[2018] FWCFB 4709

FAIR WORK COMMISSION

DECISION

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

4 yearly review of modern awards – Legal Services Award 2010
(AM2017/53)

DEPUTY PRESIDENT GOSTENCNIK
DEPUTY PRESIDENT CLANCY
COMMISSIONER CIRKOVIC

MELBOURNE, 13 AUGUST 2018

4 yearly review of modern awards – award stage – Legal Services Award 2010.

1. Introduction and background

[1] Section 156 of the Fair Work Act 2009 (the Act) requires the Fair Work Commission (the Commission) to review all modern awards every four years (the Review). The Review consists of an Initial stage, dealing with jurisdictional issues, a Common issues stage and an Award stage. 1 During the Award stage 122 modern awards were divided into 4 groups. The Legal Services Award 2010 (the Legal Services Award or Award) was assigned to Group 3.

[2] A Full Bench issued decisions with respect to the technical and drafting issues arising from the review of Group 3 awards on 6 July 2017 (the July 2017 decision 2) and 30 October 2017 (the October 2017 decision3). The October 2017 decision referred two issues concerning the Legal Services Award to this Full Bench for determination. The two issues proposed substantive changes to the award.4 This decision resolves the two issues.

[3] A hearing was held before the Full Bench on 26 March 2018. Representatives for the Australian Municipal, Administrative, Clerical and Services Union (the ASU) and a number of private legal firms (jointly ‘the Law Firms’) appeared. Directions were subsequently issued and pursuant to the directions, parties convened for a private conference to discuss the issues. At the request of the parties, a further conference was held before Deputy President Gostencnik on 29 May 2018. 5

2. The legislative context

[4] Relevantly, subsection 156(2) provides:

(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.

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.’

[5] Subsection 156(5) provides that in a Review each modern award must be reviewed in its own ‘right’. In National Retail Association v Fair Work Commission 6 the Court noted the purpose of the ‘in its own right’ requirement is to ensure the review is ‘conducted by reference to the particular terms and the particular operation of each particular award rather than by a global assessment based upon generally applicable considerations’.

[6] The ‘scope’ of the Review was considered in the Preliminary Jurisdictional Issues Decision. There the Full Bench observed that ‘the Commission is obliged to ensure that modern awards, together with the NES, provide a fair and relevant minimum safety net taking into account, among other things, the need to ensure a ‘stable’ modern award system (s.134(1)(g)). The need for a ‘stable’ modern award system suggests that a party seeking to vary a modern award in the context of the Review must advance a merit argument in support of the proposed variations’. 7

[7] The modern awards objective is set out in s.134(1) of 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

(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] No particular primacy is attached to any of the above considerations and not all will necessarily be relevant in the context of a particular proposal to vary a modern award. 8

[9] Section 138 of the FW Act provides that terms included in modern awards must be ‘necessary to achieve the modern awards objective’. That which is ‘necessary’ will involve a value judgment based on the assessment of the considerations stated in s.134(1)(a) to (h), having regard to the submissions and evidence. 9

[10] The modern awards objective applies to the exercise of the Commission’s modern award powers including the Commission’s functions or powers under Part 2–3 of the FW Act. The Review function is set out in s.156, which is in Part 2–3 and the performance or exercise of the Commission’s modern award powers.

3. The claims

Ordinary hours and roster cycles—day workers

[11] One of the claims raised by the Law Firms’ concerns ordinary hours of work for day workers under the Legal Services Award. The Law Firms’ claim initially comprised two parts, one relating to the authorisation of overtime, and the other to the averaging of hours. In the October 2017 decision the Full Bench accepted the Law Firms claim to insert a requirement that overtime be authorised. 10 This decision addresses the second limb of the claim, the proposal with respect to averaging of hours. The Law Firms proposed to vary the exposure draft of the Legal Services Award by inserting a new clause 8.1(b) as follows (and consequent renumbering of clause 8.1):11

‘8.1 Ordinary hours and roster cycles—day workers

(a) The ordinary hours of work for day workers are to average 38 hours per week but must not exceed 152 hours in 28 days.

