage Survey was said to support the ACTU submissions in relation to the changing demographic profile of apprentices. The AMWU also adopted the ACTU’s submissions in relation to the cost of its claims, and made a separate submission in relation to the cost of the claim to the manufacturing industry.
[144] The CEPU made specific comments relating to wages in relation to several modern awards where it has coverage and where apprentice wage relativities are very low compared to other modern awards. It was said that the CEPU survey of electrical apprentices and a number of other reports and witness statements confirm the general trend noted by the ACTU toward older apprentices with more extensive schooling. The CEPU evidence was also said to indicate that the majority of electrical apprentices receive substantial over-award payments.
[145] The CEPU also relied upon the evidence from apprentices and CEPU officials, and its cross-examination of the NECA witnesses. It was said that this evidence demonstrated that:
● Apprentices often perform a wider range of work than better paid trade assistant and labourer classifications in the award. 90
● Apprentices increasingly perform productive work including in the first year and the increasing incidence of pre-apprenticeship programs has contributed to this. 91
● Apprentices employed by NECA witnesses were generally working overtime which suggests that they are regarded as productive. 92
[146] The CFMEU referred to the history of apprentice wages in awards covering the building and construction industry. It was said that the claims before the Full Bench with respect to apprentice rates are the next logical step in the development of awards covering the industry and follow on from comments by the Award Modernisation Full Bench in relation to the desirability of economy-wide standard provisions. The CFMEU also made submissions in relation to apprentices’ living costs, referring to both its own survey of living costs and other reports. It submitted that the wage increases sought by the ACTU and the unions are reasonable given the cost of living that apprentices face.
[147] In general, the employer organisations in the proceedings opposed the wage increases sought by the unions for first year apprentices. This is with the exception of MTA and the LGA, both of which accepted that the relativities for first year apprentices in their industry modern awards were too low. The MTA and the LGA opposed the rates sought by the unions, but indicated their support for a modest increase in apprentice rates of pay.
[148] The Ai Group submitted that the wages claim by the unions is inconsistent with the principle of a safety net of fair and relevant minimum wages (see ss.3(b), 134(1) and 284(1) of the Act). It was said that the current apprentice minimum wages in awards reflect a fair safety net and that the unions have not made out the case for the increases claimed. Much of the union case inappropriately conflates notions of “market rates” or a “living wage” for apprentices with the concept of a minimum safety net. It was said that the safety net is not designed to, or intended to, represent a “living wage”.
[149] The Ai Group referred to the evidence regarding the costs to employers associated with the training and supervision of apprentices. It was said that the wage increases sought would distort the current balance between the cost of training apprentices and the productivity of apprentices and incentive payments from governments. This will discourage employers from engaging apprentices. The Ai Group also submitted that the wage increases will not improve the commencement and retention of apprentices and will only discourage employers from taking on apprentices. The evidence shows that the decision of an employer to take on an apprentice is a very price-sensitive issue. It also shows that the reasons that individuals elect to commence or continue in an apprenticeship are complex and varied, with key motivators including the attainment of a relevant qualification and enhanced income upon completion. The Ai Group disputed the evidence provided by the unions about people not choosing to commence an apprenticeship because of wages or failing to complete their apprenticeship because of “low wages”. It was said that the extent to which wages can be demonstrated to contribute to non-commencements and non-completions should not be overstated. In relation to non-completion, factors such as “poor fit” with the chosen vocation and recruitment practices by employers are more important than pay.
[150] The Ai Group and other employer parties submitted that the unions’ wage claim will have a significant cost impact on employers and will have the effect of discouraging many employers from offering apprenticeships, particularly in difficult economic times. It was also said that the claim fails to acknowledge the special circumstances of small and medium-sized businesses (see s.3(g) of the Act) which are important in providing apprenticeship opportunities.
[151] ABI opposed the unions’ wage claims for apprentices and advanced similar submissions to those of the Ai Group. It was said that each of the contentions upon which the ACTU and the unions have advanced their claims could be refuted. In particular, it was said that the motivation for commencing an apprenticeship is rarely pay-related and that wage rates are a very small factor influencing decisions by apprentices not to finish an apprenticeship. Further, it must be recognised that the apprentice wage is a training wage and, as such, has to be discounted to balance employer attraction and apprentice productivity relative to a tradesperson. Apprentices are now mostly employed by small employers and increasing rates will have an impact on their decisions to employ apprentices.
[152] In relation to the evidence regarding the payment of over-award rates to some apprentices, ABI submitted that the existence of over-award payments is a sign that the safety net is working effectively and not a reason to increase rates of pay. It should not be assumed that employers that pay over-award rates can automatically absorb further increases to apprentice rates into their business. ABI was also opposed to the differentiation of apprentice rates of pay based on levels of school completion. It was said that work-readiness does not necessarily translate into apprenticeship-readiness or take-up and, in any event, it would be difficult to assess the value of such a proposed distinction across the vastly different industries regulated by the awards.
[153] The ACCI recognised the importance of the apprenticeship system in meeting the skills needs of Australian industry and the economy. It was said that, in view of the critical skills development role, any adjustment to wages and conditions for apprenticeships should be viewed not just by comparing apprenticeship wages to other wages of employed persons, but the choice of the apprenticeship option over other training or life options (such as university or VET study, or formal training in the workforce). The ACCI submitted that, given that many of the training choices are high-cost/no wage options, the Commission should not place particular or undue significance on the apprenticeship wage in the context of “living expenses”.
[154] The ACCI submitted that there are a range of factors to be taken into account in considering the rates of pay for first year apprentices. The first year rate is by definition a wage rate paid for one year in the career development of a person with minimal skills in the trade and who requires maximum supervision. Apart from the substantial evidence of over-award payments, many award-reliant apprentices will receive allowances (e.g. for tools, travel and accommodation), and penalty rates and overtime, lifting their take home pay to a higher level than the base rate for a first year apprentice.
[155] It was said that the wage rate being sought would be a very substantial increase in the cost of apprentices for employers and will substantially damage a highly valuable method of skills acquisition as apprenticeship commencements are demonstrated to be price-elastic. It was also submitted that the increases will not assist in improving apprenticeship completion rates as wage rates are not a key determinant of completions.
[156] The State Chambers of Commerce and Industry 93 supported the ACCI’s submissions.
[157] The AFEI submitted that current research indicates that apprentice wages are a relatively insignificant determinant of retention and completion rates, as compared to other micro- and macroeconomic factors. It submitted that the significant wage increases sought by the unions would increase costs for employers and deter them from taking on apprentices. It was said that comparisons between apprentice rates and wages for unapprenticed juniors are inappropriate because an apprentice’s employment comes with significant training and supervision costs for employers.
[158] MBA submitted that the CFMEU’s application to increase first year apprentice wages in the Building Award seeks wage increases of an unprecedented level, which could have significant adverse effects on employment costs and growth (see ss.134(1)(f), (h)). It was said that demand for apprentices is elastic and varies with the cost of employing apprentices. It was submitted that the increases sought would be a substantial disincentive for small businesses faced with marginal decisions about whether to employ first-year apprentices.
[159] The HIA stressed that the Commission should consider industry-specific circumstances in considering claims for wage increases, which dictates against standardising apprentice rates. It particularly urged the Commission to consider the possible effects on the residential construction sector, and particularly small businesses, which face challenging economic circumstances and rely heavily on award rates of pay. It submitted that the figures relied upon by the CFMEU are not all-purpose wages, and that with appropriate all-purpose allowances factored in, award-reliant apprentices’ take home pay is in fact higher than the cost of living calculated by the CFMEU.
[160] The NECA referred to the substantial incidence of incentive and bonus payments to apprentices in the electrical contracting industry, but noted that these payments are made if and when employers can afford to make them. It stressed the low productivity of first and second year apprentices, and submitted that notwithstanding the ACTU and unions’ comments about the demographic profile of apprentices, there has been no relevant change since the award modernisation process.
[161] The ECA submitted that existing apprentice wage provisions in relevant modern awards are a product of determinations going back to the 1960s, many of which were made with the consent of the CEPU. Like the HIA, it stressed that the ACTU and CEPU evidence and submissions were based on base rates rather than the higher all-purpose rates that apprentices in the electrical industry actually receive.
[162] The MTA submitted that its members were broadly in favour of a modest increase in apprentice wages, because apprentices in the vehicle industry are low paid relative to other apprentices in the traditional trades. The MTA sought an increase that would bring the vehicle industry into the mid-range of rates of pay for other trades. In opposition to the size of the increase sought by the ACTU and the AMWU, it was said that the latest ACCI small business survey indicates that revenue, profit growth and business investment are approaching historic lows. The MTA made submissions in relation to the nature of employers of apprentices in the vehicle industry, noting that over 50% of these employers employ between 10 and 19 employees, and that most of the remainder have fewer employees. The MTA referred to a survey of its members indicating that, if the AMWU claim was granted, 34.3% of respondents would no longer employ apprentices.
[163] The MTA in its submissions advanced an “alternate wage proposal” with smaller increases than those sought by the ACTU and the AMWU. The MTA’s proposal would differentiate between first and second year apprentices who had finished Year 10, Year 11 or Year 12. A first year apprentice would earn 45.9% to 47.5% of the C10 rate depending upon their level of educational attainment, while a second year apprentice would earn 55% to 58.9%.
[164] The LGA accepted that the 45% relativity for first year apprentices in the Local Government Industry Award 2010 (the Local Government Award) is “inadequate”. It opposed the size of the increase sought by the ACTU, but did not make submissions on what would be an appropriate wage rate. It submitted that apprentice wages in the award should be specified as dollar amounts rather than as percentages of a standard rate.
[165] The MPA-NSW submitted that the CEPU’s claims with respect to the Plumbing and Fire Sprinklers Award 2010 (the Plumbing Award) would create unreasonable burdens for employers, and that this regulatory burden would be contrary to the modern awards objective (see s.134(1)(f)). It was said that in the current economic circumstances and given the lack of interest in employing apprentices shown by its respondents to the organisation’s member survey, the CEPU had not advanced a sufficient argument in support of its variations. The MPA-NSW further submitted that the CEPU did not provide sufficient evidence to support its proposed variations, as much of the evidence was unrelated to the plumbing industry. The MPA made similar submissions, and further submitted that the CEPU’s calculations excluded all-purpose allowances and therefore understated the remuneration of apprentices.
[166] The PIAA submitted that the ACTU and the AMWU did not make out a sufficient evidentiary case to justify variation of the Graphic Arts Award. It referred to the economic circumstances of the printing industry, which experienced a 24% contraction during the Global Financial Crisis, and the need to preserve a set of minimum terms and conditions that are fair and relevant to all parties. It was said that the AMWU did not justify the amount of the increases sought, and that its submissions and evidence relating to the cost of the claim were only relevant to the Manufacturing Award.
[167] The CMIEG submitted that none of the evidence led by the ACTU or unions indicated any unfairness in the current apprentice rates of pay in the Black Coal Award. It was said that for this reason the Commission should not make any variation and that the AMWU could revisit the issue of apprentice remuneration in the four-year review of modern awards required by s.156 of the Act. The submissions of AMMA with respect to a number of awards were broadly similar. AMMA also submitted that across-the-board increases in first year apprentice rates cannot guarantee higher completion rates, but are likely to reduce employer demand for apprentices.
[168] The AMIC, Ports Australia and the ARA each referred to the history and process of modernising the awards covering their members, and submitted that the Transitional Review should not be used to substantially increase apprentice wages.
[169] We have considered the submissions and evidence regarding the union claims to increase the first year apprentice rate and to adjust the rates for second, third and fourth year apprentices. We have had regard to the research and reports relating to the apprenticeship system referred to in the course of the proceedings. We have also taken into account the evidence of the apprentice and other witnesses and the various surveys.
[170] Both the modern awards objective in s.134 of the Act and the minimum wages objective in s.284(1) are relevant in the consideration of the union claims. The modern awards objective requires the Commission to ensure that modern awards provide a fair and relevant minimum safety net of terms and conditions, taking into account the various factors set out in s.134(1). The minimum wages objective requires the Commission to establish and maintain a safety net of fair minimum wages taking into account various factors including the provision of “a comprehensive range of fair minimum wages to... employees to whom training arrangements apply” (s.284(1)(e)).
[171] We have decided that it is appropriate to review and adjust the wage rates for first year apprentices in the context of the Transitional Review. As noted above, the need for a review of apprenticeship provisions was recognised in the award modernisation process.
[172] There have been a range of significant changes in recent years relating to the apprenticeship system and the position of apprentices which are relevant to the current review. These are referred to in numerous reports and research papers, and in the evidence and submissions in the proceedings. In particular, we refer to the following changes:
● The average age of apprentices has increased substantially over time and apprentices can no longer be assumed to be teenagers with little or no experience in the workforce.
● Many apprentices have now completed Year 12 schooling or its equivalent.
● In some areas of apprenticeships, a significant number of apprentices have completed a vocational qualification prior to commencing an apprenticeship.
● The wage rates for first year apprentices have fallen to be significantly below the Henderson poverty line and they are now properly regarded as amongst the “low paid” in the workforce. 94
[173] The changing profile of apprentices is relevant in the setting of fair minimum rates of pay. One of the implications of apprentices generally being older is that many of today’s apprentices are entering apprenticeships with higher levels of schooling, qualifications and a broader range of work and life experience. This contrasts with the traditional picture of a first year apprentice as an early school leaver moving into their first job with no previous experience. Current apprenticeship wage structures were set when most apprentices were 14, 15 or 16 years old on commencement. Many are now 17 or older and have completed Year 12 schooling, and are already undertaking part-time and casual work with higher wages than they receive under an apprenticeship.
[174] It is also relevant to consider the wage rates for first year apprentices relative to other workers, including unskilled labourers. An unskilled labourer is entitled to at least the National Minimum Wage, which is currently $622.20 per week. As noted in the report of the Apprenticeship Expert Panel, this raises the question of whether the first year apprentice of today is only half as productive in the workplace as an unskilled labourer in receipt of the minimum wage. 95 A comparison between the wages paid to trainees under the NTWS and those paid to first year apprentices is also relevant.
[175] Both the modern awards objective and the minimum wages objective require the Commission to take into account “relative living standards and the needs of the low paid” in setting or varying award minimum wages. 96 The rate for first year apprentices must therefore be considered having regard to evidence as to hardships experienced by apprentices as a result of the current rates and community expectations of reasonable living standards, as well as other considerations.
[176] In the consideration of fair and relevant rates of pay for apprentices, we accept that apprentice wages should be regarded as “training wages” and that it is appropriate for the rates to be discounted to take account of the fact that, during the course of an apprenticeship, apprentices will be engaged in both training and productive work. We also recognise that much of the off-the-job training is undertaken in the first two years of an apprenticeship. It is important that an appropriate balance be maintained between the costs of employing apprentices and their productivity. 97
[177] Apart from equity considerations, there are other grounds for addressing the problems of low pay for apprentices. There is a persuasive case that increased rates may assist to improve the attractiveness of apprenticeships compared to other training options or employment opportunities for young people. All the parties recognised the importance of the apprenticeship system in providing for the skills needs of the Australian economy and industry. Increased rates of pay will go some way towards addressing the situation where new apprentices are earning far less than other school leavers or workers the same age employed as juniors or in other employment options, including unskilled adult entry level work. It may be expected that this will encourage more young people to consider taking up apprenticeships, and in this way help to contribute to skills development and the improved performance of the national economy. 98 In this regard we note that the Apprenticeship Expert Panel pointed out:
“The low level of pay extends the period of dependence for young people on parents and family, at a time when many of their peers are entering the unskilled workforce and earning considerably more on junior wages. This has led to apprenticeships being perceived as an unattractive proposition for many young people leaving school and seeking employment.” 99
[178] Increased wage rates for apprentices may also assist in the improvement of completion rates for apprentices. The Apprenticeship Expert Panel refers to the low completion rates for apprenticeships and traineeships (about 46% for trade apprentices and trainees) with an attrition rate within the first 12 months for trade occupations being just above 32%. 100 An improvement in completion rates would be to the benefit of the economy and industry, given the significant economic cost in terms of time and resources invested in the training of apprentices. However we note that there is still debate about the extent of the impact that increasing apprentice wages might have on completion rates.
[179] In considering variations to the wage rates for first year apprentices, we have also taken into account the likely impact of any increases on business and the national economy. 101 We note the submissions and evidence presented by employer bodies regarding the possible adverse impact that any increase might have on the willingness of employers to take on apprentices and the viability of some businesses. In general the employers submitted that increased rates of pay will lead to fewer apprenticeship opportunities for young people as fewer employers will be willing or able to afford to engage apprentices. Notwithstanding these submissions, we have come to the conclusion that the rates of pay for apprentices may be increased without having a significant adverse effect on business or the national economy.
[180] The impact that any increases will have will depend upon a variety of factors, including the level of any increase awarded, the acceptance of the need for a more relevant safety net and the incidence of existing over-award payments to apprentices. The evidence presented suggests that over-award payments to apprentices are relatively common with NCVER research suggesting that almost 64% of apprentices earn above the award. This research also suggested that above-award payments for apprentices were most prevalent in occupations with strong demand and high levels of collective bargaining, such as electrical and engineering, and automotive. It also suggested that apprentices in small businesses and outside capital cities were less likely to get over-award payments and that apprentices were more likely to be paid at the award wage than adult apprentices. This is generally consistent with the other evidence presented in the proceedings before us. The widespread existence of over-award payments will limit the cost to business of increases in the safety net award rates.
[181] We also note the studies and research referred to in the proceedings which suggest that apprentice wages are far from the critical factor in determining employment decisions by employers. The Toner Report reviews various studies on the determinants of apprentice employment and highlights the relative insensitivity of employer demand for apprentices. It found that the key drivers of apprentice commencements are macroeconomic variables such as growth in demand for the output of the firm and not the level of apprentice wages. It also found that many employers recognise the problems of low wages for equity reasons and in terms of their ability to attract apprentices and the quality of the apprentice intake.
[182] We are not persuaded, having regard to the material and evidence presented, that the increases we have determined will have a significant adverse effect on apprenticeship commencements. In this regard we note the relatively widespread existence of over-award payments to apprentices and the evidence presented in regard to the experience in previous cases where apprentice wages have been increased as a result of tribunal decisions. We also note that much of the concern expressed by employer witnesses and in the surveys conducted by several employer organisations related to the granting in full of the various claims pressed by the ACTU and the unions in the Transitional Review. Indeed, in some cases the evidence was based on the consideration of claims which have not been made or pursued in the present proceedings. The evidence and concerns about the cost impact and the response by employers needs to be considered having regard to the decisions we have reached regarding the various aspects of the claims before us.
[183] The overall cost impact of the wage increases must also be considered in light of the benefits which might be achieved through a better skilled workforce and overcoming or avoiding skills shortages. 102 As we have noted earlier, there may be positive benefits for industry and the economy as a result of the improvement in apprenticeship commencements and the quality of the apprentice intake which will result from the provision of a fair and relevant minimum rate for first year apprentices.
[184] Having regard to all the submissions and evidence presented, and taking into account the relevant legislative requirements, we consider that there should be an increase in the first year rate of pay in the relevant awards. The modern award safety net should better reflect the reality of the current day apprenticeship intake. It must also take into account relative living standards and the needs of workers who must within the community be considered to be low-paid. We consider that the present rates of pay in the awards do not provide a fair and relevant safety net for apprentices and that an increase in the first year rate is appropriate. However, having regard to the possible effect that the increases sought by the unions might have on the capacity of employers generally, and in particular small business, to engage apprentices in the current economic circumstances, we have decided not to grant the level of increases sought by the unions.
[185] In considering the case for increased rates of pay, we have also had regard to the evidence across the variety of trades and industries covered by the relevant awards. We are mindful of the need in the Transitional Review for each modern award to be reviewed in its own right having regard to the matters set out in Item 6(2), Schedule 5 to the Transitional Provisions Act. We also note the submissions of the MTA and the LGA relating to the low level of apprentice rates in their awards relative to other awards. Notwithstanding the differences in relation to some awards and trades, we have come to the conclusion that the first year apprentice rates across the relevant modern awards should not be below the level we have determined. This is because the general circumstances of award reliant apprentices across the various trades are not materially different having regard to many of the considerations we have referred to, including cost of living and wage comparisons with other relevant groups of workers. We believe that this approach will help to provide a simpler and more sustainable range of wage rates for apprentices across modern awards and will provide for a level of consistency in the rates for first year apprentices. 103
[186] In relation to the structure of first year apprentice rates of pay, we note that some awards provide different rates of pay for first and second year apprentices based on whether an apprentice has completed Year 10, 11 or 12 schooling at the time of commencement. 104 In the course of the proceedings it was suggested that differential rates might be based on both age and level of school completion. The Apprenticeship Expert Panel referred to this matter as follows:
“...many first year apprentices have now completed Year 12 and in many cases have also been in the outside-of-school-hours workforce for several years. Apprentices in this category therefore are better educated and more productive than a person who left school in Year 9 and pursued an apprenticeship as a first job. Yet in many modern awards, all of these apprentices, including those who have completed Year 12 and have one year of full time work experience combined with several years in the after-school -hours workforce, are paid the same first year wage.” 105
[187] We accept that there is a case for differential treatment of junior first year apprentices based on considerations such as age, education level and work experience. However it would introduce too many complexities into the award provisions if distinctions were made according to all these criteria. We have therefore decided to adopt a similar approach as in several modern awards before us and to provide for differential rates for first and second year apprentices on the basis of completion of Year 12 schooling. This would maintain a differential in those awards which currently so provide and introduce such a differential into other modern awards. We consider that such a differential is appropriate in setting a fair and relevant minimum safety net for apprentices and would recognise the benefits of having better educated and potentially more productive young people entering apprenticeships. The introduction of these differentials will protect the position in the labour market of early school leavers whilst also encouraging Year 12 completion.
[188] For all the above reasons we have decided to vary the rates for first year apprentices so that the rate for an apprentice who has completed Year 12 schooling will be 55% of the C10 rate, being $398.50 per week or $10.49 per hour. The rate for other first year apprentices will be 50% of the C10 rate.
[189] The second year rate for apprentices should be adjusted in order to provide an appropriate progression of rates through the apprenticeship. 106 The second year rate for an apprentice who has completed Year 12 schooling shall be shall be 65% and for other apprentices shall be 60%. This will result in a typical progression for the Year 12 apprentice in a significant number of the relevant awards approximating 55% - 65% - 75% - 88% of the C10 or equivalent adult trades classification.
