[2020] FWCFB 3443
FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.157—FWC may vary etc. modern awards if necessary to achieve modern awards objective

Application to vary the Clerks – Private Sector Award 2020
(AM2020/30)

JUSTICE ROSS, PRESIDENT
DEPUTY PRESIDENT CLANCY
COMMISSIONER BISSETT

MELBOURNE, 9 JULY 2020

Joint Application to vary modern award to achieve the modern awards objective – application to extend the operation of Schedule I – Award flexibility during the COVID-19 pandemic – application granted.

1. Background

[1] On 28 March 2020 we issued a Decision 1 granting a joint application filed by Ai Group and ACCI, to insert a new schedule, Schedule I-Award flexibility during the COVID-19 pandemic, into the Clerks – Private Sector Award 2020 (the Clerks Award). The new schedule came into operation on 28 March 2020 and was to cease to operate on 30 June 2020, unless extended. That joint application was supported by the Australian Council of Trade Unions (ACTU) and the Australian Services Union (ASU).

[2] This decision concerns a subsequent application filed by Ai Group and ACCI (the Application) to vary the terms of Schedule I and its period of operation. A revised draft determination was filed by the Applicants in the morning of 30 June 2020. The ASU opposed the Application.

[3] A number of conferences were conducted in an effort to resolve the issues in dispute but these were ultimately unsuccessful and the Application was the subject of a hearing on Tuesday, 30 June 2020. At the conclusion of the hearing we said that we had decided to grant the Application and vary the award in the terms proposed in the revised draft determination. We indicated that we would publish our reasons later; these are those reasons.

2. The Application

[4] The Application is best understood by reference to the terms of the current Schedule I.

[5] The current Schedule I is directed at providing targeted flexibility in relation to:

•  the range of duties employees can be required to perform (clause I.2.1(a) and (b));

•  working from home (clauses I.2.2, I.2.3 and I.2.4);

•  hours of work – agreed temporary reductions in ordinary hours (clause I.2.5);

•  the taking of annual leave (clause I.2.6); and

•  the notice period for a close-down (clause I.2.7).

[6] As we have mentioned, Schedule I operated until 30 June 2020. The Application (as varied by the revised draft determination) seeks to extend the operation of Schedule I, until 30 September 2020, and to vary the terms of the schedule, as follows:

1. By adding a new clause I.1.2, as follows:

I.1.2  Any direction or request given by an employer under Schedule I must be given in writing and does not apply to the employee if the direction is unreasonable in all of the circumstances.

2. By adding a new clause I.1.3, as follows:

I.1.3 Any direction or request given by an employer under Schedule I or any agreement made pursuant to clause I.2.1, from 1 July 2020, is not valid unless the employee is advised in writing that the employer consents to a dispute about the direction, request or agreement being settled by the Fair Work Commission through arbitration in accordance with clause 40.5—Dispute Resolution and section 739(4) of the Act.

3. By deleting clauses I.2.1 – Operational flexibility, I.2.2 – Part-time employees working from home and I.2.3 – Casual employees working from home.

4. By deleting the word “11:00pm” in clause I.2.1(a) and replacing it with the word “10:00pm”.

5. By adding new clauses I.2.2(i) to (k) as follows:

(i) This clause only applies to employers who implemented a temporary reduction in ordinary hours under Schedule I in this Award before 30 June 2020.

(j) Any employee who has had their hours of work reduced pursuant to this Schedule I prior to 1 July 2020 may request an employer to conduct a further vote to confirm the ongoing reduction in hours pursuant to this Schedule I. Such a vote must be held within 7 days of any request. The vote must comply with the requirements in clause I.2.2(h).

(k) If any vote requested under clause I.2.2(j) does not approve of the ongoing reduction of hours or is not held within 7 days of the making of the request, the operation of clause I.2.2 with respect to the relevant employees will cease to be effective 7 days from the date when the request was made.

6. By deleting clause I.2.6 – Annual leave, and inserting a new clause I.2.3.

7. By deleting clause I.2.7 – Close-down.

[7] Schedule I, with the proposed variations marked up in red, is set out at Attachment A. The proposed variations would result in re-numbering of some existing clauses.

[8] In broad terms, when seen in the context of the current Schedule I, the proposed variation restricts the flexibilities available and expands the range of safeguards. In terms of restricting flexibilities, the revised schedule removes the ‘operational flexibility term’ and the ‘close down term’ (clauses 1.2.1 and I.2.7 of the current schedule). Further, the provision facilitating agreed temporary reductions in ordinary hours is proposed to be confined to the employers who implemented a temporary reduction in ordinary hours under Schedule I before 30 June 2020. In other words, those agreed arrangements can continue until 30 September 2020, subject to proposed clauses I.2.2(j) and (k).

[9] As to safeguards, two of the ‘universal’ safeguards proposed are particularly important:

•  in effect, disputes about the operation of Schedule I can be dealt with by the Commission, by arbitration; and

•  any direction or request given by an employer under Schedule I must be given in writing and does not apply to the employee if the direction is unreasonable.

[10] These ‘universal’ safeguards are similar to those that apply to all ‘JobKeeper enabling directions’ under Part 6-4C of the Act, in particular:

•  A JobKeeper enabling direction does not apply to an employee if it is unreasonable in all the circumstances (s 789GK).

•  A JobKeeper enabling direction does not apply to an employee unless the employer gave the employee written notice of the employer’s intention to give the direction (s 789GM).

•  The Commission may deal with a dispute about the operation of Part 6-4C by arbitration (s 789GV).

