[2018] FWCFB 4704

The attached document replaces the document previously issued with the above code on 14 August 2018.

The wording of clause G.1 has been amended to read as it appeared at paragraph [259] of [2017] FWCFB 5258:

“G.1 Clause G applies if, because of redundancy, an employee is transferred to new duties to which a lower ordinary rate of pay is applicable.”

Modern Awards Team

On behalf of the Associate to President Ross

6 September 2018

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

4 yearly review of modern awards – plain language re-drafting – standard clauses
(AM2016/15)

4 yearly review of modern awards – plain language re-drafting – standard clause H.

[1] Section 156(2)(a) of the Fair Work Act 2009 (Cth) (the Act) requires the Commission to review all modern awards every four years (the Review). This Full Bench has been constituted to oversee a number of plain language projects as part of the Review including the review of a number of clauses in modern awards which have been identified as ‘standard clauses’. 1

[2] This decision deals with two outstanding items regarding standard clause H—Employee leaving during redundancy notice period; it should be read together with our previous decisions and statements in respect of the review of the standard terms. 2

[3] Standard clause H was last published in a decision of 28 August 2017. 3 The two outstanding items relate to the circumstance where an employee is made redundant, and under clause H, elects to leave their employment before the end of the redundancy notice period. The outstanding issues were set out in a Statement of 19 July 20184 (the July 2018 statement), as follows:

‘1. Whether an employee is entitled to benefits and payments they would have received had they remained in employment until the expiry of the notice under clause H, or alternatively, under the award; and

2. Whether an employer may make deductions from payments due to the employee if the employee did not give the employer the required period of notice of their termination.’ 5

[4] Submissions were invited from interested parties. The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) made a submission in relation to issue 1. No other party made a submission.

[5] A conference was held on 2 August 2018 (the August 2018 conference) to discuss outstanding issues relating to Standard subclauses H.2 and H.3. The transcript of the conference is available on the standard clauses page of the Commission’s website.

Issue 1

[6] Issue 1 relates to whether an employee is entitled to benefits and payments they would have received had they remained in employment until the expiry of the notice period under clause H.

[7] The issue arose from an Ai Group submission that the re-drafted wording results in a substantial increase in the entitlements of employees who are made redundant and substantial increase in employer costs. 6 Ai Group submitted the clause should be amended as follows:

‘H.2 The employee is entitled to receive the benefits and payments they would have received under clause H of this award or sections 119-122 of the NES had they remained in employment until the expiry of the notice.’

[8] As we have mentioned, following the July 2018 Statement the AMWU made a submission in which it advanced an argument that employees who leave during the redundancy notice period are entitled to annual leave for the whole of the redundancy notice period. This submission was based on the particular terms of a limited number of pre-reform awards. The CFMMEU supported the AMWU’s submissions and contended that it had general application across all modern awards, though no particulars (or evidence) were advanced in support of that contention.

[9] On the limited material before us we are not persuaded that there is any merit in the submission advanced by the AMWU. In the finalisation of variation determinations interested parties will have a further opportunity to raise award specific issues or to press for award specific variations.

Issue 2

[10] Issue 2 relates to the rights of employers to made deductions from termination payments pursuant to clause E.1. In the July 2018 Statement we noted that the issue appeared to be overtaken by the decision in relation to clause E.1. Written submissions were invited. No party made written submissions in relation to this issue.

[11] The issue in relation to deductions was not pressed by any party during the August 2018 Conference and on that basis we regard issue 2 as being resolved.

Next Steps

[12] It is our provisional view that all modern awards should be varied to insert a revised Standard clause H, as follows:

‘H. Employee leaving during redundancy notice period

H.1 An employee given notice of termination in circumstances of redundancy may terminate their employment during the period of the notice prescribed by s.117(3) of the Act.

H.2 The employee is entitled to receive the benefits and payments they would have received under clause H of this award or under Subdivisions B and C of Division 11 of Part 2-2 of the Act had they remained in employment until the expiry of the notice.

H.3 However, the employee is not entitled to be paid for any part of the period of notice remaining after the employee ceased to be employed.