[190] These rates should be reflected through variations to the modern awards before us. In the case of awards where the first and/or second year rates are higher than those we have determined, the current rates in the awards should not be adjusted pursuant to this decision.
‘No loss of pay’ for existing employees
[191] The AMWU seeks the introduction of a clause into the Sugar, Graphic Arts, Black Coal, Manufacturing and Airline Awards that an existing employee shall not suffer a reduction in pay when taking up an apprenticeship with their employer. The clause sought is in similar terms to the existing clause 26.1 of the Manufacturing Award, which applies only to existing employees who become adult apprentices. The CFMEU seeks the introduction of a similar clause into the Building and Joinery Awards, but in different terms which would prevent “a reduction in the all purpose rate of pay by virtue of becoming an apprentice”.
[192] The AWMU submitted that it is unfair and discriminatory that existing junior employees should not receive the benefit available to existing employees who are adults commencing an apprenticeship. It was said that the same benefits of experience, saving on recruitment costs, enterprise knowledge and productivity apply equally to existing junior employees and as to adults who are existing employees. It is unfair for employees in this situation to suffer loss of pay upon commencing an apprenticeship. It was also submitted that the introduction of the provision would encourage commencement and completion of apprenticeships.
[193] The employers opposed the proposed variations. Generally they made similar submissions to those advanced in opposition to similar claims with respect to adult apprentices. It was said that the requirement to pay higher rates would be a disincentive for employers to offer apprenticeships to existing employees. It was also submitted that although existing employees may have some knowledge of the business or industry, they are still unlikely to be immediately productive as they will not have trade-specific skills or knowledge, and because they will still have to spend the equivalent of one day a week in off-the-job training.
[194] Although there is a history of provisions of this type in relation to adult apprentices, a similar provision with respect to apprentices generally is not common in awards. Such provisions are not sought by the ACTU in relation to the 32 awards that its application covers, or by the CEPU.
[195] While we have decided that such provisions should be made for adult apprentices (see below), we consider that there are special considerations with respect to adult apprentices that do not apply to apprentices generally. These include the likelihood that adult apprentices will have additional financial commitments and living expenses, and the potentially greater value to the enterprise of these apprentices because of their work experience, maturity and productivity.
[196] We are also concerned about the potential implications of the claim. When combined with the other award variations resulting from the Transitional Review, granting this claim may have significant cost implications for employers. Further, it may result in significant differentials between apprentices who were employed by their employer prior to beginning their apprenticeship and those who were not. At least under some of the awards sought to be varied, the effect of the proposed clauses would be that apprentices who have only a short period of service with an employer may receive substantially more pay than a newly employed apprentice. 107
[197] Having regard to the above considerations, we do not consider that varying the awards as sought by the AMWU and the CFMEU is consistent with the need to provide a fair and relevant minimum safety net of terms and conditions and a comprehensive range of fair minimum wages to apprentices. 108
(ii) Adult apprentice rates of pay
[198] The ACTU claim with respect to adult apprentices seeks:
● The introduction of adult apprentice rates of pay in various awards;
● The application of adult apprentice rates when the adult age is reached (including during an apprenticeship) rather than only if the apprentice is an adult on commencement;
● The introduction of a provision, where it does not already exist, that existing workers in an enterprise when taking up an adult apprenticeship suffer no loss of salary;
● That adult apprentice rates be no less than the greater of the federal minimum wage, the lowest adult rate in the award, or the apprentice rate at the relevant year or stage; and
● The introduction of adult apprentice rates at age 20 years rather than 21.
[199] There are some variations from the ACTU claim in the applications made by the CFMEU, the CEPU and the AMWU, the most important of which are as follows:
● Adult apprentice rates only apply if the apprenticeship is commenced as an adult. This is the status quo in those awards which presently contain adult apprentice provisions.
● Variations in the wording of the ‘no loss of pay’ clause for existing workers. The CFMEU variation adds reference to the “all purpose” rate.
● Variations to the rates for years or stages of the adult apprenticeship beyond the first year in the Sugar Award, the Airline Award, the Vehicle Award, the Graphic Arts Award and the Manufacturing Award.
● The AMWU proposes that the first year adult rate be higher than the lowest adult rate in an award. In particular, the AMWU proposes that in the Sugar Award, the Manufacturing Award, the Graphic Arts Award and the Airline Award the lowest adult rate (C14 in the Manufacturing Award) should only apply to an adult apprentice for three months and then the next classification rate should apply (C13 in the Manufacturing Award).
● The AMWU does not propose any change to adult apprentice rates in the Black Coal Award and the CFMEU does not propose any change to adult apprentice rates in the Building Award or the Joinery Award, as current provisions are already equal to or better than the ACTU claim.
● The CEPU does not propose adult apprenticeship rates to commence at 20 years of age rather than 21 in the Electrical Power Industry Award 2010 (the Electrical Power Award), the Telecommunications Services Award 2010 (the Telecommunications Award) or the Electrical Contracting Award. The AMWU does not seek adult apprenticeship rates to commence at 20 years of age rather than 21 in the Black Coal Award or the Higher Education Awards.
● The CEPU proposes that rates in the Electrical Power Award should be the greater of the minimum weekly wage payable for the lowest paid adult classification or the existing table of rates for adult apprentices in the award.
[200] The ACTU and the unions relied upon much of the evidence and submissions relating to apprentice rates of pay in support of their claims with respect to adult apprentices.
[201] Adult apprenticeships were not able to be undertaken in most traditional trade areas until the 1980s. Although the restriction on adult apprentices being engaged has now been removed, there is no provision made for adult apprentice rates of pay in some awards.
[202] NCVER statistics show that considerably more than half of all apprenticeship commencements are in automotive, engineering, building, and electrotechnology; that is, they are in the industries and occupations covered by the modern awards subject to the CFMEU, CEPU and AMWU applications. 109
[203] It is not in dispute that the proportion of apprentices who commence an apprenticeship at age 20 or 21 or over has been increasing. In 1981-82 only 3% of apprentices commenced at 21 years of age or over. In 2011-12 some 47% of apprentices commenced at 21 years or over; 64% of electrotechnology apprentices commenced at age 20 years or over; and 54% of auto apprentices were aged 20 or over. The figures for the engineering trades are similar. Mr Ian Curry, AMWU National Coordinator, Skills Training and Apprenticeships, gave evidence of the rapid increase in older apprentices in engineering.
[204] Apprentices who start at an older age are more likely to have completed Year 12 schooling than those who commence at a younger age and this trend has been increasing over time even while school retention rates have plateaued. The level of work exposure and experience has also been increasing in commencing apprentices, particularly those who are older. There has been a growth in school-based vocational education and also in the incidence of senior school and post-secondary students undertaking paid employment. 110
[205] The Apprenticeship Expert Panel Report notes that the trend over the last decade has been a reduction in the proportion of apprentices and trainees aged 17 to 24 years while the proportion aged over 25 years has increased. In 2010 more than 42% of apprentices and trainees were more than 25 years old compared to 32% in 2000. 111 The Expert Panel suggested that:
“More thought needs to be given to the extent that the remuneration for apprentices and trainees is still seen as a training wage, in contrast with recognition that the cohort of Australian Apprentices is changing to include higher numbers of adults and others with additional qualifications and experience before they enter an Australian Apprenticeship.” 112
[206] The Expert Panel identified a number of inconsistent approaches in modern awards to some issues affecting apprentices and suggested that these should be considered in the context of the FWA review. These included the following in relation to adult apprenticeships:
“Only a small number of modern awards include provisions for adult apprentices. Those awards that include a provision for apprentices 21 years or over generally include a percentage of the trade rate fixed at a higher rate than the traditional junior rate. The percentage rate varies from award to award. In some cases this rate has been set as a monetary amount, rather than as a percentage.” 113
[207] The ACTU and the unions submitted that all modern awards should provide for an adult apprentice rate of pay that is no less than the minimum adult classification in that award, or the rate prescribed for the relevant year of the apprenticeship, whichever is higher. The ACTU also sought that existing adult workers entering into an apprenticeship with their current employer should receive the added protection of no reduction in their current rate of pay, so that they continue to receive the rate of pay that they received before starting the apprenticeship.
[208] In relation to the modern awards covered by the ACTU application, 24 of these awards make no provision for adult apprentice wage rates. The ACTU submitted that it was an untenable position that adults undertaking an apprenticeship covered by these awards will receive the same rates as apprentices who are juniors for the relevant year or stage of apprenticeship, unless other arrangements are entered into. The ACTU submitted that the modern awards covering the bulk of apprentices in the building, metal and engineering trades already provide adult apprentice rates and that the intention of its application is that similar provisions are provided to adult apprentices across all relevant modern awards. Almost half of all apprentices are in the building, vehicle, metals and engineering trades. 114
[209] In general it was submitted by the ACTU and the unions that adult apprentice rates of pay are appropriate because of the higher cost of living and financial pressures facing adult apprentices (perhaps reflecting the additional responsibilities that older apprentices may have) and the greater skills and work experience which they have acquired.
[210] There was evidence from the CEPU and the ACTU that employers are increasingly seeking completion of Year 12 schooling and pre-apprenticeships prior to the commencement of an apprenticeship, particularly in the electrotechnology trades. There was also evidence that apprentices who have completed pre-apprenticeships or participated in some form of school-based trade training are considered by employers to be much more productive at the commencement of their apprenticeship. 115 These trends have contributed to the increase in adult commencement of apprenticeships. The AMWU submitted that the evidence demonstrates that older apprentices have higher productivity when they commence their apprenticeship.116 The CEPU provided similar evidence.117
[211] The unions drew attention to an ACCI report titled “It’s not about age, pathways for engaging mature age people and existing workers as apprentices.” 118 The report notes that employers believe that mature aged apprentices are good value and come to employers with existing knowledge. The report notes the positive attitudes of employers towards mature age apprentices as they bring to their work “earlier productivity and enthusiasm, maturity and previous skills”. One of the key findings from the survey conducted for the report was that “employers are aware of the reluctance of mature age or existing workers to take up apprenticeships and believe this reluctance has much to do with the low apprentice wage.”119
[212] The ACTU submitted that the contrast between apprentice award rates and the rates available in other employment alternatives is particularly stark for adult apprentices. This affects the take up of adult apprenticeships. In those awards where there are no adult apprentice rates the award rate upon commencement as an apprentice is often about half the award rate for an alternative unskilled job.
[213] In relation to other career options, it was submitted that young adults can study full time at university or TAFE and earn more from part-time or casual work than many apprentices can earn full-time in the first two years of an apprenticeship. 120 There is still a considerable gap in many of those awards where adult apprentice rates exist. The rates for an 18 year old unapprenticed junior are significantly higher than the rates for a 25 year old adult commencing an apprenticeship in many awards. It is also relevant that a young adult and their employer can choose between a traineeship and an apprenticeship in many industries. Adult trainees earn far more than adult apprentices in those awards where there are no adult apprentice rates.
[214] The ACTU evidence suggested that the costs of living are higher for older apprentices. It was said that an apprentice commencing at age 25 is more likely to have higher transport, housing and other costs and is much more likely to have dependent children. 121 The CEPU, CFMEU and AMWU evidence from apprentices and apprentice surveys supported similar conclusions. A number of the CEPU apprentice witnesses were adult apprentices,122 who said that they had considered leaving their apprenticeships because of low pay rates and the difficulties in meeting basic living costs.123
[215] In support of the proposal to define an adult apprentice at 20 rather than 21 years of age, the ACTU and AMWU submitted that only a small proportion (approximately 5%) of apprentices commenced at age 20. 124 On this basis the unions submitted that the cost to employers of the proposed change would be small and, when considered in conjunction with the level of over-award payments, would have an insignificant impact on employers’ decisions to engage apprentices.
[216] The Commonwealth supported the ACTU claims in respect to adult apprenticeships and submitted that they are consistent with the modern awards objective. 125 It was said that the cost impact of granting the claim would not be excessive. It has been estimated that a quarter of apprentices and trainees are working in the same enterprise before taking up the apprenticeship or traineeship. In ten of the awards subject to the applications an adult existing worker already retains their existing minimum rate of pay upon commencing an apprenticeship.
[217] The employers generally opposed the ACTU and union applications relating to adult apprentices, relying upon similar submissions and evidence as was put in relation to apprentice rates of pay. The employer organisations submitted that granting the claim for all awards to be adjusted so that mature age apprentices are paid not less than the rate for the lowest adult award classification will prejudice the employment of those apprentices. This will be exacerbated if the age of adult apprenticeship is lowered to 20 years. It was submitted that lower commencing wages in apprenticeships are offset by higher earning capacity and career opportunities upon completion. Further it should be taken into account that apprentices, whether adult or junior, spend a considerable amount of time in training and not in productive work. It was said that apprentice wages should be considered as training wages and that there must be associated consideration of the cost of training to employers.
[218] It was submitted by the employers that adult apprentices are in a better position to make informed decisions about their career choices and how they can manage financially. The decision by an adult to take up an apprenticeship is a career development choice based on the long term benefit of undertaking education and training. There is already provision made in many awards for adult apprentices, and these awards set rates to suit the circumstances of particular industries. It was also submitted that there is a marked difference between a 40 year old apprentice and a 23 year old apprentice in respect of their value to the employer and their likely living arrangements and costs. There is also a difference between an existing employee in an enterprise who begins an apprenticeship and a person from a different industry seeking a “sea change” by undertaking an apprenticeship in a new industry.
[219] AMMA submitted that many adult apprentices already receive higher rates than apprentices who are juniors and this reflects the work and life experience they bring to the role. It was said that determining adult apprentice rates is highly dependent upon the individual, their productivity, and their potential future with the enterprise. The decision as to whether an adult apprentice should retain prior rates while undertaking training with the same employer should be made at the enterprise level and not enshrined in modern awards. 126
[220] The MTA submitted that adult apprentices are not currently attractive to employers in the vehicle repair industry and that the ACTU claim would worsen this situation. 127 However the NCVER statistics provided by the MTA show that of the automotive apprentices and trainees in training in 2012: 92% are undertaking a Certificate III qualification which is the apprenticeship qualification; 53.6% are aged 20 years or over; and 42% have qualifications at Year 12 school level or equivalent.128 The proportion of apprentices aged 20 years or over has been increasing. In 2008 it was 49%. This does not suggest that there is anything out of the ordinary in respect of the trend to older and more educated entrants to apprenticeships in the vehicle repair industry compared to other traditional trades industries. Furthermore it does not suggest that existing adult apprentice rates are a particular barrier to the engagement of adult apprentices.
[221] We have considered the submissions and evidence regarding the ACTU and union claims in relation to adult apprentice rates of pay. Much of what was put in support of or in opposition to the claims is similar to what we have considered in relation to apprentice rates. We do not repeat here what we have earlier decided regarding those matters.
[222] We have decided that it is appropriate to consider the various claims in relation to adult apprentice rates in the context of the Transitional Review. Both the modern awards objective and the minimum wages objective are relevant to the consideration of the claims.
[223] We note that in recent years there has been a significant increase in the number of older workers undertaking apprenticeships. Those awards which do not have adult apprentice rates rely on the rates which were historically set on the assumption that apprentices would be juniors.
[224] There is evidence that older, better educated and experienced apprentices are more productive in the workplace, even taking into account the training and education being undertaken. There was evidence that such apprentices are less likely to have issues with timeliness than those who are juniors and are likely to be more productive in their work. It was also suggested that the increase in adult apprentice commencements at least in part reflects employer preferences for better educated and more experienced apprentices and a view that these employees are likely to be more productive. There is some evidence that over-award payments are higher amongst adult apprentices than amongst apprentices under the age of 21. 129 There is also evidence that the financial hardships and challenges with living costs which apply to apprentices generally may have an even greater impact on adult apprentices.130
[225] We are satisfied that it is not consistent with the modern awards objective to have provisions for apprenticeships in modern awards without provision for adult apprentice rates. It cannot be said that the minimum safety net provided by a modern award is fair and relevant in the absence of such provisions.
[226] Adult apprentice rates are already contained in modern awards covering a significant proportion of apprentices and the inclusion of such rates in other awards is appropriate in providing both a fair and relevant minimum safety net and a comprehensive range of fair minimum wages for apprentices (see s.284(1)(e)). The introduction of adult apprentice rates will assist in addressing the needs of low paid workers (see ss.134(1)(a) and 284(1)(c)) and contribute towards the improved performance of business and the economy by providing adult apprentice options and skill development opportunities for older and more experienced workers (see ss.134(1)(h) and 284(1)(a)). The competitiveness of the national economy is likely to be improved by encouraging such workers to undertake apprenticeships and this will assist in improving the education and skills of the workforce. The introduction of such rates is not likely have a significant negative effect on business costs having regard to the incidence of over-award payments, the likelihood that adult apprentices will be more productive, and the relative proportion of the workforce constituted by such employees.
[227] We also consider that the inclusion of adult apprentice rates in awards may assist in encouraging capable and educated adults to undertake apprenticeships, and in improving completion rates for apprentices. The options available to a young adult at the time of entering into a apprenticeship include working in a lesser skilled adult classification, and in some cases an adult traineeship. The gap between apprenticeship rates and the lowest classification rates for lesser skilled adult work is very wide and constitutes a disincentive to entering an adult apprenticeship. The rates in the NTWS to relevant awards provide significantly higher rates for those entering a traineeship as an adult. The existence of much more highly paid options through traineeships and through work at the lowest adult classification rates is a disincentive to the take up of apprenticeships and particularly in attracting quality applicants into those positions.
[228] There is no persuasive evidence that the provision of adult rates will reduce the engagement of adult apprentices. In this regard we have taken into account the experience with the modern awards which presently contain adult apprenticeship provisions. We note that there was no evidence of any significant detriment caused by the introduction of adult apprentice rates in the awards for manufacturing and building, or which suggested that the trend towards engaging older apprentices was affected by the incidence of adult apprentice rates in awards.
[229] For all these reasons, we have decided to provide for adult apprentice rates of pay in those awards subject to the applications before us.
[230] The most significant area of traditional apprentice employment where the modern award does not provide for adult apprentice rates is electrical contracting. The NECA and the ECA opposed the introduction of adult apprentice rates of pay for the Electrical Contracting Award, even though adult apprentice rates do exist in that award for electrical contracting in Queensland. There was no evidence presented of any difference in the rate of engagement of older apprentices in electrotechnology between Queensland and the other parts of Australia.
[231] The employers submitted that the introduction of adult apprentice rates in the Electrical Contracting Award would lead employers to cease or reduce the engagement of adult apprentices and would have flow-on effects into enterprise agreements. It was said that the issue of adult apprenticeship provisions in the award was considered in the award modernisation process and it is therefore not appropriate to deal with the CEPU application in the Transitional Review. It was also said that it would be contrary to an agreement reached with the CEPU in Victoria in relation to the age of adult apprentices in collective agreements.
[232] The CEPU submitted that the evidence from NECA employer witnesses that they will cease or reduce the engagement of adult apprentices if adult apprentice rates are introduced in the award was not convincing.
[233] We are satisfied that the issue of adult apprenticeship provisions in the Electrical Contracting Award was only dealt with in the award modernisation process to preserve the transitional provisions of the adult apprentice provisions in the previous Queensland award and the transitional federal instrument preserving it. The issue of introducing adult apprentice rates more generally into the award was not considered by the Full Bench in that case. The Full Bench on 3 April 2009 determined to include the Queensland provision on a transitional basis and said that “while the transitional arrangement is operating the parties should attempt to reach agreement on appropriate adult apprenticeship provisions to be included in the award.” 131 This is a clear indication that the matter was not closed or finally determined.
[234] For similar reasons as above, a provision for adult apprentice rates will be included in the Electrical Contracting Award.
When adult apprentice rates apply
[235] The ACTU seeks that adult apprentice rates should apply to all apprentices when they reach 20 years of age, and not just to apprentices who commenced their apprenticeship as an adult.
[236] We consider that the cost to employers of the introduction of adult apprenticeships in those awards which presently do not have such provision will be significantly increased if the current approach in awards that adult apprenticeship rates only apply to those who are adults on commencement is changed. The additional costs attributable to this changed approach will be increased if the age at which adult apprentice wages apply is reduced from 21 to 20 years. 132
[237] We are not satisfied that it is necessary having regard to the modern awards objective to change the general provision in awards that an adult apprentice is defined as a person who is an adult at the time of commencing an apprenticeship. An apprentice who reaches the adult age during the period of the apprenticeship receives increases in rates with progress through the stages of the apprenticeship. These increases reduce the disadvantage arising from not being covered by the provisions relating to adult apprentices. In any event, the possible disadvantage to employees has to be offset against the additional costs to business. The unions did not seek to change the definition of adult apprenticeship in the awards covering the majority of apprentices.
[238] In the absence of strong reasons particular to the circumstances of those awards, we are not satisfied that it would be consistent with the modern awards objective to introduce a provision in a range of awards which adopts a different approach to the definition of an adult apprentice than that which has applied in the awards which cover the majority of apprentices. In a situation where all the major parties associated with the awards which have established adult apprentice provisions are not seeking to change the provisions in those awards, it would require a compelling argument for us to vary those awards. No party urged us to vary those awards.
[239] Although we accept that there is some logic in the position advocated by the ACTU and the Commonwealth, we do not believe it is appropriate to make the variation at this time.
[240] A provision that adult apprenticeship rates only apply to those who meet the age requirement upon commencement of an apprenticeship will be included in those awards where adult apprentice rates are being introduced.
‘No loss of pay’ for existing employees
[241] The ACTU and the unions seek the introduction of a provision that workers should suffer no loss of salary when taking up an adult apprenticeship with their current employer.
[242] A provision of this sort has been in a number of apprenticeship awards including the Manufacturing and Vehicle Awards for more than 20 years. There is no evidence that it has inhibited the growth of adult apprenticeships or limited the availability of such apprenticeship opportunities for existing employees.
[243] A move by an existing worker to take up an apprenticeship is part of career development. Skills development, training and career path opportunities are best promoted where backed by a principle of ‘no loss of pay’. Such a principle was generally adopted during award restructuring processes in the 1990s. An existing adult employee is likely to have skills, knowledge and experience which will continue to contribute to the productivity of the enterprise even during the early stages of an apprenticeship. It would be inequitable for an existing employee to be paid the same minimum rate as an inexperienced new entrant undertaking an apprenticeship. It is inequitable for an existing adult employee undertaking an apprenticeship to suffer loss of minimum or base pay.
