Fair Work Act 2009
s.156 - 4 yearly review of modern awards

4 yearly review of modern awards – penalty rates - admissibility of Productivity Commission Report.

[1] Under s.156 of the Fair Work Act 2009 (the FW Act), the Fair Work Commission (the Commission) is required to review all modern awards every four years. In the current 4 yearly review of modern awards (the Review) the Commission is dealing with a number of applications to vary penalty rates in various awards in the hospitality and retail sectors (the Penalty rates case). This Decision deals with an application by some employer parties for the Productivity Commission, Workplace Relations Framework, Final Report (the Final PC report) to be admitted into evidence and considered by the Full Bench as part of the Penalty rates case. The employer application is opposed by the Shop, Distributive and Allied Employees’ Association (SDA) and United Voice.

[2] The Australian Industry Group (Ai Group) seeks to tender the PC final report. A number of other employer parties support Ai Group’s application, namely:

● Restaurant & Catering Industrial (RCI);
● the Pharmacy Guild of Australia (PGA);
● the Australian Retailers Association (ARA), National Retailer Association (NRA) and Master Grocers Australia (MGA);
● Clubs Australia Industrial (CAI); and
● the New South Wales Business Chamber (NSWBC) and Australian Business Industrial (ABI) (collectively, ‘the employer parties’). 1

[3] The PC Final Report was issued by the Productivity Commission on 30 November 2015 following an inquiry into the ‘Workplace Relations Framework’ which arose from a request 2 made by the Commonwealth Government pursuant to Parts 2 and 3 of the Productivity Commission Act 1998 (PC Act). In August 2015 the Productivity Commission issued an interim report titled Workplace Relations Framework – Interim Report (PC Draft Report), as part of that inquiry.

[4] The employer parties propose to tender the entire PC Final Report, for completeness, but only seek to rely on Chapters 9, 10, 11, 12, 13, 14 and 15 and Appendix F of that report. These Chapters and the Appendix deal with, among other things, penalty rates for ‘long hours and night work’ and the ‘level of weekend penalty rates’. They also include data and information about Australia’s social, working and consumer demographics and as well as expressing views about the appropriate level of penalty rates in Australian workplaces.

[5] In accordance with directions issued by the Commission, the employer parties and the SDA and United Voice have each filed submissions in support of their respective positions.

[6] Before dealing with those submissions, it is necessary to appreciate the nature and context of the Review and the role of the Fair Work Commission in that regard.

[7] As we have mentioned, the present proceedings form part of the review of all modern awards required by s.156 of the FW Act. Subsection 156(2) deals with what has to be done in a Review:

‘(2) In a 4 yearly review of modern awards, the FWC:

(a) must review all modern awards; and
(b) may make:

(i) one or more determinations varying modern awards; and
(ii) one or more modern awards; and
(iii) one or more determinations revoking modern awards; and

(c) must not review, or make a determination to vary, a default fund term of a modern award.

Note 1: Special criteria apply to changing coverage of modern awards or revoking modern awards (see sections 163 and 164).
Note 2: For reviews of default fund terms of modern awards, see Division 4A.’

[8] Subsections 156(3) and (4) deal with the variation of modern award minimum wages in a Review and are not relevant for present purposes.

[9] The present proceedings form part of the Review. Whilst a number of employer parties have proposed certain variations in relation to the modern awards before us 3 and the SDA and United Voice have participated in the review opposing those variations, this is not an inter partes proceeding, it is a review. Consistent with the nature of the Review, public contributions and submissions have been invited as part of the process conducted by the Commission.4

[10] In conducting the Review, the Commission is able to exercise its usual procedural powers, contained in Division 3 of Part 5–1 of the FW Act. Importantly, the Commission may inform itself in relation to the Review in such manner as it considers appropriate. Section 590 provides as follows:

‘590 Powers of the FWC to inform itself

(1) The FWC may, except as provided by this Act, inform itself in relation to any matter before it in such manner as it considers appropriate.

(2) Without limiting subsection (1), the FWC may inform itself in the following ways:

(a) by requiring a person to attend before the FWC;

(b) by inviting, subject to any terms and conditions determined by the FWC, oral or written submissions;

(c) by requiring a person to provide copies of documents or records, or to provide any other information to the FWC;

(d) by taking evidence under oath or affirmation in accordance with the regulations (if any);

(e) by requiring an FWC Member, a Full Bench or an Expert Panel to prepare a report;

(f) by conducting inquiries;

(g) by undertaking or commissioning research;

(h) by conducting a conference (see section 592);

(i) by holding a hearing (see section 593).’

[11] Section 591 is also relevant for present purposes, it states:

‘The FWC is not bound by the rules of evidence and procedure in relation to a matter before it (whether or not the FWC holds a hearing in relation to the matter).’