[11] As noted in Re: Vehicle Manufacturing, Repair, Services and Retail Award 2010: 2

‘In circumstances where an application to vary a modern award proposes flexibilities which are the same or analogous to those which apply to JobKeeper enabling directions and requests under Part 6-4C of the Act it is entirely appropriate that such a variation also incorporate the relevant safeguards provided in Part 6-4C. Indeed, in the context of this Application, we have given significant weight to the provision of the safeguards in Schedule J set out above at [91] in our consideration of whether the variation of the Vehicle Award in the manner proposed would ensure that the Award provides ‘a fair and relevant minimum safety net of terms and conditions’ within the meaning of s.134(1).’ 3

[12] We agree with the above observation. The alignment of the ‘JobKeeper’ safeguards with those in award schedules containing flexibilities which are similar to those in Part 6-4C, is entirely appropriate.

[13] Additional, specific, safeguards are proposed in relation to annual leave flexibility. A comparison between the relevant terms of the current schedule and that proposed in the Application is set out below:

[14] The substance of the proposed change is that an employer will no longer be able to direct an employee to take paid annual leave but will be able to request that an employee take paid annual leave ‘if the request is made for reasons attributable to the COVID-19 pandemic or Government initiatives to slow the transmission of COVID-19 and to assist the employer to avoid or minimise the loss of employment’. Proposed clause I.2.3 requires that an employee must consider and may not unreasonably refuse such a request. This flexibility is subject to the universal safeguards mentioned earlier.

[15] The provision in Schedule I whereby an employer and employee can agree to take up to twice as much annual leave at a proportionately reduced rate of pay (clause I.2.6(a) of the current schedule and clause I.2.3(d) of the varied schedule) is retained in the schedule as varied.

[16] In support of the Application, ACCI advanced five broad lines of argument:

•  the health crisis has returned with a spike of cases in Victoria ‘And with it that brings an ongoing economic threat to businesses and a renewed focus on working from home’; 4

•  working from home remains at substantially increased levels and is a key area of focus for employees and employers;

•  the reduction in hours clause has been utilised in practice and ‘has proven relevant for some workplaces’; 5

•  the schedules remain relevant and important to employers despite the introduction of the JobKeeper arrangements as a large group do not fall within the scope of the JobKeeper scheme but may still be experiencing economic distress; and

•  the finding made by the Commission in March 2020 that the introduction of Schedule I was necessary to ensure that the Clerks Award achieved the modern awards objective remains apposite as the circumstances have not materially changed.

[17] Ai Group supported the submissions put by ACCI, emphasising that the variation was necessary to ensure that the Clerks Award achieved the modern awards objective, noting that the provisions sought are directed at assisting employers to maintain employment levels.

[18] As we have mentioned, the ASU opposed the Application and submitted, in essence, that the present circumstances are ‘significantly different’ to those which confronted the parties in late March 2020 when the ASU supported the variation of the Clerks Award to insert Schedule I, with an expiry date of 30 June 2020. The ASU contends that the change in circumstances are such that an extension to the operation of the schedule is not warranted.

[19] In support of its general position, the ASU relied on a number of matters which are said to militate against the extension of the schedule, including:

•  the three step framework for the easing of COVID-19 restrictions announced by the National Cabinet;

•  the introduction of the JobKeeper scheme;

•  the fact that employers are not using a key part of the schedule – clause I.2.5, which allows for agreed temporary reductions in hours. Only 24 employers, employing 352 employees, have utilised this provision; and

•  the schedule disadvantages some employees and such disadvantages should not be extended – the working from home term extends the spread of hours, denying employees the benefit of penalty payments. Further, clause 13.4 of the Clerks Award already provides a mechanism to extend the spread of hours by mutual agreement and, in addition, the ASU is prepared to make enterprise agreements with employers to address the particular needs of their enterprises.

3. The COVID-19 Pandemic

[20] The Commission has published an information note on the Government responses to the COVID-19 pandemic on its website, which was last updated on 26 June 2020. The information note outlines the measures taken by both federal and state governments to put restrictions on social gatherings and non-essential businesses, as well as the assistance provided to support businesses and households.

[21] As noted by the majority in the 2019-20 Annual Wage Review decision, the COVID-19 pandemic ‘casts a large shadow over the current economic environment’ 6 and the future is uncertain:

‘Despite the success in flattening the curve, health experts and the Commonwealth Government have advised that some level of restrictions on movement and gatherings, as well as border controls and social distancing measures, are likely to continue for some time, possibly until a vaccine is developed. The highly infectious nature of COVID-19 and concerns about a second wave of infections add to the uncertainty.

The form and shape of our pathway to recovery is uncertain and heavily contested. However, it is generally accepted that the pathway to recovery is largely dependent on how well the spread of the virus is contained, which will affect the extent to which restrictions can be eased with a consequent impact on business and consumer confidence.

The pace of recovery beyond the June quarter 2020 is especially uncertain.’ 7 (Footnotes omitted)

[22] The advice from the Commonwealth and state governments to work from home if it suits workers and their employers, to contain the spread of COVID-19, has affected the conduct of clerical and office work. 8

[23] On 26 June 2020 the Commission published an Information Note, prepared by Commission staff, on the Clerks Award and COVID-19. That note states that the business impacts of COVID-19 on the Clerks Award can be broadly assessed by looking at the impacts on 4 industries at the 1-digit industry level for which data are available, namely: Administrative and support services; Information media and telecommunications; Rental, hiring and real estate services; and Professional, scientific and technical services. However, as the Clerks Award does not ‘map’ 9 neatly to one industry we have used data at the occupation level, where available, to focus on ‘Clerical and administrative workers’.

[24] Table 1 provides data on the prevalence of working from home arrangements for employees in 2018 using data from the latest HILDA survey (Wave 18) by occupation.

