[2014] FWC 7838
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009
s.158 - Application to vary or revoke a modern award

Application by United Voice
(AM2013/46; AM2013/47)

Application by the Independent Education Union of Australia
(AM2014/7)

VICE PRESIDENT CATANZARITI

SYDNEY, 12 NOVEMBER 2014

Applications to vary modern awards - transitional provisions - Educational Services (Teachers) Award 2010 [MA000077] and Children’s Services Award 2010 [MA000120].

[1] On 24 December 2013, United Voice filed two applications to vary a modern award. The applications were filed in relation to the Educational Services (Teachers) Award 2010 [MA000077] and the Children’s Services Award 2010 [MA000120] (the Awards). Both applications sought to extend certain transitional provisions contained in the Awards from 1 July 2014 to 31 December 2014.

[2] On 30 January 2014, the Independent Education Union of Australia (the IEU) made an application to vary the Educational Services (Teachers) Award 2010 to the same effect as the United Voice application. As all three applications (the Applications) deal with related subject matter, they were heard together in Sydney on 25 and 26 August 2014.

Award Provisions

[3] The Applications seek to vary the following provisions of the Educational Services (Teachers) Award 2010:

[4] The Applications also seek to vary the following provisions of the Children’s Services Award 2010:

[5] The effect of the variations sought is to extend these transitional provisions until 31 December 2014.

Power to Vary Modern Awards

[6] The Applications are brought pursuant to s.157 of the Fair Work Act 2009 (the Act) which provides as follows:

[7] Section 134 of the Act sets out the modern awards objective as follows:

[8] The Applications also refer to powers conferred on the Fair Work Commission by the Awards. Both Awards contain a clause in similar terms to cl. 2.6 of the Children’s Services Award 2010:

Submissions

United Voice

[9] United Voice submitted that the cessation of the transitional provisions will have a significant deleterious impact upon low paid workers in the Early Childhood Education and Care (ECEC) sector in New South Wales. It was submitted that the decrease in minimum wages for employees covered by the transitional provisions would vary between $1.52 per week and $110.20 per week for full time employees employed by long day care centres, and $3.80 per week and $79.42 per week for employees employed by pre-schools.

[10] United Voice submitted that on 15 July 2013 it made an application seeking an equal remuneration order pursuant to s.302(1) of the Act. The equal remuneration order would, if successful, remedy the drop in wages for employees covered by the Awards. However, it was submitted that this application will not be heard and determined before the cessation of the transitional arrangements, and therefore United Voice seeks to vary the Awards to remedy this position.

[11] United Voice submitted that the variations were necessary at this time, outside of the prescribed periodic reviews, in order to ensure that the Awards continue to meet the modern awards objective. It was submitted that a number of factors had arisen since the making of the transitional provisions to support a finding that the variations are justified and are not an attempt to re-agitate settled issues.

[12] These factors can be summarised as follows:

IEU

[13] The IEU also submitted that it was necessary to extend the operation of the transitional arrangements in the Awards in order to achieve the modern awards objective. The IEU sought to rely on the following facts in making its submissions:

[14] The IEU submitted that the following exceptional circumstances justified the Commission exercising its power to vary the Educational Services (Teachers) Award 2010:

Goodstart Early Learning Limited

[15] Goodstart Early Learning Limited (Goodstart) currently employs approximately 13,000 early childhood workers in 641 long day care centres within Australia. Goodstart made submissions in these proceedings that it did not oppose the Applications as the Goodstart Enterprise Agreement provided for wage increases that are not directly tied to the wage rates set out in either of the Awards.

Australian Business Industrial and the New South Wales Business Chamber Ltd

[16] Australian Business Industrial and the New South Wales Business Chamber Limited (ABI and NSWBC) opposed the Applications. ABI and NSWBC submitted that it was “entirely uncontroversial and inherently necessary” as a part of the modern award process that some minimum benefits would move up and that others would move down when compared to the previously applicable benefits.

[17] It was submitted that the transitional arrangements in the Awards came about as a result of an “industrial deal” between various interested parties involved in the modern award process. It was submitted that this was a private deal and as such, neither the Commission nor any person not involved in the making of the deal is privy to its original motivation.

[18] It was submitted that the “necessary” element of s.157 of the Act set a high bar for the Commission to be satisfied that it should vary an award. It was further submitted that there had been no suggestion in the proceedings that the Applications involved any consideration of “work value reasons” as required by s.157.

[19] It was submitted that it was “axiomatic” that the higher transitional minimum wage rates were not necessary to achieve the modern awards objective as the “final” rates that commenced operation on 1 July 2014 had been set for that very purpose, and that these “final” rates had been confirmed by the Commission as operating to give effect to the fair and relevant minimum safety net of terms and conditions contemplated by s.134 of the Act.

