Fair Work Act 2009
s.157–Application to vary or revoke a modern award

Restaurant & Catering Industrial
(AM2021/58)

Restaurant Industry Award 2020 – application to vary a modern award – award flexibility – exemption rate – simplified classification structure – substitute allowance – provisional views confirmed – draft determinations issued.

1. Background

[1] This decision concerns an application by Restaurant and Catering Industrial (RCI) (the Application) to vary the Restaurant Industry Award 2020 (the Restaurant Award). The background to the Application is set out in a Statement published on 3 June 2021.

[2] For present purposes, we need only note that the Application arose out of a process which was initiated by correspondence from the Minister for Industrial Relations in which the Minister expressed the Government’s view that ‘… in the extraordinary circumstances that have been caused by the COVID pandemic … it would be in Australia’s economic best interest for the Fair Work Commission to use its powers under s.157(3)(a) … to undertake a process to ensure several priority modern awards in sectors hardest hit by the pandemic be amended.’ 1 The Restaurant Award was among the awards identified by the Minister as priority awards.

[3] The Application seeks to vary the Restaurant Award by including 2 new schedules, Schedule R and Schedule AA, in order to assist employers and employees recover from the COVID-19 pandemic. Proposed Schedule R includes:

•  access to a simplified classification structure (which is set out in Schedule AA)

•  a ‘substitute’ allowance in substitution for certain work and expense related allowances, and

•  exemption rates.

[4] The proposed Schedule R incorporates a number of safeguards, which we set out later.

[5] Following a number of private conferences, an amended draft determination was filed on 31 May 2021. RCI also filed a submission in support of the Application and a number of witness statements.

[6] On 3 June 2021 we issued a Statement 2 (June Statement) setting out our provisional view that the Restaurant Award be varied in the terms set out in the draft determination at Attachment A to that Statement. Interested parties were directed to file submissions and evidence in response to our provisional view.

[7] In accordance with the directions, we received the following:

•  correspondence from NSW Business Chamber and Australian Business Industrial

•  Submission from the United Workers Union (UWU), attaching the witness statement of Ms Angela Knox, and

•  Submission in reply from RCI.

[8] In its correspondence, NSW Business Chamber and Australian Business Industrial confirmed that it endorsed the proposal to vary the Restaurant Award as set out in Attachment A to the June Statement.

[9] In a Statement 3 issued on 5 July 2021 (July Statement), we informed the parties that updated information notes regarding the COVID-19 situation had been published, and that an updated note regarding the Accommodation and food services industries would be published concurrently with the Statement:

•  Information note – COVID-19 situation update

•  Information note – Government responses to COVID-19 pandemic

•  Information note – Accommodation and food services

[10] Any party who wished to provide comments on the updated information notes was directed to file a short written submission by 4.00pm on 7 July 2021. Submissions were received from:

•  UWU

•  RCI

[11] The UWU submits that the updated information notes ‘describe a situation broadly consistent with that depicted in the submissions filed by the UWU in this matter’.

[12] In response to the updated information notes RCI submits:

‘The updated information note also provided recent data which demonstrated that from December 2020 to June 2021, the accommodation and food services when compared to all industries were disproportionately affected in their change of revenue. In addition, the changes in operating hours due to COVID-19 reaffirmed the disproportionate impact of COVID-19 with fewer than 10% of businesses in Accommodation and food services were ‘operating as normal’ between mid-June and mid-September 2020.

The correlation between the economic recovery with the easing of restrictions is highlighted in the updated information note which also found that during the second wave of new cases in Victoria, the turnover recovery stalled with ongoing restrictions from the subsequent waves of community transmission.

In June 2021, the information note stated that a higher proportion of businesses in Accommodation and food service would be in a difficult or very difficult to meet financial commitments over the next 3 months at 25% which compared with 16% for all industries. There is also a lower proportion who indicated that it would be “easy” or “very easy” to meet financial commitments over the next 3 months with 28% for accommodation and food services when compared to 41% for all industries.

The latest data in accordance with the updated information note recognised that up until the week ending 5 June 2021, the number of jobs across all industries was 2.3% higher than mid-March 2020 levels which is contrasted with Accommodation and food services where it was still 12.3% below the mid-March levels.

Overall, the updated information note reiterates the views of RCI that the accommodation and food services industry continue to be disproportionately affected by the pandemic. The ongoing variants of COVID-19 resulting in further government lockdowns and restrictions continues to impede the economic recovery and exacerbate the two-speed economy that is occurring in Australia. As new variants of COVID-19 spread in the community, the Accommodation and food services sector continue to be the severely affected.’

[13] We deal later with the impact of the COVID-19 pandemic on the restaurant sector.

[14] In the June Statement, we indicated that absent a specific request for an oral hearing the matter would be determined on the papers. No party requested an oral hearing and nor did any party express a desire to cross-examine any of the witnesses. Accordingly, we will proceed to determine the matter on the papers.

2. The Context

[15] As noted in the 2020-21 Annual Wage Review decision (the AWR decision), the COVID-19 pandemic cast a large shadow over 2020. While predominantly a public health issue, federal and state government-imposed restrictions to contain the spread of the virus had a profound economic impact. 4 The restrictions included travel restrictions (both international and domestic) and social distancing rules. The social and economic consequences of these measures were unprecedented and led to business closures and job losses. All but ‘essential workers’ were forced to stop work or modify their work arrangements. These actions significantly reduced domestic activity and resulted in ‘a large and near-simultaneous contraction across the global economy.’5

[16] The Restaurant Award has been varied a number of times during the course of the pandemic to provide a range of flexibilities designed to assist employees covered by the Award to retain staff and remain in business. The last COVID-19 schedule expired on 27 September 2020. A list of relevant variations is set out below:

•  COVID-19 Award Flexibility Schedule [2021] FWCFB 1621; Applications to vary Schedule X PR728081

•  COVID-19 Award Flexibility Schedules [2020] FWCFB 5137; PR723052

•  Applications to vary Schedule X [2020] FWCFB 3444; [2020] FWCFB 3490; PR720774

•  Application to vary the Restaurant Industry Award 2020 [2020] FWCFB 3401; Restaurant and Catering Industry Association T/A Restaurant and Catering Industry Association PR720589

•  Variation of awards on the initiative of the Commission [2020] FWCFB 1837; PR718143

•  Application to vary the Restaurant Industry Award 2010 [2020] FWCFB 1741; PR717978

[17] The Australian economy has recovered to a greater extent and more quickly than anticipated.

[18] The Minutes of the Monetary Policy Meeting of the Reserve Bank Board on 4 May 2021 summarise how well the domestic economy has improved recently:

‘… the Australian economy was transitioning from recovery to expansion earlier and with more momentum than previously anticipated. The unique features of the pandemic and the policy response had seen the economy rebound much faster than in previous downturns. GDP was expected to have returned to its pre-pandemic level in the March quarter and there were more people employed in March than before the onset of the pandemic.’ 6

[19] The RBA’s Statement on Monetary Policy for May 2021 commented that ‘GDP growth in the December quarter 2020 was stronger than expected and the recovery in activity and the labour market again exceeded expectations in the March quarter’. 7

[20] However, the pandemic is not over and risks remain. As noted in the AWR decision:

‘While the economic recovery is well underway and the overall outlook is much more positive than it was last year, we acknowledge the risk of domestic outbreaks and on-going disruptions to other major economies. COVID-19 outbreaks necessitating further containment measures remain a significant risk and, as the Commonwealth submits ‘even localised outbreaks could have an impact on consumer and business confidence weighing on consumption and investment’. 8

[21] The AWR decision also observed that the pattern in 2021 in respect to further cases of community transmission has seen comparatively brief lockdown periods comprised of stay-at-home orders generally localised to particular regions that have limited the reasons for people to leave their homes. Broadly, it has meant that only work deemed ‘essential’ has been allowed to operate during these periods. These restrictions imposed in each state and territory, and nationally, have been documented in the Commission’s information note throughout the pandemic. 9 Chart 1 shows the length of lockdown since Victoria’s second wave of COVID-19 from the middle of 2020.

Source: Fair Work Commission (2021), Information note - government responses to COVID-19 pandemic, updated 2 July.

Note: Lockdown duration commences from when restrictions were first increased. High severity means very limited reasons to leave home. Medium severity involves some easing of restrictions with the ability to gather in limited numbers in homes, public or venues. Low severity involves relatively little restrictions but still more than before the lockdown commenced. A lockdown is considered to be finished when restrictions return to the same level or are comparable to pre-lockdown levels. Lockdowns are defined as those with restrictions that are considered high severity.

The second Victorian lockdown started on 20 June 2020, but only data from 1 July 2020 are shown. However, the duration includes the days prior to 1 July 2020.

[22] Chart 1 shows the length of lockdowns since Victoria’s second wave of COVID-19 from the middle of 2020. The lockdowns have been temporary and have included: 10

•  Adelaide in mid-November 2020 (3 days);

•  Sydney’s Northern Beaches in late December 2020, with fewer restrictions for the rest of Greater Sydney (including Wollongong, Central Coast, and Blue Mountains) that lasted for several weeks, and in May 2021 (4 days) and in late June/early July 2021 (19 days and ongoing);

•  Brisbane in January and late March/early April 2021 (both for 3 days) and South East Queensland in late June/early July 2021 (4 days);

•  Perth and surrounding regions in late January/early February (5 days) late April 2021 (3 days) and late June/early July 2021 (4 days);

•  Victoria in mid-February 2021 (5 days) and in late May/early June 2021 (14 days), with restrictions easing in regional Victoria after 1 week; and

•  Darwin, Palmerston and certain rural regions in the Northern Territory in late June/early July 2021 (6 days) and Alice Springs in late June/early July 2021 (3 days).