[25] The data show that Clerical and administrative workers were more likely to have home-based work as a workplace entitlement and have a normal working from home arrangement with their employer than other occupational categories.

Table 1: Working from home arrangements, by occupations, HILDA survey 2018

Note: *Estimates had a relative standard error of between 50 per cent and 75 per cent and should be interpreted with caution. ^Proportions are based on employees that work ‘any usual working hours’ at home. For example, 39.1 per cent of Professionals work from home, and 42.1 per cent of these employees have a formal working from home arrangement with their employer.

Source: HILDA, Wave 18.

[26] As part of a range of new products undertaken to measure the impact of COVID-19 the ABS has released the Household Impacts of COVID-19 Survey, which among other things, collects data on working from home arrangements by gender and age from around 1000 persons aged 18 years and over.

[27] The data shows that 46 per cent of survey respondents were working from home in late April to early May 2020 (Table 2). For those respondents, around one quarter were working the same number of hours from home since the outbreak of COVID-19, while around 1 in 6 were working more hours from home since COVID-19.

[28] Females were more likely to work from home (55.6 per cent) than males (37.5 per cent) and were more likely to be working more hours from home since COVID-19. Those aged 65 years and over were more likely to work from home (55.6 per cent) compared with those aged between 18 to 64 years (45.5 per cent).

Table 2: Working from home arrangements, late-April/early-May 2020

Note: * Proportion has a margin of error greater than 10 per cent, which should be considered when utilising this information.

Source: ABS, Household Impacts of COVID-19 Survey, 29 Apr–4 May 2020, Catalogue No. 4940.0.

[29] In a recent survey, around one quarter of trading businesses were reported to be operating as normal throughout May and June without the need to modify operations, such as shifting operations online or operating with a reduced workforce (Table 3). Among these 4 selected industries, a higher proportion of businesses in Information media and telecommunications and Rental, hiring and real estate services reported operating as normal in mid-June, which has increased since mid-May, while the proportion of trading businesses operating as normal in Professional, scientific and technical services declined.

Table 3: Businesses operating as normal, trading businesses

Note: Refers to trading businesses. Modified conditions include shifting more operations online, or operating with a reduced workforce.

Source: ABS, Business Indicators, Business Impacts of COVID-19, June 2020, Catalogue No. 5676.0.55.003.

[30] Businesses that reported having modified operations as a result of COVID-19 also provided information on the types of modifications made. These are listed in Table 4.

[31] The most common modifications were to introduce new hygiene protocols and practices (65 per cent) and limits to the number of people on site (57 per cent). These were the most common modifications reported by businesses in Information media and telecommunications and Administrative and support services (over half in both industries), but also relatively common in the other 2 selected industries.

[32] However, the most common modification in Professional, scientific and technical services was ‘other workforce changes’ (over 60 per cent). This included staff working from home or operating with a reduced workforce. This modification was also relatively common among the other industries, and for nearly half of all businesses.

Table 4: Modifications to business operations, 10–17 June 2020

Source: ABS, Business Indicators, Business Impacts of COVID-19, June 2020, Catalogue No. 5676.0.55.003

4. Consideration

[33] The available data supports a finding that the COVID-19 pandemic has had, and continues to have, a substantial adverse impact on the employers and employees covered by the Clerks Award. It may be inferred from the data that a substantial proportion of businesses covered by the Clerks Award have modified their operations as a result of the pandemic and that a significant proportion of clerical employees are working from home.

[34] During the course of the proceedings, ACCI tendered material relating to what it described as the ‘emerging health crisis’ in Victoria. The material includes a comment attributed to Victoria’s Chief Health Officer warning that the ‘second surge’ in the number of new COVID-19 cases in Victoria ‘will get worse before it gets better’ and that the current spike in cases is ‘as big as the first one’.

[35] In responding to this material, the ASU acknowledged that there had been a ‘recent spike in the last couple of weeks’ in Victoria but point to the easing of restrictions in other states:

‘this is not a Victorian award, this is a national award so … we need to have a national view when we come to looking at the restrictions and easing of the restrictions and the like.’ 10

[36] It seems to us that the recent ‘second surge’ of COVID-19 cases in Victoria highlights the uncertainty and downside risks in the short to medium term. As the majority observed in the 2019-20 Annual Wage Review decision:

‘In our view there are significant downside risks in the period ahead. These include that the international outlook remains highly uncertain, the future of fiscal support to the domestic economy (including through JobKeeper) is unknown and there is the risk of a second wave of COVID-19 infection and the reimposition of extensive restrictions. As to the last point, the June 2020 OECD Economic Outlook (Preliminary Version) notes in regard to Australia that:

‘… should widespread contagion resume, with a return of lockdowns, confidence would suffer and cash-flow would be strained. In that double-hit scenario, GDP could fall by 6.3% in 2020. Even in the absence of a second outbreak, GDP could fall by 5% in 2020’. 11 (footnotes omitted).

[37] While the ‘second wave’ of COVID-19 infection is presently limited to Victoria, that fact does not obviate the risk of further outbreaks in other States and Territories. Further, as noted by ACCI in its submission, Victoria is Australia’s second most populous state with over 2.7 million employees of whom 360 000 are clerical employees.

[38] We propose to briefly address the other merit arguments advanced before turning to the legislative framework.