[20] ABI and NSWBC also submitted that employees covered by the Awards have had the benefit of circumstances that no other Australian employees have enjoyed due to the industrial deal. It was submitted that by not allowing the Applications, the Commission would simply be putting those employees covered by the Awards in the same position as all other employees and employers in Australia covered by modern awards. It was submitted that this is an entirely uncontroversial and common place circumstance.

[21] It was submitted that in these circumstances, nothing arises that would move the Commission to reinstate the transitional rates of pay.

[22] It was further submitted that the Commission should have regard to the fact that the transitional arrangements arose from an industrial deal, and that “doubtless” all parties understood and agreed to the industrial deal on the basis that it expired on 30 June 2014. It was submitted that equity dictates that it would be inappropriate for the Commission to impose conditions upon the parties that are contrary to the terms of the industrial deal.

The Australian Federation of Employers and Industries

[23] The Australian Federation of Employers and Industries (AFEI) also opposed the Applications. It was submitted that any submissions that employees under the Awards would not be eligible for take-home pay orders if the employees suffered a reduction in wages following the cessation of the transitional provisions were misapprehended.

[24] Sub-item 13A of Schedule 5 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 is set out at sub-regulation 3B.04 of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 as follows:

[25] Both Awards contain the following clause in relation to take-home pay orders:

[26] It was also submitted that there was no relationship between the equal remuneration orders that have been sought in relation to the ECEC sector and the Applications. It was submitted that in any event, the equal remuneration proceedings are unlikely to be finalised prior to 31 December 2014, and no evidence had been put on in relation to the likely success of the equal remuneration proceedings.

[27] It was further submitted that the evidence relied upon by the IEU and United Voice was of little probative value to the Commission, and that it went “nowhere near” that which the Commission has previously said is required to satisfy it to vary an award on the grounds of necessity.

Australian Childcare Centres Association and the Australian Childcare Alliance

[28] The Australian Childcare Centres Association and the Australian Childcare Alliance (ACCA and ACA) submitted that the industrial deal was the motivating factor behind the inclusion of the transitional provisions in the Awards, not any concern of the full bench that made the award to preserve the rates set as a result of the New South Wales Industrial Relations Commission equal remuneration decision.

[29] The ACCA and ACA further submitted that the fact that the transitional provisions in the Children’s Services Award 2010 extend to Western Australia and Tasmania suggests that the New South Wales Industrial Relations Commissions decision was not a relevant factor in inserting the transitional provisions into the Awards.

[30] It was also submitted that it was a “fundamental understanding” of the parties to the industrial deal that it would expire on 1 July 2014. It was submitted that the ACCA and ACA were parties to the industrial deal, and that their opposition to the Applications could be taken as a clear sign that it is not possible to retrospectively assert that had the expiry date of the transitional provisions been set as 31 December 2014 as opposed to 1 July 2014 that the same consent arrangement would have been reached.

United Voice Reply Submissions

[31] United Voice agreed that consensus was reached by the relevant parties in respect to the drafting of the transitional provisions during the modern award process. However, it was submitted that there was no compelling reason why the conclusion of the transition period was July 2014 rather than a later date. United Voice submitted that in its view, it is likely that the industrial deal would still have been reached at that time had an alternative date, such as 31 December 2014, been included as the end date of the transitional provisions.

[32] United Voice also submitted in reply to the AFEI submissions in relation to take-home pay orders that sub-item 8 of Schedule 5 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 would not apply to employees under the Awards as, under that provision, the relative comparator for a take-home pay order would be the rates of pay at the time the modern award came into operation. As the pay rates under the Awards have increased since that time, it is unlikely that employees would be able to apply for a take-home pay order pursuant to sub-item 8 of Schedule 5 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.

[33] It was also submitted that s.157(1) of the Act, as opposed to s.157(2), does not require the Commission to be satisfied that the variation of a modern award is justified by work value reasons. As the Applications have been brought pursuant to s.157(1), there is no need to address work value reasons.

[34] Finally, United Voice submitted in reply that the equal remuneration matter is relevant insofar as it relies on the aspect of the modern awards objective that relates to the principle of equal remuneration for work of equal or comparable value. It was submitted that the equal pay decision of the New South Wales Industrial Relations Commission supports the view that there is a serious question to be tried with respect to fairness of the minimum rates of pay in the ECEC sector, and that while no outcome is certain, employees should be given the benefit of the full 5 year transitional period whilst those proceedings are dealt with.

IEU Reply Submissions

[35] The IEU submitted that the AFEI had conflated the concepts of “review” pursuant to Item 7 of Schedule 5 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 with the exercise of power pursuant to s.157 of the Act, and that these concepts should not be confused.