[23] States and territories have also re-imposed border restrictions during these times.   

[24] Based on the broadly consistent pattern following Victoria’s second wave, the AWR decision concluded that ‘future lockdowns are likely to be of limited duration and localised, with most states locking down regions rather than the whole state’. 11

[25] These lockdowns were expected to adversely impact a number of industries, including hospitality (other than those providing take away food services). 12 The increase awarded from the 2020–21 Annual Wage Review was delayed until 1 November 2021 for modern awards mapped to the Accommodation and food services industries including the Restaurant Award.13

[26] In 2021, restrictions have since been re-imposed at different times during city or state-wide lockdowns. At the beginning of July 2021, restrictions were in place across most states and territories. For example, lockdowns in Greater Sydney and surrounds, as well as parts of Queensland, Western Australia and the Northern Territory mean that hospitality venues are closed except for providing takeaway services, while across Victoria and South Australia there were density and capacity limits.

[27] Despite the easing of restrictions, the number of employee jobs in the Accommodation and food services sector has not yet returned to the level recorded before the onset of the pandemic. This can be measured using the data released by the ABS that provide weekly statistics on employee jobs and wages using payroll data from the Australian Taxation Office.

[28] Employee jobs in Accommodation and food services fell 35 per cent in only 4 weeks (between 14 March and 11 April 2020), a larger fall than any other industry. While the ensuing rebound was longer than the initial fall, more than half of the number of employee jobs lost in those 4 weeks had returned by early July 2020. However, this was interrupted by restrictions being re-imposed in Victoria. Between early July and mid-November 2020, the number of employee jobs was relatively steady in the industry. With the re-opening of hospitality in Victoria in the last week of October, this increased up to mid-December 2020. 14

[29] The latest data, to the week ending 5 June 2021, show that the number of jobs across all industries is 2.3 per cent higher than that reported in mid-March 2020. However, for Accommodation and food services, it is 12.3 per cent below the level at 14 March 2020 and 12.0 per cent below for Food and beverage services.

[30] Total wages had also declined in Accommodation and food services by a relatively large percentage (–10.9 per cent) compared with an overall increase of 2.1 per cent across all industries (as shown in Chart 2).

Chart 2: Change in employee jobs and total wages between 14 March and 5 June 2021

Source: ABS, Weekly Payroll Jobs and Wages in Australia, Week ending 5 June 2021.

[31] In June 2021, a higher proportion of businesses in Accommodation and food services indicated that it would be difficult or very difficult to meet financial commitments over the next 3 months (25 per cent) compared with the average across all industries (16 per cent), and a lower proportion indicated that it would be easy, or very easy to meet financial commitments over the next 3 months (28 per cent compared with 41 per cent) (Chart 3).

Chart 3: Business ability to meet financial commitments over the next three months, Accommodation and food services and all industries, June 2021

Accomodation and food services                                   All industries
 

Note: These proportions exclude responses that did not know their change in operating expenses. The reference week is 9–16 June. Source: ABS, Business Indicators, Business Impacts of COVID-19, June 2021.

[32] The UWU acknowledges that the impact of the pandemic on the sector of the hospitality industry covered by the Restaurant Award ‘was significant’ but submits that ‘the industry is recovering’. The UWU relies on aspects of the AWR decision 15 and the fact that the Annual Wage Review increase in respect of the Restaurant Award was delayed by 6 months in 2020 and by 3 months in 2021.

[33] The UWU submitted a statement made by Associate Professor Angela Knox from the University of Sydney Business School containing a report prepared by Professor Knox in relation the hospitality industry (the Knox Report). The Knox Report was commissioned by the UWU in relation to the priority modern awards and Commission review process generally, and not specifically in relation to this Application.

[34] The UWU submits that the Commission ‘can and should take general regard of the report, taking into account the fact that it was not prepared specifically in relation to this application.’ 16

[35] The UWU notes that the Knox Report states:

‘While the onset of the COVID crisis and its effects have been significant, both here and abroad, Australia’s economy appears to be bouncing back at aggregate level (Borland 2021). Within Australia’s hospitality industry, similar trends are apparent, although slightly more tempered.’

[36] The UWU submits that on this basis, the Commission should take the view that: 17

•  the circumstances facing the sector of the industry covered by the Restaurant Award are different than they were at the time of the Minister’s Letter and at the time the Commission commenced the process to review the Restaurant Award

•  the hospitality industry is not facing as acute an economic crisis as may have appeared to exist at the time of the Minister’s Letter and at the time the Commission commenced the process to review the Restaurant Award, and

•  while the speed and circumstances of the economic recovery in the hospitality industry is inferior to that of some other industries (and was categorized by Professor Borland as ‘lagging’), the hospitality industry is recovering from the economic effects of the pandemic.

[37] The UWU also drew our attention to the following passage from the Knox Report:

‘Further degradation of wages and/or career progression opportunities is likely to heighten recruitment and retention problems and exacerbate labour shortages, proving counterproductive for hospitality businesses. Instead, evidence indicates that efforts should be directed towards increasing the quality of hospitality jobs, including pay and professional opportunities, to increase productivity, stimulate economic growth and spur competitiveness.’ 18

[38] The UWU submits that the proper approach to be taken to the Application is a ‘cautious one’ and that in respect of the COVID pandemic, the relevant environment is no longer ‘extreme’; the Commission should not approach the Application as though there are ‘unique’ circumstances. 19

[39] It is convenient to deal with the Knox Report here.

[40] As noted by the UWU, the Knox Report was not specifically commissioned in response to the Application and it does not address the terms of the Application. This is a significant limitation and impacts the relevance of the report to the matter before us. The summary of the Knox Report states:

‘A review of academic research was undertaken in response to the ‘Distressed’ Industries Award Reviews, specifically in relation to the hospitality industry. The evidence highlights the predominance of ‘bad jobs’ in Australia’s hospitality industry, marked by low pay, limited career progression opportunities, long working hours and lack of job security. Typically, these characteristics contribute to the recruitment and retention problems that blight the industry. Although the onset of COVID-19 lockdowns had a severe impact on employment in the hospitality industry, the subsequent recovery has reignited job vacancies; with labour shortages intensified by COVID-related disruptions to labour supply. Any proposed changes to hospitality awards would need to be assessed in this context. An intensification of ‘bad jobs’ would compound labour shortages and recruitment and retention problems.

Research evidence indicates that a reduction in penalty rates, including via ‘loaded rates’, is likely to compound the industry’s poor-quality jobs by reducing wages among some of the countries lowest paid workers. There is no evidence to suggest that the costs borne by workers would be offset by increased rates of employment. Rate reductions have also been linked to a reduced willingness to work during non-standard times and increased turnover among hospitality workers. Although simplification of penalty rates has been put forward as a means of solving the industry’s compliance problems, existing evidence indicates that simplification has not only failed to improve compliance it has contributed to labour shortages. Additionally, research examining broad-banding highlights the importance of providing workers with additional pay to compensate for resultant increases in task, skill and workload demands, and its effect on progression opportunities.

Further degradation of wages and/or career progression opportunities is likely to heighten recruitment and retention problems and exacerbate labour shortages, proving counterproductive for hospitality businesses. Instead, evidence indicates that efforts should be directed towards increasing the quality of hospitality jobs, including pay and progression opportunities, to increase productivity, stimulate economic growth and spur competitiveness. Nations within the developed world, including the US and UK, are now turning their attention to improving job quality to fuel the job creation that will drive economic recovery from the COVID crisis.’ 20

[41] While the conclusions advanced by the Knox Report may well be soundly based, they do not assist our consideration of this Application.

[42] Two points may be made in this regard:

1. The proposition that:

‘a reduction in penalty rates, including via ‘loaded rates’, is likely to compound the industry’s poor-quality jobs by reducing wages among some of the countries lowest paid workers’,

is not relevant to the present Application given the nature of the exemption rates proposal and the range of safeguards provided. In particular, disputes about the operation of Schedule R can be dealt with by the Commission by arbitration. In arbitration the Commission can, among other things, require an employer to pay an employee the difference between what they were paid under Schedule R and what they would otherwise have received under the Award if the Commission determines that any agreement entered into was unfair for an employee.

2. The proposition that:

‘research examining broad-banding highlights the importance of providing workers with additional pay to compensate for resultant increases in task, skill and workload demands, and its effect on progression opportunities. Further degradation of wages and/or career progression opportunities is likely to heighten recruitment and retention problems and exacerbate labour shortages, proving counterproductive for hospitality businesses’, 21

does not address the broad banding proposal before us. As we mention later, it is common ground that the proposed broad banding:

•  would not result in a reduction in take home pay for any employee provided employees are classified correctly, in accordance with the new classification structure in Schedule AA, and

•  would result in an increase in take home pay for some workers who are classified in accordance with the new structure.

[43] As mentioned earlier, the Knox Report also deals with the impact of the pandemic on the hospitality sector, expressing the view that Australia’s economy recovery ‘appears to be bouncing back at the aggregate level’ and that similar trends are apparent in the hospitality sector ‘although slightly more tempered’.

[44] In our view, the most recent data does not support Dr Knox’s opinion regarding the extent of the ongoing impact of the pandemic on the hospitality sector. We agree with RCI that the Accommodation and food services sector continues to be disproportionately affected by the pandemic. Further, the likely future pattern of lockdowns will substantially affect the sector in those areas subject to lockdown.

3. Consideration

[45] We now turn to consider the merits of the Application.