[39] We commence with the Applicants’ reliance on the fact that Schedule I had initially been inserted into the Clerks Award with the consent of the ASU. For our part, we wish to make it clear that the ASU’s previous position has played no part in our decision to vary and extend Schedule I. We accept the ASU’s argument that the position taken by the union in the earlier proceedings was in the context of the circumstances at that time. As Mr Rizzo put it during the course of oral argument:

‘but the salient point is that one of the main reasons why we supported it was the short-term nature of it, Your Honour, and that is beyond dispute.  We do say that the circumstances have changed since March 28.  If I can take the Bench's mind back to that time because I think it's the same Full Bench, in late March 2020 there was a lot of fear, concern, even panic happening at that time because no-one really was on top of what was happening at the time, nor governments, nor unions nor employers.  The economy was shutting down and so forth.  There were newspaper headlines showing that there was modelling shown between something like 50 to 150,000 Australians might die.  I mean, this is the sort of scenario that we were dealing with at the time.  None of us were wise at the time.’ 12

[40] However, we would also observe that the uncertainty as to the future path of the pandemic remains, as evidenced by recent developments in Victoria.

[41] We have concluded that the Application has merit, and that the ASU’s arguments to the contrary are unpersuasive. While the National Cabinet has announced a pathway out of the restrictions imposed to contain the virus, considerable uncertainty remains. We acknowledge that the introduction of the JobKeeper scheme is a relevant consideration, however the scheme does not cover all of the employers and employees experiencing financial distress.

[42] As to the ASU’s contention that there has been limited utilisation of clause I.2.5 to date, we accept that this is so. However, the revised draft variation determination only seeks to extend existing agreed arrangements, until 30 September 2020. In relation to that extension, the ASU contends that it would amount to a ‘breach of trust in respect of those employees who had voted to reduce their hours, because:

‘They voted at the time with the understanding that this disadvantage would be for limited time until 30 June 2020.’ 13

[43] The point raised has some merit, but in our view it is satisfactorily addressed by the terms of proposed clauses I.2.2(j) and (k), which provide for a further vote to confirm any ongoing reduction in hours, upon the request of any employee who has had their hours reduced.

[44] Finally, we acknowledge that the continuation of the extended spread of hours related to working from home may have the effect of denying some employees an entitlement to penalty payments, that would otherwise occur, but note three points in this regard:

•  the working from home arrangements only apply on the request of an employee (and with the agreement of the employer);

•  the extension of the spread of hours in clause I.2.1(b) have been modified (from 6am – 11pm, to 6am – 10pm); and

•  disputes in respect of agreements made pursuant to clause I.2.1 can be the subject of arbitral determination by the Commission.

[45] We now turn to the legislative framework.

[46] The Commission may make a determination varying a modern award if the Commission is satisfied the determination is necessary to achieve the modern awards objective. The modern awards objective is in s.134 of the Fair Work Act 2009 (Cth) (the Act) and provides as follows:

‘What is the modern awards objective?

134(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

(c) the need to promote social inclusion through increased workforce participation; and

(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and

(da) the need to provide additional remuneration for:

(i) employees working overtime; or

(ii) employees working unsocial, irregular or unpredictable hours; or

(iii) employees working on weekends or public holidays; or

(iv) employees working shifts; 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).’

[47] The modern awards objective is to ‘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 the particular considerations identified in ss.134(1)(a)–(h) (the s.134 considerations).

[48] The modern awards objective is very broadly expressed. 14 It is a composite expression which requires that modern awards, together with the National Employment Standards (NES), provide ‘a fair and relevant minimum safety net of terms and conditions’, taking into account the matters in ss.134(1)(a)–(h).15 Fairness in this context is to be assessed from the perspective of the employees and employers covered by the modern award in question.16

[49] The obligation to take into account the s.134 considerations means that each of these matters, insofar as they are relevant, must be treated as a matter of significance in the decision-making process. 17 No particular primacy is attached to any of the s.134 considerations18 and not all of the matters identified will necessarily be relevant in the context of a particular proposal to vary a modern award.

[50] It is not necessary to make a finding that the award fails to satisfy one or more of the s.134 considerations as a prerequisite to the variation of a modern award. 19 Generally speaking, the s.134 considerations do not set a particular standard against which a modern award can be evaluated; many of them may be characterised as broad social objectives.20 In giving effect to the modern awards objective the Commission is performing an evaluative function taking into account the matters in s.134(1)(a)–(h) and assessing the qualities of the safety net by reference to the statutory criteria of fairness and relevance.

[51] Section 138 of the Act emphasises the importance of the modern awards objective:

‘Section 138 Achieving the modern awards objective

A modern award may include terms that it is permitted to include, and must include terms that it is required to include, only to the extent necessary to achieve the modern awards objective and (to the extent applicable) the minimum wages objective.’

[52] What is ‘necessary’ to achieve the modern awards objective in a particular case is a value judgment, taking into account the s.134 considerations to the extent that they are relevant having regard to the context, including the circumstances pertaining to the particular modern award, the terms of any proposed variation and the submissions and evidence. 21

[53] The ASU submitted that the ‘legal environment has changed’ since Schedule I was inserted into the Clerks Award. The gravamen of this submission seemed to be that the Commission has recently adopted a higher threshold for the insertion or extension of COVID-19 schedules in modern awards. As Mr Rizzo put it during the course of oral argument:

‘…in a more sober environment the Full Bench has made it quite clear to all applicants who want to vary awards that they have to present a fair bit of evidence, they have to establish the need for necessity for the application to be extended, and that evidence has to be presented to convince the Bench to that effect and it hasn't.’ 22

[54] Mr Rizzo later submitted that in the recent Vehicle Repair, Repair and Retail Award 2010 23 and Fast Food Award 201024 decisions ‘there was a shift from the Full Bench of demanding more from parties if they were going to succeed in an application and I think that’s the general gist of those decisions’.25

[55] In support of this proposition, the ASU refers to [112] of the Fast Food decision,:

‘Any party seeking to extend the operation of the schedule (or any similar COVID-19 related variation) will be required to make a new application under s.158 supported by probative evidence.’ 26