H.4 Job search entitlement

(a) Where an employer has given notice of termination to an employee in circumstances of redundancy, the employee must be allowed time off without loss of pay of up to one day for each week of the minimum period of the notice prescribed by s.117(3) of the Act for the purpose of seeking other employment.

(b) If an employee is allowed time off without loss of pay of more than one day under paragraph (a), the employee must, at the request of the employer, produce proof of attendance at an interview.

(c) A statutory declaration is sufficient for the purpose of paragraph (b).

(d) An employee who fails to produce proof when required under paragraph (b) is not entitled to be paid for the time off.

(e) This entitlement applies instead of clause E.2.’

[13] Revised Standard clause H gives effect to Ai Group’s proposed variation to subclause H.2, though we have amended the wording to make it consistent with Note 1 of Standard clause E. We have also amended subclause H.1 to make it clear that the period of notice referred to in the clause is the notice period prescribed by s.117(3) of the Act. 7 This amendment is consistent with the original intent of the TCR standard term and the safety net nature of modern awards.

[14] We have now reviewed the terms of each of the following standard clauses:

A. Award flexibility

B. Consultation about major workplace change

C. Consultation about changes to rosters or hours of work

D. Dispute resolution

E. Termination of employment

F. Redundancy

G. Transfer to lower paid job on redundancy

H. Employee leaving during the redundancy notice period.

[15] A consolidated version of the standard clauses is set out at Attachment A. It is our provisional view that all modern awards should be varied to replace the relevant existing terms with the standard clauses. That provisional view would only be displaced in respect of any particular award if it is demonstrated that there are matters or circumstances particular to that award which compel the conclusion that the achievement of the modern award objective for that award does not necessitate the inclusion of the model standard terms.

[16] Draft determinations giving effect to our provisional view will be published in the coming weeks. Interested parties will have 14 days from the date of publication of the draft determinations to comment and confirm whether any award-specific issues are pressed. In the absence of any comments in respect of a particular modern award we will confirm our provisional view and vary the relevant modern award.

[17] All material should be sent to [email protected].

[18] Liberty to apply.

PRESIDENT

Printed by authority of the Commonwealth Government Printer

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ATTACHMENT A

A. Individual flexibility arrangements

A. 1 Despite anything else in this award, an employer and an individual employee may agree to vary the application of the terms of this award relating to any of the following in order to meet the genuine needs of both the employee and the employer:

(a) arrangements for when work is performed; or

(b) overtime rates; or

(c) penalty rates; or

(d) allowances; or

(e) annual leave loading.

A.2 An agreement must be one that is genuinely made by the employer and the individual employee without coercion or duress.

A.3 An agreement may only be made after the individual employee has commenced employment with the employer.

A.4 An employer who wishes to initiate the making of an agreement must:

(a) give the employee a written proposal; and

(b) if the employer is aware that the employee has, or should reasonably be aware that the employee may have, limited understanding of written English, take reasonable steps (including providing a translation in an appropriate language) to ensure that the employee understands the proposal.

A.5 An agreement must result in the employee being better off overall at the time the agreement is made than if the agreement had not been made.

A.6 An agreement must do all of the following:

(a) state the names of the employer and the employee; and

(b) identify the award term, or award terms, the application of which is to be varied; and

(c) set out how the application of the award term, or each award term, is varied; and

(d) set out how the agreement results in the employee being better off overall at the time the agreement is made than if the agreement had not been made; and

(e) state the date the agreement is to start.

A.7 An agreement must be:

(a) in writing; and

(b) signed by the employer and the employee and, if the employee is under 18 years of age, by the employee’s parent or guardian.

A.8 Except as provided in clause A.7(b), an agreement must not require the approval or consent of a person other than the employer and the employee.

A.9 The employer must keep the agreement as a time and wages record and give a copy to the employee.

A.10 The employer and the employee must genuinely agree, without duress or coercion to any variation of an award provided for by an agreement.

A.11 An agreement may be terminated:

(a) at any time, by written agreement between the employer and the employee; or

(b) by the employer or employee giving 13 weeks’ written notice to the other party (reduced to 4 weeks if the agreement was entered into before the first full pay period starting on or after 4 December 2013).