(b) By agreement between an employer and an employee, the employee's ordinary hours of work may be arranged on the basis that the weekly average of 38 ordinary hours is achieved over a period which exceeds 28 consecutive days but does not exceed 26 weeks.

(d) Span of Hours

(i) The ordinary hours of work are to be worked continuously, except for meal breaks, at the discretion of the employer between 7.00 am and 6.30 pm, Monday to Friday.

(ii) The spread of hours may be altered by up to one hour at either end of the spread, by agreement between the employer and the majority of employees concerned.

(iii) Subject to clause 8.1~~(c)~~(d)(iv) any authorised work that is required or requested by an employer to be performed outside the spread of hours is to be paid for at overtime rates as prescribed in clause 14—Overtime.

(iv) Any work performed by an employee prior to the spread of hours which is continuous with ordinary hours for the purpose, for example, of getting the workplace in a state of readiness for other employees to start work is to be regarded as part of the 38 ordinary hours of work.

(e) Rostered days off

(i) Arrangements for rostered days off may be reached between an employee and an employer.

(ii) Such arrangements will outline:

● the method of accruing time towards a rostered day off; and

● an agreed method of accumulating and taking rostered days off.’

Witness evidence

[12] The Law Firms called one witness in support of their claim, Mr Nick Grant who is employed by K&L Gates as Director of Human Resources, Australia. Mr Grant gave oral evidence 12 and provided a written statement.13 Mr Grant’s evidence with respect to this issue largely repeated previous submissions by the Law Firms, and upon which they continue to rely.14 During cross-examination Mr Grant acknowledged that K&L Gates keeps records of billable and non-billable hours worked by legal professionals, however this data was not analysed to determine a pattern of work for the purposes of his evidence.15

[13] The ASU did not call any witnesses.

Submissions

[14] The Law Firms submitted that the change sought ensures consistency in the working arrangements between staff in law firms who are covered by the award, and those who are not. The Law Firms submitted that s.63 of the Act permits a modern award to include a term providing the averaging of hours over a specified period, and does not limit the time period over which such hours may be averaged. They contend that under s.64 of the Act, employees of a law firm who are not covered by an award or enterprise agreement may agree in writing to average their ordinary hours of work over a 26 week period. 16

[15] The Law Firms submitted that employees under the Legal Services Award work side-by-side with qualified and admitted lawyers who are not covered by the Award. Therefore, they argued, it is reasonable and desirable that employees covered by the Award should be permitted to average hours of work over a 26 week period. 17

[16] The Law Firms further submitted that the change fulfils the modern awards objective that modern awards should promote modern workplace practices and the efficient and productive performance of work pursuant to s.134 of the Act. 18

[17] The ASU opposed the amendment. The ASU contends that the proposal diminishes the current conditions of employees under the Award. The ASU submitted that the Law Firms confuse s.64 with s.63 and that that the current Award provision dealing with averaging hours provides a safety net that is relied upon by many workers covered by the Award. 19

[18] In oral submissions, the ASU contended that should employees under the Award be required to work long or irregular hours, existing overtime and shift penalty rates apply, rather than the averaging of ordinary hours of work. 20

Determination

[19] Those who propose a change to a modern award term bear the evidentiary onus of establishing that it is necessary to achieve the modern awards objective. At the hearing, the Law Firms advised that 26 weeks was ‘the specified period’ over which they sought to average hours of work. 21 We indicated we would require evidence directed to the issues whether the current Award provision allowing for the averaging of ordinary hours over a 28-day period was not sufficient and whether the 26 week period was necessary.22

[20] No probative evidence was adduced by the Law Firms directed to the issues. We are therefore not persuaded that the proposed amendment to averaging of hours of work is necessary to achieve the modern awards objective. Consequently, the amendment sought is refused.

Law Graduates

[21] The second claim raised by the Law Firms concerns the study leave entitlements of law graduates. Clause 39 of the current Legal Services Award 23 provides:

‘39. Special conditions of employment—Law graduate

39.1 A law graduate is entitled to leave of absence with pay:

(a) for study and attendance at examinations, not exceeding four days in respect of each subject for which they present themselves for examination which is necessary to enable the employee to qualify for admission; and

(b) to attend lectures and organised classes at a university or other course of instruction which is required to enable the employee to qualify for admission.’

