| [2018] FWC 5810 |
| FAIR WORK COMMISSION |
STATEMENT |
Fair Work Act 2009
s.156 - 4 yearly review of modern awards
4 yearly review of modern awards—Plain language re-drafting
(AM2016/15)
JUSTICE ROSS, PRESIDENT |
MELBOURNE, 16 OCTOBER 2018 |
4 yearly review of modern awards – standard absorption clause – take-home pay order – referral to Plain Language Full Bench
[1] Section 156 of the Act requires the Fair Work Commission (the Commission) to review all modern awards every four years (the Review).
[2] This statement concerns two outstanding issues relating to clause 1 – Title and commencement – in all exposure drafts. A number of general drafting and technical issues which arose during the course of the review of the Group 1 awards were dealt with in a decision issued on 23 December 2014 (the December 2014 decision). 1 As a consequence of that decision the standard Title and commencement clause was as follows:
1.1 This award is the xx Award 2015.
1.2 A variation to this award does not affect any right, privilege, obligation or liability that a person acquired, accrued or incurred under the award as it existed prior to that variation.
1.3 Schedule H—Definitions sets out definitions that apply in this award.
1.4 The monetary obligations imposed on employers by this award may be absorbed into overaward payments. Nothing in this award requires an employer to maintain or increase any overaward payment.
1.5 Neither the making of this award nor the operation of any transitional arrangements is intended to result in a reduction in the take-home pay of employees covered by the award. On application by or on behalf of an employee who suffers a reduction in take-home pay as a result of the making of this award or the operation of any transitional arrangements, the Fair Work Commission may make any order it considers appropriate to remedy the situation.’
[3] The two outstanding issues concern clause 1.4 (the absorption clause) and clause 1.5 (the take home pay order clause). It is convenient to deal with the second matter first.
[4] In the December 2014 decision 2 it was decided that the current take home pay clause (clause 1.5 above) would remain in all modern awards, with the intention that it would be removed in the next four yearly review.
[5] The take home pay clause was also considered in the 4 yearly review of modern awards – Penalty rates – Transitional arrangements decision 3 (the Transitional arrangements decision). The Full Bench in the Transitional arrangements decision concluded:
‘[100] Item 13A of the TPCA Act and the take-home pay order clauses in modern awards are limited to reductions in take-home pay suffered by employees as a result of the award modernisation process, including as a result of any transitional arrangements phasing in differences between the pay rates in pre-modernised awards and modern awards. Item 13A was inserted to address both the inclusion of take-home pay order terms in modern awards, and their scope, which expands the class of employees eligible to seek a take-home pay order to include employees employed after the commencement of modern awards (who are not eligible for a take-home pay order under Part 3, item 9 of Schedule 5 to the TPCA Act).
[101] Any reductions in take-home pay arising from the Penalty Rates decision will not be attributable to the award modernisation process or any residual issues arising from that process, but, rather, will result from the variation of specified modern awards as part of the 4 yearly review of modern awards. It follows that take-home pay orders are not available to mitigate the impact of the proposed reduction in Sunday (or public holiday) penalty rates.
[102] One of the questions on notice put to all parties in the present proceedings was in the following terms:
“It seems to be common ground that the take home pay order provisions of the TPCA Act are not an available option to mitigate the impact of the reductions in penalty rates set out in the Penalty Rates decision. Does any interested party take a different view?”
[103] No party expressed a view contrary to that posed in the question. Ai Group , ACCI, the Hospitality Employees, ABI, the Pharmacy Guild, RCI, the SDA and United Voice all submitted that the take-home pay provisions of the TPCA Act were not an available option to mitigate the impact of the reductions in penalty rates. (references omitted)’
[6] A decision issued on 20 September 2015 4 considered, among other things, whether an absorption clause such as clause 1.4 can be included in modern awards. The Commission concluded that:
• the absorption clause was intended to be transitional in character; 5
• there was doubt as to whether the absorption clause can properly be said to be about one or more of the matters specified in s.139(1)(a), but it was not necessary to reach a concluded view in respect of that issue; 6 and
• it is not necessary to include the absorption clause in modern awards to achieve the modern awards objective. 7
[7] As to the last matter the Full Bench said:
‘Modern awards are part of the minimum safety net of terms and conditions established by the Act. It is not the function of such a minimum safety net to regulate the interaction between minimum award entitlements and overaward payments. Such matters are adequately dealt with by the common law principles of set off to which we have referred and should be left to individual employers and employees to determine. It is not necessary to include an absorption clause in modern awards in order to provide a fair and relevant minimum safety net. As the absorption clause is not a term which is necessary to achieve the modern awards objective it cannot be included in a modern award.’
[8] In those proceedings ABI, Ai Group and the MBA submitted that it would not be appropriate to remove the absorption clause while the take home pay order clause remained. After noting the comments in the December 2014 decision, the Full Bench said:
‘[77] Our conclusion in respect of the absorption clause raises a question as to the appropriateness of retaining the take-home pay order subclause. In the summary document published on 25 August 2015 interested parties were put on notice that if there was no relevant source of power then the subclause should be deleted…
[81] We do not propose to determine this issue at this time. We will revisit the take-home pay provision before the conclusion of the Review after providing all interested parties with a further opportunity to make submissions regarding the relevant source of power and, if there is such a power, whether we should exercise our discretion to retain the subclause in either its current form or with amendments.’
[9] The award stage of the Review is nearing completion and only a small number of common issue matters remain and so we propose to now consider the issues in relation to take home pay orders that were deferred by the December 2014 decision.
[10] The take home pay clause will be referred to the Plain Language Re-drafting Full Bench for consideration.
[11] Interested parties are invited to make submissions addressing the following issues:
• Whether there is a power to retain the take home pay clause in modern awards and if so, the relevant source of that power; 8 and
• If there is such a power, should the Commission exercise the discretion to retain the provision.
[12] Interested parties are to file submissions by 4 pm on 6 November 2018.
[13] Submissions in reply must be filed by 4 pm on 20 November 2018.
[14] This matter will be determined on the papers unless a party requests an oral hearing by 13 November 2018.
[15] All material should be sent to [email protected]. All material will be published on the Commission’s website.
2 [2014] FWCFB 9412 at [12] to [16].
5 Ibid at [27].
6 Ibid at [56].
7 Ibid at [57] to [74].
8 In written submissions filed on 28 August 2015 the ACTU and AMWU addressed the source of the power.
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