[244] We have therefore decided that a provision for the protection of minimum rates for existing employees who commence adult apprenticeships should be inserted in all the relevant awards which do not currently contain such a provision. The inclusion of this provision is consistent with the modern awards objective and the minimum wages objective.
[245] We do not consider that there are likely to be significant negative effects on employment, employment costs or the regulatory burden as a result of this change. Similar provisions are already contained in some awards and have not been shown to be operating in a detrimental way. In any event, an employer has a choice in deciding whether to offer an apprenticeship to an existing employee and may benefit from providing such opportunities to them in order to retain their skills and experience in the enterprise and allow them to acquire new skills. We consider that increasing the attractiveness of adult apprenticeships to existing employees as a career option will be positive for the performance and competitiveness of the economy and for the productive performance of work.
[246] We consider that the appropriate formulation for this provision in those awards where it does not currently exist is that which was determined during the making of the Manufacturing Award (clause 26.1) as follows:
“A person employed by an employer under this award immediately prior to entering into a training agreement as an adult apprentice with that employer must not suffer a reduction in their minimum wage by virtue of entering into the training agreement. For the purpose only of fixing a minimum wage, the adult apprentice must continue to receive the minimum wage that applies to the classification specified in clause X in which the adult apprentice was engaged immediately prior to entering into the training agreement.”
[247] For reasons discussed earlier when considering jurisdictional matters, we agree with the employer submissions that any new provision for maintenance of salary should refer to no “reduction in the minimum wage by virtue of entering into the training agreement” rather than by reference to actual rate of pay.
[248] We note that with respect to the Building and Joinery Awards, the CFMEU seeks the inclusion of the words “all purpose” in relation to the ‘no loss of pay’ provision. It was suggested that this is appropriate in order to clarify the current application of the provision. We request that the parties concerned with these awards confer as to whether or not the addition of these words is necessary, so that the matter can be considered in the finalisation of orders.
[249] We have considered the Commonwealth’s suggestion that there may be value in defining an existing worker within an enterprise for the purpose of the ‘no loss of pay’ provision. It was suggested that the definition which is used for Commonwealth employer apprenticeship subsidy purposes, namely three months’ full-time or 12 months’ part-time or casual prior engagement, may be appropriate.
[250] One of the reasons that the ‘no loss of pay’ provision is appropriate relates to the skills, knowledge and experience likely to be contributed by an existing employee. Those benefits may not be present in a situation where the employee has only been employed in the enterprise for a very short period. In the relevant awards where new ‘no loss of pay’ provisions for existing workers commencing an adult apprenticeship are inserted, we will include a provision that the apprentice must have been an employee in that enterprise for at least six months as a full-time employee or twelve months as a part-time or regular and systematic casual employee immediately prior to commencing the apprenticeship.
The minimum rates for adult apprentices
[251] In considering appropriate rates for adult apprentices, we have had regard to various matters, including the relationship between rates of pay for apprentices and trainees and the ‘training’ nature of apprentice wages.
[252] We accept that there is a strong argument in favour of the adult minimum wage being a floor for adult apprentice rates. As the South Australian Industrial Relations Commission said in adopting this approach in fixing rates for adult apprentices:
“Such employees are adults with life skills and often work experience and they are subject to adult costs of living. Further, given the demand for more apprentices and need to encourage workers to take up such vocations, we consider adult apprentices in general terms should be entitled to the adult minimum wage.” 133
[253] However we also recognise that if employers are required to pay an adult apprentice the same rate as a similarly skilled worker who is available 100% of the time this may act as a disincentive to engage adult apprentices. Although we are satisfied that it is necessary to meet the modern awards and minimum wages objectives to set the rate for a first year adult apprentice at a higher rate than currently exists in a number of awards, we consider that in respect of an adult apprentice, who is not an existing employee in an enterprise, some allowance must be made for the fact that they will spend approximately 20% of working time in the first year in off-the-job training and not in productive work.
[254] We have also considered the relationship between rates of pay for apprentices and trainees. Although we accept the submissions that generally an apprenticeship is a more intensive and prolonged training program than a traineeship, there should not be too great a disparity between the rate paid to an adult trainee and the rate paid to an adult apprentice in the first year. Traineeships are generally, but not exclusively, no more than one year in duration for full-time employees, so this is not a relevant consideration after the first year.
[255] In the Manufacturing Award and some other awards the adult apprentice rate in the first year is the same as the adult traineeship rate. The rate is linked to the Level B traineeship. The engineering production traineeship is associated with the Level B rates but a number of other manufacturing traineeships are associated with the Level A rates. We are not satisfied that the linkage to the Level B traineeship remains appropriate given that the apprenticeship is a training program for a level of skill which generally exceeds that associated with Level A traineeships. We cannot see why an apprentice should be paid less than a trainee of similar age and at a similar stage in their training program.
[256] The Apprenticeship Expert Panel said that “the Australian Apprenticeship brand [is] being devalued over time by significant inconsistencies given that the integrity of alignments between qualifications and classifications levels has broken down.” The Expert Panel saw wage rates as a significant factor affecting the current status of Australian apprenticeships. The Panel suggested that FWA, in conducting its review, should “consider additional reference points for setting fair and sustainable relativities for those receiving apprentice and trainee rates of pay”. 134
[257] The industry skills council Manufacturing Skills Australia, in response to the Expert Panel Report, said that “[d]ecoupling apprenticeships from traineeships will assist in establishing the different skills requirements of apprenticeships and traineeships. While an apprenticeship and a traineeship at [Australian Qualification Framework (AQF)] certificate III level may have the same academic requirements, the skills requirements for an apprenticeship are very different to those of a traineeship at that level.” 135 This provides support for the proposition that the value of the AQF III traineeships is not equivalent to the AQF III apprenticeships. The overall intensity of training and skills development involved is different. This is a consideration in favour of commencement rates for adult apprentices being higher than the rate for a trainee at a similar age.
[258] We note that a number of awards provide for the first year adult apprentice to be paid between 80% and 90% of the base trade rate, as illustrated in the following table:
RELEVANT AWARD |
AWARD RATE |
Level B adult trainee (commencing rate for adult apprentices in Manufacturing, Sugar, Higher Education and Vehicle Awards) |
$549.10 |
Level A adult trainee |
$568.70 |
80% to 83.5% of trade rate (commencing rate for adult apprentices in the Black Coal (note trade rate $719.20), Coal Export, Graphic Arts, Joinery, Timber, and TCF Awards) |
$575.40-$605.00 |
Adult minimum wage (ACTU claim for commencing rate for adult apprentices) Commencing Rate in Educational Services, Local Government, Water, Building, and Plumbing Awards is the minimum wage or lowest classification rate. |
$622.20 |
90% of C10 Rate (commencing rate in Aluminium Award
|
$652.10 |
C10 |
$724.50 |
[259] We have decided with respect to the applications before us that the appropriate minimum rate for an adult apprentice, who is not an existing employee at an enterprise, in the first year or stage of the apprenticeship, should be 80% of the C10 or base trade rate unless an award already provides for a higher rate. This would generally provide for a commencement rate of $579.60 for adult apprentices. 136
[260] We consider it appropriate that the minimum rate for an adult apprentice in the second year or stage of the apprenticeship should be the adult minimum wage or the lowest classification rate in the award, whichever is the greater. The adult apprentice is likely to be sufficiently productive in the second year or stage to justify minimum payment at this level. This level of payment corresponds with the existing rates in the Manufacturing, Sugar, Higher Education and Vehicle Awards for a second year adult apprentice. If the current award rate is greater, then it will continue to apply. We will not disturb the rates for the third and fourth year or stage in those awards which currently have higher rates for adult apprentices at those stages.
[261] We accept that adult apprentices should be paid the higher of the relevant apprentice rate for the year or stage of the apprenticeship or the relevant adult apprentice rate. There was no substantive opposition to this approach.
[262] In the other awards where we are introducing rates for adult apprentices there was no proposal that we introduce specific rates for third and fourth year or stage adult apprentices. We will not introduce such rates but will provide that in subsequent years or stages the rate should not be less than the rate otherwise applicable to an apprentice who is a junior at that stage of the apprenticeship.
Definition of adult apprentice
[263] The ACTU seeks that the adult apprentice rates should be applied to apprentices aged 20 years and over. This change was not sought by the unions in relation to all the awards before us.
[264] We have considered the evidence and submissions in regard to the appropriate definition of adult apprentices. We recognise that it is a difficult matter to determine where the appropriate line should be drawn in relation to minimum wages between workers in different age groups.
[265] We accept that the living cost pressures for apprentices will tend to increase with age. In this regard it may be appropriate to distinguish between an 18 year old apprentice and an adult apprentice. The case for distinguishing between a 20 year old and a 21 year old upon commencing an apprenticeship is much weaker. In respect of 20 year olds, the rates for unapprenticed juniors at 20 years of age vary between the awards which include provisions for apprentices. Some of the awards have discounted rates for unapprenticed 20 year olds and some do not. We accept the force in the NECA submission that there may often be more difference between an apprentice at age 25 years who was previously employed in the enterprise and an inexperienced apprentice aged 20 years than there is between an 18 or 19 year old apprentice and a 20 year old apprentice.
[266] We have decided to introduce award provisions which recognise the skills and experience of adult apprentices and which ensure that existing employees will not be disadvantaged when commencing an adult apprenticeship. These provisions are necessary to meet the modern awards and minimum wages objectives in the Act. We are not however persuaded, on the basis of the evidence and submissions before us, that the case has been made for applying the adult apprenticeship provisions to a wider category of workers. This would increase the cost burden on employers of the award variations that we have otherwise determined are appropriate to be made at this time, and may act as a disincentive to engage 20 year old apprentices.
[267] We have therefore decided that the adult apprenticeship provisions should apply only to apprentices who are 21 years of age or over at the commencement of their apprenticeship.
(iii) Competency based wage progression
[268] The applications by the CFMEU and AMWU seek to introduce competency based wage progression (CBWP) into the Building, Joinery, Airlines, Sugar and Graphic Arts Awards. The Commonwealth urged the Commission to facilitate the introduction of CBWP in all awards with apprenticeship provisions. The Apprenticeship Expert Panel in its report recommended that FWA should consider the removal of barriers to CBWP in modern awards. 137
[269] The Commonwealth indicated that only six modern awards provide for some form of CBWP and a further three provide for some recognition of previous experience to commence at a higher wage. Four modern awards have comprehensive provisions for CBWP.
[270] The national training system has provided for apprentices and other vocational training students to progress through courses on the basis of the acquisition of competency for several decades. Where this results in an apprentice acquiring competencies more quickly the employer has the ability to apply those additional competencies in the workplace and may gain some productivity benefits. However, this competency based training progression must be distinguished from CBWP. CBWP means that upon the acquisition of the competencies associated with a particular year or stage of the apprenticeship, the apprentice is entitled to be paid the minimum wage rate associated with the next year or stage. CBWP should also be distinguished from competency based completion. The system for regulation of apprenticeships has traditionally allowed for earlier completion and in some cases for later completion. The ability to complete an apprenticeship early where all the necessary competencies have been achieved is now more widespread and a number of awards provide for it.
[271] A number of reports provided to the Commission refer to the benefits of CBWP for apprentices including:
● Providing incentive for apprentices to apply themselves to their training and to persevere with that training.
● Recognition and reward for effort.
● The capacity to respond more effectively to the skill needs of the economy through the production of qualified tradespersons more quickly.
● The encouragement of higher quality training and training which is more attuned to the emerging needs of industry by better integration of on and off-the-job learning and stronger partnerships between employers of apprentices and Registered Training Organisations (RTOs). This arises because the achievement of competency involves the combination of both on and off-the-job learning, and because competency based progression requires better integration of the process of competency sign off between apprentices, employers and RTOs.
● Increased labour market opportunities as local skills formation is facilitated rather than relying on importation of temporary skilled labour.
● Improved opportunities for more mature existing workers in an industry to have their skills recognised and to complete apprenticeships within a reduced time frame.
● More flexible and responsive RTOs. CBWP will create market pressure from apprentices and in some cases employers for RTOs to provide more flexible approaches to training delivery so as to enable recognition of existing skills and differential rates of progression adapting to the needs of individual learners and businesses. This will enhance productivity.
[272] No party argued against the value of CBWP provided it was properly implemented.
[273] The CFMEU referred to the Board of Vocational Education and Training NSW (BVET) study which noted the dissatisfaction of employers and apprentices with the lack of CBWP. 138 Mr Robert Cameron, Apprentice Training Coordinator, gave evidence for the CFMEU concerning the successful implementation of CBWP in the building industry in Queensland over a number of years. The CFMEU pointed to the fact that building and construction apprentices employed under the Manufacturing Award have access to CBWP and that there has been no evidence of any significant problems arising as a result of that provision.
[274] The MTA support CBWP and there is provision for it in the Vehicle Award. However the MTA note that there have been some difficulties with RTOs adapting to competency based progression. The MTA agree that the award provision has removed barriers to CBWP but has not necessarily meant that it has been fully implemented throughout the industry because of a range of implementation issues.
[275] The AMWU submitted that no good reason has been advanced that an engineering apprentice employed under the Sugar Award, doing the same qualification as an apprentice under the Manufacturing Award, should not have access to CBWP. The AMWU also submitted that in the Graphic Arts Award competency based training progression is provided for but not CBWP. It was said that, unless provision is made in the awards for CBWP, employers will get the benefit of competency based progression in the acquisition of skills without the employee getting the benefit of being paid for those competencies. This is unfair and discourages progression and completion.
[276] Governments, the ACTU and peak employer bodies have supported competency based progression including CBWP for more than ten years. The Ai Group and the AMWU jointly proposed variations which introduced CBWP into the Metal, Engineering and Associated Industries Award 1998 in 2006. There have also been CBWP provisions in Queensland awards for all trades for a similar period. There was no evidence before the Commission of any significant problems created by these provisions. The evidence that was provided suggested that the CBWP arrangements generally have worked successfully and have facilitated earlier completion of apprenticeships. In this regard we note that the average duration of the engineering apprenticeship is now approximately three years as opposed to the nominal duration of four years.
[277] Group Training Australia supported the introduction of CBWP provisions into modern awards through the Transitional Review:
“Group Training Australia's concern is in relation to how common anomalies and/or objectives across awards or industries may be managed in an award by award process. For example the application of competency based training and CBWP varies across the country. The Council of Australian Governments’ Meeting 10 February 2006 agreed that by December 2006 measures would be in place to implement competency based training progression (CBTP). This is the responsibility of the State and Territory training authorities. To support such a system, CBWP is required in modern awards. The application of CBWP is currently limited to 4 modern awards. Despite the COAG agreement CBWP has not commonly been adopted in modern awards. The review of modern awards may be an opportunity for FWA to provide for a common approach to CBWP across modern awards while taking into consideration the licensing requirements in some trades. A common schedule outlining matters such as those outlined in the Government's scoping paper of 23 May 2012 could provide common approaches to issues such as assessment of competency on which wage progression is based, i.e. how is the assessment of competency determined so a pay rate may be established.” 139
[278] The NSW Government supported having CBWP provisions in modern awards:
“Of major concern in relation to Modern Awards is the four year wage structure in trades where NSW apprenticeships have been established with three year nominal terms, inadequate provision for competency based progression and gaps in the provision of school based part-time apprenticeships.
This is hindering NSW’s ability to fully implement the COAG directives for states and territories to shorten the duration of apprenticeships where competencies are demonstrated.” 140
[279] The Western Australian Government also indicated its support for the inclusion of competency based training arrangements and the inclusion of provisions in modern awards to facilitate such arrangements.
[280] Some of the administrative barriers and inconsistencies in this area are being tackled through the Council of Australian Governments (COAG) and in particular through the National Partnership Agreement on Skills Reform. 141
[281] The Commonwealth and relevant stakeholders have developed “Principles for competency-based wage progression for Australian Apprentices” (CBWP Principles) which are supported by the peak industry councils. The following CBWP Principles are of particular relevance: 142
“Each stage of the apprenticeship should identify competency requirements which, once accomplished, allow the apprentice to progress to the next stage of the apprenticeship and next wage level provided [that]... the apprentice, the employer and the RTO agree that the apprentice possesses the necessary competency requirements covered by the training agreement and relevant industry training package...
... Competency assessment is a three way process between the employer, the apprentice and the RTO. Each party must agree that the apprentice has the necessary skills, knowledge and practical experience to consistently demonstrate required competencies in a variety of work contexts and consistent with the training package requirements.”
[282] A number of witnesses and parties submitted that RTOs generally did not offer the necessary flexibility in the scheduling of training and assessment to achieve CBWP. It was said that sometimes the decision as to whether or not an apprentice was competent was made by the RTO and that this would have no regard to whether the apprentice was actually competent to perform the work on the job.
[283] MBA referred to a Workplace Research Centre report of June 2012, 143 which concluded that the utilisation of competency based progression is fundamentally premised on stakeholders’ perception of the usability of the concept. The report suggests that practical and attitudinal barriers must be removed if a higher take up of competency based progression is to be achieved.
[284] MBA and HIA support the principle of CBWP but submitted that it should not be introduced in the building awards until various issues are resolved. MBA and HIA submitted that if a stage of the apprenticeship was defined as 25% of the competencies, there was no practical mechanism to determine what this means. In the Manufacturing Award, competencies have points assigned to them so that account can be taken of competencies which take more time to achieve than others. Particular competencies have pre-requisites so that competencies in a particular skill area are achieved in the right order. MBA submitted that it is matter for the relevant skills council to determine what the relevant competencies for each stage of an apprenticeship are and the mechanism for sign off of competency before CBWP can be introduced in the building and construction industry. The CFMEU did not accept these arguments and pointed to the successful operation of CBWP in Queensland for many years despite the prerequisites raised by the MBA not being in place. The HIA submitted that in Queensland other supportive arrangements are in place which facilitate competency based progression. The primary support is through the appointment of an RTO which has a supervisory role, including with respect to assessment arrangements.
[285] In relation to the Graphic Arts Award, the PIAA indicated that it has jointly applied with the AMWU for funding to promote competency based progression. It was therefore submitted that any variation to the Graphic Arts Award should only be made after the completion of this project.
[286] The State Chambers of Commerce and Industry referred to a number of State and Commonwealth programs designed to promote CBWP and in particular effective industry involvement in the assessment of competencies. It was said that this is occurring particularly in those areas where award provisions exist. The Chambers accepted that an award provision would remove some of the barriers to accessing State and Territory legislation that facilitates CBWP. CCIWA acknowledged that the alternative approach of waiting until the details of the training and assessment support system are in place has not worked over the past decade.
[287] The employer organisations and the CEPU opposed any award provision for competency based progression in the plumbing and electrical contracting industries. However, they did provide detailed evidence of the trial competency based progression process funded by the Commonwealth which is underway with respect to electrical apprentices.
[288] Mr Nicholas Minto, Senior Policy Adviser, Employment Education and Training, NSW Business Chamber, gave evidence that it was more appropriate at this stage to ensure the training system is fully equipped to deliver competency based progression prior to any changes to modern awards. However, Mr Minto accepted that if the award provision was in place but the training system did not have sufficient flexibility there would be no disadvantage to the employer because the apprentice would simply not progress at a faster rate. Mr Minto confirmed the support of the Chamber for CBWP and accepted that the shift to CBWP would be facilitated by greater recognition within awards of the concept of CBWP.
[289] ABI, MBA and others expressed concern that the variations proposed could mean that progression would occur based simply on the completion of TAFE related course components.
[290] We consider that the proposed variations and the existing Manufacturing Award provisions make it clear that progression is based upon the achievement of the required proportion of the competencies, which is clearly something more than successful acquisition of knowledge and theory. In respect to the Manufacturing Award the industry parties have, through the relevant Industry Skills Council, developed guidelines to ensure that the RTO involves the employer and the apprentice prior to competency sign off so that it can be effective for the purposes of CBWP and completion.
[291] Mr Dean Arundell, who manages Australian Industry Group Training Services (a large group training scheme linked to the Ai Group) gave evidence that competency based progression works well in his group scheme and that it had some effect in accelerating the rate of progression through apprenticeships. Mr Arundell also said that the RTO, the employer and the apprentice are involved in decisions about whether competency had been achieved to justify progression and/or completion.
[292] We consider that CBWP will have greater impact if there are corresponding changes in the training system to maximise the opportunities for competency based training progression, including flexible delivery, industry level processes and partnerships for competency based sign off, complementary work by industry skills councils, and enhanced processes for recognition of prior learning and current competencies. Many of these matters are on the agenda of COAG. 144 Some of the matters will be progressed through Australia’s eleven Industry Skills Councils. Other implementation details will require further discussions between industrial parties.
[293] Overall the evidence supports a conclusion that CBWP award provisions have achieved the objective of facilitating CBWP in those awards where they have been in existence for some time. The corresponding reforms to the training system and to industry culture are occurring progressively but are not yet complete.
[294] We consider that if awards are varied to facilitate CBWP then some employers and RTOs will utilise the opportunity. There is nothing raised by the employer organisations that satisfies us that it would be harmful to introduce such facilitative provisions into awards.
[295] We are satisfied that it is consistent with the modern awards objective for the Commission to facilitate the introduction of CBWP for apprentices in awards where it is not already provided for. We agree with the submission of the Commonwealth that the adoption of CBWP in awards supports the modern awards objective of promoting flexible modern work practices and the efficient performance of work (s.134(1)(d) of the Act). We are also satisfied that such a provision will promote productivity in that it will facilitate a more skilled workforce (s.134(1)(f)).
[296] The Commonwealth advised that it would be willing to take an active role in assisting the parties to develop appropriate award provisions for CBWP, and supported the Commission arbitrating the matter if a consent position cannot be reached. The Commonwealth proposed that the award provisions should be in operation by 1 January 2014.
[297] The Ai Group, ACTU, CFMEU, and MBA all supported the concept of further discussions between the industrial parties about CBWP provisions with the Commission providing assistance in that process.
[298] The AMWU referred to Clause 15.8 of the Manufacturing Award which provides as follows:
“15.8 Notwithstanding the nominal period, the apprenticeship is completed in a shorter period when:
(a) the qualification specified in the training agreement is successfully completed; and
(b) the apprentice has the necessary practical experience to achieve competency in the skills covered by the training agreement, provided that the determination as to whether this condition has been met must be by agreement between the registered training organisation, the employer and the apprentice and where there is a disagreement concerning this matter the matter may be referred to the relevant State/Territory apprenticeship authority for determination; and
(c) the requirements of the relevant State/Territory apprenticeship authority and any requirements of Manufacturing Skills Australia with respect to demonstration of competency and any minimum necessary work experience requirements are met; and
(d) with respect to trades where there are additional licensing or regulatory requirements under State legislation, when these requirements are met.”