[56] The ASU’s reliance on this passage is misconceived. As we made clear during the course of oral argument, this observation was confined to the particular circumstances of that matter and to any subsequent application to extend the COVID-19 schedule in the Fast Food Award. So much is clear from the context and, in particular, the Full Bench’s observation at [110] of that decision,:

‘The only evidence before us about the particular circumstance of a Fast Food industry employer relates to McDonald’s. An enterprise agreement has applied to McDonald’s in the past and we see no reason why McDonald’s cannot engage in collective bargaining for an enterprise agreement that suits the needs of its business. Such a process would also provide an opportunity for the employees directly affected to have a say. We accept that such a process takes time, and that is one of the reasons in favour of varying the Award, but we are not persuaded that a period of 3 months is necessary. We propose that clause H.2 be amended as follows:

H.2 Schedule H operates from 19 May 2020 (Date of Operation) until 31 July 2020 (3 months from Date of Operation). The period of operation can be extended on application to the Fair Work Commission.’ 27

[57] Contrary to the ASU’s submission, there has been no shift or change in the Commission’s approach. The statutory tests remain the same. The Commission may only include a term in a modern award to the extent necessary to achieve the modern awards objective.

[58] In this context we would note that we accept the submission put by Mr Izzo, on behalf of ABI, that the extent of the evidence required to support a variation depends on the context and what is necessary, from an evidentiary perspective, to support a temporary change to the award safety net in response to extraordinary circumstances is plainly different to that which is required to support a substantive, ongoing variation to a modern award.

[59] We now turn to the modern awards objective.

[60] It was common ground that the consideration in s 134(b), (c), (e) and (h) were not relevant. We deal with the other considerations below.

s. 134(1)(a): relative living standards and the needs of the low paid

[61] A threshold of two-thirds of median full-time wages provides ‘a suitable and operational benchmark for identifying who is low paid’, 28 within the meaning of s.134(1)(a). Using the two-thirds of median full-time wages as the benchmark, employees paid at classification levels 1 to 3 in the Clerks Award are ‘low paid’ within the meaning of s.134(1)(a).

[62] We accept that the proposed variation may result in low paid employees working less hours and consequently receiving less pay. It is axiomatic that such a reduction in pay will mean that they are less able to meet their needs. But, as noted in our decision of 28 March 2020, which inserted the present Schedule I into the Clerks Award, employers and employees face an invidious choice in the present circumstances and the retention of as many employees as possible in employment, albeit on reduced hours, is plainly a priority.

[63] We also note the agreed measures to mitigate the impact of reduced hours, particularly by maintaining relevant accruals; that all entitlements on termination of employment based on each employees weekly ordinary hours of work prior to the commencement of Schedule I; and by facilitating engagement in secondary employment, training, professional development and study.

[64] Further, the continued operation of the term relating to ordinary hours of work for employees working from home may result in employees receiving less pay than they would otherwise receive for working ordinary hours outside the spread of hours set by the award. In this context we note the matters identified at [44] above.

[65] This consideration weighs against granting the Application.

s. 134(1)(c) the need to promote social inclusion through increased workforce participation

[66] This consideration is directed at obtaining employment. The package of measures will facilitate the parties’ shared objective of retaining as many employees in employment as practicable in the current crisis.

s.134(1)(da)(ii) the need to provide additional remuneration for (relevantly) employees working unsocial hours

[67] The continuation of the extended spread of hours relating to agreed working from home arrangements may have the effect of denying some employees an entitlement to penalty payments for working unsociable hours. This consideration may be said to weigh against granting the application.

s. 134(1)(d) and (f) the need to promote flexible modern work practices and the efficient and productive performance of work and the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden.

[68] The proposed variation will promote flexibility and the ‘efficient and productive performance of work’ and will reduce the regulatory burden on business. This is a factor which weighs in favour of making the variation sought.

[69] Additional considerations apply to the proposed annual leave flexibilities (in proposed clause I.2.3). Subsections 93(3) and (4) are relevant in this regard. Subject to the requirement to take leave being reasonable, a modern award term which provides that an employee can be required to take a period of annual leave is a term of the type contemplated by s.93(3). The issue in the present matter is whether proposed clause I.2.3 is ‘reasonable’ within the meaning of s.93(3).

[70] Clause I.2.3 provides that an employer may request that an employee take paid annual leave; the employee must consider the request and must not unreasonably refuse the request. The term in question is of limited duration and is a response to an extraordinary set of circumstances. Further, the right to request is subject to a number of safeguards:

•  the employer must consider the employee’s personal circumstances;

•  the request must not result in the employee having a balance of paid annual leave of fewer than 2 weeks;

•  an employer can only make a request where it is reasonable in all the circumstances and if the request is made for reasons attributable to the COVID-19 pandemic or Government initiatives to slow the transmission of COVID-19 and is necessary to assist the employer to avoid or minimise the loss of employment; and

•  a period of leave must start before 30 September 2020 but may end after that date.

[71] We are satisfied that proposed clause I.2.3 is a permitted term and is ‘reasonable’ within the meaning of s.93(3).

[72] As to the proposed clause I.2.3(d) – the ability to take twice as much annual leave at half the rate of pay for all or part of any period of annual leave – we are satisfied that the proposed term is an ancillary or incidental term permitted by s.55(4).

5. Conclusion

[73] The terms in the varied Schedule I are terms that may be included in a modern award pursuant to ss.136(1)(a) and (c), and ss.139(1)(a), (c), (h) and (j) and s.142(1) of the Fair Work Act 2009.

[74] We are satisfied that the variation proposed is necessary to achieve the modern awards objective and in so deciding we have taken into account the considerations in s.134(1)(a) to (h), insofar as they are relevant. Once varied, the Clerks Award will only include terms to the extent necessary to achieve the modern awards objective.