[12] While the Commission is not bound by the rules of evidence that does not mean that those rules are irrelevant. In certain circumstances fairness may require that evidence be excluded. 5

[13] The Full Bench has been hearing evidence in these proceedings during much of 2015. The Full Bench is about to receive public submissions 6 and closing submissions from the employer and union organisations that have been involved in this case to date. The program7 of submissions includes each union party, and any interested person opposing the change to penalty rate provisions in the relevant awards, filing final written submissions on or before Monday 21 March 2016 and each employer party and any interested person filing final written submissions in reply on or before Friday 1 April 2016. The matter has been listed for hearing from Monday 11 April 2016 to Friday 15 April 2016 (inclusive).

[14] In August 2015, the Ai Group, RCI and most of the other employer organisations, filed submissions supporting the proposed tender of the PC Draft report and outlining the factual propositions which they intended to advance based upon that report. On 17 September 2015, both the SDA and United Voice provided notice to the Ai Group of their objections to the tender of the PC Draft Report on the grounds of relevance, hearsay, opinion and unfair prejudice. The parties have maintained their respective positions in terms of the PC Final Report.

[15] The employer parties contend 8 that the PC Final Report contains factual material that is relevant to the matters before this Full Bench. Further, it is submitted that the report is inherently likely to be reliable and of assistance to this Commission because part of the Productivity Commission’s functions involve conducting inquiries, making reports and undertaking research and it is constituted by members having qualifications relevant to those functions.

[16] The employer parties also contend that the Commission has had regard to similar reports in other proceedings and that the objections taken by the union parties should be considered to be matters going to weight, not admissibility.

[17] The SDA and United Voice object to the tender of the PC Final Report on a number of grounds including:

● the PC Final Report is a submission, and is not evidence capable of proving the existence of a fact in dispute;
● alternatively, if the PC Final Report, or part of it, can properly be described as evidence, the tender of the report by the employer parties at this stage of proceedings would constitute a denial of natural justice to the union parties;
● those parts of the PC Final Report sought to be tendered by the employer parties are inadmissible on the grounds of hearsay, opinion and prejudice; and
● the employer parties have failed to identify what findings they wish the Commission to make on the basis of the PC Final Report in respect of the specific awards that are the subject of this Review. 9

[18] We are satisfied that the parts of the PC Final Report referred to by the employer parties are relevant to the review of penalty rates in the awards before us. We also note that material of this nature has in the past been considered by the Commission and its predecessors in a variety of matters. 10 The PC Draft Report has been referred to in the evidence of a number of witnesses that has been admitted in this matter, including the report of an expert called by United Voice.11

[19] The PC Final Report contains information and discussion that is properly regarded as evidentiary in nature and some elements that should properly be considered as submissions. It contains considerable factual material based upon sources that are also set out in the report. These matters are relevant to the factual context for this Review. The report also contains the views of the Productivity Commission, including specific recommendations that it makes to the Commonwealth Government. To the extent that the Productivity Commission comments upon some of the evidence that has been presented us as part of this Review and expresses its views about what we should do as a result of this Review these observations are in the nature of submissions, rather than evidence, and will be considered as such by us. We note that to the extent that the PC Final Report considers the expert evidence given in these proceedings 12 the employer parties place no reliance on such consideration.13

[20] The SDA and United Voice contend that they would be denied natural justice because they are not able to cross-examine the authors of the report. They further contend that the rules of evidence, including s.76 and s.79 of the Evidence Act 1995 (Cth), should be applied as a guide to reject the PC Final Report as evidence. That is, the specialised knowledge exception to the general rule, that opinion is not admissible to prove the existence of a fact, is not engaged given the employer organisations have not called the authors of the report. Further, it is submitted that the probative value of the report is outweighed by the unfair prejudice to the union parties, 14 and any evidence is hearsay.

[21] Given the nature of the Review, and subject to natural justice considerations, the Commission may use relevant information and material as it sees fit. As we have mentioned, one of the grounds upon which United Voice and the SDA object to the admission of the PC Final Report is that the admission of this material would deny them natural justice. The essence of this objection is as follows:

“Each of the penalty rate findings sought by the employer organisations requires the Full Bench to make determinations about matters of central controversy in these proceedings. They involve the Commission drawing conclusions on the basis of highly evaluative propositions set out in the PC Report concerning the appropriateness of penalty rates in the Australian workforce.

The question of the expertise of the authors of the PC Report to make those highly evaluative propositions does not come into consideration. Even assuming that the authors are appropriately qualified to give admissible expert opinion evidence, the union parties have not been afforded the opportunity to cross-examine the authors about their opinions so as to test those opinions.