[299] We have decided that those awards which are the subject of the AMWU and CFMEU applications will be varied to provide for CBWP from 1 January 2014. The variations should reflect the criteria for competency based completion currently found in clause 15.8 of the Manufacturing Award and will provide for progression through the wage rates for each year or stage of the apprenticeship based upon achievement of the relevant proportion of the competencies. We consider that there should be further discussions between the parties about the appropriate wording of the variations to the relevant awards.
[300] We accept that at this stage it is appropriate to exempt those undertaking training for the qualification in the Electrotechnology Training Package from the CBWP provision in the Building and Joinery Awards.
[301] In relation to the awards before us where there is no specific CBWP variation application, we believe that further efforts should be made by the parties towards the introduction of CBWP in those awards. Many of those involved with the apprenticeship system are rightly frustrated about the length of time it has taken to progress this matter. The Apprenticeship Expert Panel Report, the decisions of COAG and the agreement between the peak industrial parties represent a high level of consensus that awards should provide for CBWP. The rationale advanced for CBWP is consistent with the considerations in the modern awards and minimum wages objectives.
[302] For reasons set out earlier, we consider that awards which contain apprenticeship provisions where the qualifications are competency based should also provide the opportunity for CBWP. In order to move forward with this matter, we consider that a model clause should be developed, noting that there may be award specific variations to take account of specific industry and trade circumstances such as whether or not competency units are weighted, whether or not license provisions apply and the relationship with proficiency payments where they apply. The Commonwealth should take the initiative to assist in organising the process of further discussion between the parties within the framework of the CBWP Principles developed by the peak industry bodies and the Commonwealth.
(iv) Apprentice conditions of employment
Travel time; travel and accommodation costs; recognition of training
[303] The AMWU, CEPU and CFMEU are seeking variations so that existing award provisions with respect to work-related travelling allowances, travelling time and fares apply to travel for off-the-job apprentice training. In some cases the unions seek that the provisions only apply to excess travelling time and costs. Where the training involves overnight stays, such as with block release training at a distant location, the unions are seeking that the award provisions concerning remote work including travel, accommodation and other expenses should apply. Where there are no appropriate award provisions the unions are seeking to introduce equivalent provisions.
[304] The unions are also seeking a number of variations to provide that attendance at training is to be treated as if it were attendance at work for various purposes in the relevant award.
[305] Some of the submissions of the unions proceeded on the basis that there was some ambiguity or doubt as to whether or not existing provisions for travel allowance, travel time and costs apply to apprentices when attending off-the-job training as part of their training plan.
[306] The relevant apprenticeship provisions in awards generally ensure that time spent by an apprentice in attending any training and assessment specified in, or associated with, the training contract is to be regarded as time worked for the employer for the purposes of calculating wages and service. This is consistent with the provisions of relevant State apprenticeship legislation 145 and the Apprenticeship/Traineeship Training Contract (the standard training contract).
[307] That apprenticeship training takes place within paid hours is a long-established practice in awards. There is also a long established-principle that apprentices are entitled to all award conditions unless otherwise specifically stated. However, some allowances are associated with specific work or disability. Employers argue that travel provisions are associated with the disability of certain work and that does not include off-the-job apprentice training.
[308] In CFMEU v The Master Builders Group Training Scheme Inc 146 (CFMEU v MBGTS) the Full Federal Court dealt with an appeal concerning the proper interpretation of clause 38 of the National Building and Construction Industry Award 2000 as it applied to apprentices in South Australia, and in particular whether an apprentice was entitled to the fares and travel allowance on a day when they were at trade school. The Court noted that it was “... not in dispute that the apprentices attend trade school in the course of, and as part of, their employment.”147 However, the Court determined that an apprentice whilst attending off-the-job training was not “employed on work” within the meaning of the travel allowance provisions of the relevant award and therefore was not entitled to be paid the allowance to attend that training. The terms of the clause stated that the allowance was to be “paid to employees for travel patterns and costs peculiar to the industry which include mobility requirements on employees and the nature of employment on construction work.” The Court found that “[a]n apprentice’s travel to trade school does not involve travel patterns and costs peculiar to the building and construction industry and has nothing to do with the nature of employment on construction work”.148
[309] A similar approach was adopted in the CEPU v Excelior Pty Ltd, 149 which considered the interaction between the Telecommunications Award and the NTWS. The CEPU argued in that case that clause E.6.3 of the NTWS was a ‘definitional clause’ which modified the meaning of ‘work’ in the award so that it included ‘training’. Cameron FM held that clause E.6.3 did not operate to change the definition of ‘work’ in the award, noting that there was a historical distinction between training and work that had underpinned a number of previous decisions (including CFMEU v MBGTS).150 Consequently, while the award required trainees to be paid while in attendance at training, no allowances were payable to trainees who were required to travel for training purposes. An appeal against this decision by the CEPU was dismissed.151
[310] In some cases, State training legislation provides that attendance at off-the-job apprenticeship training is deemed to be attendance at work for the purposes of any employment agreement or contract. This is reflected in the provisions of the NTWS in modern awards as follows:
“X.6.3 Time spent by a trainee, other than a trainee undertaking a school-based traineeship, in attending any training and assessment specified in, or associated with, the training contract is to be regarded as time worked for the employer for the purposes of calculating the trainee’s wages and determining the trainee’s employment conditions.”
[311] However, neither the legislation nor the award provision says anything about the time spent in travelling to attend training or assessment. The provisions are about the time spent in attending training and assessment.
[312] For these reasons we accept the submissions of the employers that with respect to travel and accommodation costs there is no anomaly or technical problem arising from the creation of the modern awards. The current provisions are consistent with the principle that apprentices are entitled to the provisions of the award unless specified. The courts have found that particular allowance clauses in terms only apply to work and not to training.
[313] In these circumstances, the unions would need to demonstrate on the merits that time and costs associated with travelling to off-the-job apprentice training should be treated in the same way as travel required for work.
[314] The unions’ primary submission is that, given the low pay of apprentices and the significant costs involved in some cases in attending off-the-job training, the awards should be varied to provide that allowances should apply for travel to attend such training. It was submitted that the apprentice is required as part of their contract of training and contract of employment to attend off-the-job training and should be entitled to all award conditions which would otherwise apply to such attendance as if it was attendance at work. It was said that the current situation is unfair and unreasonable.
[315] The CEPU suggested that attendance at a different location for training is analogous to attendance at a different location for work, which is commonplace in the industry. CEPU Organiser Mr Omar Merhi gave evidence that payment of travel time for off-the-job training to apprentices in the electrical contracting industry is a widespread provision in a large number of collective agreements in Victoria. CFMEU Organiser Mr Terry Kesby gave evidence that apprentices in NSW under the State award “were paid fares and travelling to attend TAFE”, however under the modern award “this has become a grey area as there is no specific provision in the award”. Evidence from apprentices called by the CFMEU does not indicate that fares and travel allowance or other costs were paid by employers for attendance at block release training. However, the apprentices did give evidence of the significant costs and distances involved. The AMWU also provided evidence of the hardship caused by travel costs and the costs of attendance at block release training. There was, for example, evidence about apprentices sleeping in their cars overnight to attend training. 152 The AMWU apprentice survey reveals instances of concern about the impact of travel and accommodation costs associated with attendance at training and notes that a significant proportion of apprenticeship training occurs through block release.
[316] It is not in contention that a number of apprentices when attending training are required to stay away from their usual place of residence overnight. This particularly affects apprentices from regional areas or in more specialised trades where there may be long distances to the nearest appropriate TAFE. Mr Timothy Phelps from Group Training and Employment Specialists (GTES), a large group training scheme, suggested that in most cases the burden of these costs is passed on to parents.
[317] The Commonwealth referred to the report of the Apprenticeship Expert Panel, which notes that “some modern awards do not explicitly include a provision specifying payment while an apprentice is carrying out off-the-job training”. The Commonwealth supported the Commission revising the terms and rates of training related allowances to achieve greater consistency across awards as this will contribute to the achievement of a simple and easy to understand modern award system, and would encourage take up and completion of apprenticeships and traineeships as recommended by the Expert Panel. The Commonwealth submitted that apprentices should not be expected to meet unreasonable travel costs associated with undertaking training.
[318] The employers submitted that there would be significant costs to employers if the current situation where travel and accommodation provisions do not apply was altered. It was said that the additional costs would be a disincentive to the engagement of apprentices. It was also said that the proposed variations will have a disproportionate impact on regionally based employers who have no other option but to send apprentices for block release training. In this regard it was submitted that the proposed variations would reduce social inclusion by potentially disadvantaging employers and young people in regional, rural and remote areas, contrary to s.134(1)(c) of the Act.
[319] It was also submitted by the employers that an extension of travel provisions will mean that the cost of employing an apprentice will be uncertain, as it will depend upon the residence of the apprentice and the location of the training provider, matters not within the control of an employer. Further it was said that there could be compliance problems because of the difficulty in ascertaining the correct number of hours for payment.
[320] The PIAA submitted that the AMWU’s submissions and evidence do not apply specifically to the Graphic Arts Award. It was said that evidence specific to the Graphic Arts Award is required, even if similarities between awards exist. The NECA submitted that all awards relevant to the electrical contracting industry since 1960 have provided for fares and travelling time allowances relevant to employees required to start and/or finish at work sites, and that these provisions have not applied to attendance by apprentices at trade schools. The HIA submitted that witness evidence as to the distance an apprentice must travel to attend training does not equate to a necessity to vary the award. It was said that the evidence shows that an apprentice can choose their TAFE location.
[321] The MTA supported the principle of payment for time spent in attendance at training and for travel where it takes place in ordinary hours, but opposed the union claim for award excess travel time provisions to apply to attendance at off-the-job apprentice training.
[322] We have considered all the evidence and submissions presented in reaching our conclusions regarding the extension of award travel provisions to apprentices. We note that off-the-job training is an essential part of an apprenticeship and that the evidence shows that some apprentices may suffer hardship in meeting travel costs to attend such training.
[323] Award travel provisions apply to apprentices when they are required to travel to different work sites. These provisions may apply in some situations to off-the-job apprentice training. For example, the AMWU referred to the decision in Rohrlach v Career Employment Group Inc 153 (Rohrlach) as authority for the proposition that clause 32.5(b) of the Manufacturing Award has application to apprentices.
[324] In relation to travel for day release training there was little evidence of the incidence of excess travel. We therefore do not adequately understand the extent to which this is a significant problem for apprentices or the extent of the cost impact upon employers of the variations sought. We also recognise that there may be administrative difficulties in the calculation and verification of excess travel time and cost claims given that three parties are involved: the RTO, the apprentice and the employer.
[325] Overall, we do not consider that the union case has demonstrated that it is necessary to meet the modern awards objective to generally extend the concept of the fares and travelling pattern allowance in the construction and electrical contracting awards to apprentice off-the-job training. Similarly in relation to the other applications the unions have not demonstrated that the concept of excess travelling time applicable to approved work travel should be extended generally to apprentice travel for off-the-job training.
[326] There is a stronger case with respect to the situation where an apprentice is required to attend block release training at a distant location. The costs associated with travelling, and in some cases, of accommodation in these situations may be significant given the low income of apprentices. The consequential impact on apprenticeship participation and on living standards is therefore far greater. It is hard to see why an employee who is required by the terms of his or her contract of employment to attend training far from their usual workplace should have to meet most of the costs of travel and accommodation to enable them to do so. The unions noted that in these situations there may be some government assistance available and proposed that any such assistance be deducted from any award obligation of the employer.
[327] Only a small proportion of apprentices are required to attend block release training at a distant location. We do not have evidence of the exact proportion. However, there was evidence that in some industries block release is not a common practice. The evidence was that in Victoria generally block release training does not involve a requirement for apprentices to stay away from home overnight.
[328] The provisions sought by the unions in respect to attendance at block release training which requires an overnight stay mirror those which apply to distant work in the awards. The costs for which the unions seek reimbursement include: excess costs of travel, travelling time, other expenses including accommodation and board, and the cost of returning home after each four week period.
[329] A requirement for employers to meet excess travel and other costs for block release training involving overnight stays away from home would have particular impact on employers in regional Australia. There is also an issue about who chooses the location of the training. In many cases there will be little real choice. If there is no TAFE college in the regional locality then distant travel is inevitable. In cases where “user choice” applies, the employer is likely to be able to have significant influence on the choice.
[330] We are satisfied that it is consistent with the modern awards objective to provide that employers are required to meet some of the costs where an apprentice is required to attend block release training at a distant location. However, in the absence of further evidence about the possible impact on employers in regional Australia, we are not prepared to extend this to the full range of costs which apply to distant work in awards. Government subsidies available to apprentices in respect to travel and accommodation for distant training should be considered as part of any future consideration of these issues.
[331] At this stage we will only vary the awards to provide for the payment of excess travel costs for attendance at block release training which requires overnight stay, except where it is open to the apprentice to attend an alternative RTO at a location closer to their usual workplace and the use of the more distant RTO is not agreed between the employer and the apprentice.
[332] We now turn to consider the variations proposed by the unions regarding the recognition of training as work for award purposes.
[333] The unions submitted that it is necessary to meet the modern awards objective to remove any uncertainty that, for apprentices, time spent in attending off-the-job training and assessment consistent with the training contract is part of work time for the purposes of service, wages, weekly ordinary hours and leave entitlements. It was submitted that where awards do not already so provide, it should be made clear that except as provided in the apprentice clause or otherwise stated, all conditions of employment specified in the award apply to apprentices.
[334] This was opposed by the State Chambers of Commerce and Industry in their joint submissions. It was pointed out that the standard training contract provides at paragraph (e) that “the employer will release the apprentice/trainee from work and pay the appropriate wages to attend any training and assessment specified in our Training Plan.” It was submitted that if there are instances where paragraph (e) is not complied with, this is a breach of the training contract and should be raised with the relevant State/Territory training authority. On this basis, it was said that the variation sought by the unions is unnecessary as it simply seeks to double-up on existing requirements that are adequately and appropriately dealt with by the State/Territory training authorities. The engagement of apprentices is already a highly regulated area and there is no evidence that the variation is necessary to achieve the modern awards objective. However, the State Chambers of Commerce and Industry supported a provision that leave entitlements accrue during training time where the training occurs during ordinary hours.
[335] The NECA submitted that the acceptance of the CEPU application to define attendance at trade school as ‘time worked’ has very real consequences for the payment of overtime hours once the apprentice has reached a total of 38 ordinary hours in a week. However we do not consider that clarification of this matter will result in any significant change in current award entitlements in most circumstances.
[336] We accept that it is consistent with the modern awards objective to remove any uncertainty that for apprentices the time spent in attending off-the-job training and assessment consistent with or associated with the training contract is regarded as part of work time for the purposes of wages, weekly ordinary hours and leave entitlements. This is generally consistent with the requirements of the relevant State legislation.
[337] Minimum entitlements to wages and allowances are appropriately determined through awards and evidence suggests that the State apprenticeship bodies tend to deal with “training” disputes rather than “employment conditions” disputes. It is appropriate that on such matters the awards identify entitlements and that there be access to appropriate disputes settlement procedures and enforcement mechanisms. We do not therefore accept that the provision in the standard training contract is sufficient.
[338] The approach taken in the NTWS to the entitlements to the recognition of training time and the application of award conditions to trainees is relevant. The clause provides:
“X.6.2 A trainee is entitled to be released from work without loss of continuity of employment and to payment of the appropriate wages to attend any training and assessment specified in, or associated with, the training contract.
X.6.3 Time spent by a trainee, other than a trainee undertaking a school-based traineeship, in attending any training and assessment specified in, or associated with, the training contract is to be regarded as time worked for the employer for the purposes of calculating the trainee’s wages and determining the trainee’s employment conditions.
X.6.4 Subject to clause X.3.5 of this schedule, all other terms and conditions of this award apply to a trainee unless specifically varied by this schedule.”
[339] These provisions of the NTWS were the subject of consideration in the award modernisation process. We can see no reason why traineeships and apprenticeships should be different in this respect.
[340] The Commonwealth supported the inclusion in awards of similar provisions for apprentices:
“...the Government supports the inclusion of provisions in modern awards deeming time spent by an apprentice attending off-the-job training as work time, including for the purposes of calculating leave entitlements under the award and the National Employment Standards (NES). Off-the-job training is an integral component of an apprenticeship which necessarily affects arrangements for when an apprentice performs work (s 139(1)(c)). The Government considers that this amendment would support the modern awards objective to provide a fair and relevant minimum safety net taking into account, in particular, relative living standards and the needs of the low paid (s 134(1)(a)).”
[341] We agree with this submission. We also agree with the union and Commonwealth submissions that it is necessary to clarify that time spent in attending off-the-job training is part of an apprentice’s service for the purpose of NES entitlements.
[342] The provisions in the NTWS provide a model where the current award provisions do not clearly provide for entitlements equivalent to X.6.2 and X.6.3. We have decided that the awards in Schedule 7 of the ACTU common claims document 154 should be varied to include such provisions.
[343] We have also decided that the awards should include a provision to the effect that except as provided in the apprentice clause or where otherwise stated, all conditions of employment specified in the award apply to apprentices. A model for this provision is provided by clause X.6.4 of the NTWS. We note that there is no provision of this sort in the Airline and Vehicle Awards. For clarity and to avoid uncertainty we have decided that such a provision should be inserted in those awards.
[344] We are not satisfied that there is sufficient evidence that the other variations under the heading “when training time is work time and what follows from this” in the common claims document 155 sought by the unions are required to meet the modern awards objective or to remove uncertainty.
Training costs - Fees and textbooks.
[345] Awards for apprentices generally provide for the payment of fees for off-the-job training and for the fees to be reimbursed based upon “satisfactory progress”. The AMWU, CEPU and CFMEU seek to remove any requirement for satisfactory progress and to require the employer to take responsibility for the payment of fees. The unions also proposed that the requirement to pay fees should extend to textbooks.
[346] The unions presented evidence about the significant impact of fees on apprentices. The AMWU apprentice survey showed that the majority of apprentices are reimbursed for course fees, textbooks and other course materials. However, a significant proportion get reimbursement of training fees but not other costs and more than 10% reported no reimbursement at all. There was evidence about some apprentices not being able to continue apprenticeships because of training costs. The survey found that the top five issues of concern for apprentices were (in order) lack of proper mentoring, low apprentice pay rate, poor quality training, costs associated with training and the ratio of tradespeople to apprentices.
[347] The CFMEU also provided evidence about the problem of apprentices not being reimbursed training fees, delays in reimbursement and the impact of the costs of fees and textbooks. Mr Terry Kesby, a CFMEU organiser who is a member of NSW Vocational Training Tribunal and Appeal Panel, gave evidence that it is common for apprentices to pay TAFE fees and books and not to be reimbursed, particularly if the employer terminates the apprentice prior to the end of a TAFE year. Mr Liam O’Hearn, CFMEU apprenticeship officer, gave similar evidence with respect to Victoria.
[348] Two of the CEPU apprentice witnesses, Mr Christopher Punch and Mr Nigel Carroll, gave evidence of the costs of textbooks to apprentices.
[349] The CEPU Plumbing Division does not seek to alter the requirement for reimbursement based upon satisfactory progress but it does seek to extend reimbursement to costs beyond course fees. The CEPU Plumbing Division submitted that the additional costs such as materials, resources and administration fees are usually built into course fees. It was said that it would place award apprentices under financial pressure if it was not clarified that such costs are included in reimbursement.
[350] Mr Nigel Muller is the manager of auto apprenticeships for the VACC group training scheme, a major employer of apprentices. He suggested that trying to get TAFE fees from apprentices was “virtually near impossible”, and that the current reimbursement mechanism for TAFE fees may not be a successful motivator for apprentices to undertake or complete their training. The VACC scheme pays the fees up front as an incentive to attract apprentices and encourage completion.
[351] The employers opposed the union applications. It was submitted that requiring employers to pay for fees and textbooks upfront without proof of satisfactory progress would increase the cost burden on employers, making business, particularly small businesses, less likely to engage apprentices. It was said that removing the requirement for satisfactory progress would mean that where an apprentice failed units, failed to attend the required training or wished to cancel the apprenticeship during the probationary period, the employer would unnecessarily have incurred these costs.
[352] The State Chambers of Commerce and Industry submitted that the issue of apprentices not being reimbursed by employers is a matter of enforcement and compliance and does not demonstrate that award variations are necessary. It was said that increasing the costs of the apprenticeship to the employer would undermine the achievement of the modern awards objective, in particular taking into account s.134(1)(f) of the Act. The PIAA agreed with the AMWU that the matter of fees and charges is dealt with inconsistently by the States and Territories, but submitted that it is not appropriate to resolve these issues through award prescription. 156
[353] The evidence from both unions and employers showed diversity in the way that current award provisions for reimbursement subject to satisfactory progress are applied. In some cases the employers pay the fees directly, or reimburse the fees very early in the apprenticeship year. In other cases, reimbursement occurs late in the year or not at all.
[354] The evidence also shows that there have been some significant changes in apprenticeship off-the-job training in recent years including:
● “User choice of provider”, whereby the employer and to some extent the apprentice have a choice of the RTO;
● Changes to the fee structure of TAFE courses with the introduction of a more competitive training market. In some cases this has led to significant fee increases; and
● The introduction of competency based training and assessment which may involve apprentices progressing at different pace and in some cases in the integration of off- and on-the-job aspects of training and assessment.
[355] We are satisfied that in this changed environment the requirement for reimbursement subject to satisfactory progress should be clarified. It would be unreasonable to interpret satisfactory progress as meaning ‘following the satisfactory completion of all competency units for the particular apprenticeship stage’. This could mean apprentices are out of pocket for a year or more and would not be consistent with the modern awards objective due to the impact on low paid workers (s.134(1)(a) of the Act). It may also act to discourage apprenticeship completion and early apprenticeship completion (s.134(h)). On the other hand, there is no reason that an employer should be required to pay fees up front in the case of a first year apprentice who never attends the required off-the-job training. The evidence shows that there is a significant drop out rate from apprenticeships during the probation period, which is generally three months from commencement
[356] We consider that in the context of competency based training, the emphasis should be on the demonstration of an appropriate level of commitment to the apprenticeship rather than a requirement to have completed particular competencies. The objective of the award provision should be both to avoid the apprentice having to meet the significant cost of fees whilst on low pay and to avoid the employer being required to pay upfront fees in a situation where an apprentice fails to effectively participate in training. Provided that it is not mandatory for employers to pay fees prior to apprentices establishing satisfactory commitment to the apprenticeship, and maintaining this in subsequent stages of their apprenticeship, the cost impact on employers of the change is not likely to be significant (s.134(1)(f)).