[46] It is convenient to first deal with some general submissions advanced by the UWU. As mentioned earlier, the UWU submits that the Commission should take a ‘cautious’ approach to the Application and that the Commission should adopt an approach which ensures no reduction in take-home pay:

‘Reductions in take home pay would not assist this industry to continue to recover from the economic effect of the pandemic – in fact, any such measure would be counter-productive, and contribute to the specific challenge facing the industry at present – attracting and retaining staff.’ 22

[47] We agree that a cautious approach is warranted. The changes proposed in the Application are, in the context of this Award, somewhat novel. We also accept that reductions in take home pay would serve to exacerbate the current challenges facing the hospitality sector in relation to the attraction and retention of staff.

[48] The UWU also contends that the context in which the Application is made is ‘no longer extreme or unusual’ and:

‘… to the extent FWC has in the past eighteen months approached applications to vary modern awards having regard to the “unique” circumstances of the pandemic, it should not take that approach in this matter.’ 23 [Footnotes omitted]

[49] As mentioned earlier, we acknowledge that the Australian economy has recovered to a greater extent and more quickly than anticipated; but the pandemic is not over and risks remain. Future lockdowns are likely albeit of limited duration compared to 2020 and localised, with most states locking down regions rather than the whole state. NSW is presently battling a significant outbreak of the delta COVID-19 variant.

[50] The lockdowns likely to be imposed to contain the spread of the virus are likely to adversely impact a number of industries including that part of the hospitality sector covered by the Restaurant Award.

[51] We accept that the circumstances presently facing the Restaurant sector are not as dire as in the earlier stages of the pandemic; but the sector continues to face real challenges. Such circumstances weigh in favour of award variations which promote flexible modern work practices.

[52] Managed flexibility is an appropriate response in the current circumstances – the introduction of flexibilities within a framework of safeguards directed at ensuring employees do not suffer a reduction in their take home pay.

[53] Before turning to 3 three key elements of the proposed Schedule R, we note that a number of safeguards apply to each element. In summary the safeguards are as follows:

•  The proposed Schedule R is expressed to operate for a limited period (clause R.1).

•  The exemption rate can only be accessed by agreement between an employer and an individual employee and any such agreement must be recorded in writing.

•  The substitute allowance can only be accessed by agreement between an individual employee and an employer; or by agreement with 75% of affected employees. These agreements must also be recorded in writing.

•  An agreement can be terminated by giving 4 weeks’ notice in writing.

•  An employer must consult with affected employees and their representatives (if any) prior to initiating any of the provisions in proposed Schedule R.

•  Disputes about the operation of Schedule R can be dealt with by the Commission by arbitration. In arbitrating a dispute the Commission may:

•  terminate an agreement made under Schedule R if it determines that it was not entered into genuinely

•  terminate an agreement made under Schedule R if it determines that the employer failed to consult as required

•  require an employer to pay an employee the difference between what they were paid under the Schedule and what they would otherwise have received under the Award if the Commission determines that any agreement entered into was unfair for an employee, and

•  terminate an agreement for an employee if the Commission determines that any agreement entered into was unfair for that employee.

[54] We now turn to the key elements of proposed schedules.

3.1 The Simplified Classification Structure

[55] The simplified classification structure and classification definitions are set out in proposed Schedule AA. Pursuant to clause R.4, an employer can elect to classify all relevant employees in accordance with the Schedule AA.

[56] The essence of the proposed simplified classification structure is to ‘broadband’ part of the classification structure, namely certain grades in the food and beverage stream and in the kitchen stream.. It is common ground that the proposed variation would:

•  not result in a reduction of take home pay for any employee provided employees are classified correctly, in accordance with the new classification structure, and

•  result in an increase in take home pay for some workers who are classified in accordance with the new structure.

[57] RCI submits that the proposal operates to broad band certain work tasks that are currently classified into separate classifications and streams:

‘this broad banding seeks to reflect the practical way employees often work especially in cafes and in smaller businesses covered by the Restaurant Award’ 24

[58] RCI also submits that the simplified classification structure will assist employers during the recovery from the pandemic because:

‘(a) It removes the complexity to classify employees by reducing 6 arbitrary and overlapping levels to 3 easy-to-understand tiers.

(b) It consolidates the restaurant/café worker by combining the Kitchen Stream and Food and Beverage Attendant Stream, providing confidence and assurance that employees are being classified correctly even when they are required to help out with broader general duties; which is an increasingly common feature of the industry through the Pandemic and the recovery.

(c) Promotes multi-skilling and training of employees to be able to execute a broader range of tasks that are currently found in other streams.

(d) Provides flexibility for employers and increases productivity levels by employees who are multi-skilled.

(e) It reflects the manner in which many smaller businesses in the industry work in practice.’

[59] The UWU identified 2 concerns with the proposal: 25

•  the combination of multiple classifications results in a requirement that employees ‘multi-skill’ in order to perform those roles; the effect of multi-skilling may be such that the combination and variation of multiple skill sets results in an increase in the work-value associated with the work, and

•  the increase of the level 4 rate to the level 5 rate might operate as a disincentive to promote employees from level 3.

[60] The first point advanced is merely speculative and in the event that there is an increase in work value as suggested by the UWU, it may make an application to increase the relevant minimum wages, having regard to the terms of ss.157(2) and (2A).

[61] In relation to the second point, Note 1 under the definition of ‘appropriate level of training’ in the Restaurant Award currently stipulates that:

‘The minimum classification level for an employee who has completed AQF Certificate III or higher qualifications relevant to the classification in which they are employed and who makes use of skills and knowledge derived from Certificate III competencies relevant to the work undertaken is Level 4.’

[62] In short, the Award already provides that for promotion to Level 4 when an employee has completed an AQF Certificate III or higher qualification and makes use of those skills and knowledge. Any dispute about whether an employee has been correctly classified can be dealt under the dispute resolution procedure in clause 34 of the Restaurant Award.

[63] In response to Commission’s provisional view to grant the variation, the UWU submitted the following further protective measures should be adopted: 26

‘A committee should be formed to monitor the operation of this and any other variation FWC is minded to make in relation to this application. The committee should comprise at least two representatives nominated by RCI, and two nominated by UWU (and such additional representatives as these two parties may agree to). The Committee should meet bi-monthly and consider matters relevant to whether this proposal (and others contemplated by this application) are working fairly, efficiently and appropriately. The formation of this committee need not be a clause of the award, but FWC should recommend that it be constituted and function along the lines suggested in any decision it makes about this matter.

The review in relation to the operation of this variation to the Award (and others, if any) should commence no later than nine months after the commencement of its operation. The review should consider, among other things, whether the concerns identified by UWU members and outlined at [31] of this Outline of Submissions have come to fruition.’

[64] In its reply submission RCI consents to the ‘further protective measures’ proposed by the UWU:

‘Subject to drafting that the Fair Work Commission is satisfied with, this represents a practical proposal and will provide a new plenary safeguard that should materially assuage any concerns about “caution” or any mis-use of the proposed Schedule R.

The clause can be considered as permissible pursuant to section 139 (1) (j).

RCI consents to such a clause being including in Schedule R is willing and able to engage in the committee and review process as noted in paragraph [34] of the submission by the UWU.’ 27

[65] We deal with the UWU’s proposed monitoring committee and the review in Section 4, Next Steps.

3.2 The Substitute Allowance Proposal

[66] The substitute allowance proposal is set out at clause R.5 of proposed Schedule R as follows:

R.5 Substitute Allowance

Subject to this clause:

R.5.1 an employer and an employee may enter into an agreement to pay the employee a substitute allowance below (the Substitute Allowance):

R.5.2 an employer and at least 75% of the employees in the workplace concerned may agree to pay all of the employees in the workplace a Substitute Allowance below:

R.5.3 Where an agreement to pay the Substitute Allowance has been made in accordance with clause R.5, the following clauses of this award shall not apply:

(a) clauses 16.5 and 16.6 (meal break);

(b) clause 21.2 (meal allowance);

(c) clause 21.3 (split shift allowance);

(d) clause 21.4 (tool and equipment allowance);

(e) clause 21.5 (special clothing allowance); and

(f) clause 21.6 (distance work allowance).

R.5.4 The Substitute Allowance shall be paid for all purposes of this award.

R.5.5 The Substitute Allowance is adjusted in accordance with increases to wages.

[67] The proposed substitute allowance provides for the payment of a single all-purpose payment per hour worked in substitution for several work and expense related allowances (specified in clause R 5.3). The proposal has the following features:

•  it operates by agreement with an individual employee or to all the employees in the workplace as a whole on a 75% vote of employees

•  any such agreement must be reduced to writing

•  any such agreement can be unilaterally terminated by and employer or an employee on 4 weeks’ notice with an individual, or where the agreement applies to all the employees in a workplace by a 50% plus one vote of employees

•  while subject to an agreement, the employee must be paid the substitute allowance for each hour worked and the substitute allowance is paid for all purposes, and

•  the quantum of the substitute allowance is different for different classifications based on the modelling used by RCI and the higher prevalence of paying the allowances that are substituted at the lower classification levels in the industry.

[68] The term ‘all purposes’ is not a defined term in the Restaurant Award. However, the following definition was inserted into relevant modern awards during the 4 yearly review of modern awards 28 and this applies to Schedule R:

‘all purposes means the payment will be included in the rate of pay of an employee who is entitled to the allowance, when calculating any penalties or loadings or payment while they are on leave’

[69] In relation to the differences in the quantum of the substitute allowance at different classification levels, RCI filed a further submission (on 2 June 2021) outlining the rationale for the calculation of the substitute allowance. In that submission RCI states:

‘… that some 408,873 hours of rostered work were examined.

This data set was broken down by employment status and classification level.

While potentially counter intuitive at first glance the data set when broken down showed that employees at the lower levels of the classification structure had a higher incidence of receiving the allowances being substituted than employees at the higher classification levels.