Submissions in Relation to Interim Orders

[36] On 24 June 2014, I published a decision 1 dismissing an application to make interim orders preserving the transitional provisions until this matter was dealt with.

[37] In making my decision in relation to the substantive Applications, I have had regard to all of the written submissions that were filed with respect to the interim order application.

Consideration

[38] A Full Bench recently considered the exercise of power pursuant to s.157(1) of the Act as follows:

[39] In determining whether or not the variations sought by the IEU and United Voice are necessary as opposed to desirable, close regard must be had to the modern awards objective, which I have set out above.

[40] I am not satisfied, on the basis of the material before me, that not varying the Awards will result in teachers choosing not to enter the industry, or teachers choosing not to stay in the industry. The 2013 National Early Childhood Education and Care Workforce Census, which was attached to the evidence of Ms Verona Heron, IEU Industrial Officer, shows that 87% of respondents were satisfied with their jobs, despite only 48.9% of respondents agreeing that they were satisfied with their pay and conditions. This data reinforces the concept that a holistic approach must be taken to determining the impact that pay and conditions will have on retaining teachers within the industry and attracting teachers to the industry.

[41] The Productivity Commission’s Draft Report on Childcare and Early Childhood Learning 3 found that “the earnings of the ECEC workforce are predominantly determined through awards. The Productivity Commission (2011) found that over 70 per cent of ECEC educators and around 35 per cent of ECEC directors had their wages set via the award in comparison to around 20 per cent of the rest of the workforce.”4 The Draft Report further finds that “almost all long day care teachers and preschool teachers are employed on wages and conditions that do not compare favourably with those offered in the school system.”5 The Draft report also finds that there is “substantial evidence” of widespread staff shortages in the ECEC sector, particularly in regional and remote areas of New South Wales.6

[42] While I accept the above evidence, I am not satisfied that these factors render it necessary for the Commission to vary the Awards in the terms sought by the IEU and United Voice outside of the 4 yearly review process. The evidence before me did not provide a sufficient basis for me to find that the proposed variations would have a substantial impact on the factors identified in the Productivity Commission’s Draft Report, particularly in circumstances where the proposed variations are limited to extending the operation of the transitional provisions until the end of 2014. While it was suggested that there are other steps that could be taken by the unions after 31 December 2014 and that “the fact that this order is sought until 31 December should not be weighed against the applicants,” 7 the unions were unable to articulate what their options might be to extend the operation of the transitional provisions after 31 December 2014. The Applications must be considered on their own terms and at the present point in time.

[43] I am also not satisfied that take-home pay orders pursuant to clause 2 of the Awards and Sub-item 13A of Schedule 5 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 would not be available to employees whose take-home pay is affected by the ceasing of the transitional provisions. However, I make no positive finding to this effect and any such application must be dealt with on its own merits.

[44] I am further not satisfied that the existence of the equal remuneration proceedings is a factor that affects the interaction between the Awards and the modern awards objective. The equal remuneration proceedings do go towards a principle that constitutes part of the modern awards objective (namely, the principle of equal remuneration for work of equal or comparable value). However, it is not clear how the fact that these proceedings are on foot affects the capacity of the Awards to achieve the modern awards objective.

[45] Significant reference has been made throughout the proceedings to the “industrial deal” that resulted in the current form of the transitional provisions. While some evidence was put on to attempt to explain the circumstances of the industrial deal, insufficient evidence was available for any conclusions to be drawn in relation to the industrial deal except to the extent that the industrial deal clearly contemplated the expiry of the transitional provisions on 1 July 2014.

[46] I have considered the Applications in light of the Awards in their current form and in light of their context and history. The existence of an industrial deal bore little impact on my consideration.

Conclusion

[47] I am not satisfied, on the basis of the material before me, that it is necessary to vary the Awards outside of the 4 yearly review in order to achieve the modern awards objective. Nor am I satisfied that the Commission should exercise any power it has pursuant to clause 2.6 of the Awards to vary the transitional arrangements in the Awards. The Applications are dismissed.


VICE PRESIDENT

Appearances:

J Nolan of Counsel for United Voice.

L Andelman of Counsel for the Independent Education Union of Australia.

J Shingles for the Australian Child Care Association and the Australian Childcare Alliance.

N Ward with M Roucek for Australian Business Industrial and the New South Wales Business Chamber Limited.

S Forster for the Australian Federation of Employers and Industries.

J Gunn for Community Connections Solutions Australia.

Hearing details:

2014.

Sydney:

August 25, 26.

 1   [2014] FWC 4197.

 2   4 Yearly Review of Modern Awards: Preliminary Jurisdictional Issues [2014] FWCFB 1788, [38]-[39].

 3   Exhibit 4.

 4   Exhibit 4, p. 475.

 5   Ibid.

 6   Ibid pp. 486–487.

 7   Transcript, PN695.

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