[75] For the reasons set out above, we will make the variation determination sought. The determination will come into operation on 1 July 2020. As required by s.165(3), the determination does not take effect in relation to a particular employee until the start of the first pay period that starts on or after the day the determination comes into operation.

[76] A copy of the variation determination is set out at Attachment B.

PRESIDENT

Appearances:

Mr L. Izzo and Ms T. Lawrence for the Australian Chamber of Commerce and Industry

Ms S. Ismail for the Australian Council of Trade Unions

Mr S. Smith for the Australian Industry Group

Mr M. Rizzo for the Australian Services Union

Hearing details:

By telephone

2020

30 June

Printed by authority of the Commonwealth Government Printer

<PR720642>

ATTACHMENT A

Schedule I—Award Flexibility During the COVID-19 Pandemic

I.1 The provisions of Schedule I are aimed at preserving the ongoing viability of businesses and preserving jobs during the COVID-19 pandemic and not to set any precedent in relation to award entitlements after its expiry date.

I.1.1 Schedule I operates from 28 March 2020 until 30 September 202030 June 2020. The period of operation can be extended on application to the Fair Work Commission.

I.1.2 Any direction or request given by an employer under Schedule I must be given in writing and does not apply to the employee if the direction is unreasonable in all of the circumstances.

I.1.3 Any direction or request given by an employer under Schedule I or any agreement made pursuant to clause I.2.1, from 1 July 2020, is not valid unless the employee is advised in writing that the employer consents to a dispute about the direction, request or agreement being settled by the Fair Work Commission through arbitration in accordance with clause 40.5—Dispute resolution and section 739(4) of the Act.

I.2 During the operation of Schedule I, the following provisions apply:

I.2.1 Operational flexibility

I.2.2 Part-time employees working from home

I.2.3 Casual employees working from home

I.2.14 Ordinary hours of work for employees working from home

(a) Instead of clause 25.1(b) (Ordinary hours of work (other than shiftworkers), for employees working from home by agreement with the employer where an employee requests and the employer agrees, the spread of ordinary hours of work for day workers is between 6.00 am and 10.00 11.00 pm, Monday to Friday, and between 7.00 am and 12.30 pm on Saturday.

(b) Day workers are not shiftworkers for the purposes of any penalties, loadings or allowances under the award, including for the purposes of clause 28.

(c) The facilitative provision in clause 25.2 (Ordinary hours of work (other than shiftworkers)), which allows the spread of hours to be altered, will not operate for the employees referred to in clause I.2.25(ae).

I.2.25 Agreed temporary reduction in ordinary hours

(a) An employer and the full-time and part-time employees in a workplace or section of a workplace, may agree to temporarily reduce ordinary hours of work for the employees in the workplace or section for a specified period while Schedule I is in operation.

(b) At least 75% of the full-time and part-time employees in the relevant workplace or section must approve any agreement to temporarily reduce ordinary hours.

(c) For the purposes of clause I.2.25(a), ordinary hours of work may be temporarily reduced:

(i) For full time employees, to not fewer than 75% of the full-time ordinary hours applicable to an employee immediately prior to the implementation of the temporary reduction in ordinary hours.

(ii) For part-time employees, to not fewer than 75% of the part-time employee’s agreed hours immediately prior to the implementation of the temporary reduction in ordinary hours.

(d) Where a reduction in hours takes effect under clause I.2.25(a), the employee’s ordinary hourly rate will be maintained but the weekly wage will be reduced by the same proportion.

(e) Nothing in Schedule I prevents an employer and an individual employee agreeing in writing (including by electronic means) to reduce the employee’s hours or to move the employee temporarily from full-time to part-time hours of work, with a commensurate reduction in the minimum weekly wage.

(f) If an employee’s hours have been reduced in accordance with clause I.2.25(a):

(i) the employer must not unreasonably refuse an employee request to engage in reasonable secondary employment; and

(ii) the employer must consider all reasonable employee requests for training, professional development and/or study leave.

(g) For the purposes of clause I.2.25(a), where there is any reduction in the ordinary hours of work for full-time or part-time employees in a workplace or section during the period Schedule I is in operation, all relevant accruals and all entitlements on termination of employment will continue to be based on each employee’s weekly ordinary hours of work prior to the commencement of Schedule I.

(h) For the purposes of clause I.2.25(a), the approval of employees shall be determined by a vote of employees. In order for the vote to be valid, the employer must comply with the following requirements:

(i) Where any of the employees are known to be members of the Australian Services Union or another organisation, the ASU or other organisation shall be informed before the vote takes place.

(ii) Prior to the vote of employees, the employer shall provide the employees with the contact details of the ASU, should they wish to contact the ASU for advice; and

(iii) The employer must notify the Fair Work Commission by emailing [email protected] that the employer proposes to conduct a vote under Schedule I. The employer shall provide the work email addresses of the employees who will be participating in the vote, to the Commission. The Commission will then distribute the ASU COVID-19 Information Sheet to the employees prior to the vote. The Commission shall list the name of the business on a register which will be accessible to the ASU, upon request, for the period when Schedule I is in operation.

(iv) The vote shall not take place until at least 24 hours after the requirements of clause I.2.25(h)(i), (ii) and (iii) have been met.

(i) This clause only applies to employers who implemented a temporary reduction in ordinary hours under Schedule I in this Award before 30 June 2020.

(j) Any employee who has had their hours of work reduced pursuant to this Schedule I prior to 1 July 2020 may request an employer to conduct a further vote to confirm the ongoing reduction in hours pursuant to this Schedule I. Such a vote must be held within 7 days of any request. The vote must comply with the requirements in clause I.2.2(h).