This was in part due to the fact that employees on lower classification levels triggered the payment of more allowances than employees on higher classification levels. Also, the prevalence of casual employees as a proportion of the hours examined also impacted the calculation of the rate. As there are far more casual employees on levels 1 & 2, their allowance rate was found to be higher.

This trend reversed when coming to levels 5 and 6 of the classification structure which might have been more expected.

Accordingly, to create an outcome where employees were not worse off the substitute allowance needed to be higher for level 1 descending to level 4 and then ascending for level 5 and 6.’ 29

[70] This issue is also canvassed in the witness statement of Mr Tom Green dated 31 May 2021.

[71] In their submission dated 31 May 2021, RCI submits that the substitute allowance will assist employers in the industry during the recovery from the pandemic because:

•  it encourages employment with a higher headline rate of pay to attract labour during the recruitment process when the industry is dealing with both demand and supply side challenges during the recovery

•  it reduces the compliance costs and administrative burden borne by employers from calculating each allowance separately for each employee

•  it allows for a more consistent and better estimation about the cost of wages for cashflow purposes rather than ad hoc allowances that may or may not apply in a given week

•  it promotes compliance by allowing for a single reference point as a substitute allowance, thereby reducing the costs of compliance for employers who already face increasing compliance measures from Pandemic related government directives and restrictions, and

•  it increases ease of employment by providing peace of mind and assurance for compliance purposes, allowing employers to focus on other functions in the business.

[72] We note that s.149 of the Fair Work Act 2009 (Cth) (the Act) provides for the automatic variation of allowances to coincide with a variation in modern award wages:

‘If a modern award includes allowances that the FWC considers are of a kind that should be varied when wage rates in the award are varied, the award must include terms providing for the automatic variation of those allowances when wage rates in the award are varied.’

[73] In the RCI submission dated 2 June 2021, RCI notes that the substitute allowance should be ‘adjusted to reflect the change in minimum award rates set down by the Commission for the 2021/22 financial year’. A term providing for the adjustment of the substitute allowance was included in the draft determination attached to the June Statement. We address this issue later in Section 4, Next Steps.

[74] The UWU acknowledges that for some employees the adoption of the substitute allowance proposal would result in a pay increase ‘because it would be paid for all purposes and in all circumstances, including in circumstances where under the award, allowances in lieu of which it is paid might not have applied to a particular employee.’ 30

[75] While the extent to which an employee receiving the allowance is better off is difficult to predict, the UWU notes that the value of the allowance could be as much as $60.80 per week (or more if overtime hours are worked).

[76] Despite the various safeguards attached to this proposal, the UWU submits that its members have identified the follows concerns with this proposal:

‘a. Much of the case in favor of this provision made by RCI is that it will improve compliance with the award. Enhanced compliance with the award may well be a factor in favor of its adoption, in the context of the modern awards objective. However, a case in favor of a proposed award variation based solely on improving compliance with the award may not be enough. UWU does not concede that the frequent non-compliance with this award justifies its amendment solely on that basis. FWC should not make this variation to the award unless it is persuaded that it is consistent with the modern awards objective for reasons in addition to the reason that it might improve compliance.

b. It is important that an employee who enters into an agreement that will aggregate allowances in the manner contemplated by this provision can withdraw from that agreement for any reason, including when they discover they would be better off receiving individual allowances under the award. It is therefore appropriate that this measure include a provision allowing parties to withdraw from any agreement by providing at least four weeks notice (as is proposed). However, the hospitality industry is afflicted by significant level of award non-compliance. It is therefore crucial that employees are informed of their right to withdraw from an agreement to aggregate allowances and their right to do is respected.

c. Item R.11 of the amended draft determination provides that FWC may arbitrate a dispute which arises under this (and other) proposals, and in arbitrating such as dispute, may, among other things, “require an employer to pay an employee the difference between what they were paid under this Schedule and what they would otherwise have received under this award if the Fair Work Commission determines that any agreement entered into under this Schedule was an unfair for an employee”. In other words, the proposed clause appears to be intended to empower the FWC to order an employer to rectify any financial disadvantage that may arise for an employee who is paid the substitute allowance, who can show they would have been better off not receiving the substitute allowance, and instead receiving individual allowances under the award. This should be clear – that is – the power of FWC to require payment of a financial disadvantage suffered as a result of the adoption of the substitute allowance should be clarified.’ 31

[77] The UWU submits that the concerns it has identified justify the adoption of further protective measures, and if the award variation is made:

•  Proposed clause R.7 should be amended as follows:

R.7 … Agreement must be in writing, and specify in writing that either party can withdraw from the agreement by providing notice of four weeks. An agreement that does not contain this is not valid.

•  Proposed clause R.11(b)(iii) should be amended as follows:

R.11 (b) (iii) … require an employer to pay an employee the difference between what they were paid under this Schedule and what they would otherwise have received under this award if the Fair Work Commission determines that any agreement entered into under this Schedule was unfair for an employee (including in circumstances where it is shown that an employee would have earned more if an agreement to be paid the substitute allowance did not exist and the employee had been paid individual allowances under the award).

[78] As to the concerns raised by the UWU, we would note that non-compliance is a significant issue in the hospitality sector. An investigation by the Fair Work Ombudsman between December 2018 and March 2020 in two popular food precincts (Brisbane’s West End and Melbourne Laneways) 32 found that 86% of the 93 businesses investigated were non-compliant with workplace laws.

[79] The UWU submits that ‘a case in favour of the proposed award variation based solely on improving compliance with the award may not be enough’.

[80] We note further that the case advanced in support of the Application is not based solely on improving compliance with the Award. Further, if a proposed variation makes an award simpler and easier to understand and hence enhances compliance; and does not disadvantage the employees covered by the award, then prima facie that would provide a strong merit argument in favour of such a variation.

[81] In reply, RCI consents to the UWU’s proposal that employees be informed of their right to withdraw from a substitute allowance proposal and does not object to an amendment which clearly stipulates the Commission’s authority to require payment to the employee if they would have been paid more under the previous arrangement ‘should the Commission see it as desirable’.

[82] For the reasons indicated above, we propose to make both of the amendments proposed by the UWU, namely:

•  a variation to clause R.7 33 as follows:

… Agreement must be in writing, and specify in writing that either party can withdraw from the agreement by providing notice of four weeks. An agreement that does not contain this is not valid.

•  a variation to clause R.11(b)(iii) 34 as follows:

… require an employer to pay an employee the difference between what they were paid under this Schedule and what they would otherwise have received under this award if the Fair Work Commission determines that any agreement entered into under this Schedule was unfair for an employee (including in circumstances where it is shown that an employee would have earned more if an agreement to be paid the substitute allowance did not exist and the employee had been paid individual allowances under the award)

3.3 The Exemption Rate Proposal

[83] Exemption rate clauses operate to exclude certain employees from some or all of the terms of an award. 35

[84] Historically, a number of pre-reform awards and Notional Agreements Preserving State Awards (NAPSAs) included exemption rate clauses. 36 These are a feature of a relatively small number of modern awards;37 most commonly providing that employees at or above a certain classification are exempt from provisions concerning overtime payments, penalty rates and some allowances.38

[85] Part 10A of the Workplace Relations Act 1996 (WR Act) established a process for the Australian Industrial Relations Commission (AIRC) to make modern awards. The AIRC had to carry out the process in accordance with an ‘award modernisation request’ from the Minister to the President of the AIRC. 39 An award modernisation request could, inter alia, give directions about how, or whether, the AIRC was to deal with particular matters about which terms could be included in a modern award.40 Any terms the AIRC did include in a modern award had to be consistent with such directions.41

[86] Paragraph 2(f) of the Minister’s Award Modernisation Request relevantly provided:

‘2. The creation of modern awards is not intended to: …

(f) exempt or have the effect of exempting employees who are not high income employees, from modern award coverage or application, unless there is a history of exempting employees from coverage across a wide range of pre-reform awards and NAPSAs in the relevant industry or occupation;’

[87] Paragraph 2(f) was added to the Minister’s Award Modernisation Request on 2 May 2009. In Clerks – Private Sector Award 2010 42 (Clerks), the Full Bench considered paragraph 2(f) in dealing with an application to delete an exemption rate clause in the Clerks – Private Sector Award 2010. The Full Bench had previously decided to include such a clause in the award but reconsidered this in light of the variation to the Minister’s Award Modernisation Request on 2 May 2009. The Full Bench also considered the Minister’s covering letter to the President of the AIRC regarding paragraph 2(f), which said:

‘… The request now reflects more clearly the Government’s intention that the creation of modern awards should not exempt, or have the effect of exempting from the safety net provided by modern awards, employees other than those expressly listed in the request. Employees who are not high income employees should be protected by a complete and comprehensive modern award safety net of basic entitlements unless there is a history of exempting employees from coverage across a wide range of pre-reform awards and NAPSAs in the relevant industry or occupation …’

[88] The Full Bench decided to remove the exemption rate clause, stating at [24]:

‘We also note the clear intent of the change to the Minister’s request and the submission made in her letter to the Commission regarding her view of the test to be applied and the incidence of exemption provisions in current instruments. In this connection we also consider that it is relevant that, for the first time, the legislation determines that an award will not apply to persons who reach a certain level of income.’

[89] Following the reasoning in Clerks, the Full Bench subsequently also removed an exemption rate clause from the Banking, Finance and Insurance Award 2010. 43 In both awards, an annualised salary clause was inserted instead, which allowed an employer to pay an employee an annual salary in satisfaction of provisions in the award regarding minimum weekly wages, allowances, overtime and penalty rates, and annual leave loading.