[357] We consider that to meet the modern awards objective it is appropriate to clarify the award requirement for the reimbursement of training fees. There should be an addition to current award provisions to require reimbursement of training fees to occur within six months of commencement of the apprenticeship or the relevant stage of the apprenticeship unless there is unsatisfactory progress. It should also be clear that payment of fees directly to the training provider by an employer within six months of commencement of the apprenticeship or stage of the apprenticeship will satisfy the award requirement.
[358] We consider six months to be an appropriate time frame. Stages of apprenticeships are nominally one year in length. After six months an apprentice will be able to demonstrate a reasonable record of attendance and participation in on and off-the-job training. A six month outer time limit for reimbursement is likely to provide some relief and assistance to apprentices in undertaking their training.
[359] The other aspect of the union applications is to clarify that reimbursement applies to fees including textbooks where this is not currently clear in the award. As referred to earlier, the evidence from the AMWU apprentice survey is that a significant proportion of employers reimburse for textbooks but that some employers do not. If textbook or training resource costs are included in fees then the employer is currently required to provide reimbursement.
[360] The provision in the Manufacturing Award, and some other awards, in respect to training agreed by the employer requires payment of fees and prescribed textbooks (clause 32.5 of the Manufacturing Award). The proposed variations would ensure consistency between these provisions and apprenticeship-specific provisions.
[361] The Commonwealth supported the union applications. The Commonwealth submitted that apprentices should not be left out of pocket in relation to course fees or textbooks.
[362] We accept that the cost of textbooks can be a hardship for apprentices given their low pay. However there was limited evidence presented in the proceedings as to the actual cost of textbooks generally associated with each of the trades and the extent to which such costs are currently part of the fees charged by RTOs. In these circumstances we have decided to vary the awards to provide for reimbursement for the cost of prescribed textbooks. The variations will be subject to similar qualifications as in the Manufacturing Award. We also consider that it may be appropriate to include a cap on the level of reimbursement for textbooks in particular awards. This will be considered in the settlement of the award variations.
Attendance at training on an RDO
[363] The AMWU seeks to insert a provision into the Manufacturing, Graphic Arts, Sugar, Airline and Vehicle Awards to the effect that an apprentice who attends off-the-job apprenticeship training on an RDO must be allowed a substitute day off in the current or in the next work cycle. It was said that the variation has a similar purpose to clause 44.3 (Rostered Day off Falling on a Public Holiday) of the Manufacturing Award. It was submitted that it would be unfair to have apprentices work on a cycle accruing additional time for the RDO and then lose it due to performing their duties under the training contract.
[364] The Ai Group, ABI, the PIAA and the State Chambers of Commerce and Industry opposed the variations. The State Chambers of Commerce and Industry submitted that the proposed variation would create unnecessary overlap with existing award provisions. In this regard, we note that the Graphic Arts Award already contains a provision which is similar in nature to the provisions proposed in the RDO variation. Clause 30.7(c)(ii) of that award provides that where an employer adopts a system of work which entitles an employee to a day off during a work cycle, an apprentice who is required to attend trade school on a RDO must be entitled to substitute a day as soon as practicable following that attendance.
[365] Ordinary hours of work and rostering for employees, including apprentices, are regulated by a range of provisions including, for example, clauses 15.11, 15.12, 15.14, 36 and 44.3 of the Manufacturing Award. These provisions, when read in conjunction with State training legislation and the training contract, mean that apprentice off-the-job training is generally conducted within paid working hours.
[366] There was no substantial evidence presented to show that the absence of the provision sought has created problems. There was no direct evidence of apprentices accruing additional time for the RDO and then losing it due to performing their duties under the training contract.
[367] In these circumstances, it has not been established that the proposed variation is necessary or that there is good reason having regard to the modern awards objective to move beyond the regulation of apprentice hours currently provided in the relevant awards. We will not vary the awards in the manner sought.
Limitation on overtime and shiftwork
[368] The Manufacturing Award provides as follows:
“15.12 The ordinary hours of employment of apprentices in each enterprise are not to exceed those of the relevant tradesperson ...
15.16 An apprentice under the age of 18 years is not required to work overtime or shiftwork unless such an apprentice so desires. No apprentice, except in an emergency, is to work or be required to work overtime or shiftwork at times which would prevent their attendance in training consistent with their training agreement.”
[369] The provisions in the Manufacturing Award are also found in a number of other awards. The AMWU seeks to insert a provision of similar effect to clause 15.16 into the Airlines, Graphic Arts and Vehicle Awards and a provision of similar effect to clause 15.12 into the Airline Award. The AMWU submitted that the variations are appropriate having regard to various general considerations including the modern awards objective, the need to ensure that the provisions of the award do not undermine the NES, and to allow apprentices to complete their training.
[370] Generally the employers opposed the variations on the basis that there was inadequate evidence to support them. The Ai Group and the State Chambers of Commerce and Industry submitted that there are a range of mechanisms protecting employees undertaking an apprenticeship from requirements to work unreasonable or unsafe hours. For example, the standard training contract places an obligation on the employer to allow an apprentice to attend the training specified in the training plan. The employers submitted that the amendments are therefore unnecessary.
[371] The MTA opposed the prohibition on the rostering of overtime for apprentices. The MTA survey asked employers “how would you respond if you were prohibited from rostering overtime for apprentices under 18 years?” A number of the employer witnesses from the vehicle repair industry were strongly opposed to a prohibition on the rostering of overtime. It was clear that the employer witnesses did not accurately understand the AMWU claim and several of them changed their views about the claim when it was clarified.
[372] We agree with the Ai Group that no case has been made out for placing additional restrictions on employers being able to require employees to perform reasonable overtime or shiftwork. The AMWU did not produce evidence of problems created by the absence of such provisions in the specified awards which would justify the insertion of provisions further limiting access to overtime or shiftwork for those under 18 years of age. Similarly we do not consider that the AMWU has demonstrated the need for a provision that the ordinary hours of apprentices not exceed those of the relevant tradesperson. We have therefore decided not to vary the specified awards to include such provisions
[373] The variation sought to restrict the working of overtime and shift work by apprentices where it would prevent attendance at training is in a different category. We do not consider that such a provision would impose unreasonable limitations on the working of overtime or shiftwork. Although the training contract provides an obligation on the employer to allow an apprentice to attend training we consider that it is important that both the employer and the apprentice be alert to the fact that in certain circumstances the working of overtime or shiftwork may render attendance at training impractical, even if the overtime or the shiftwork was not at the same time as the scheduled training. In this regard, we agree with the Ai Group submission that overtime and shiftwork should not be unnecessarily restricted “where reasonable and consistent with the training contract.”
[374] There was significant evidence of the importance of access to quality training and work experience consistent with the training contract and related training plan. This is an essential part of an apprenticeship and is a necessary and defining characteristic of the type of employment. Concerns about the quality of the work and training arrangements are significant reasons given for non-completion of apprenticeships.
[375] We are satisfied that it is appropriate to include a provision in the awards subject to the AMWU applications that:
“No apprentice, except in an emergency, is to work or be required to work overtime or shiftwork at times which would prevent their attendance in training consistent with their training contract.”
[376] Such a provision is necessary to ensure the effective operation of the provision in the awards and relevant legislation to the effect that an employer must provide and/or provide access to training consistent with the training contract without loss of pay. In the absence of the provision, the working of overtime or shiftwork could make attendance at training consistent with the training contract impractical.
[377] We consider that the inclusion of the provision will promote a higher quality apprenticeship experience by ensuring that employers understand their obligation to ensure that apprentices have effective access to training and to ensure that overtime and shiftwork does not interfere with such access. This is consistent with the modern awards objective.
Extension of training contract due to absences
[378] The AMWU seeks to vary the provisions in the Sugar Award and the Manufacturing Award which automatically extend the nominal duration of the apprenticeship for each day of absence during each year of the apprenticeship, except in respect of absences due to annual leave or long service leave. The AMWU also seeks to introduce the amended provisions into the Vehicle Award and the Airline Award.
[379] The current provision in the Manufacturing Award is as follows:
“15.17 Apprentices are required to serve an additional day for each day of absence during each year of their apprenticeship, except in respect of absences due to annual leave or long service leave. The following year of their apprenticeship does not commence until the additional days have been worked. However, any time that has been worked by the apprentice in excess of their ordinary hours must be credited to the apprentice when calculating the amount of additional time that needs to be worked in the relevant year.”
[380] The AMWU seeks to replace the provision in clause 15.17 and similar provisions in the Sugar Award with a provision that an employer can apply to the relevant training authority for an extension to the nominal duration of the apprenticeship contract where absences, other than on paid leave, negatively affect progress. The provision sought would retain the current provision in the Manufacturing Award that overtime worked must be taken into account in determining whether an application to the relevant authority is warranted.
[381] Three main arguments were advanced in support of the proposed variations. First, that the current approach mandating an extension of the nominal period is inconsistent with competency based progression. The average duration of an engineering apprenticeship is 37 months as opposed to the nominal duration of 48 months. 157 The AMWU submitted that this demonstrates that the lost time provisions which have been in the awards for many years are no longer relevant. Secondly, the requirement to extend the period for all absences other than annual leave or long service leave is unreasonable. Thirdly, the extension of the training contract in cases of extended illness is best left to the apprenticeship authority.
[382] The Ai Group submitted that the lost time provision operates in respect to the nominal term of the apprenticeship and that the apprentice is still able to complete it in a shorter time if competency requirements are met. It was said that it would be an unnecessary burden for the employer to seek approval of the relevant training authority before utilising the lost time provisions. The MTA took a different view. They submitted that “[t]he associations have not led any evidence on this claim as any extension of training contracts would be handled through the relevant State Training Authorities.” ABI also submitted that applications for an extension of an apprenticeship or traineeship are governed by the standard training contract and that State and Territory regulation concerning these matters remains operative.
[383] We agree with the Ai Group that there is insufficient evidence to justify the proposal by the AMWU to alter the lost time provision so that it is only accessible where progress is negatively affected and following successful application for extension to the relevant apprenticeship authority. This would be a significant change to the existing provision which would reduce flexibility.
[384] We consider that the Ai Group is correct as to the intended operation of clause 15.17. The preamble in clause 15.8 that “[n]otwithstanding the nominal period, the apprenticeship is completed in a shorter period” is intended to ensure that an apprenticeship can be completed when competencies are achieved. The Ai Group submitted that notwithstanding the lost time provision, if an apprentice completes the competencies then he or she would still finish at that time. It was therefore submitted that there is no ambiguity or uncertainty in the provisions about lost time and the provisions about competency based progression and completion.
[385] Notwithstanding these submissions, we consider that there is some ambiguity in clause 15.17. The provision that “apprentices are required to serve an additional day” is unqualified and as it does not refer to the apprenticeship nominal period could be read as overriding provisions allowing for CBWP and competency based completion. Any ambiguity should be removed and to achieve this clause 15.17 should be amended to make it clear that it is the nominal period of the apprenticeship which is extended by certain absences and that CBWP and competency based completion requirements take precedence over lost time provisions.
[386] The other aspect of the AMWU application is to extend the types of absence which do not justify extension to the nominal duration of an apprenticeship from annual leave and long service leave to all forms of paid leave. It was said that there is no good reason that absences on paid personal leave should automatically extend the nominal period of the apprenticeship. It is hard to see why an extension of the nominal period of the apprenticeship should occur every time an apprentice takes a day of paid personal leave. Short periods of absence on paid personal leave are common and are unlikely to affect the ability to successfully complete the requirements of an apprenticeship. The intention of the award provision is to ensure that the nominal period of the apprenticeship is extended where absences are likely to interfere with the effective acquisition of competencies.
[387] The Ai Group submitted that the retention of lost time provisions was negotiated and agreed between the industrial parties as part of a package of variations to apprenticeship provisions in 2006. The Ai Group opposed the extension of the types of paid leave which are exempt but did not specifically address the rationale for excluding paid personal leave.
[388] We have decided to retain the lost time provisions in the awards but to provide exemption for paid personal leave and to remove any ambiguity or uncertainty in relation to CBWP and competency based completion. We will limit the exempt paid personal leave to 10 days in any year in order to ensure that it would not significantly interfere with the effective acquisition of competencies.
[389] We have decided that clause 15.17 should be amended to the following effect:
“The nominal period of the apprenticeship is extended by an additional day for each day of absence during each year of their apprenticeship, except in respect of absences due to annual leave or long service leave. However, periods of paid personal leave which total less than ten days in any apprenticeship year do not extend the nominal period of the apprenticeship. Except where the apprentice meets the competency requirements to progress to the next stage as set out in clause 25.6 the following year of their apprenticeship does not commence until the additional days have been worked. However, any time that has been worked by the apprentice in excess of their ordinary hours must be credited to the apprentice when calculating the amount of additional time that needs to be worked in the relevant year.”
[390] Completion of apprenticeships in the shortest possible time consistent with the maintenance of high quality skills acquisition is positive for the performance and competitiveness of the economy and employment (s.134(1)(h) of the Act). The amended variation will promote competency based progression and completion of apprenticeships and will remove the possibility of unreasonable and unnecessary extension of apprenticeships in case of short term paid personal leave which does not significantly interfere with skills acquisition. We are satisfied that the limited exemption for paid personal leave is necessary and appropriate to achieve the modern awards objective.
[391] We consider it appropriate to adopt the same approach to the AMWU application to amend similar provisions in the Sugar Award. There has been insufficient evidence to demonstrate that it is necessary to introduce lost time provisions into the Vehicle and Airline Awards. We will not vary those Awards.
[392] The AMWU, CEPU and CFMEU seek to insert clauses into various modern awards relating to training requirements for apprentices. The precise form of the training requirements vary from application to application, but each proposed clause would require that an apprenticeship not be undertaken without a training contract registered with the appropriate State or Territory authority, and require the employer to:
● provide and/or provide access to training consistent with the training contract, without loss of pay;
● provide work that is relevant and appropriate to the vocation and to the achievement of the qualification referred to in the training contract;
● appropriately mentor apprentices consistent with their training contract;
● provide appropriate facilities and experienced people to facilitate the training of apprentices and to supervise them while at work; and
● not leave apprentices to work alone or unsupervised, consistent with the OHS requirements of the job being performed and the competence of the apprentices.
[393] The unions submitted that the proposed award variations with respect to mentoring, supervision, and the provision of appropriate work and training would improve the quality of the employment experience of apprentices and, in this way, contribute towards improving retention rates and skills formation to the benefit of the national economy (see s.134(1)(h) of the Act). It was also submitted that the proposed variations with respect to supervision would benefit the national economy by improving safety at the workplace.
[394] It was said that many apprentices are not given sufficient appropriate and relevant work and that some apprentices are used as cheap labour and perform menial tasks rather than work related to the attainment of their trade. It was submitted that the proposed clauses will ensure that apprentices are not exploited, and thereby assist in providing a fairer safety net of wages for apprentices (see s.284(1)(e) of the Act). The clauses will also ensure that apprentices are given sufficient relevant and appropriate work to progress through their apprenticeship. It was said that the proposed clauses are similar to obligations which already appear in the standard training contract, and are already dealt with to various extents in State and Territory legislation. Reference was also made to guidelines and policies set down by State and Territory training bodies.
[395] It was submitted by the CPEU that supervision is particularly important for electrical apprentices given the workplace health and safety issues associated with electrical work. In this regard the CEPU referred to State and Territory regulations dealing specifically with the supervision of electrical apprentices, and to provisions dealing with supervision in enterprise agreements and State awards covering the electrical industry.
[396] The unions submitted that the proposed clauses encapsulate the essential elements of the “fair deal” for apprentices, as set out in a report of the NSW Board of Vocational Education and Training titled “A fair deal: Apprentices and their employers in NSW” (the BVET Report). The essential elements of the fair deal are:
● “Varied and increasingly challenging work experience, so that by the end of the apprenticeship, the apprentice has experience across the range of trade work; no long periods of doing the same task or too much time spent on meaningless work
● Real on-the-job training, provided by a skilled tradesperson, someone who can coach and mentor the apprentice through skills acquisition, not leave them to work it out by themselves or expect them to be able to perform tasks for which they don’t have the skills
● Good supervision, with increasing flexibility and autonomy but in the early months, no time left unsupervised or working alone
● Competency based pay and progression, based on skills and work performance and recognition for the apprentice’s achievements and contributions, not an artificial time construct
● A good boss, someone who treats the apprentice as a human being and an employee, not a kid at the bottom of the ladder
● Good open communications between apprentice, employer, work colleagues and RTO
● Fair work practices including a contemporary workplace culture that prevents bullying and ensures safety”. 158
[397] In relation to the requirement to mentor apprentices, it was said that mentoring improves the employment experience of apprentices and promotes completion. It was noted that mentoring was rated as the third most important issue for the apprentices surveyed by the AMWU, with 57.25% of respondents rating it as “important” or “very important”. Reference was made to the Australian Apprenticeships Mentoring Package, an Australian Government program providing funding for apprentice mentoring, as recognition of the importance of mentoring.
[398] The employers opposed the union applications with respect to training requirements. The opposition was mainly based on jurisdictional issues, as considered above, but the proposed variations were also opposed by the employers on their merits.
[399] Most of the employer organisations submitted that the proposed clauses would unnecessarily duplicate existing obligations found in the standard training contract and State and Territory legislation. ABI, for example, submitted that the States and Territories have comprehensive and robust systems for the regulation of training matters within apprenticeships, whereby problems are resolved by specialist bodies that operate in a way conducive to managing the special apprenticeship relationship, which often involves minors. It was said that the State and Territory systems work well and should be left to operate. The Ai Group submitted that matters relating to OHS should be addressed, where possible, in legislation specifically intended to address such matters.
[400] The State Chambers of Commerce and Industry submitted that the proposed variations relating to supervision would create dual responsibilities for employers under both modern awards and State and Territory OHS legislation. It was said that this would not improve safety outcomes, but would add to the regulatory burden on business and create confusion as to whether OHS is an industrial issue or a matter for State and Territory regulation. The PIAA similarly submitted that the clauses proposed by the AMWU would replicate existing requirements, and could create a “double jeopardy” situation whereby employers could be exposed to an additional layer of potential sanctions for breach of a modern award as well as consequences under State and Territory legislation. Several employer organisations submitted that the proposed provisions with respect to relevant and appropriate work are unduly restrictive and do not recognise that general duties, including menial and cleaning work, are incidental to the work of tradespeople, and that apprentices should be expected to perform this kind of work.
[401] Generally the employer organisations submitted that the unions’ proposed variations are not necessary in order to meet the modern awards objective. The Ai Group submitted that the inclusion of the training requirements clauses would be contrary to “the need to promote flexible, modern work practices and the efficient and productive performance of work” (s.134(1)(d)). The State Chambers of Commerce and Industry submitted that the mentoring provisions would add to the regulatory and cost burden on business (s.134(1)(f)). MBA submitted that many of the clauses sought have an “eye of the beholder” quality, and that their vagueness is problematic for a simple modern awards system (see s.134(1)(g)).
[402] The employers generally recognised the value of mentoring in improving the employment experience for apprentices and in increasing retention rates. However, the creation of an award obligation for mentoring was opposed. ABI submitted that mentoring is inherent in the relationship between an apprentice and a supervising tradesperson, and more akin to an art than something that is amenable to award prescription. The ECA drew attention to the difficulty of deciding who would be the appropriate person to provide mentoring to apprentices (e.g. the employer, tradespersons, specialised mentoring providers) and how the concept of “mentoring” should be defined.
[403] We have considered the submissions and evidence presented in relation to the proposed award variations relating to training requirements. In general, the provisions proposed by the unions relate to commendable principles and practices which should be adopted by employers in relation to the employment of apprentices and to ensure the provision of high quality on-the-job training.
[404] The Apprenticeship Expert Panel identified the provision of high quality on-the-job and off-the-job training as a core characteristic of the Australian Apprenticeships system and as providing significant benefits for apprentices, employers and the economy. 159 The report of the Expert Panel refers to the importance of high quality employment relationships, including the provision of appropriate induction processes and effective support such as mentoring and pastoral care, and recognises that some employers already provide high quality on-the-job training.160 It identifies various options to improve the quality of the on-the-job experience of apprentices, including: the identification of key criteria or pre-conditions that employers should meet to be considered a high quality on-the-job training provider; the recognition of good practice in providing on-the-job training through an Excellence in Employment scheme; and the recognition of the value of mentoring and pastoral care in supporting apprenticeships and trainees.161
[405] It is important to ensure that there is high quality on-the-job training for apprentices and that apprentices are given appropriate and relevant work in their employment. However whether there is a need for award provisions dealing with such matters will depend upon the extent to which existing arrangements are shown not to be working effectively. On the evidence and submissions presented in the proceedings we are not satisfied that this has been done. We are not therefore persuaded that the case has been made out for the award variations sought by the unions to be made.
[406] The standard training contract presently includes many of the obligations which the unions seek to impose upon employers through the award variations. The contract sets out the training obligations of the parties to the training contract. The obligations under the standard training contract include that the employer will:
● provide the appropriate facilities and experienced people to facilitate the training and supervise the apprentice/trainee while at work, in accordance with the Training Plan;
● make sure the apprentice/trainee receives on-the-job training and assessment in accordance with the Training Plan;
● provide work that is relevant and appropriate to the vocation and also the achievement of the qualification referred to in the Contract;
● release the apprentice/trainee from work and pay the appropriate wages to attend any training and assessment specified in the Training Plan;
● meet all legal requirements regarding the apprentice/trainee, including but not limited to, OHS requirements and payment of wages and conditions under the relevant employment arrangements; and
● work with the RTO and the apprentice/trainee to make sure the parties follow the Training Plan, keep training records up-to-date, and monitor and support the apprentice/trainee’s progress.