NOTE: If an employer and employee agree to an arrangement that purports to be an individual flexibility arrangement under this award term and the arrangement does not meet a requirement set out in s. 144 then the employee or the employer may terminate the arrangement by giving written notice of not more than 28 days (see s.145 of the Act).

A.12 An agreement terminated as mentioned in clause A.11(b) ceases to have effect at the end of the period of notice required under that clause.

A.13 The right to make an agreement under clause A is additional to, and does not affect, any other term of this award that provides for an agreement between an employer and an individual employee.

B. Consultation about major workplace change

B.1 If an employer makes a definite decision to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must:

(a) give notice of the changes to all employees who may be affected by them and their representatives (if any); and

(b) discuss with affected employees and their representatives (if any):

(i) the introduction of the changes; and

(ii) their likely effect on employees; and

(iii) measures to avoid or reduce the adverse effects of the changes on employees; and

(c) commence discussions as soon as practicable after a definite decision has been made.

B.2 For the purposes of the discussion under clause B.1(b), the employer must give in writing to the affected employees and their representatives (if any) all relevant information about the changes including:

(a) their nature; and

(b) their expected effect on employees; and

(c) any other matters likely to affect employees.

B.3 Clause B.2 does not require an employer to disclose any confidential information if its disclosure would be contrary to the employer’s interests.

B.4 The employer must promptly consider any matters raised by the employees or their representatives about the changes in the course of the discussion under clause B.1(b).

B.5 In clause B:

significant effects, on employees, includes any of the following:

(a) termination of employment; or

(b) major changes in the composition, operation or size of the employer’s workforce or in the skills required; or

(c) loss of, or reduction in, job or promotion opportunities; or

(d) loss of, or reduction in, job tenure; or

(e) alteration of hours of work; or

(f) the need for employees to be retrained or transferred to other work or locations; or

(g) job restructuring.

B.6 Where this award makes provision for alteration of any of the matters defined at B.5, such alteration is taken not to have significant effect.

C. Consultation about changes to rosters or hours of work

C.1 Clause C applies if an employer proposes to change the regular roster or ordinary hours of work of an employee, other than an employee whose working hours are irregular, sporadic or unpredictable.

C.2 The employer must consult with any employees affected by the proposed change and their representatives (if any).

C.3 For the purpose of the consultation, the employer must:

(a) provide to the employees and representatives mentioned in clause C.2 information about the proposed change (for example, information about the nature of the change and when it is to begin); and

(b) invite the employees to give their views about the impact of the proposed change on them (including any impact on their family or caring responsibilities) and also invite their representative (if any) to give their views about that impact.

C.4 The employer must consider any views given under clause C.3(b).

C.5 Clause C is to be read in conjunction with any other provisions of this award concerning the scheduling of work or the giving of notice.

D. Dispute resolution

D.1 Clause D sets out the procedures to be followed if a dispute arises about a matter under this award or in relation to the NES.

D.2 The parties to the dispute must first try to resolve the dispute at the workplace through discussion between the employee or employees concerned and the relevant supervisor.

D.3 If the dispute is not resolved through discussion as mentioned in clause D.2, the parties to the dispute must then try to resolve it in a timely manner at the workplace through discussion between the employee or employees concerned and more senior levels of management, as appropriate.

D.4 If the dispute is unable to be resolved at the workplace and all appropriate steps have been taken under clauses D.2 and D.3, a party to the dispute may refer it to the Fair Work Commission.

D.5 The parties may agree on the process to be followed by the Fair Work Commission in dealing with the dispute, including mediation, conciliation and consent arbitration.

D.6 If the dispute remains unresolved, the Fair Work Commission may use any method of dispute resolution that it is permitted by the Act to use and that it considers appropriate for resolving the dispute.

D.7 A party to the dispute may appoint a person, organisation or association to support and/or represent them in any discussion or process under clause D.

D.8 While procedures are being followed under clause D in relation to a dispute:

(a) work must continue in accordance with this award and the Act; and

(b) an employee must not unreasonably fail to comply with any direction given by the employer about performing work, whether at the same or another workplace, that is safe and appropriate for the employee to perform.

D.9 Clause D.8 is subject to any applicable work health and safety legislation.