[90] During the award modernisation process, an exemption rate clause (clause 17.3) was included in the Registered and Licensed Clubs Award 2010, however that industry had a history of exempting employees from the full range of award coverage. The AIRC Full Bench noted that the clause reflected the terms of the major federal award for club managers and the New South Wales Bowling and Golf Clubs Employees (State) Award. 44 The clause is two-tiered and applies to club managers receiving a salary in excess of 20 per cent, or in excess of 50 per cent, of the minimum annual salary rates for their classification. The clause also allows Maintenance and horticultural Levels 1–4 to freely agree in writing to payment of a salary of not less than 33 per cent in excess of the minimum weekly rate of pay for level 4 (Maintenance and horticultural Level 3–tradesperson) instead of various provisions of the award.

[91] In our view, the constraints that the Minister’s Award Modernisation Request placed on the AIRC as to the terms it could include in modern awards do not apply to variations to modern awards under the Act. The Commission can include exemption rate clauses in modern awards provided that:

•  it is satisfied that they are necessary to achieve the modern awards objective in s.134 of the Act 45

•  they are about matters set out in s.139 of the Act 46

•  they are not terms that must not be included in a modern award, 47 and

•  they do not have the effect that employees earning above a certain rate stop being covered by the award altogether (unless the Commission is satisfied that those employees would instead be covered by another modern award (other than the Miscellaneous Award) that is appropriate for them). 48

[92] As a general proposition, we accept that an exemption rate clause could reduce award complexity and the regulatory burden on business and may encourage collective bargaining. Whether this potential is realised will depend on the terms of the clause itself, and how it will operate in the relevant industry. In particular the Commission needs to consider whether the exemption rate has been set at a sufficiently high level so that it does not disadvantage employees and whether it is consistent with the need to provide additional remuneration for employees as set out in s.134(1)(da). Further, the factors the Full Bench considered in Clerks in deciding to remove the exemption rate clause may also be relevant to whether an exemption rate clause provides a fair and relevant minimum safety net. These factors include that the Act already provides a level at which high income employees do not receive award entitlements, with s.47(2) providing that modern awards do not apply to employees at a time they are high income employees  49(currently those earning above $158,500).

[93] An exemption rate can be expressed as a specified amount (e.g. an annual salary in excess of $80,000), or as a percentage of the rate of pay specified in the award (e.g. in excess of 25% above the prescribed rate).

[94] Staff of the Commission have conducted an audit of modern awards and have identified exemption rate clauses in the following 6 modern awards:

•  Business Equipment Award 2020

•  Hospitality Industry (General) Award 2020

•  Market and Social Research Award 2020

•  Racing Industry Ground Maintenance Award 2020

•  Registered and Licensed Clubs Award 2010, and

•  Sugar Industry Award 2020

[95] In most of the relevant clauses, the exemption rate is expressed as a percentage above the minimum rate that would otherwise apply. The percentages range from 10 per cent for employees in the clerical stream of the Business Equipment Award to 50 per cent for club managers in the Registered and Licensed Clubs Award. The only rate that is not expressed as a percentage is the exemption rate for employees in the technical stream of the Business Equipment Award which is currently $64,653 (compared to the highest rate in the minimum rates clause of $ 52,426).

[96] Each of the relevant exemption rate clauses is set out at Attachment A.

[97] An exemption rate clause can be drafted to operate by inclusion or exclusion, by providing that:

•  the award will not apply to employees earning in excess of a specified amount/percentage of the minimum annual salary payable under the award, other than specified clauses; 50 or

•  the award will apply to employees earning in excess of a specified amount/percentage of the minimum annual salary payable under the award, save for specified clauses. 51

[98] Of the exemption rate clauses currently in modern awards, commonly excluded terms are those dealing with:

•  penalty rates 52

•  overtime 53

•  higher duties 54

•  ordinary hours of work and rostering, 55 and

•  allowances e.g. uniform allowances, 56 vehicle allowances57 and living away from home allowances.58

[99] As mentioned earlier, exemption rate clauses are a feature of a relatively small number of modern awards which had a history of such provisions. It is appropriate to adopt a cautious approach to the insertion of such provisions in modern awards. They should generally be confined to the higher classification levels in the award and should include safeguards aimed at ensuring that employees are not disadvantaged.

[100] Evidence about common work patterns and allowances received by employees earning more than the proposed exemption rate will assist the Commission in determining which clause exclusions are necessary for the clause to meet the modern awards objective.

[101] The range of excluded terms cannot be so broad that, in effect, the exemption rate clause provides that the award ceases to apply to employees who are paid the exemption rate. .

[102] The exemption rate proposal is set out in clause R.3 of proposed Schedule R, as follows:

R.3 Exemption Rate

R.3.1 An employer and a full time employee (paid at the Level 5 or Level 6 rate of pay) may enter into an agreement to pay the employee no less than 170% of their relevant Level rate of pay each week as set out in clause 18 Minimum Rates of this award (the Exemption Rate).

R.3.2 Where an agreement to pay the Exemption Rate has been made, the following clauses of this award shall not apply:

(a) clauses 16.5 and 16.6 (meal break);

(b) clause 21 (allowances);

(c) clause 23 (overtime rates) but not clause 23.2; and

(d) clause 24 (penalty rates).

R.3.3 Where an agreement has been made to pay an employee the Exemption Rate the employee must be paid the Exemption Rate for each hour worked up to and including 57 hours in a week and for hours worked in excess of 57 in a week the employee must be paid:

(a) 150% of the Exemption Rate for the first two hours in excess of 57 in the week; and then

(b) 200% of the Exemption Rate thereafter in the week.

R.3.4 The Exemption Rate shall be the rate for the purposes of calculating:

(a) personal leave; and

(b) annual leave.

R.3.5 Clause R3 does not apply to employees classified under the administrative and general stream (Schedule A.4).

NOTE: Under the NES (see section 62 of the Act) an employee may refuse to work additional hours if they are unreasonable. Section 62 sets out factors to be taken into account in determining whether the additional hours are reasonable or unreasonable.

[103] The central features of the exemption rate proposal are as follows:

•  It only applies to persons otherwise paid at the level 5 or 6 rate in the Restaurant Award, which effectively limits the application of the exemption rate to senior or specialist roles in the industry.

•  It operates by agreement with an individual employee and such agreement must be reduced to writing.

•  Any such agreement can be unilaterally terminated on 4 weeks’ notice.

•  While subject to an agreement, the employee must be paid for each hour worked at the rate of 170% of their ordinary hourly rate (the exemption rate).

•  The exemption rate is paid for the first 57 hours worked in a week and after 57 hours the employee is paid at overtime rates based on the Exemption rate (which is 170% of the hourly rate).

•  The employee receives the 170% exemption rate for the purposes of annual leave and personal leave.

•  An exemption rate agreement means that the following clauses of the Award do not apply:

•  16.5 and 16.6 (meal break)

•  21 (allowances)

•  23 (overtime rates) but not clause 23.2, and

•  24 (penalty rates).

•  All other provisions of the Award and the NES continue to apply, such as hours of work.

[104] The RCI submission advances the following arguments in favour of the proposed exemption rate:

‘(a) It removes excessive administration required from employers who already face increasing compliance measures from Pandemic related government directives and restrictions.

(b) Provides for a minimum guaranteed rate of pay for employees which can be utilised to incentivise staff and applicants during the recruitment process.

(c) It is attractive for potential applicants and existing employees because it provides a realistic and tangible cap of 57 hours instead of relying on “reasonable overtime” for an annualised salary arrangement which was ambiguous, uncertain and reconciled in arrears.

(d) Promotes business confidence and encourages employment with assurance of hours and expectations of pay while reducing the administrative burden and compliance costs required from employers and employees.’

[105] The UWU submits that the proper role of exemption rate clauses in awards is limited only to those employees covered by an award who might be described as ‘high income’. The UWU referred to the decision of the Full Bench of the AIRC in Clerks 59 which, as set out at [87] above, in considering the then Minister’s Award Modernisation Request provided:

‘The request now reflects more clearly the Government’s intention that the creation of modern awards should not exempt, or have the effect of exempting from the safety net provided by modern awards, employees other than those expressly listed in the request. Employees who are not high income employees should be protected by a complete and comprehensive modern award safety net of basic entitlements unless there is a history of exempting employees from coverage across a wide range of prereform awards and NAPSAs in the relevant industry or occupation …’

[106] The UWU also referred to the following statement from Munro J in Alcoa of Australia Ltd v Federated Clerks Union of Australia 60:

‘The notion of an exemption rate as the point of demarcation between a subordinate employee and a staff or managerial level employee seems most compatible with the evidence and history of the provision in the awards and their antecedents. Moreover, such an approach is also consistent with the rationale of some exemption clauses which have been the subject of arbitral discussion in this Commission. That rationale is consistent also with the exemption rate being treated as the practical boundary to FCU negotiations for overaward payments.’

[107] The UWU submits that the proposed exemption rate may go further in its application than ‘high income’ employees or ‘managers’ as it applies to both the highest grade within the food and beverage stream of the Award, the highest grade within the Kitchen stream and the second highest grade within the Kitchen stream, none of which are described as ‘managers’. 61

[108] The UWU raises the following concerns: 62

•  The proposal may extend the operation of the exemption rate concept beyond its proper confines, in a manner inconsistent with the traditional approach taken by the FWC and its predecessors to limit the application of exemption rates only to managers, or high income employees, or where a historical tradition of exemption applies.