[407] Such matters are also addressed in relevant State and Territory training legislation 162 and through legislation and regulations addressing OHS matters.163
[408] In the proceedings the unions presented evidence and submissions about various deficiencies in the current arrangements. For example, the unions referred to problems with some employers not meeting their obligations under apprenticeship arrangements and with the legislative regimes in different States and Territories directed towards securing compliance with such obligations. However it was not demonstrated by the evidence that such problems as have arisen are not capable of being addressed through existing arrangements.
[409] Overall we do not consider that a persuasive case has been made out that the existing arrangements are not operating satisfactorily. In these circumstances, we do not see the need for the relevant modern awards to duplicate existing legal obligations which are contained in the training contract and in State and Territory training and OHS legislation. Further we consider that to include the proposed award provisions dealing with appropriate work, training and supervision would unnecessarily add to the regulatory burden on business and possibly lead to confusion amongst employers and others as to which obligations are to be observed. 164 It would potentially add to the already complex system for the regulation of apprenticeships without achieving any discernible benefit. This would not be consistent with the modern awards objective.165 Accordingly we have decided that, particularly in the absence of broad agreement between the major stakeholders as to the need for greater uniformity in relation to such arrangements that might be achieved through award regulation, we should not make the changes sought by the unions.
[410] We note that there is no specific reference to mentoring as such in the standard training contract. Notwithstanding this, many employers recognise that mentoring can play a positive role in promoting the success of apprentices. In relation to the proposed variations dealing with the provision of mentoring, there was considerable debate in the proceedings as to the need for an award obligation and what appropriate mentoring for apprentices might involve and who might be in the best position to provide it. There was evidence as to mentoring of apprentices presently being provided by employers, GTOs, union officials, and fellow employees. The variation proposed by the AMWU to the Manufacturing Award requires that apprentices be appropriately mentored and that employers provide appropriate facilities and qualified and experienced people to facilitate training and mentor the apprentice while at work. The reference to “appropriate mentoring” is stated to include providing apprentices with:
“(i) feedback, checking progress and providing progress reports regarding skills’ development;
(ii) detailed instructions including through demonstration and explanation;
(iii) sufficient opportunity and time to practice new skills;
(iv) questions to confirm the apprentice’s understanding of a skill;
(v) a range of tasks and opportunities to practice new skills; and
(vi) an explanation on developing good relationships with other workers.”
[411] We accept that this would provide a model for good practice in relation to mentoring and pastoral care in supporting apprentices. However we do not consider that the case for its imposition by award prescription has been made out in the proceedings. The provision of mentoring might be best pursued at this time by promoting a wider understanding of the value of mentoring and pastoral care in supporting apprenticeships 166 and by encouraging employers and GTOs to adopt such practices on a voluntary basis. Consideration may also be given to the further development by stakeholders in the apprenticeship system of guidelines for the provision of mentoring and support to apprentices.
[412] For the above reasons, we have decided not to vary the relevant modern awards to include the unions’ proposed provisions relating to training requirements.
(vi) Suspension, cancellation and recognition of service
[413] Before we deal with the applications to vary awards in respect to these matters we should first refer to the terms of the standard training contract. Some provisions of this contract are referred to earlier in this decision. There are some other provisions of this contract that are relevant to this part of our decision. They are as follows:
● The parties acknowledge that they understand the training contract can only be terminated within the period of probation and/or in accordance with the requirements of the relevant State or Territory legislation. They also acknowledge that probationary periods are determined by a State or Territory training authority or relevant industrial award or agreement.
● The contract can only be changed by agreement of the parties and according to State or Territory legislation. In the event of this occurring the training authority must be informed of the proposed changes.
● The parties agree that they will try to resolve any dispute they have between them and if they cannot they will contact their State or Territory training authority to request assistance or to access the appropriate dispute resolution processes.
● The contract will be successfully completed where there is agreement from the employer, registered training organisation and apprentice and acknowledgement from the relevant training authority that the apprentice has attained the required competencies. Alternatively, it expires if it reaches the end of the term of the contract without the apprentice having attained all relevant competencies or having received authorisation for an extension of the contract.
● The employer agrees that it will inform the relevant State or Territory training authority and the RTO within five working days, or such time as legislation requires, if the training contract has become jeopardised.
[414] We have also earlier referred to the legislation which operates in each State and Territory which deals with apprenticeships. We have referred to the interaction provisions of the Act and the way in which they save the operation of certain provisions of legislation dealing with the cancellation, suspension and termination of a training contract and probationary periods that are part of a training contract. The State and Territory legislation, although in different terms, generally deals with the issues of the suspension, cancellation or termination of the training contract, the resolution of disputes about the training contract and probationary periods in training contracts. 167 We have taken all of this legislation, and the regimes established by it, into account when considering whether to make the variations sought by the unions. In respect to the variations we deal with in this part of our decision we note the following matters which are dealt with in the legislation:
● The legislation in each State and Territory identifies the authority which is to be the first point of contact for resolving any disputes. Although dealt with in different ways the legislation has a number of similar attributes. The parties are required to deal with any disputes that they have by first having discussions in the workplace. In a number of cases area consultants or other training officers of the relevant authority are available to participate in discussions with the parties.
● The role of these officers also includes the monitoring of training contracts and all aspects relating to the provision of training under them. They are able to make enquiries of any persons in relation to the provision of training, to search premises and inspect documents, and to give a written direction about these matters.
● Either party to the training contract is able to refer a dispute to a relevant authority. In some cases there is a further ability to refer the dispute to a higher authority, for example, a State industrial tribunal.
● In the case of all of the legislation the clear emphasis is on the parties resolving the dispute without the issue proceeding further to, for example, the termination of the training contract.
● Should a matter not be able to be resolved there is an authority which has power to make a final order or determination. The orders or determinations that may be made range from reprimands, the giving of a direction to a party to the contract to take some particular action, an amendment of the training contract, the suspension, extension, cancellation and termination of the training contract, to an order for the payment of compensation.
● Probationary periods are dealt with in the legislation. There is a high degree of similarity in the manner in which they deal with probationary periods. As a general rule it is recognised that probationary periods will not exceed a period between one and three months depending on the term of the contract. Three months is the norm for apprenticeships. In New South Wales, the provision of a probationary period can be extended by up to three months on the application of the employer or apprentice. In Queensland, applications can be made by an employer or apprentice to shorten or lengthen the period of probation provided such applications are made within the original probationary period. The employees are to be informed of the period of probation in any approval or confirmatory letters that are received.
● Applications to suspend or cancel a contract are referred to. Applications can be made by either the employer or the apprentice. Although provided for in different ways, in each case there is a person or authority identified in the legislation that will oversee the requirement that the parties seek authorisation or approval of the cancellation or suspension. The parties to a training contract may by mutual agreement cancel or suspend the contract. In most States and Territories mutual cancellation or suspension is not subject to approval or takes effect unless the relevant training authority is satisfied that the agreement is not genuine or has been withdrawn.
[415] The effectiveness and adequacy of the resources allocated to the implementation of these provisions in each State and Territory was a matter of conflicting submissions but little substantive evidence.
Notice of termination - the NES
[416] The unions sought the deletion of a clause in many of the awards before us which limits the entitlement of apprentices to notice of termination of their contract of employment. An example of such a provision is currently contained in the second sentence of clause 15.11 in the Manufacturing Award which is in these terms:
“15.11 ... notice of termination and redundancy provisions do not apply to apprentices.”
[417] The NES are contained in Part 2-2 of the Act. Notice of termination and redundancy pay are in Division 11 of that Part. There is no contest that the Act excludes apprentices from an entitlement to payment for redundancy under the NES, 168 but it is submitted that an award should not exclude them from minimum notice or payments to be made upon termination of employment and to do so is contrary to the Act. We agree with this submission. Section 123 excludes a number of employees from the entitlements under Division 11 but it is clear from s.123(1)(d) that in respect to the notice and termination provisions apprentices are not excluded. Any variation seeking to amend a provision of an award in this respect is granted.
Notice prior to cancellation or suspension of training contract
[418] A claim is made which seeks to place a constraint on the time before which an employer may apply to a training authority to cancel or suspend an apprentice’s training contract. The claim is made by a number of unions in relation to several awards. Generally the terms of the clause sought are the same or very similar. They read as follows:
“An employer will not terminate an apprentice except consistent with the process outlined in the training contract. Where an employer is considering or has made a decision to apply to a training authority to cancel or suspend an apprentice’s training contract they shall give the apprentice 2 weeks’ notice in writing prior to notifying the training authority, identifying the reason for the proposed cancellation or suspension and the apprentice’s rights under the training contract. This clause is additional to and does not replace any entitlements or process under the training contract or the relevant state/territory training legislation”.
[419] The AMWU submitted that the additional notice did not alter the entitlement to terminate the training contract but provided for an additional period of time that would enable discussions at the workplace to occur when an employer was considering the cancellation or suspension of the contract. It submitted that the additional notice was consistent with s.55(4) of the Act having the effect of extending the minimum notice of termination of employment provisions in the NES. It was also submitted that the claim was necessary to meet the modern award objectives in ss.134(a), (c) and (g). None of these submissions were developed in any detail.
[420] Reliance was placed on the evidence of Mr Phillip Reid and Ms Kate Luke, witnesses called by the AMWU. Mr Reid, an organiser employed by the AMWU, gave evidence that he had seen companies which had informed their apprentices that there was no more work for them to do and asked them to sign a form which stated that the company and apprentice mutually agreed to terminate the apprenticeship. He said that the apprentices were unaware of their rights and would generally sign the form. He believed that a period of two weeks’ notice would give an opportunity for apprentices to better understand their rights and that their training contract may be in jeopardy and allow them to seek information and assistance. Ideally, it would allow any issues that had arisen to be resolved in that time, resulting in the apprentice being able to continue in their employment. No detail was given about the companies Mr Reid referred to. The only specific evidence seemed to relate to an incident in New South Wales where the employer was attempting to unilaterally terminate an apprentice contrary to the legislation in that State. The union took the issue to the apprenticeship committee and it was “sorted out”.
[421] Ms Luke is an apprentice coordinator for the AMWU. She said that concerns had arisen as a result of the rise of GTOs. It was frequently the case that if there was any issue with a host organisation, they simply handed the apprentice back without taking any responsibility to work through any issues. The apprentice would be given little opportunity to rectify any problems. The GTO would then claim they were unable to find an alternative post and apply for the cancellation of the training contract. The two week notice period would be invaluable as many cancellations occur because there had been a breakdown in communication between an employer or host organisation and the apprentice. The time would give the union or other representative an opportunity to try to resolve the problems and rectify them. She gave as an example the experience she had with an employer applying for a cancellation of a training contract of an apprentice who had been consistently late for work. She believed if an extra two weeks’ notice period had applied there would have then been an opportunity for intervention and at least an attempt to allow the apprentice to continue working.
[422] Evidence was also given by Mr William Ashcroft, who addressed the problems he had with frequently changing host organisations. He would be given little warning that they had no additional work for him and he had been finished up on a day’s notice. He would then be contacted by the GTO and would just have to wait until he got another job.
[423] The AMWU also referred to an extract from the sixth annual report of the South Australian Industrial Relations Court and Commission in which it is said that commonly employers, and occasionally apprentices, acted to unilaterally terminate the employment relationship by dismissal or resignation instead of accessing the suspension or dispute processes under the Training and Skills Development Act 2008.
[424] The CEPU relied on the evidence of Mr Omar Merhi, an organiser with the union. He said the toughest situation for an apprentice is when they are suddenly made redundant and find themselves with no income and no job security. Employers were terminating or suspending apprentices on no notice and this was occurring a lot in his industry.
[425] Reference was made to the evidence of Mr Timothy Phelps, the General Manager of GTES, a New South Wales based GTO. He said that if a host organisation wanted to hand back an apprentice his organisation would require them to give two weeks’ written notice. His organisation would use the two weeks to try and find an alternative host organisation so the training could continue. He had not found this requirement to be a burden on any of the host organisations.
[426] The CFMEU referred to the evidence of Mr Liam O’Hearn and Mr Terry Kesby. In the case of Mr O’Hearn we have taken his evidence into account but note the issues he addressed are related more to the unsatisfactory practice of an employer taking a person on a trial period and paying them apprentice wage rates, but not entering into a formal contract of training. In the case of Mr Kesby we note his evidence about underpayment of wages and termination payments. These matters are not particularly relevant to the claim being considered. Although such practices would be contrary to the relevant awards and to the relevant State and Territory legislation, it is not appropriate for us to deal with this further here.
[427] We note, but do not detail, the competing evidence given by employers that it is common for apprentices to simply walk away from the job without giving any notice. It was said that apprentices just do not turn up. Many apprentices decide that the apprenticeship is not what they thought it would be. Little detail was given as to specific examples, but we note this observation was reasonably widespread. The employers also took issue with the allegation that apprentices are misled into signing cancellation documents, but in the absence of being given names and dates they were not able to reply further to those assertions.
[428] We do not underestimate the importance of trying to resolve disputes between apprentices and employers and the retention of the training contract, if at all possible. However, we have decided in the context of the Transitional Review to reject the proposed variation.
[429] The process for suspending or cancelling a training contract is already regulated by State and Territory training legislation and no apprentice can be suspended or have their training contract cancelled without the approval of the relevant training authority. It is clear that it is currently intended that such outcomes are to be considered as a last resort. However, there is no requirement for prior approval of mutual suspensions or cancellations. The unions are particularly concerned to ensure the opportunity for genuine consideration and consent by apprentices prior to their agreement to a suspension or cancellation.
[430] We note that the training contract expressly requires parties to attempt to resolve disputes and where this fails, to then seek assistance from the relevant State training authority or dispute resolution processes. In this way there are already existing provisions that operate in a way to try to prevent the breakdown of the training contract. We have earlier referred to these obligations when identifying key provisions of the standard training contract.
[431] No adequate evidence was called by the unions to suggest that there is any significant difficulty with the manner in which the State and Territory regimes operate. The evidence was not sufficient for us to make a finding that the State and Territory regimes are in some way deficient in the manner in which they deal with disputes between employers and apprentices. To the extent that there was any evidence, it went no further than the identification of a very small number of circumstances (without sufficient particulars) suggesting that some State authorities may have taken a longer period of time to deal with disputes than the unions had wished.
[432] We are not persuaded that the variation is necessary to achieve any of the modern award objectives or that the clause was one appropriate to make under s.55(4) as being supplementary to the NES.
[433] The proposal would present particular difficulties for GTOs. The claim only relates to the placing of an obligation on an employer (which would include a GTO) and not a host organisation. It will not prevent the unhappy practice of host organisations handing back employees with little or no notice. It is no answer to observe that a GTO might give consideration to placing a requirement in any arrangement it has with a host organisation that the host would give the GTO a corresponding period of notice. Such an obligation is not one we can currently see that we would have power to insert into an award.
[434] Finally, the terms of the clause sought are problematic. If there was to be any further consideration of such a claim then it should not compromise the rights of an employer in circumstances of an apprentice’s serious misconduct. Further consideration would also need to be given to what is meant by the obligation on an employer to provide written details of the apprentice’s rights.
Termination of employment contract
[435] Several claims are made for a clause in these terms:
“If a training contract is entered into between an employer and a person who is already in the employment of the employer, the termination, or expiry of the term, of the training contract does not of itself terminate the person's employment with the employer.”
[436] It was submitted that such a provision would make the award easy to understand and enhance apprentice and employer awareness of their entitlements and responsibilities. We note that reference was made to the Training and Skills Development Act 2008 (SA) which contains a provision in s.54 in similar terms to the clause here sought. Reference was also made to s.31 of the Apprenticeship and Traineeship Act 2001 (NSW).
[437] We do not readily identify the clause as being a term that is about rights, duties or obligations that attach to the training contract as the AMWU submitted. It is principally a term which impacts on the contract of employment. Depending on the terms of the contract between the employer and apprentice it may do more to confuse the parties than to make the award easy to understand. If such a term was inserted into an award it may also undermine the ability of an employer to engage an apprentice on a contract for a specific term which is aligned with the completion of the apprenticeship.
[438] We note the AMWU’s submission that the clause would be justifiable as a supplementation to the termination provisions of the NES. In this respect it was the Division 11 entitlements in the NES which were referred to. We do not readily see that it is so or can be said to be a term which is incidental or ancillary to the NES. The clause does not supplement the scale of payments or notice provisions of the NES. It does not deal with redundancy. The effect of the clause is to declare what the legal position will be upon the occurrence of the termination of the training contract. That may, or may not be what is in fact the legal position established by the terms of the contract of employment.
[439] The AMWU also submitted that the claim was incidental to the type of employment of an apprentice and to the cancellation or suspension of the training contract. We are not persuaded the clause is, in terms of s.142, essential for the purpose of making another term operate in a practical way. We do not know what that other term is said to be.
[440] We are not persuaded that a sufficient case has been made out to warrant the inclusion of this term in any of the awards in which it is sought.
Recognition of service if re-engaged
[441] Several applications are made to vary awards to include a clause in the following (or very similar) terms:
“In the event that an apprentice is terminated at the end of their apprenticeship and is re-engaged by the same employer within six months of such termination, the period of the apprenticeship will be counted as service in determining any future award and NES entitlements where those entitlements were not paid out on termination.”
[442] We read the clause as operating as a deeming provision overriding the legal effect of the termination of the apprentice’s employment and deeming service before that termination to be continuous with the subsequent period of service. No merit case was established to justify such a significant provision in the awards before us.
[443] The Act provides in s.22 for what is to be considered service for the purposes of the Act and those entitlements in it which are conditional on a certain period of service. That section does not go so far as the clause proposed by the unions. For us to entertain the union claim, much more would need to be said about the justification for it. To the extent the clause operates upon award entitlements, we were not advised which entitlements these were. But assuming it relates to any award entitlement which has a service pre-requisite, the clause would then need to be justified as being essential for each of those clauses to operate in a practical way. We simply do not have sufficient evidence or submissions before us to take this justification for the clause further.
[444] The AMWU submitted it was supplementary to the NES. Presumably it is said to be supplementary to any of the NES provisions which contain some service qualification. Little more was said about this justification for the clause. We acknowledge that the AMWU identified clauses in other awards which it submitted reflected a similar “policy provision position”. As we read the provisions we were taken to they do not go so far as the proposed clause. In the case of the Building Award that clause 169 relates only to the prior period of service being counted to determine termination entitlements. Clause 42.2 of the Manufacturing Award relates to the right of an employee re-engaged within a period of six months to any unclaimed balance of their paid personal/carers leave to continue from the date of re-engagement. Clause 16.6(b) of the Sugar Award relates to redundancy pay for apprentices in sugar mills. It provides that the limitation on redundancy contained in s.123 of the Act would not apply to employees of sugar mills where they are apprentices who are retained in employment for more than six months after the completion of their apprenticeship. It is clear that none of these clauses are in the same terms nor go as far as the clause here claimed.
[445] We note the evidence of Mr Omar Merhi, an organiser with the CEPU, that he had regularly encountered situations where, to minimise entitlements, apprentices were dismissed upon completing their trade and then rehired after three months or even less. No other detail was given in relation to the frequency of this occurring, which employers had acted this way, whether it is peculiar to any particular State, or whether any action was taken by the union or anyone else on the apprentices behalf to seek to address it.
[446] The AMWU submitted that the clause would encourage apprentices who had completed their training to return to their employer, thus meeting a major employer complaint that after a significant investment in apprentices they leave employment at the completion of their apprenticeship. The submission was not supported by the employers. Some submitted it was more likely to act as a disincentive to re-engage. Further, a clause in these terms will not benefit an apprentice who had been engaged by a GTO. It is unlikely they would be returning to work with that GTO after the completion of their apprenticeship.
[447] We are not persuaded that a sufficient case has been made for this clause to be inserted into the awards where it is sought.
[448] The CFMEU sought a clause to be inserted into the Joinery Award which had a counterpart in the Building Award. The clause does not go as far as the one sought by the AMWU but rather the relevant part of it provides that if an apprentice is re-engaged by the same employer within six months of the end of their apprenticeship, the period of apprenticeship is counted as service in determining future termination entitlements. The major building industry employers did not object to this variation.
[449] The desire to have the same clause in each award was the sole basis relied upon by the CFMEU to justify it. This submission alone would not normally be sufficient without more being said for us to grant this variation. However, we note the submissions of the employers and also that the two awards are closely related and operate in different sectors of the building and construction industry. We have decided to make the variation sought.
[450] A clause is sought by the AMWU and CFMEU in a number of awards which will limit the maximum length of probationary periods in training contracts. The terms of the clause sought are not identical in all cases, but their effect is. The clause most commonly sought is in these terms:
“The probationary period of an apprentice is as set out in the training contract consistent with the requirement of the apprenticeship authority and with State legislation but must not exceed three months.”
[451] One justification for the clause is that a similar clause is contained in some modern awards. The AMWU pointed to clause 12.6 in the Sugar Award and clause 15.10 of the Manufacturing Award. In the case the Graphic Arts Award the variation that is sought is to reduce a reference in clause 13.7 to the maximum period for probationary employment to not exceed six months to a period of three months. The CFMEU justified the variation it sought to the Building Award for a maximum probationary period of three months as such a clause is in the Joinery Award.
[452] The AMWU submitted that the clause is consistent with the period identified in most modern awards and most vocational training orders. The clause would provide for national consistency and reflects what is submitted to be a fair and relevant standard.
[453] The employers submitted there was no evidence establishing any need for the variation and simply relying on the fact that a similar clause exists in another award is insufficient. There was no evidence to show that it was common for employers to seek to extend probationary periods once they have been set. Mr Phelps, General Manager of GTES, gave evidence that probationary periods were rarely extended but he did seek to retain any flexibility he had. When there may be a need to extend a probationary period this was a desirable and better alternative to terminating the contract.
[454] Probationary periods in training contracts are a matter dealt with in the State and Territory legislation we have earlier referred to. No case has been made out that the legislation is not adequate or operating effectively. A range of periods are prescribed as being the maximum depending on the type of apprenticeship or training that is entered into. Generally three months is the maximum period for an apprentice. There are slightly different provisions in New South Wales and Queensland. In New South Wales the legislation allows for the extension of a probationary period by up to three months. In Queensland, although as a general rule the probationary period for apprenticeships is three months, an employer or an apprentice is able to apply in writing to the relevant authority to shorten or lengthen the probationary period. Examples are given of the reasons that a probationary period may be reduced or extended: the employer may be either satisfied or dissatisfied with the apprentice’s progress; or the apprentice may be uncertain about their suitability for the apprenticeship. The applications for amendment are to be made before the original probationary period has expired.