E. Termination of employment

NOTE: The NES sets out requirements for notice of termination by an employer. See sections 117 and 123 of the Act.

E.1 Notice of termination by an employee

(a) This clause applies to all employees except those identified in sections 123(1) and 123(3) of the Act.

(b) An employee must give the employer notice of termination in accordance with Table X—Period of notice of at least the period specified in column 2 according to the period of continuous service of the employee specified in column 1.

Table X—Period of notice

NOTE: The notice of termination required to be given by an employee is the same as that required of an employer except that the employee does not have to give additional notice based on the age of the employee.

(c) In paragraph (b) continuous service has the same meaning as in section 117 of the Act.

(d) If an employee who is at least 18 years old does not give the period of notice required under paragraph (b), then the employer may deduct from wages due to the employee under this award an amount that is no more than one week’s wages for the employee.

(e) If the employer has agreed to a shorter period of notice than that required under paragraph (b), then no deduction can be made under paragraph (d).

(f) Any deduction made under paragraph (d) must not be unreasonable in the circumstances.

E.2 Job search entitlement

Where an employer has given notice of termination to an employee, the employee must be allowed time off without loss of pay of up to one day for the purpose of seeking other employment.

E.3 The time off under clause E.2 is to be taken at times that are convenient to the employee after consultation with the employer.

F. Redundancy

Redundancy pay is provided for in the NES.

G. Transfer to lower paid duties on redundancy

G.1 Clause G applies if, because of redundancy, an employee is transferred to new duties to which a lower ordinary rate of pay is applicable.

G.2 The employer may:

(a) give the employee notice of the transfer of at least the same length as the employee would be entitled to under section 117 of the Act as if it were a notice of termination given by the employer; or

(b) transfer the employee to the new duties without giving notice of transfer or before the expiry of a notice of transfer.

G.3 If the employer acts as mentioned in paragraph G.2(b), the employee is entitled to a payment of an amount equal to the difference between the ordinary rate of pay of the employee (inclusive of all purpose allowances, shift allowances 8 and penalty rates applicable to ordinary hours) for the hours of work the employee would have worked in the first role, and the ordinary rate of pay (also inclusive of all purpose allowances, shift allowances and penalty rates applicable to ordinary hours) of the employee in the second role for the period for which notice was not given.

H. Employee leaving during redundancy notice period

H.1 An employee given notice of termination in circumstances of redundancy may terminate their employment during the period of the notice prescribed by s.117(3) of the Act.

H.2 The employee is entitled to receive the benefits and payments they would have received under clause H of this award or under Subdivisions B and C of Division 11 of Part 2-2 of the Act had they remained in employment until the expiry of the notice.

H.3 However, the employee is not entitled to be paid for any part of the period of notice remaining after the employee ceased to be employed.

H.4 Job search entitlement

(a) Where an employer has given notice of termination to an employee in circumstances of redundancy, the employee must be allowed time off without loss of pay of up to one day for each week of the minimum period of the notice prescribed by s.117(3) of the Act for the purpose of seeking other employment.

(b) If an employee is allowed time off without loss of pay of more than one day under paragraph (a), the employee must, at the request of the employer, produce proof of attendance at an interview.

(c) A statutory declaration is sufficient for the purpose of paragraph (b).

(d) An employee who fails to produce proof when required under paragraph (b) is not entitled to be paid for the time off.

(e) This entitlement applies instead of clause E.2.

 1   [2016] FWCFB 4756

 2   See [2016] FWC 4756; [2017] FWCFB 1638; [2017] FWCFB 3745; [2017] FWCFB 4419; [2017] FWCFB 5367; [2017] FWCFB 5258; [2018] FWCFB 3009; [2017] FWCFB 4177; [2018’ FWCFB 4181.

 3   [2017] FWCFB 4419

 4   [2018] FWCFB 4181

 5   [2018] FWCFB 4181 at [3]

 6   Ai Group submission, 9 August 2018

 7   See [2018] FWCFB 4181 at [15] to [16].

 8   Reference to shift allowances will be omitted in modern awards that do not provide for shiftwork, [2017] FWCFB 4177 at [169]..