(k) If any vote requested under clause I.2.2(j) does not approve of the ongoing reduction of hours or is not held within 7 days of the making of the request, the operation of clause I.2.2 with respect to the relevant employees will cease to be effective 7 days from the date when the request was made.

I.2.3 Annual leave

(a) Subject to clause I.2.3(f) and despite clauses 32.6, 32.7 and 32.8 (Annual leave), an employer may, subject to considering an employee’s personal circumstances, request an employee to take paid annual leave, provided that the request does not result in the employee retaining a balance of less than 2 weeks annual leave after the leave is taken. Such a request must be made a minimum of 72 hours before the date on which the annual leave is to commence.

(b) An employee must consider and may not unreasonably refuse a request to take annual leave made pursuant to clause I.2.3.

(c) Clauses I.2.3(a) and (b) do not prevent an employer and an employee agreeing to the employee taking annual leave at any time.

(d) Employers and individual employees may agree to take up to twice as much annual leave at a proportionately reduced rate for all or part of any agreed or directed period away from work, including any close-down.

(e) The period of annual leave must commence before 30 September 2020 but may end after this date.

(f) An employer can only request that an employee take annual leave pursuant to this clause if the request is made for reasons attributable to the COVID-19 pandemic or Government initiatives to slow the transmission of COVID-19 and to assist the employer to avoid or minimise the loss of employment.

I.2.6 Annual leave

(a) Employers and individual employees may agree to take up to twice as much annual leave at a proportionately reduced rate for all or part of any agreed or directed period away from work, including any close-down.

(b) Instead of clauses 29.6, 29.7 and 29.8 (Annual leave), an employer may direct an employee to take any annual leave that has accrued, subject to considering the employee’s personal circumstances, by giving at least one week’s notice, or any shorter period of notice that may be agreed. A direction to take annual leave shall not result in an employee having less than 2 weeks of accrued annual leave remaining.

I.2.7 Close down

(a) Instead of clause 29.5 (Annual leave), and subject to clause I.2.7(b), an employer may:

(i) require an employee to take annual leave as part of a close-down of its operations by giving at least one week’s notice, or part of its operations, or any shorter period of notice that may be agreed; and

(ii) where an employee who has not accrued sufficient leave to cover part or all of the close-down, the employee is to be allowed paid annual leave for the period for which they have accrued sufficient leave and given unpaid leave for the remainder of the closedown.

(b) Clause I.2.7(a) does not permit an employer to require an employee to take leave for a period beyond the period of operation of Schedule I.

(c) Where an employee is placed on unpaid leave pursuant to clause I.2.7(a), the period of unpaid leave will count as service for the purposes of relevant award and NES entitlements.

ATTACHMENT B: Schedule I as varied

Schedule I—Award Flexibility During the COVID-19 Pandemic

I.1 The provisions of Schedule I are aimed at preserving the ongoing viability of businesses and preserving jobs during the COVID-19 pandemic and not to set any precedent in relation to award entitlements after its expiry date.

I.1.1 Schedule I operates from 28 March 2020 until 30 September 2020. The period of operation can be extended on application to the Fair Work Commission.

I.1.2 Any direction or request given by an employer under Schedule I must be given in writing and does not apply to the employee if the direction is unreasonable in all of the circumstances.

I.1.3 Any direction or request given by an employer under Schedule I or any agreement made pursuant to clause I.2.1, from 1 July 2020, is not valid unless the employee is advised in writing that the employer consents to a dispute about the direction, request or agreement being settled by the Fair Work Commission through arbitration in accordance with clause 40.5—Dispute resolution and section 739(4) of the Act.

I.2 During the operation of Schedule I, the following provisions apply:

I.2.1 Ordinary hours of work for employees working from home

(a) Instead of clause 13.3 (Ordinary hours of work (employees other than shiftworkers), for employees working from home by agreement with the employer where an employee requests and the employer agrees, the spread of ordinary hours of work for day workers is between 6.00 am and 10.00 pm, Monday to Friday, and between 7.00 am and 12.30 pm on Saturday.

(b) Day workers are not shiftworkers for the purposes of any penalties, loadings or allowances under the award, including for the purposes of Part 6—Shiftwork.

(c) The facilitative provision in clause 13.4 (Ordinary hours of work (other than shiftworkers)), which allows the spread of hours to be altered, will not operate for the employees referred to in clause I.2.1(a).

I.2.2 Agreed temporary reduction in ordinary hours

(a) An employer and the full-time and part-time employees in a workplace or section of a workplace, may agree to temporarily reduce ordinary hours of work for the employees in the workplace or section for a specified period while Schedule I is in operation.

(b) At least 75% of the full-time and part-time employees in the relevant workplace or section must approve any agreement to temporarily reduce ordinary hours.

(c) For the purposes of clause I.2.2(a), ordinary hours of work may be temporarily reduced:

(i) For full time employees, to not fewer than 75% of the full-time ordinary hours applicable to an employee immediately prior to the implementation of the temporary reduction in ordinary hours.

(ii) For part-time employees, to not fewer than 75% of the part-time employee’s agreed hours immediately prior to the implementation of the temporary reduction in ordinary hours.

(d) Where a reduction in hours takes effect under clause I.2.2(a), the employee’s ordinary hourly rate will be maintained but the weekly wage will be reduced by the same proportion.

(e) Nothing in Schedule I prevents an employer and an individual employee agreeing in writing (including by electronic means) to reduce the employee’s hours or to move the employee temporarily from full-time to part-time hours of work, with a commensurate reduction in the minimum weekly wage.

(f) If an employee’s hours have been reduced in accordance with clause I.2.2(a):

(i) the employer must not unreasonably refuse an employee request to engage in reasonable secondary employment; and

(ii) the employer must consider all reasonable employee requests for training, professional development and/or study leave.