[455] No adequate case has been made out to justify the variations sought. We acknowledge the existence of similar clauses already in some modern awards but that alone is not sufficient for us to introduce them into the awards now sought to be varied. This is certainly the case where the relevant employers do not consent to the variation. We are not persuaded that to achieve the modern awards objective it is necessary that the awards contain the same maximum period of probation.
[456] The CFMEU sought to vary the dispute resolution clauses of the Building and Joinery Awards by inserting a new final sub-clause in the following terms:
“If a dispute concerns the contract of training of an apprentice or trainee it shall be dealt with in accordance with the requirements of the relevant State/Territory training legislation. Otherwise any dispute involving an apprentice or trainee shall be dealt with in accordance with this clause.”
[457] The CFMEU submitted that the evidence before the Commission demonstrates problems inherent in the existing mechanisms for the resolution of disputes involving apprentices. It referred in this respect to the evidence of two of its officials, Mr Liam O’Hearn and Mr Terry Kesby. Mr O’Hearn gave evidence that in Victoria disputes concerning apprentices are referred to State training authorities, but that this is a lengthy process and only deals with issues relating to contracts of training. Mr Kesby gave evidence in relation to his experience as a CFMEU organiser and as a member of the Vocational Training Tribunal in NSW. His evidence was that the role of the Tribunal is to focus on the role of training in a given dispute, whereas the underlying issues in disputes are often industrial and involve wages. It was submitted that the proposed variations to the awards would help to identify which matters are within the purview of State and Territory training authorities and which are within the jurisdiction of the Commission. It was said that this would therefore be of assistance to employers and employees.
[458] The variations were opposed by employers. MBA submitted that the variations would cause complications with respect to the correct forum for a given dispute, and could potentially give rise to parallel proceedings concerning the same dispute in the Commission and before a State/Territory training body. The CCIWA submitted that the variations would unnecessarily duplicate and convolute the dispute resolution process. In this regard, reference was made to the difficulty of delineating disputes that do and do not involve issues relating to the training contract.
[459] The proposed variations to the dispute settlement clauses in the building awards were not the subject of extensive submissions in the proceedings. We have considered the evidence and submissions presented. We note that some disputes regarding apprentices are dealt with by the Commission under the terms of existing dispute resolution provisions in awards. We also note existing practices whereby the parties and/or State and Territory training authorities can identify the most appropriate avenues through which disputes involving apprentices may be resolved. In general, disputes primarily concerned with matters relating to the training contract may be dealt with by the training bodies, whereas other disputes involving wages and employment matters may be considered under award procedures.
[460] Given such practices and the difficulties raised in relation to the categorisation of disputes under the variations proposed by the CFMEU, and having regard to the limited material put to the Commission, we have decided not to vary the dispute resolution clauses in the two awards.
Application to vary the National Training Wage Schedule
[461] The relevant provisions of the NTWS are as follows:
“X.6.2 A trainee is entitled to be released from work without loss of continuity of employment and to payment of the appropriate wages to attend any training and assessment specified in, or associated with, the training contract.
X.6.3 Time spent by a trainee, other than a trainee undertaking a school-based traineeship, in attending any training and assessment specified in, or associated with, the training contract is to be regarded as time worked for the employer for the purposes of calculating the trainee’s wages and determining the trainee’s employment conditions.
X.6.4 Subject to clause X.3.5 of this schedule, all other terms and conditions of this award apply to a trainee unless specifically varied by this schedule.”
[462] Clause X.3.5 provides:
“X.3.5 Where the terms and conditions of this schedule conflict with other terms and conditions of this award dealing with traineeships, the other terms and conditions of this award prevail.”
[463] The Ai Group seeks to vary X.6.2 by replacing “to attend any training” with “when in attendance at any training.” It seeks to replace “in attending any training” in X.6.3 with “in attendance at training.” It also seeks to add the words “that are applicable to the trainee,” after the word “award” in X.6.4. The variations are intended to make it clear that employers are not required to pay for time spent by trainees in travelling to training, and that the NTWS does not extend the application of general award entitlements.
[464] Many of the employer organisations supported the Ai Group application. It was submitted that if the proposed variations to the NTWS are not made (and the CEPU’s interpretation of the clauses is adopted) there will potentially be significant negative consequences for both employers and trainees. It was said that the proposed variations are necessary to correct anomalies that have arisen in respect of the clauses as they are currently drafted, and because the clauses are ambiguous or uncertain. It was submitted that the variations proposed are in accordance with the original intent of the clauses and subsequent judicial interpretations.
[465] We agree with the Ai Group that its application has not been subsumed by the separate union applications seeking to extend award provisions dealing with travel and board to attendance at off-the-job training by apprentices. Those applications do not relate to trainees. The unions sought clarification that such provisions apply to trainees although there is no specific application by the unions in the common claims to vary the NTWS.
[466] Clause X.6.3 was inserted during the award modernisation process. An equivalent clause was not present in the National Training Wage Award 2000. The clause expands upon clause 10.4 of the National Training Wage Award 2000, which provides that “[t]he Trainee shall be permitted to be absent from work without loss of continuity of employment and/or wages to attend the approved training.” It is clear that pursuant to clause X.6.3 if the training and/or assessment takes place outside ordinary hours it must be paid for in accordance with the relevant provisions of the award, including penalties where relevant, and that time spent in training and/or assessment is taken into account in determining other employment conditions under the award, for example service. Depending upon the context, it is possible that “time spent in attending training” could include time spent getting to and from training. However, we agree with the submission of the Ai Group that, read in context, the phrase “in attending training” is only about the time spent in actual attendance at training and/or assessment and it is only that time which is to be regarded as time worked pursuant to the clause.
[467] Clause X.6.2 of the NTWS and clause 10.4 of the National Training Wage Award 2000 permit absence from work without loss of continuity of employment and to the payment of appropriate wages to attend any training and assessment. It is apparent that if an employee travels during ordinary working hours to attend training that travel time will be paid time. However, the clause does not create any other entitlement to payment for travel time or travel costs.
[468] We see nothing uncertain or ambiguous in clauses X.6.2 and X.6.3 of the NTWS.
[469] In relation to clause X.6.4, the Ai Group is concerned that the clause could be read as broadening the application of other clauses of the awards to trainees so that a clause which would not otherwise be applicable to the trainee would become applicable.
[470] An employee is only entitled to, for example, cold places allowance in an award if that employee actually works in a cold place and meets the conditions specified in the award. A trainee is not entitled to a particular award condition unless they meet all of the requirements for that condition. Clause X.6.4 does not create any entitlement which would not otherwise apply to the trainee if the NTWS did not exist.
[471] We do not see the provision as uncertain or ambiguous.
[472] There is no argument that clause 25 (Fares and Travel Patterns Allowance) of the Building Award applies to the work of apprentices and trainees when performing work on sites which meets the provisions of the clause. Similarly there is no argument that an apprentice or trainee who is required to start and/or finish work at a job away from the employer’s usual workplace is entitled to the excess fares and travelling time allowance in clause 32.4(a) of the Manufacturing Award. The Ai Group submitted that these clauses and others like them do not apply to travel to off-the-job training. The CFMEU v MBGTS 170 is authority for that position.
[473] The unions submitted that because time spent in attending training is to be regarded as time worked for the purposes of determining the wages and conditions of an apprentice, the provisions which apply to work related travel should also apply to travel for off-the-job apprentice training. Whether this is correct or not depends upon the words of the award travel provision, considered in context, not upon the words of clause X.6.4. That clause does not alter the meaning of “work” in the relevant award clauses which apply to travel.
[474] The Ai Group suggested that when the AMWU submits that trainees have access to clause 32.5 (Training Costs) by virtue of clause D.6.4 of the Manufacturing Award, it is asserting that the provisions of the NTWS play a role in extending the application of clause 32.5. The Ai Group also referred to a similar CFMEU submission in relation to clause 15.2(a) of the Building Award.
[475] We do not understand the AMWU submission to have this meaning. The AMWU relied upon the decision in Rohrlach 171 as authority for the proposition that clause 32.5 of the Manufacturing Award has application to apprentices by virtue of the provision in clause 15.1 that “the terms of this award apply to apprentices, including adult apprentices, except where otherwise stated”. The AMWU submitted that similarly the provision applies to trainees by virtue of clause D.6.4. It also submitted that the clause only applies to particular apprentices and particular circumstances to the extent that an apprentice meets the stated requirements of the relevant clause. Then the clause will apply unless otherwise provided for in the award. The unions submitted that the same situation applies to trainees.
[476] In respect to trainees there is an additional proviso in clause X.6.4, and that is “unless specifically varied by this schedule”. There is no specific provision about payment of course fees or travel costs in the NTWS. Therefore the only provisions which could apply are those which would otherwise be applicable under the award.
[477] In a decision handed down after the hearings in the present matter were completed, the Federal Court dismissed an appeal against the decision of the Federal Magistrates Court in CEPU v Excelior Pty Ltd, 172 which dealt with clauses X.6.2 - X.6.4 of the NTWS. In her judgment upholding the decision of Cameron FM, Justice Katzmann found clause X.6.3 of the NTWS was not ambiguous or uncertain. Her Honour held that clause X.6.4 is intended to “ensure that, save to the extent provided in the schedule, trainees [are] not to be disadvantaged in comparison with other employees”, but that the clause does not alter the meaning of “work” in a particular award travel provision.173 Her Honour also found that the requirement in clause X.6.2 for payment of appropriate wages to attend training does not include the payment for travel to training and that the phrase “in attending training” in clause X.6.3 is only about the time spent in actual attendance at training and/or assessment and it is only that time which is to be regarded as time worked pursuant to the clause.
[478] We are satisfied that the minor changes to the wording of clause X.6.2 and X.6.4 during the award modernisation process made no substantive change to the meaning and operation of those clauses and has not created any ambiguity or uncertainty. With respect to clause X.6.3 the award modernisation process did make a substantive change. That change puts beyond doubt that time spent undertaking training associated with the training contract is to be regarded as time worked for the purposes of determining wages and conditions. The unions have unsuccessfully argued in the courts that this change supports their argument that provisions associated with travel time and costs to attend work apply to trainees travelling to off-the-job training. The fact that such an argument has been raised does not make the clause ambiguous or uncertain. The courts have not found that there is ambiguity or uncertainty.
[479] Apart from these considerations, we are concerned that the variation sought by the Ai Group to clause X.6.2 may have unintended consequences. The present clause would require the employer to release an apprentice from training in time to be able to travel to attend the training. The variation proposed by the Ai Group may remove that requirement.
[480] We consider that the variations sought to the NTWS are not necessary to meet the modern awards objective or to address ambiguity or uncertainty.
[481] We also reject the submissions of the unions that we should make variations similar to those proposed in relation to apprentices to ensure that award travel provisions apply to trainees attending training. There is no application to that effect before us.
[482] The Commonwealth and Group Training Australia proposed variations to ensure that consistent school-based apprenticeship provisions are in all relevant awards and that these provisions provide for competency based progression.
(i) Insertion of school-based apprenticeship provisions
[483] A Full Bench of the AIRC published the model schedule for school-based apprentices on 3 April 2009. 174 The Full Bench said:
“[31] We deal next with the draft schedule for school-based apprentices. There was general agreement with the terms of the draft. The ACTU suggested that the operation of the schedule should be limited to the trades provided for in the modern award concerned. We agree in general with that approach. To put the matter beyond doubt we shall include a provision limiting the schedule to trades covered by the award. The ACTU also pointed out that the schedule should specifically recognise the possibility of a three year apprenticeship. We shall include an appropriate clause. The schedule should be included in every award in which an apprenticeship is possible. It is desirable that other provisions in the body of the award should be deleted. This will ensure consistency of approach and make review and variation simpler.”
[484] In the present proceedings, it was sought to include the schedule for school-based apprentices into several awards.
[485] In general, the applications were not opposed. The CFMEU and CCIWA were the only parties to oppose the inclusion of the schedule dealing with school-based apprentices in awards which include provision for apprentices but which do not contain the schedule. The submission of the CFMEU was essentially to reiterate its long standing opposition to school-based and part-time apprenticeships. The submission of the CCIWA was that there was inadequate evidence of the need for the variations.
[486] The Alpine Resorts Award 2010 (the Alpine Resorts Award), the Children’s Services Award 2010 (the Children’s Services Award) and the Nursery Award 2010 (the Nursery Award) have apprentice wage provisions which are the subject of applications by the ACTU in these proceedings. We are satisfied that it is consistent with the approach adopted by the AIRC Full Bench to ensure that the schedule is inserted in a consistent manner into all modern awards under which apprenticeship is available, and that the omission from the Alpine Resorts, Children’s Services and Nursery Awards was an oversight.
[487] The Horse and Greyhound Training Award 2010 does appear to cover apprentices who are working as track riders. The relevant provision is as follows (clause 3.1):
“track rider means a person who is engaged to ride track work exclusively and may be a jockey or an apprentice other than a jockey or an apprentice who has an established arrangement with the employer with respect to race riding.”
[488] There are no discounted wage rates for apprentices under this award, although there are discounted rates for unapprenticed juniors. An apprentice would be paid the rate for an adult track rider. In these circumstances we consider it unlikely that an apprentice would be employed as a school-based apprentice under the award. However we cannot exclude this possibility, and therefore we will insert the schedule into the award.
[489] The variations to the abovementioned awards will be made to ensure the awards are operating without anomalies or technical problems and meet the modern awards objective.
[490] Group Training Australia applied to vary the Aged Care Award 2010 to insert the schedule for school-based apprentices into the award. 175 There are no apprentice rates of pay in the award, although Group Training Australia has sought to have these inserted. An examination of the classifications covered by the award suggests that trades qualified employees may be included in some instances. It is therefore possible that there may be a desire to engage apprentices. We do not consider it appropriate to insert provision for school-based apprentices when there is no specific provision for their continuing employment under the award when they complete the school based phase of their apprenticeship. The application to insert apprenticeship rates into this award will be considered separately. It was not identified as a “common matter”. If such provisions are inserted, the schedule for school-based apprentices should be inserted at that time.
[491] The Contract Call Centres Award 2010 does not provide for the employment of apprentices. The NTWS excludes those engaged as traditional apprentices. The classification structure includes provision for a trainee level which excludes those engaged through a new apprenticeship/traineeship. There are no pay rates for apprentices and no classifications which appear to cover traditional trades employees. In the absence of further evidence we do not consider it appropriate to insert provisions for school-based apprentices in the award. The Commonwealth submitted that there are apprentices employed under this award. In the event that there is evidence that apprentices are employed under the award the appropriate apprentice provisions, including school-based apprentice provisions, can be revisited in the four yearly review.
[492] There was no opposition to the proposal to vary the schedule for school-based apprentices in the Black Coal and Hospitality Awards to correct an omission. For similar reasons as above, we will vary those awards to insert the missing provision in the schedule.
(ii) Competency based wage progression
[493] The other aspect of the Commonwealth’s proposal is to vary the schedule to provide for competency based progression.
[494] We are satisfied that competency based progression for school-based apprentices is consistent with the modern awards objective. We will therefore insert the schedule into the specified awards with the variation for competency based progression proposed by the Commonwealth. We will also vary the schedule in a similar way in the other awards before us to provide for competency based progression.
[495] It is possible that not all affected parties have had the opportunity to consider the particular drafting of the amendments proposed by the Commonwealth to the school-based apprentice schedule in a large number of awards. In the settlement of orders we will consider any technical drafting issues which may be raised to ensure that the variation meets the intended purpose.
[496] There are a number of other aspects of the variations proposed by the AMWU, CEPU and CFMEU in the common claims 176 which could appropriately be described as technical amendments to remove uncertainty or ambiguity. For example, several applications seek consistency of expression in award descriptions of apprenticeship training contracts and the use of updated names for various authorities. Generally there were no specific submissions in opposition to these variations being made. The parties should confer in the settlement of orders in respect to those matters.
[497] As referred to earlier, the parties should also confer in the settlement of orders on the expression “all purpose” in the Building and Joinery Awards and in respect to consequential changes for three year apprenticeships and trainee apprentices in NSW. They should also confer about the proposed simplification of the tables in the Higher Education Award and the deletion of the definition in G1 of that Award; the inclusion of an “all purpose” preamble for the apprentice rates proposed by the CFMEU in the Building and Joinery Awards; the proposed insertion of the heading to 15.3 adult apprentices in the Manufacturing Award and the proposed addition of a prohibition on payment by results in the Vehicle Award clause 15.9; and how the CEPU proposal in respect to the lift industry allowance should be considered by the Full Bench. These matters will be finalised in the settlement of the award variations to be made pursuant to this decision.
G. CONCLUSIONS AND OPERATIVE DATES
[498] The apprenticeship system is a complex area and we have been greatly assisted in our consideration of the matters by the very comprehensive submissions and the evidence provided by the parties in the proceedings, and by the numerous reports, research, studies and surveys referred to. We have noted in particular the report of the Apprenticeship Expert Panel and its recommendations directed at the reform of the apprenticeship system to allow it to meet the skills needs of the 21st century economy.
[499] For all the reasons given, we have decided that in the Transitional Review there should be variations made to the modern awards before us in relation to apprentice rates of pay and conditions of employment. We consider that these variations are necessary having regard to the modern awards and minimum wages objectives, and to take into account the significant changes which have occurred in relation to apprenticeships in Australia.
[500] In particular, we have decided that:
● the rates of pay for first and second year apprentices should be adjusted;
● special provisions should be made in relation to rates of pay and wage protection for adult apprentices;
● provision should be made for competency based wage progression to be introduced into a range of modern awards and for consideration to be given to its introduction into other awards;
● adjustments should be made in relation to apprentice conditions of employment including those relating to travel costs, training time, timely payment of training fees, and attendance at training; and
● The model school-based apprentice schedule should be inserted into several modern awards which do not contain it, and the schedule should be varied to provide for competency based wage progression.
[501] We consider that these changes are appropriate having regard to the purpose and objective of the Transitional Review as set out in the Transitional Provisions Act, and are necessary to ensure that the apprenticeship system meets the needs of business and the Australian economy and is relevant and attractive to modern day apprentices.
[502] We have not adopted many of the award variations sought by the unions in relation to apprentice conditions of employment and training requirements. This is not because we do not accept the principles and good practices which the variations are directed at achieving. However, many of the proposed changes would duplicate obligations already provided in the standard training contract and in State and Territory legislation. To provide for such matters in awards may add unnecessary complexity in circumstances where there was inadequate evidence that the current arrangements have not been be working satisfactorily.
[503] We have been mindful in determining the various matters of the cost of the changes to business and the economy. However we consider that the costs of the changes we have determined can and should be accommodated in the interests of providing a better functioning apprenticeship system and a more relevant set of award minimum wages and conditions for apprentices.
[504] Several of the employer groups submitted that if we decided to increase apprentice wages, any increases should be phased in over time. It was generally submitted that this should be done in order to mitigate the cost impact of any increases on employers.
[505] We have decided that the increases to apprentice rates of pay should be phased in, and will take effect as follows:
● If the relevant increase is equal to or less than a 5% increase in the relevant percentage of the award reference rate (whether the equivalent of the C10 tradesperson rate or otherwise), then the full increase shall apply from 1 January 2014;
● If the relevant increase is more than a 5% increase in the relevant percentage of the award reference rate, then the percentage or rate shall be increased by 5% from 1 January 2014, with the remainder of the increase to take effect from 1 January 2015.
[506] We have also decided that the new rates of pay shall apply only to apprentices who commence their apprenticeship on or after 1 January 2014.
[507] The phasing arrangements shall apply to increases in apprentice rates of pay, and to increases in first year adult apprentice rates in awards that already contain adult rates.
[508] Where we have decided to introduce adult apprentice rates into awards we consider that it is impractical to phase them in. We note that these rates shall only apply to apprentices commencing on or after 1 January 2014.
[509] In relation to the variations dealing with apprentice conditions of employment, these variations shall apply to all apprentices (regardless of commencement date) from 1 January 2014.
[510] The parties should confer about the variations necessary to give effect to this decision and provide draft variations to the Full Bench by 30 September 2013. The Full Bench will make the determinations varying the modern awards.
SENIOR DEPUTY PRESIDENT
Appearances:
T Shipstone, R Reitano of counsel, T Clarke and D Oliver for the ACTU
S Taylor, L Weber, N Apple, J Moriarty and A Dettmer for the AMWU
S Maxwell and D Noonan for the CFMEU
A Kentish and P Tighe for the CEPU
C Young for the USU and ASU
J Willey for the SDA
M Tehan and T Pick, solicitors, and A Morehead for the Commonwealth of Australia
B Ferguson, S Smith and G Vaccaro for the Ai Group
S Forster for the AFEI
N Ward and S Haynes, solicitors, for ABI
H Wallgren for Business SA
J Murphy for the CCIWA
R Calver for MBA and the ACCI
J Nikolić for MBA
D Humphrey and M Adler for the HIA
K McCosh for the NECA
J O’Dwyer for the ECA
W Chesterman for the MTA
P Eblen for the Motor Trade Association of South Australia
A Morris and B Rauf, solicitors, for the CMIEG
M Gao for the PIAA
S Kraemer for the MPA
T Dixon of counsel and N Peacocke, solicitor, for the MPA-NSW
Hearing details:
2012.
Sydney, Melbourne, Brisbane, Canberra, Adelaide (mentions by video link):
October 26, December 10.
2013.
Sydney:
March 4-6 and 19, April 3-5 and 22-24, May 1-3 and 8-9.
Adelaide:
March 20.
Melbourne:
March 21-22.