•  Employers who attempt to activate this proposal will have to be careful to honor contractual obligations they have in place with employees – for example – in relation to extant “over-award” entitlements. For example, in a Statement filed by RCI in support of the application, Jeremy Courmadias from Fink Restaurant says:

“We employ a range of senior staff, both in back and front of hours positions whose salary puts them well above the current award rates. We would immediately seek to introduce exemption rates into our business for roughly 30 employees.” (Courmadias Statement at [9]),

•  UWU does not suggest Courmadias has indicated or intends that his business may dishonor the above award arrangements he refers to. But his evidence demonstrates circumstances in which employers may seek to implement the exemption rate proposal – where extant above award contractual entitlements already apply. And UWU submits employers should be cautioned by FWC to ensure any such conduct occurs in a manner which is consistent with those contractual obligations.

•  While the proposal is apparently designed to promote compliance, it might inadvertently encourage non-compliance:

•  A common cause of non-compliance is the failure to properly pay each individual entitlement in the Award; to instead pay an aggregate rate (in breach of the Award) or an annualized salary, but fail to adhere to its requirements.

•  This proposal expands the circumstances in which an employer is permitted to pay an employee an aggregate rate of pay, instead of the complete safety net of basic modern award entitlements.

•  By introducing such an exemption, there may be a danger some employers may believe, incorrectly, that the circumstances in which they are entitled to pay an aggregate rate, expand beyond the Level 4 and into more junior levels in the classification structure.

•  The proposal embodies a scenario in which employees might work more than 57 hours in a week. While RCI submits that this scenario is “rare” the very reference to a scenario in which an employee might work more than 57 hours in a week, or indeed the possibility that such a scenario might somehow be legitimized by a specific provision in an award, is cause for some concern.’

[109] As to the UWU’s concerns, we do not accept that the proposal extends the ‘operation of the exemption rate concept beyond its proper confines’. Nor do we accept that the proposal ‘might inadvertently encourage’ non-compliance.

[110] Non-compliance is an issue in the hospitality sector and the most common breaches relate to under/non-payment of penalty rates. The reasons given for non-compliance by employers include paying flat hourly rates to save on administration costs but failing to adequately compensate employees for their full entitlement. We would expect that the inclusion of an exemption rate proposal would promote compliance – by specifying the rate which must be paid to ‘exempt’ an employee from the specified award entitlements; rather than leaving it to employers to ‘guess’ at an appropriate loaded hourly rate. As to the concern that employers may incorrectly apply the exemption rate to more junior classification levels, the proposal only applies to level 5 and 6 employees – as is apparent from clause R 3.1. To put the matter beyond doubt we will insert a note, as follows:

‘NOTE: Exemption rate agreements under clause R.3 only apply to full time employees paid at Level 5 or 6 rates of pay. This clause does not apply to Level 1 – 4 employees.’

[111] Finally, as to the UWU’s concern that employees might work more than 57 hours per week, in the June Statement we proposed including a note referencing s.62 of the Act and suggested that the following wording from the note at clause 23 of the Restaurant Award might be appropriate:

‘NOTE: Under the NES (see section 62 of the Act) an employee may refuse to work additional hours if they are unreasonable. Section 62 sets out factors to be taken into account in determining whether the additional hours are reasonable or unreasonable.’

[112] The UWU submitted that the inclusion of this note would be appropriate. The note will be included in the draft determination attached to this decision.

[113] In response to the Commission’s provisional view that the variation be granted, the UWU submitted the following: 63

•  the draft determination be amended to prevent the making of an exemption rate agreement in relation to the Grade 4 Cook such that the provision is limited only to the two highest classifications in the Kitchen and Food and beverage streams respectively

•  clause R.11 be amended as follows: 64

‘R.11 (b) (iii) … require an employer to pay an employee the difference between what they were paid under this Schedule and what they would otherwise have received under this award if the Fair Work Commission determines that any agreement entered into under this Schedule was [an] unfair for an employee (including in circumstances where it is shown that an employee would have earned more if an agreement to be paid the substitute allowance did not exist and the employee had been paid individual allowances under the award)’

•  the Note appearing beneath clause 23 65 of the Restaurant Award should be repeated below clause R.3(c).

[114] In response to the proposal that the Grade 4 Cook be excluded from the exemption rates proposal, RCI submits that:

‘there is no probative basis advanced by the UWU for the Fair Work Commission to depart from its preliminary view as expressed in its Statement.

No criticism has been made of the method of calculating the exemption rate for this Grade Cook nor any special circumstances advanced to disentitle them.

All Level 5 and Level 6 employees should be entitled to enter into a voluntary exemption rate arrangement under this Award if they wish to at the rate of 170% which is acknowledged by the UWU as a higher rate than exists in any other modern award it has an interest in.

RCI reinforces that the exemption rate proposal should be aligned with the Level 5 and Level 6 pay grades and not the Classification Levels for consistency.

A Food and Beverage Supervisor who is a Level 5 and a Cook Grade 4 who is also being paid a Level 5 have the same pay levels. Therefore, they should both be entitled to the voluntary exemption rate proposal and demonstrates that the criteria for eligibility should be based on pay grade levels.’ 66

[115] We agree with RCI, there is no logical reason for excluding a Grade 4 Cook from the proposal. A Grade 4 Cook is a classification Level 5 employee and the proposal includes Level 5 Food and beverage supervisors. In these circumstances we see no reason to exclude Grade 4 Cooks.

[116] We have already accepted the other amendments proposed by the UWU.

[117] As amended in the terms set out above, the proposed variation has merit.

[118] We now turn to consider the modern awards objective.

3.4 The Modern Awards Objective

[119] 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 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).’

[120] The modern awards objective is very broadly expressed. 67 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) (the s.134 considerations).68 Fairness in this context is to be assessed from the perspective of the employees and employers covered by the modern award in question.69

[121] 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. 70 No particular primacy is attached to any of the s.134 considerations71 and not all of the matters identified will necessarily be relevant in the context of a particular proposal to vary a modern award.

[122] 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. 72 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.73 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.

[123] 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.’

[124] 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. 74

[125] We now turn to the s.134 considerations.

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

[126] A threshold of two-thirds of median full-time wages provides ‘a suitable and operational benchmark for identifying who is low paid,’ 75 within the meaning of s.134(1)(a). Using this benchmark, employees paid at classification levels 1 to 5 in the Restaurant Award are ‘low paid’ within the meaning of s.134(1)(a).

[127] The various elements of the proposed Schedules have the potential to increase the wages of the low paid and thus assist them to better meet their needs, in particular:

•  the exemption rate option (available to level 5 and 6 employees) will provide a guaranteed 170% of the relevant weekly rate of pay and is set at a level well above comparable provisions in other awards

•  the classification broad banding provides an opportunity for the relevant employees to increase their minimum rate of pay by performing a broader range of tasks for which they have the requisite skills, and

•  the substitute allowance will increase the minimum rate of pay on an ‘all purposes’ basis in substitution for a number of allowances paid on a per occasion or contingent basis.

[128] The extent to which these proposals result in an increase in wages will depend on the circumstances and is difficult to estimate with any precision; but the likelihood is that some low paid employees will be better off.

[129] The UWU submits that a variation which has the effect of reducing take home pay is not consistent with the need to take into account ‘relative living standards and the needs of the low paid’. As a general proposition we agree with the UWU; but the proposed variation contains a range of safeguards and the exemption rate and substitute allowance rates have been set at levels intended to prevent such an outcome.

[130] In our view – taking account of the matters mentioned – this consideration weighs in favour of the proposed variation.

s. 134(1)(b) the need to encourage collective bargaining

[131] RCI submits that the industry has ‘limited experience of bargaining and is mainly award reliant.’ It contends that s.134(b) is a neutral consideration.

[132] The proposed variation may be said to decrease the incentive for employers to bargain; but it is also likely that employee and employer decision making about whether or not to bargain is influenced by a complex mix of factors. Section 134(1)(b) speaks of ‘the need to encourage collective bargaining’. We are not persuaded that the proposed variation would ‘encourage collective bargaining’. It follows that this consideration weighs against the variation proposed.

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

[133] This consideration is directed at obtaining employment. RCI submits that the measures in the proposed variation are designed to promote business confidence and flexibility during the Pandemic recovery phase and which ‘will have an ambient benefit to increased workforce participation’ 76 and further:

‘The operation of the proposed classification structure will assist an employer in the supply side challenge that the Pandemic has created in the industry allowing an employer to provide increased minimum wages in return for greater working flexibility which will likely make working in the industry more attractive for some prospective employees.’ 77

[134] In our view s.134(c) is a neutral consideration. The asserted benefits for workforce participation are largely speculative. We accept that increasing wages would make the industry more attractive to prospective employees, but employers can chose to increase wages without the need for a variation.

s. 134(1)(d) the need to promote flexible modern work practices and the efficient and productive performance of work

[135] The exemption rate and substitute allowance proposals will not in themselves change work practices and on that basis s.134(1)(d) is a neutral consideration (in respect of those elements of the proposed variation). The RCI accepts that proposition.

[136] As to the proposed broad banding classification structure, RCI submits that it:

‘promotes an employee to undertake a broader set of tasks reflecting the ordinary and practical operation of many businesses in the industry which will promote flexible modern work practices and the efficient and productive performance of work.’ 78

[137] We accept that the broad banding aspect of the proposed variation will promote flexible modern work practices. This consideration weighs in favour of the proposed variation.

s. 134(1)(da) the need to provide additional remuneration

[138] The level of the exemption rate (170%) is intended to effectively offset the substituted award benefits such as overtime and is at a level well above comparable provisions in other modern awards. This consideration is neutral.

s. 134(1)(e) the principle of equal remuneration for work of equal or comparable value

[139] This consideration is neutral; no party contended to the contrary.

s. 134(1)(f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden

[140] We accept the submission of RCI that the exemption rate and substitute allowance proposals will reduce the regulatory burden on employers. We also accept that the broad banding proposal has the potential to promote the more ‘effective and efficient performance of work’. . These are matters which weigh in favour of making the variation sought.

s. 134(1)(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

[141] Each element in the proposed schedules is simple and easy to understand. In respect of the exemption rate element RCI submits:

‘as some of the evidence suggests the exemption rate may also draw more employers back to operating fully under the Award rather than working on the basis of common law set off provisions which reinforces the sustainability of the Award and its part in the modern award system.’ 79

[142] The consideration weighs in favour of the proposed variation.

s.134(1)(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

[143] We accept that the variation sought will have some, albeit limited, positive impact on the sustainability, performance and competitiveness of the national economy and that this is a factor which weighs in favour of the proposed variation.