This fundamental tenant of procedural fairness was relied on by the High Court in Betfair Pty Ltd v Racing New South Wales (2012) 249 CLR 217, where Keifel J refused to allow the applicant to rely on a draft Productivity Commission report about market competition in the gambling industry because, among other reasons, “the respondents have not had the opportunity to test the opinions contained within it”. 15

In this context, United Voice and the SDA will be denied natural justice should the Commission decide to admit the PC Report without providing them with an opportunity to test it. So much is clear when assessing the application of the rules of evidence to the admission of the PC Report, as detailed below. The rules of evidence, whilst not binding on the Commission, act as an important guide in assisting it to ensure that natural justice is afforded to the parties that appear before it.” 16

[22] As we have mentioned, the opinions expressed by the Productivity Commission as to the appropriateness of penalty rates in the Australian Workforce will be treated as submissions, not evidence. Further, we note that the employer parties have not expressly sought to have the PC Final Report treated as expert opinion evidence and we have considered the tender request on that basis. In other words, the relevant aspects of the PC Final Report have been sought to be tendered as part of the common evidence in the proceedings and not as expert opinion evidence. When viewed in this light, we are not persuaded that the admission of the material would constitute a denial of procedural fairness to the union parties. We also consider that the employer parties have identified the intended application of the PC Final Report to the relevant awards with sufficient particularity to ensure fairness to the union parties.

[23] Accordingly, we will admit Chapters 9, 10, 11, 12, 13, 14 and 15 and Appendix F of the PC Final Report as part of the common evidence before the Full Bench. We do not propose to segregate the factual material from those parts of the Final PC Report which are properly characterised as submissions. To the extent that this gives rise to any controversy between the respective parties it can be addressed in the written submissions to be filed in accordance with the Revised Further Directions issued on 4 February 2016. The weight to be attributed to the admitted material can also be addressed in those submissions.

[24] The SDA and United Voice also submitted that as the Australian Hotels Association and Australian Accommodation of Australia had not joined in the submissions of the employer parties seeking to tender the PC Final Report then any part of the PC Final Report admitted into evidence should not apply to the Hospitality Industry (General) Award. We reject that submission. The relevant aspects of the PC Final Report will form part of the common evidence in the proceedings and may be relied upon in respect of each of the awards before us.

[25] Finally, we note that the PC Draft Report may also be referred to in submissions by parties given that it has been canvassed in evidence and forms part of the history of the final report. However, the PC Draft report will not be admitted into evidence.

PRESIDENT

 1   The Australian Hotels Association and Accommodation Association of Australia, have made applications forming part of this case, but have not joined in the tender request.

 2   The request and terms of reference were issued by the then Treasurer, Hon Joe Hockey MP, on 19 December 2014.

 3   The following modern awards in the hospitality and retail sectors are involved with this matter:

Details of the claims made are available on the Penalty rates page of the Commission’s website.

 4   See the Statement made by the Full Bench: [2016] FWCFB 285, 15 January 2015.

 5   King v Freshmore (Vic) Pty Ltd, Print S4213, 17 March 2000; WA Meat Commission v Australiasian Branch, Matter No. 890 of 1993, 5 August 1993, WAIRC per Sharkey P, Coleman C and Gregor C; PDS Rural Products Ltd v Corthorn (1998) 19 IR 153 at 155.

 6   [2016] FWCFB 285.

 7   Ibid.

 8   Submissions of the employer parties - 18 and 29 January 2016.

 9   Submissions of the SDA and United Voice - 25 January 2016.

 10   See, for example, Equal Remuneration Test Case Decision [2011] FWAFB 2700 at [225]; Re IEU [2014] FWC 7838 at [41], [42]; Re SDA [2014] FWCFB 1846 at [163]-[164]; Annual Wage Review 2012-2013 [2013] FWCFB 4000 at footnotes 111, 143, 144; Redundancy Test Case Decision [2004] AIRC 287; (2004) 129 IR 155 at [223]-[224].

 11   Borland Report (Exhibit UV 25); Professor Lewis Supplementary Report (Exhibit ABI 4 and Lewis Second Supplementary Report (Exhibit ABI 5).

 12   See PC Final Report p 447, figure 12.5; p 473 last paragraph; p 475, first full paragraph; pp 490-491

 13   See Reply Submission of Employer Parties dated 29 January 2016 at paragraph 2(c)

 14   Citing s.135(a) of the Evidence Act 1995 (Cth)

 15   Betfair Pty Ltd v Racing New South Wales (2012) 249 CLR 217 at [128]

 16   Submissions of the SDA and United Voice - 25 January 2016, paragraphs 15-18

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