Attachment A: Glossary of terms
ABI Australian Business Industrial ACCI Australian Chamber of Commerce and Industry Act Fair Work Act 2009 ACTU Australian Council of Trade Unions Ai Group Australian Industry Group AIRC Australian Industrial Relations Commission Airline Award Airline Operations—Ground Staff Award 2010 AFEI Australian Federation of Employers and Industry Aluminium Award Aluminium Industry Award 2010 AMIC Australian Meat Industry Council AMMA Australian Mines and Metals Association AMWU “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union Alpine Resorts Award Alpine Resorts Award 2010 AQF Australian Qualification Framework ARA Australasian Railway Association ASU Australian Municipal, Administrative, Clerical and Services Union Black Coal Award Black Coal Mining Industry Award 2010 Building Award Building and Construction General On-site Award 2010 BVET Board of Vocational Education and Training NSW CBWP competency-based wage progression CBWP Principles Principles for competency-based wage progression for Australian Apprentices, developed by the Commonwealth and relevant stakeholders CCIWA Chamber of Commerce and Industry WA Inc CEPU Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia CFMEU Construction, Forestry, Mining and Energy Union Children’s Services Award Children’s Services Award 2010 CMIEG Coal Mining Industry Employer Group COAG Council of Australian Governments Coal Export Award Coal Export Terminals Award 2010 Commission Fair Work Commission DEEWR ECA Electrical Contractors Association Educational Services Award Educational Services (Schools) General Staff Award 2010 Electrical Contracting Award Electrical, Electronic and Communications Contracting Award 2010 Electrical Power Electrical Power Industry Award 2010 FWA Fair Work Australia Graphic Arts Award Graphic Arts, Printing and Publishing Award 2010 GTES Group Training Employment Services GTO group training organisation Higher Education Award Higher Education Industry—General Staff—Award 2010 HIA Housing Industry Association Hospitality Award Hospitality Industry (General) Award 2010 Joinery Award Joinery and Building Trades Award 2010 LGA Local Government Association of NSW and Shires Association of NSW Local Government Award Local Government Industry Award 2010 Manufacturing Award Manufacturing and Associated Industries and Occupations Award 2010 MBA Master Builders Australia MBGTS Master Builders Group Training Scheme Inc MPA Master Plumbers and Mechanical Services Association of Australia MPA-NSW Master Plumbers and Mechanical Contractors Association of NSW MTA Motor Trades Associations NAPSA Notional agreement preserving State awards NCVER National Centre for Vocational Education Research Ltd NECA National Electrical and Communications Association NES National Employment Standards NTWS National Training Wage Schedule Nursery Award Nursery Award 2010 OHS occupational health and safety PIAA Printing Industries Association of Australia Plumbing Award Plumbing and Fire Sprinklers Award 2010 RTO Registered Training Organisation SDA Shop, Distributive and Allied Employee’s Association standard training contract Apprenticeship/Traineeship Training Contract State Chambers of Commerce and Industry Chamber of Commerce and Industry WA, Chamber of Commerce and Industry Queensland, Business SA and the Victorian Employers’ Chamber of Commerce and Industry Sugar Award Sugar Industry Award 2010 TCF Award Textile, Footwear, Clothing and Associated Industries Award 2010 Telecommunications Award Telecommunications Services Award 2010 Timber Award Timber Industry Award 2010 Transitional Provisions Act Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 Transitional Review The review of all modern awards after two years required by Item 6, Schedule 5 of the Transitional Provisions Act USU New South Wales Local Government, Clerical, Administrative, Energy, Airlines and Utilities Union VACC Victorian Automobile Chamber of Commerce Vehicle Award Vehicle Manufacturing, Repair, Services and Retail Award 2010 Water Award Water Industry Award 2010 WR Act Workplace Relations Act 1996 WRC Workplace Research Centre Attachment B: List of applications referred to the Full Bench Table 1: Applications referred to the Full Bench in the President’s statement of 14 June 2012 ([2012] FWA 5102).
Matter no. Modern award title Award ID AM2012/18 N/A* AM2012/128 All awards containing the National Training Wage Schedule AM2012/135 34 awards** AM2012/107 Airline Operations—Ground Staff Award 2010 AM2012/282 AM2012/60 Aged Care Award 2010 AM2012/140 Black Coal Award AM2012/50 Broadcasting and Recorded Entertainment Award 2010 AM2012/48 Building and Construction General On-Site Award 2010 AM2012/129 AM2012/160 AM2012/228 AM2012/52 Clerks - Private Sector Award 2010 AM2012/159 Electrical Power Industry Award 2010 AM2012/157 Electrical, Electronic and Communications Contracting Award 2010 AM2012/161 AM2012/184 AM2012/59 Fast Food Industry Award 2010 AM2012/178 Food, Beverage and Tobacco Manufacturing Award 2010 AM2012/177 General Retail Industry Award 2010 AM2012/8 AM2012/141 Graphic Arts, Printing and Publishing Award 2010 AM2012/172 Hair and Beauty Industry Award 2010 AM2012/287 AM2012/58 Health Professionals and Support Services Award 2010 AM2012/110 Higher Education Industry—General Staff—Award 2010 AM2012/61 AM2012/24 Hospitality Industry (General) Award 2010 AM2012/127 Joinery and Building Trades Award 2010 AM2012/55 Labour Market Assistance Industry Award 2010 AM2012/168 Local Government Industry Award 2010 AM2012/109 Manufacturing and Associated Industries and Occupations Award 2010 AM2012/164 Meat Industry Award 2010 AM2012/54 Nurses Award 2010 AM2012/202 Plumbing and Fire Sprinklers Award 2010 AM2012/183 AM2012/199 AM2012/57 Social, Community, Home Care and Disability Services Industry Award 2010 AM2012/152 Sugar Industry Award 2010 AM2012/56 Surveying Award 2010 AM2012/155 Telecommunications Services Award 2010 AM2012/64 Timber Industry Award 2010 AM2012/53 Vehicle Manufacturing, Repair, Services and Retail Award 2010 AM2012/247 Vehicle Award AM2012/271 Wine Industry Award 2010 * This application was made by a Queensland government body which no longer exists, and has not been dealt with by the Full Bench. The matter number AM2012/18, however, has been used to refer to the ‘common claims’ proceedings generally. ** Following the amendment of the application, which initially sought to vary 36 awards. Table 2: Applications subsequently referred to the Full Bench
Matter no. Modern award title Award ID AM2012/14 Aquaculture Award 2010 AM2012/66 AM2012/196 General Retail Industry Award 2010 1 A glossary of terms used in this decision is included as Attachment A. 4 The AMWU, the ASU, the AWU, the CEPU, the CPSU, the CFMEU, the SDA, and United Voice. 5 In this decision, the term “apprentices” refers to all apprentices other than adult apprentices. 6 The figure originally sought was $423.66 per week, but as a result of the Annual Wage Review 2012-13 decision ([2013] FWCFB 4000), the C10 rate was raised from $706.10 to $724.50 per week. 7 “Adult apprentice” in this decision refers to a person who is 21 years of age or older at the time of the commencement of an apprenticeship. 9 [2008] AIRCFB 1000. 10 [2009] AIRCFB 800 at [51]. 11 See [2012] FWA 5102. 12 See [2012] FWAFB 9215. 13 See [2012] FWAFB10395. 14 ‘A shared responsibility - Apprenticeships for the 21st Century’. Final Report of the Expert Panel, 31 January 2011 (the Apprenticeship Expert Panel Report). 15 The full terms of reference are set out at Appendix A of the Report, pp.98-99. 16 Apprenticeship Expert Panel Report, p.13. 17 The recommendations are set out in the Report at pp.14-15. 18 Exhibit CTH3: Letter to the FWA President, 23 May 2012, and attached “Scoping Paper for Fair Work Australia on Decision Points for Review of Apprentice and Trainee Wages and Conditions”. 19 NCVER, ‘The Apprenticeship and traineeship system’s relationships with the regulatory environment’, Report 3, 2011 (NCVER Report 3). 20 Ibid p.6. 21 Exhibit ACTU1, Attachment PT-1. 22 Ibid, pp.23-24. 23 Hanna Schutz, Michael Bittman, Sharni Chan, Michelle Jakubauskas and John Buchanan, ‘The Changing Situation of Electrical Apprentices: Submission to the Modern Award Review, Fair Work Australia’, Workplace Research Centre, University of Sydney (the WRC Report). 24 Ibid, p.53. 25 Ibid, p.54. 26 Ibid, p.55. 27 Exhibit T13, pp.95-114 (summary); Attachments M and N. 28 Excluding Tasmania and the Northern Territory. 29 Exhibit W4, Schedule ZJ.1, p.12. 30 The Centre for International Economics, “Increasing apprentice and trainee wages and conditions in the building and construction industry: Costing the impact of union applications”. Prepared for Master Builders Australia and the Housing Industry Association, February 2013, p.5. See also Exhibit MBA8, p.6. 31 Exhibits MBA8 and MBA9 respectively. 32 Exhibit MBA3, p.3 para 13. 33 Exhibit T13, p.4 para 1.4. 34 Exhibit CTH1, pp.12-13 para 3.16. 35 NCVER, ‘The cost of training apprentices’, January 2009. 36 Exhibit AIG6, p.42 para 105. 37 The Chamber of Commerce and Industry of Western Australia Inc, the Chamber of Commerce and Industry Queensland, the South Australian Employers’ Chamber of Commerce and Industry Inc (T/A Business SA) and the Victorian Employers’ Chamber of Commerce and Industry. 38 CEPU v Excelior Pty Ltd [2012] FMCA 621; CEPU v Excelior Pty Ltd [2013] FCA 638. 39 Exhibit AIG3, p.7 para 17. 40 (1997) 74 IR 446. 41 Ibid at Part 4.4. 42 (1997) 75 IR 272 at 276. 43 These were decisions that arose out of the provisions of Schedule 5, Item 49 of the Workplace Relations and Other Legislation Amendment Act 1996. 44 AIRC Print P9311, 11 March 1998 (Metals Award Simplification Decision). 45 Exhibit T12, p.2; Exhibit T33. 46 Metals Award Simplification Decision at pp. 21-42. 47 Exhibit ACTU 5, para 5. 48 AIRC Print Q0702 (11 May 1998); [1998] AIRC 589. 49 Ibid at Part 4.2. 50 AIRC Print T0301 (7 September 2000); [2000] AIRC 290. 51 AIRC Print T4991 (29 December 2000); [2000] AIRC 722. 52 Ibid at [9]. 53 Exhibit ACTU11, para 6. 54 Ibid para 7. 55 Exhibit ACTU5, para 16. 56 See also Modern Awards Review 2012 [2012] FWAFB 5600 at [38]. 57 Unless otherwise indicated, any reference in this decision to a ‘regulation’ is a reference to the relevant part of the Regulations. 58 Explanatory Statement, Fair Work Regulations 2009 at [29]-[32]. 59 Explanatory Memorandum, Fair Work Bill 2008 at [149]. 61 Ibid at [8]. 62 Ibid at [9]. 63 Ibid at [13]. 64 Set out at Exhibit ACTU4, p.4 para 24. 65 The ACTU application and submissions were also supported by the joint applicant unions (see fn. 4), as well as the Maritime Union of Australia and the Textile, Clothing and Footwear Union of Australia. 66 Annual Wage Review 2012-13 [2013] FWCFB 4000. 67 In awards where the C10 trade rate is not the relevant adult rate for the purpose of determining apprentice wages, the ACTU sought that the first year apprentice rate should also be $434.70, although expressed as an appropriate percentage of the relevant benchmark classification in the relevant award. 68 The Hospitality Industry (General) Award 2010, the Miscellaneous Award 2010, the Registered and Licensed Clubs Award 2010, the Restaurant Industry Award 2010, and the Higher Education Industry - General Staff - Award 2010. 69 NCVER Report 3, pp.50-58. 70 ‘Paying Apprentices: The Market Responds’, ACCI Review, February 2005, pp.5-9. 71 NCVER Report 3, p.54, table 16. 72 See “Summary of the current Australian Apprenticeships Incentives Program” as at 1 January 2011: Apprenticeship Expert Panel Report, Appendix Q, pp.126-128. 73 2007 Active Apprenticeship Survey, Prepared by ABS Statistical Consultancy for SA DFEEST (the Active Apprenticeship Survey), p.17. Cited in Exhibit ACTU4, p.220, fn 94. 74 Michael Bittman, Ron Reavell, Greg Smith and Tim Battin, ‘Living standards of apprentices: a report prepared for Group Training Australia by the centre of Applied Research in Social Science (CARSS)’, October 2007 (Living Standards of Apprentices). 75 Ibid, p.8. 76 See WRC Report, pp.35-41 generally, and particularly p.36. 77 See e.g. Apprenticeship Expert Panel Report, pp.9, 21-25. 78 Active Apprenticeship Survey. Cited in Exhibit ACTU4 at pp.53-56, p.60 para 266. 79 Josie Misko, Nhi Nguyen and John Saunders, ‘Doing an apprenticeship: what young people think’, NCVER, 2 October 2007. 80 Huntly Consulting Group Pty Ltd, ‘Exits from the Trades: Final Report’, 2008 (Exits from the Trades). 81 NCVER, ‘2010 Apprentices and Trainee Destinations: Australian vocational education and training statistics’, 2010. 82 See e.g. Tom Karmel and Peter Mlotkowski, ‘The impact of wages and the likelihood of employment on the probability of completing an apprenticeship or traineeship’, NCVER, 2011. 83 Exhibit ACTU4, p.69, Table 7. 84 Ibid, Appendix 5. 85 WRC Report, p.43. 86 Exits from the Trades, p.29. 87 Melbourne Institute of Applied Economic and Social Research, ‘Poverty Lines: Australia’, ISSN 1448-0530, September Quarter 2012, p.1. 88 AIRC Print PR968890 (21 February 2006) (the Metals Award Decision 2006). 89 See ss.3(a) and (b), 134 and 284 of the Act. 90 See summary of evidence at Exhibit K20, para 21. 91 See evidence of Mark Osborne: Transcript of 20 March 2013, PN4536-PN4537 and PN4579; Mr Allen Hicks: Exhibit K2; Ms Cangie Edwards: Transcript of 22 March 2013, PN6440-PN6443 and PN6438-PN6439; Mr Stewart Munro: Transcript of 22 March 2013, PN6727-PN6768; Mr Phil Green: Transcript of 22 March 2013, PN6209-PN6218, Ms Ninette Markulis: Transcript of 4 April 2013, PN8260; Mr Stephen Kerfoot: Transcript of 4 April 2013, PN8867; and Mr David Pollock: Transcript of 3 April 2013, PN7356-PN7367. 92 See summary of evidence: Transcript of 1 May 2013, PN10883. 93 Chamber of Commerce and Industry WA, Chamber of Commerce and Industry Queensland, Business SA and the Victorian Employers’ Chamber of Commerce and Industry. 94 We note the comments made by the Minimum Wage Panel about the Henderson poverty line in the Annual Wage Review 2010-11 decision ([2011] FWAFB 3400 at [226]): “Our view at present is that this measure is not helpful to our task. Its origins in the 1960s, the inconsistency between its original construction and the way it is updated, and its focus on poverty rather than the needs of the low paid reduce its value as a tool for wage-setting.” See also Annual Wage Review 2011-12 [2012] FWAFB 5000 at [179]. 95 Apprenticeship Expert Panel Report, p.88. 96 See ss.134(1)(a) and 284(1)(c) of the Act. 97 See ss.134(1)(d) and (f) and 284(1)(a) of the Act. 98 See ss.134(1)(h) and 284(1)(a) of the Act. 99 Apprenticeship Expert Panel Report, p.88. 100 Ibid, p.21. 101 See ss.134(1)(c), (f) and (g) and 284(1)(a) and (b). 102 Metals Award Decision 2006 at [43]. 103 See ss.134(1)(g) and 284(1)(e) of the Act. 104 See e.g. the Manufacturing and Associated Industries and Occupations Award 2010, clause 25.1. 105 Apprenticeship Expert Panel Report, p.88. 106 See ss.134(1)(g) and 284(1)(e) of the Act. 107 See e.g. the maintenance and engineering stream of the Airline Award, the streams of the Sugar Award under which apprentices can be employed, and the Black Coal Award. Under all three awards the rate for an unapprenticed 18 year old is substantially higher than 55% of the C10 rate. 108 See ss.134(1) and 284(1)(e) of the Act. 109 NCVER, ‘Historical time series apprenticeships and traineeships in Australia from 1963’, Table 5 (Commencements in 12 months ending 30 June by trade occupation, 1963–2012), 2012 (NCVER Historical Time Series). 110 Brian Knight, ‘Evolution of apprenticeships an traineeships in Australia: an unfinished history’ (NCVER, 2012) p.27; Australian Bureau of Statistics, ‘Schools, Australia’ (Catalogue Number 4221.0, 2012). 111 Apprenticeship Expert Panel Report, Appendix F, p 122. 112 Ibid p.90. 113 Ibid. See also at pp.96-7. 114 NCVER Historical Time Series, Table 3 (In-training at 30 June by trade occupation, 1963-2012). 115 Exits from the Trades p.76, referred to in Exhibit ACTU4, para 325. 116 Exhibit T1, para 10, and Exhibit T2. 117 See for example the evidence on transcript of Allan Hicks (5 March 2013, PN1454 and PN1457) and Omar Merhi (21 March 2013, PN5212). 118 Exhibit ACTU3 (It’s not about age). 119 Ibid, pp.5 and 31. 120 See also the Apprenticeship Expert Panel Report, p.88, and Queensland Government, ‘Queensland’s proposed responses to the challenges of skills for jobs and growth’ (Green Paper, 2005) p.16. 121 See generally Exhibit ACTU4, para 246; Living Standards of Apprentices; and the WRC Report. 122 For the ages of the witnesses see Exhibit K21, para 87(d). 123 See summary in Exhibit K21, paras 126 and 127, and see Exhibit T29 evidence of Ms Mayer. 124 Exhibit ACTU4, paras 296-307 and Exhibit T13, paras 2.8-2.10. The ACTU and AMWU appear to rely on unpublished NCVER data for their estimates. 125 Transcript of 8 May 2013, PN12484-PN12488. 126 AMMA Submission in Reply, February 2013, paras 27, 28 and 31. 127 Exhibit MTA8, paras 101-103. See also the evidence of Mr Chapman: Transcript of 20 March 2013, PN4078- PN4081. However it is noted that a small majority of the employer respondents to the MTA employer survey support increasing adult apprentices’ wages to the adult minimum rate of pay under the Vehicle Award: see Exhibit MTA8, para 99. 128 Exhibit MTA8, Attachment B. 129 Damien Oliver, ‘An Examination of Award Wages among Australian Apprentices and Trainees’, Australian Bulletin of Labour Vol. 38 No 2, 2012, pp.166, 170. 130 See ss.134(1)(a) and 284(1)(c) of the Act. 131 [2009] AIRCFB 345 at [100]. 132 This was accepted by Mr Nixon Apple for the AMWU: Transcript of 9 May 2013, PN12983-PN12986. 133 Minimum Standard for Remuneration [2006] SAIRComm 13 at [94]. 134 Apprenticeship Expert Panel Report, pp.95-96. 135 Manufacturing Skills Australia, Response to the Expert Panel Report, April 2011, p.10. 136 It is not intended that the commencement rate in the Black Coal Award be varied by this decision. 137 Apprenticeship Expert Panel Report, Recommendation 12, p.94. 138 Mary Dickie, Rod McDonald and Fadil Pedic, “A fair deal: Apprentices and their employers in NSW”. Integrated Research Report. Quay Connection, Ithaca Group and the Research Forum. Prepared for the NSW Board of Vocational Education and Training. November 2011. pp.15-6 (BVET Report). 139 Group Training Australia Submission, 9 July 2012, para 16. 140 Cover letter to submission of NSW Government, acting through its State Training Services, 29 January 2013. 141 Exhibit CTH7. 142 Exhibit CTH3, Attachment 1, principles 4 and 5. 143 Workplace Research Centre, ‘A step into the breach: Group Training initiatives and innovations using competency-based progression’, Final Report, June 2012. 144 COAG, National Partnership Agreement on Skills Reform. 145 See e.g. the Education and Training Reform Act 2006 (Vic) s.5.58(2); Training and Skills Development Act 2008 (SA) s.46(10)-(11); Vocational Education and Training Act 1996 (WA) s.60E(1)(a)(iv); Apprenticeship and Traineeship Act 2001 (NSW) s.19. 146 [2007] FCAFC 165. 147 Ibid at [13]. 148 Ibid at [20]. 149 [2012] FMCA 621. 150 Ibid at [58]-[59]. 151 CEPU v Excelior Pty Ltd [2013] FCA 638 (Katzmann J). 152 Mr Nigel Muller also referred to having witnessed apprentices sleeping in cars overnight during his time as a trainer at Box Hill TAFE in Victoria: Transcript of 4 April 2013, PN8545. 153 [2012] SAIRComm 7. 154 Exhibit ACTU7. 155 Ibid. 156 PIAA Outline of Submissions in Response to application by AMWU, paras 17.1-17.4. 157 Exhibit ACTU4; Apprenticeship Expert Panel Report, Appendix N, p.121. 158 BVET Report, p.21. 159 Apprenticeship Expert Panel Report, p.21. 160 Ibid, pp.9, 30-31. 161 Ibid, p.33. 162 See e.g. s.13 of the Apprenticeship and Traineeship Act 2001 (NSW), which states: “13 Duties of employers under apprenticeships and traineeships (1) The employer of an apprentice or trainee must, in accordance with the relevant training plan, take all reasonable steps: (a) to enable the apprentice or trainee to receive the work-based component of the required training, in particular by providing all necessary facilities and opportunities to acquire the competencies of the vocation concerned; and (b) to enable the apprentice or trainee to obtain an appropriate qualification for that vocation, in particular: (i) by releasing the apprentice or trainee as required for attendance at the relevant registered training organisation, and (ii) by liaising with the relevant registered training organisation in relation to the apprentice’s or trainee’s attendance and participation in the training provided by the relevant registered training organisation. (2) The employer of an apprentice or trainee must discharge his or her obligations under the relevant apprenticeship or traineeship as an employer of the apprentice or trainee.” 163 See e.g. s.19 of the Work Health and Safety Act 2011 (NSW). 164 See ss.26-29 of the Act, which deal with the interaction between the Act and modern awards on one hand and State and Territory legislation on the other. 165 See in particular s.134(1)(d) and (f) of the Act. 166 Apprenticeship Expert Panel Report, p.33. 167 The relevant legislation is referred to in numerous exhibits and submissions. See for example Exhibits CTH6 and AIG4. 168 See s.123(4) of the Act. We do not intend to alter any entitlement to redundancy pay which an apprentice may have under a modern award or enterprise agreement. 169 Clause 15.2(c). 170 [2007] FCAFC 165. 171 [2012] SAIRComm 7. 172 [2012] FMCA 621. 173 [2013] FCA 638 at [65]. 174 [2009] AIRCFB 345. 175 Group Training Australia also made a similar application to vary the Fast Food Industry Award 2010, but withdrew the application by letter dated 6 August 2013. 176 See Exhibits ACTU7 and ACTU8. Printed by authority of the Commonwealth Government Printer <Price code O, PR539853>