[144] Taking into account the s.134(1) considerations we are satisfied that the variation of the Restaurant Award in the terms of the amended draft determination is necessary to achieve the modern awards objective.

4 Next Steps

[145] We propose to vary the Restaurant Award in the terms set out in the attached draft variation determination. As to the operative date of the variation, RCI submits:

‘This requires some sensitivity. Schedule R is needed now. This said and consistent with the UWU seeking caution, a prospective operative date would allow the RCI and the UWU to properly prepare its members to understand and utilise Schedule R most effectively.

This requires a real balance of competing considerations and accordingly, the RCI submits that the Determination should come into operation four weeks from the date of final decision.’ 80

[146] We agree and the variation determination will come into operation on 11 August 2021. In accordance with s.165(3) of the Act, the determination does not take effect in relation to a particular employee until the start of the employee’s first full pay period that starts on or after 11 August 2021. We confirm the provisional view set out in the June Statement that the Schedule R should operate for an initial period of 12 months. We confirm that Schedule AA will operate for the same period. The Schedules will operate until 10 August 2022.

[147] Since the draft determination was published on 3 June 2021, the Expert Panel has handed down the AWR decision. 81 The Expert Panel determined that modern award minimum wages would be increased by 2.5% and was satisfied that there were exceptional circumstances justifying the variation determinations in respect of the Accommodation and food services sector (which includes the Restaurant Award) coming into operation on 1 November 2021.82 A determination varying the wages in the Restaurant Award was issued on 25 June 2021 and comes into operation on 1 November 2021.83

[148] The determination inserting Schedules AA and R into the Restaurant Award will come into operation on 11 August 2021. In order to ensure that the rates in Schedule R are increased in line with the AWR decision, we will issue a second determination in this matter which will vary both the wage rates and the substitute allowance and will come into operation on 1 November 2021.

[149] Draft determinations are attached to this decision. Interested parties have 7 days to comment on the draft determinations. Comments should be emailed to [email protected] by no later than 4pm on Wednesday, 21 July 2021.

[150] As mentioned earlier, the UWU proposes that a monitoring committee be established to monitor the operation of any variation made by the Commission and that a review of the operation of the variation commence no later than 9 months after its commencement.

[151] We endorse the UWU’s proposed monitoring committee; but as RCI consents to the proposal and has agreed to engage in the committee we do not think it necessary to include the proposal in the variation determination arising from this decision. In the event that the implementation of the monitoring committee encounters any practical difficulties the matter can be revisited.

[152] We also agree with the UWU proposal that a review commence 9 months after the variation determination comes into operation. The matter will be called on at that time for a conference to consider the scope of the review.

[153] The review will consider, among other things, whether the various concerns expressed by UWU members about the proposed variations have come to pass and the extent of utilisation of the various elements of the new Schedules. In relation to the last point, we would expect RCI to file evidence from the witnesses who have given evidence on behalf of RCI in these proceedings as to their utilisation of various elements of the new Schedules.

[154] It seems to us that the measures encompassed in the proposed variation strike an appropriate balance between the provision of additional flexibilities for employers and treating affected employees fairly. We commend the parties on their commitment to working together to address the difficult circumstances in which the industry and its employees find themselves. As demonstrated by the actions of RCI and the UWU, this is a time for co-operation, not conflict.

PRESIDENT

Printed by authority of the Commonwealth Government Printer

<PR731700>

Attachment A—Relevant exemption clause

DRAFT DETERMINATION

Fair Work Act 2009s.157—Application to vary a modern award to achieve the modern awards objective

Restaurant & Catering Industrial

RESTAURANT INDUSTRY AWARD 2020
[MA000119]

Restaurant Industry Award 2020 – Renaming of certain classification titles and COVID-19 Pandemic Recovery.

A. Further to the decision [[2021] FWCFB XXXX] issued by the Fair Work Commission on 14 July 2021, the above award is varied as follows:

1. By inserting Schedule AA as follows:

Schedule AA—Classification Structure and Definitions

Note: To avoid any doubt, for any employee at the introductory level, their duties as stipulated under the current award in Schedule A – Classification Structure and Definition will remain unchanged.

AA.1 Schedule AA operates from 11 August 2021 until 10 August 2022. The period of operation can be extended on application to the Fair Work Commission.

AA.2 Restaurant/Café Worker Grade 1

AA.2.1 Means an employee who is engaged in any of the following:

(a) picking up glasses; or

(b) providing general assistance to food and beverage attendants of a higher classification not including service to customers; or

(c) removing food plates; or

(d) setting or wiping down tables; or

(e) cleaning and tidying associated areas; or

(f) receiving money; or

(g) cooking breakfasts and snacks, baking, pastry cooking or butchering; or

(h) general cleaning duties within a kitchen or food preparation area and scullery, including cleaning cooking and general utensils used in a kitchen and restaurant; or

(i) assisting employees who are cooking; or

(j) assembling and preparing ingredients for cooking; or

(k) general pantry duties.

AA.2.2 In addition to the duties set out in AA.2.1, means an employee who has not achieved the appropriate level of training and who is engaged in any of the following:

(a) supplying, dispensing or mixing liquor; or

(b) assisting in the cellar; or

(c) undertaking general waiting duties for food or beverages, including cleaning tables; or

(d) receiving money; or

(e) attending a snack bar; or

(f) performing delivery duties; or

(g) taking reservations and greeting and seating guests.

AA.2.3 In addition to the duties set out in AA.2.1 and AA.2.2, means an employee who has the appropriate level of training, and who is engaged in specialised non-cooking duties in a kitchen or food preparation area.

AA.3 Restaurant/Café Worker Grade 2

AA.3.1 Means an employee who has the appropriate level of training and is engaged in any of the following:

(a) supplying, dispensing or mixing liquor; or

(b) assisting in the cellar; or

(c) undertaking general waiting duties for both food and liquor, including cleaning tables; or

(d) receiving money; or

(e) assisting in the training and supervision of food and beverage attendants of a lower classification; or

(f) delivery duties; or

(g) taking reservations and greeting and seating guests; or

(h) cooking duties such as baking, pastry cooking or butchering.

AA.3.2 In addition to the duties set out in AA.3.1, means an employee who has the appropriate level of training, which may include a supervisory course, and who has responsibility for the supervision, training and co-ordination of kitchen attendants of a lower classification.

AA.4 Restaurant/Café Worker Grade 3

AA.4.1 Means an employee who has the appropriate level of training, which can include a supervisory course, who:

(a) carries out specialised skilled duties in a fine dining room or a restaurant; or

(b) has responsibility for the supervision, training and co-ordination of food and beverage staff or for stock control for one or more bars.

NOTE: To avoid any doubt, an employee classified in one of the classifications set out in this Schedule shall perform all the duties of the classification as required by the employer.

AA.5 Chef stream

AA.5.1 Chef grade 1 (tradesperson) means a commi chef or equivalent who has completed an apprenticeship or passed the appropriate trade test or who has the appropriate level of training, and who is engaged in cooking, baking, pastry cooking or butchering duties.

AA.5.2 Chef grade 2 (tradesperson) means a demi chef or equivalent who has completed an apprenticeship or passed the appropriate trade test or who has the appropriate level of training and who is engaged to perform general or specialised cooking, butchering, baking or pastry cooking duties or supervises and trains other cooks and kitchen employees.

AA.5.3 Chef grade 3 (tradesperson) means a chef de partie or equivalent who has completed an apprenticeship or passed the appropriate trade test or who has the appropriate level of training in cooking, butchering or pastry cooking and who performs any of the following:

(a) general and specialised duties, including supervision or training of kitchen employees; or

(b) ordering and stock control; or

(c) supervising other cooks and kitchen employees in a single kitchen establishment.

2. By inserting Schedule R as follows:

Schedule R - Award flexibility for COVID-19 Pandemic Recovery

R.1 The provisions of Schedule R are aimed at preserving the ongoing viability of businesses and preserving jobs during the COVID-19 pandemic and do not set any precedent in relation to award entitlements after its expiry date. Schedule R operates from 11 August 2021 until 10 August 2022. The period of operation can be extended on application to the Fair Work Commission.

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

R.3 Exemption Rate

NOTE 1: Exemption rate agreements under clause R.3 only apply to full time employees paid at Level 5 or 6 rates of pay. This clause does not apply to Level 1 to 4 employees.

NOTE 2: Under the NES (see section 62 of the Act) an employee may refuse to work additional hours if they are unreasonable. Section 62 sets out factors to be taken into account in determining whether the additional hours are reasonable or unreasonable.

R.3.1 An employer and a full time employee (paid at the Level 5 or Level 6 rate of pay) may enter into an agreement to pay the employee no less than 170% of their relevant Level rate of pay each week as set out in clause 18—Minimum Rates of this award (the Exemption Rate).

R.3.2 Where an agreement to pay the Exemption Rate has been made, the following clauses of this award shall not apply:

(a) clauses 16.5 and 16.6 (meal break);

(b) clause 21 (allowances);

(c) clause 23 (overtime rates) but not clause 23.2; and

(d) clause 24 (penalty rates).