(g) For the purposes of clause I.2.2(a), where there is any reduction in the ordinary hours of work for full-time or part-time employees in a workplace or section during the period Schedule I is in operation, all relevant accruals and all entitlements on termination of employment will continue to be based on each employee’s weekly ordinary hours of work prior to the commencement of Schedule I.

(h) For the purposes of clause I.2.2(a), the approval of employees shall be determined by a vote of employees. In order for the vote to be valid, the employer must comply with the following requirements:

(i) Where any of the employees are known to be members of the Australian Services Union or another organisation, the ASU or other organisation shall be informed before the vote takes place.

(ii) Prior to the vote of employees, the employer shall provide the employees with the contact details of the ASU, should they wish to contact the ASU for advice; and

(iii) The employer must notify the Fair Work Commission by emailing [email protected] that the employer proposes to conduct a vote under Schedule I. The employer shall provide the work email addresses of the employees who will be participating in the vote, to the Commission. The Commission will then distribute the ASU COVID-19 Information Sheet to the employees prior to the vote. The Commission shall list the name of the business on a register which will be accessible to the ASU, upon request, for the period when Schedule I is in operation.

(iv) The vote shall not take place until at least 24 hours after the requirements of clause I.2.2(h)(i), (ii) and (iii) have been met.

(i) This clause only applies to employers who implemented a temporary reduction in ordinary hours under Schedule I in this Award before 30 June 2020.

(j) Any employee who has had their hours of work reduced pursuant to this Schedule I prior to 1 July 2020 may request an employer to conduct a further vote to confirm the ongoing reduction in hours pursuant to this Schedule I. Such a vote must be held within 7 days of any request. The vote must comply with the requirements in clause I.2.2(h).

(k) If any vote requested under clause I.2.2(j) does not approve of the ongoing reduction of hours or is not held within 7 days of the making of the request, the operation of clause I.2.2 with respect to the relevant employees will cease to be effective 7 days from the date when the request was made.

I.2.3 Annual leave

(a) Subject to clause I.2.3(f) and despite clauses 32.6, 32.7 and 32.8 (Annual leave), an employer may, subject to considering an employee’s personal circumstances, request an employee to take paid annual leave, provided that the request does not result in the employee retaining a balance of less than 2 weeks annual leave after the leave is taken. Such a request must be made a minimum of 72 hours before the date on which the annual leave is to commence.

(b) An employee must consider and may not unreasonably refuse a request to take annual leave made pursuant to clause I.2.3.

(c) Clauses I.2.3(a) and (b) do not prevent an employer and an employee agreeing to the employee taking annual leave at any time.

(d) Employers and individual employees may agree to take up to twice as much annual leave at a proportionately reduced rate for all or part of any agreed or directed period away from work, including any close-down.

(e) The period of annual leave must commence before 30 September 2020 but may end after this date.

(f) An employer can only request that an employee take annual leave pursuant to this clause if the request is made for reasons attributable to the COVID-19 pandemic or Government initiatives to slow the transmission of COVID-19 and to assist the employer to avoid or minimise the loss of employment.

 1   [2020] FWCFB 1690.

 2   [2020] FWCFB 2367 at [93]

 3   See also Re Fast Food Industry Award 2010 [2020] FWCFB 2316 at [84]

 4   Transcript 30 June 2020 at [21]

 5   Ibid at [26]

 6   [2020] FWCFB 3500 at [23]

 7   [2020] FWCFB 3500 at [35] – [37]

 8   See: Fair Work Commission (2020), Information note – Government responses to COVID-19 pandemic: https://www.fwc.gov.au/documents/documents/resources/covid-19-information/information-note-government-responses-covid-19-2020-06-16.pdf

 9   Preston M, Pung A, Leung E, Casey C, Dunn A and Richter O (2012) ‘Analysing modern award coverage using the Australian and New Zealand Industrial Classification 2006: Phase 1 report’, Research Report 2/2012, Fair Work Australia.

 10   Transcript 30 June 2020 at [62]

 11   [2020] FWCFB 3500 at [101].

 12   Transcript 30 June 2020 at [36]

 13   ASU submission, 29 June 2020 at para 15.

 14   Shop, Distributive and Allied Employees Association v National Retail Association (No 2) (2012) 205 FCR 227 at [35]

 15   (2017) 265 IR 1 at [128]; Shop, Distributive and Allied Employees Association v The Australian Industry Group [2017] FCAFC 161 at [41]–[44]

 16   [2018] FWCFB 3500 at [21]-[24]

 17   Edwards v Giudice (1999) 94 FCR 561 at [5]; Australian Competition and Consumer Commission v Leelee Pty Ltd [1999] FCA 1121 at [81]-[84]; National Retail Association v Fair Work Commission (2014) 225 FCR 154 at [56]

 18   Shop, Distributive and Allied Employees Association v The Australian Industry Group [2017] FCAFC 161 at [33]

 19   National Retail Association v Fair Work Commission (2014) 225 FCR 154 at [105]-[106]

 20   See National Retail Association v Fair Work Commission (2014) 225 FCR 154 at [109]-[110]; albeit the Court was considering a different statutory context, this observation is applicable to the Commission’s task in the Review

 21   See generally: Shop, Distributive and Allied Employees Association v National Retail Association (No.2) (2012) 205 FCR 227

 22   Transcript, 30 June 2020 at PN44.

 23   [2020] FWCFB 3416.

 24   [2020] FWCFB 2316.

 25   Transcript at para [56].

 26   [2020] FWCFB 2316 at [112].

 27   [2020] FWCFB 2316 at [110].

 28   [2017] FWCFB 1001 at [166]