[22] The Law Firms sought to delete clause 39 from the current award, and replace it with the following clause:

‘39. Special conditions of employment—Law graduate

39.1 A law graduate is entitled to paid study leave to attend a course of instruction, and prepare for and attend examinations, that relate to the practical legal training required for their admission to practise as an Australian lawyer.

39.2 Paid study leave should be taken at a time agreed with the employer and may not, unless otherwise agreed between the employer and the law graduate, exceed a total of 20 days in any 12 month period for the purposes of attending any course of instruction required to complete practical legal training, including one day to prepare for each examination in addition to the time reasonably required to attend the examination’ 24

Witness evidence

[23] Mr Nick Grant gave evidence that inspection of K&L Gates human resources records indicated that graduate lawyers tended to take 10 days leave for study, with a maximum of 11 taken once. Mr Grant gave evidence that there are three methods by which a law graduate can gain admission to practice: practical legal training (PLT); supervised legal training; or undertaking a graduate diploma. During cross examination, Mr Grant conceded that his evidence pertained to law graduates undertaking practical legal training only, as that is the form of training undertaken by law graduates employed at law firms. 25

Submissions

[24] The Law Firms submitted that their proposed amendment is necessary to align the Legal Services Award with the Legal Profession Uniform Admission Rules 2015 (Admission Rules). They argue that law graduates do not necessarily complete discrete subjects of study. They submitted that to tie an amount of leave to discrete subjects does not reflect the manner of delivery of the training. The Law Firms submit that their proposed change does not diminish existing entitlements. 26

[25] The ASU submitted that the proposed clause was unclear. It contends that the proposed clause is a diminution of the entitlements of employees as it places a cap on class attendance and subjects leave to employer agreement. 27 At the hearing the ASU submitted that the proposed clause did not adequately address all the methods by which a law graduate can gain admission to practice.

[26] During the hearing, the parties agreed provisionally to a proposal to break up the study leave clause. The proposal would provide an entitlement for leave in terms submitted by the Law Firms for those undertaking PLT and supervised legal training, whilst retaining the current entitlement for those undertaking the graduate diploma. This would satisfy the Law Firms with respect to those graduates undertaking PLT, and address the concern of the ASU that a change to the provision that affected all three methods would result in a diminution of entitlements for those undertaking a graduate diploma. It was accepted that supervised legal training undertaken by law graduates employed in firms is rarely utilised. 28

[27] We consider that breaking up the provision as discussed would address any concern that to change the clause as sought by the Law Firms could result in a diminution of entitlements of employees under the Award undertaking the graduate diploma. We are not inclined to alter entitlements without an understanding of the impact on those affected. 29

[28] Pursuant to directions issued on 29 March 2018, the ASU and the Law Firms arranged a private conference to discuss the proposed variations to clause 39 of the current award. Parties were unable to reach a consent position at this conference, and subsequently requested a further conference before the Commission. 30 A conference was held on 29 May 2018 before Deputy President Gostencnik. Following the conference, the parties provided the Commission31 with an agreed draft clause as follows:

‘39. Special conditions of employment—Law graduate

39.1 A law graduate is entitled to paid study leave not exceeding a total of 20 days in any 12 month period to attend a course of instruction, and prepare for and attend examinations that relate to the practical legal training required for their admission to practise as an Australian lawyer.

39.2 Paid study leave may be taken for a period or periods agreed between the employer and employee. The employer will not unreasonably refuse to agree to a request by the employee to take paid study leave in accordance with this clause.’

[29] Directions were issued on 15 June 2018 providing other interested parties an opportunity to file submissions in response to the proposed clause by 22 June 2018. No submissions were received.

Determination

[30] We propose to delete existing clause 39 of the Legal Services Award and insert a new clause 39 as outlined above at [28]. We are satisfied the new clause adequately and appropriately accommodates the various study leave requirements of those undertaking PLT and supervised training as well as those undertaking a graduate diploma and, in terms of the modern awards objective, the clause is consistent with ss. 134(1)(d), (f) and (g) of the Act. A determination giving effect to this change will be issued concurrently with this decision.

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