R.3.3 Where an agreement has been made to pay an employee the Exemption Rate the employee must be paid the Exemption Rate for each hour worked up to and including 57 hours in a week and for hours worked in excess of 57 hours in a week the employee must be paid:

(a) 150% of the Exemption Rate for the first two hours in excess of 57 hours in the week; and then

(b) 200% of the Exemption Rate thereafter in the week.

R.3.4 The Exemption Rate shall be the rate for the purposes of calculating:

(a) personal leave; and

(b) annual leave.

R.3.5 Clause R.3 does not apply to employees classified under the administrative and general stream (Schedule A.4).

R.4 Classification Structure and Definitions

R.4.1 Subject to clause R.4.2 an employer may elect to classify all relevant employees in accordance with the classifications set out in Schedule AA in substitution for classifying the employee in accordance with Schedule A.

R.4.2 An employee who is classified in accordance with Schedule AA shall be paid the minimum rate for the relevant classification in Schedule AA as set out in the table below in substitution for the minimum rates set out in clause 18—Minimum Rates of the award that would otherwise apply:

R.5 Substitute Allowance

Subject to this clause:

R.5.1 an employer and an employee may enter into an agreement to pay the employee a substitute allowance as below (the Substitute Allowance):

R.5.2 an employer and at least 75% of the employees in the workplace concerned may agree to pay all of the employees in the workplace a Substitute Allowance as below:

R.5.3 Where an agreement to pay the Substitute Allowance has been made in accordance with clause R.5, the following clauses of this award shall not apply:

(a) clauses 16.5 and 16.6 (meal break);

(b) clause 21.2 (meal allowance);

(c) clause 21.3 (split shift allowance);

(d) clause 21.4 (tool and equipment allowance);

(e) clause 21.5 (special clothing allowance); and

(f) clause 21.6 (distance work allowance).

R.5.4 The Substitute Allowance shall be paid for all purposes of this award.

R.5.5 The Substitute Allowance is adjusted in accordance with increases to wages.

R.6 Manner of Application

R.6.1 To avoid any doubt, clauses R.3 to R.5 inclusive operate on the following basis:

(a) Exemption Rate (R.3): individual employer and full time employee agreement;

(b) Classification Structure and Definitions (R.4): employer election to apply to all relevant employees in the workplace; and

(c) Substitute Allowance (R.5): individual employer and employee agreement or all employees in the workplace collectively, if at least 75% of the employees agree.

R.7. Agreement to be recorded in writing

R.7.1 Individual agreements

Where an employer and employee enter into an agreement under clause Schedule R.3 or R.5 it must:

(a) be in writing;

(b) specify, in writing, that either party may withdraw from the agreement by giving 4 weeks’ notice;

(c) be signed by the employer and the employee; and

(d) state the date the agreement commences operation.

R.7.2 Agreements with at least 75 per cent of employees

Where an employer and 75% of their employees enter into an agreement under clause R.5.2 it must:

(a) be in writing;

(b) be signed by at least one of the employees; and

(c) state the date the agreement commences operation.

R.8 Termination of Agreement

R.8.1 Where an employer and individual employee enter into an agreement under clause R.3, either party may terminate that agreement by giving the other party no less than 4 weeks’ notice in writing.

R.8.2 Where an employer and individual employee enter into an agreement under clause R.5.1 either party may terminate that agreement by giving the other party no less than 4 weeks’ notice in writing.

R.8.3 Agreements made under clause R.5.2 can be terminated by 50% plus one of the employees being covered by the agreement serving 4 weeks’ notice on the employer in writing.

R.9 Consultation

R.9.1 Prior to initiating any of the provisions in clauses R.3 to R.5, the employer must consult with all employees affected by the proposed change and their representatives (if any).

R.9.2 For the purpose of the consultation, the employer must:

(a) Provide to the employees and their representatives (if any) 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 their representative (if any) to give their views about that impact.

R.9.3 The employer must consider any views given under clause R.9.2(b).

R.10 Consent Arbitration

R.10.1 An employer who enters into an agreement under the provisions of Schedule R provides consent to a dispute being settled by the Fair Work Commission through arbitration in accordance with clause 34—Dispute resolution and section 739(4) of the Act.

R.10.2 In arbitrating a dispute, the Fair Work Commission may:

(a) terminate an agreement made under Schedule R if it determines that it was not entered into genuinely;

(b) terminate an agreement made under Schedule R if it determines that the employer failed to consult as required by clause R.9;

(c) require an employer to pay an employee the difference between what they were paid under this Schedule and what they would otherwise have received under this award if the Fair Work Commission determines that any agreement entered into under this Schedule was unfair for an employee (including in circumstances where it is shown that an employee would have earned more if an agreement under this Schedule had not been entered into and the employee had been paid in accordance with the terms of the award); and

(d) terminate an agreement made under Schedule R if the Fair Work Commission determines that any agreement entered into under this Schedule was unfair for the employee.

3. By updating the table of contents in the award accordingly.

B. This determination comes into operation on 11 August 2021. In accordance with s.165(3) of the Fair Work Act 2009, this determination does not take effect in relation to a particular employee until the start of the employee’s first full pay period that starts on or after 11 August 2021.

PRESIDENT

DRAFT DETERMINATION

Fair Work Act 2009
s.157—Application to vary a modern award to achieve the modern awards objective

Restaurant & Catering Industrial
(AM2021/58)

RESTAURANT INDUSTRY AWARD 2020
[MA000119]

Restaurant Industry Award 2020 – Award flexibility for COVID-19 pandemic recovery –Schedule R rate update resulting from the Annual Wage Review 2020–21.

A. Further to the decision [[2021] FWCFB XXXX] issued by the Fair Work Commission on 14 July 2021, the above award is varied as follows:

1. By deleting the table appearing in clause R.4.2 and inserting the following:

2. By deleting the table appearing in clause R.5.1 and inserting the following:

3. By deleting the table appearing in clause R.5.2 and inserting the following:

B. This determination comes into operation on 1 November 2021. In accordance with s.165(3) of the Fair Work Act 2009, this determination does not take effect in relation to a particular employee until the start of the employee’s first full pay period that starts on or after 1 November 2021.

PRESIDENT

 1   Letter from Minister for Industrial Relations, 9 December 2020.

 2   [2021] FWCFB 3222.

 3   [2021] FWCFB 3876.

 4   See Fair Work Commission (2020), Information note―Government responses to COVID-19 pandemic, 16 June.

 5   [2020] FWCFB 3500 at [24]; RBA (2020), Statement on Monetary Policy, May, p. 1.

 6   RBA (2021), Minutes of the Monetary Policy Meeting of the Reserve Bank Board, 4 May.

 7   RBA (2021), Statement on Monetary Policy, May, p. 71.

 8   Australian Government submission, 26 March 2021 at paras 4, 53.

 9   Fair Work Commission (2021), Information note – government responses to COVID-19 pandemic, updated 11 June.

 10   Fair Work Commission (2021), Information note – government responses to COVID-19 pandemic, updated 12 July: Fair Work Commission (2021), Information note – COVID-19 situation update, updated 12 July.

 11   Annual Wage Review 2020-21 [2021] FWCFB 3500 at [52].

 12   [2021] FWCFB 3500 at [247]

 13   [2021] FWCFB 3500 at [288]

 14   ABS, Weekly Payroll Jobs and Wages in Australia, Week ending 8 May 2021.

 15   [2021] FWCFB 3500.

 16   UWU submissions, 19 June 2021 at [20].

 17   UWU submissions, 19 June 2021 at [22].

 18   UWU submissions, 29 June 2021 at [24], citing Knox Report, p 2.

 19   UWU submission, 29 June 2021 at [25]-[28]].

 20   Knox Report, p 2.

 21   Knox Report, p 2.

 22   UWU submission, 29 June 2021 at [27].

 23   UWU submission, 29 June 2021 at [26].

 24   RCI submission, 31 May 2021 at [29].

 25   UWU submission, 29 June 2021 at [31].

 26   UWU submission, 29 June 2021 at [34].

 27   RCI submission, 2 July 2021 at [17]-[19].

 28   [2015] FWCFB 4658

 29   RCI submission, 2 June 2021 at [9]-[14].

 30   UWU submission, 29 June 2021 at [36].

 31   UWU submission, 29 June 2021 at [38].

 32   Fair Work Ombudsman, ‘Food Precincts’.

 33   This is clause R.7.1(b) in the attached draft determination.

 34  This is clause R.10.2(c) in the attached draft determination.

 35   Clerks (Breweries) Consolidated Award case, Print S6443, 26 May 2000, at [3].

 36   Clerks – Private Sector Award 2010 [2009] AIRCFB 922 at [14].

 37   For example clause 18.4 of the Registered and Licensed Clubs Award 2020¸ clause 16 of the Business Equipment Award 2020 and clause 25 of the Hospitality Industry (General) Award 2020.

 38   For example clause 23.4 of the Airport Employees Award 2020.

 39   WR Act, s.576C(1).

 40   WR Act, s.576C(3)(d).

 41   WR Act, s.576N(2).

 42   [2009] AIRCFB 922.

 43   Banking, Finance and Insurance Award 2010 [2009] AIRCFB 923.

 44   Award Modernisation [2009] AIRCFB 826 at [118].

 45   FW Act, s.157(1).

 46   FW Act, s.136(1)(a).

 47   Terms that may not be included are set out in Subdivision D of Division 3 of Part 2-3 of the FW Act. None are clearly relevant here.

 48   Act, s.163(1).

 49   High income employee is defined in the Act at s.329.

 50   For example, the draft exemption clause in Clerks at [3].

 51   For example, clause 17.3 of the Clubs Award.

 52   For example: Clubs Award, clauses 17.3(a)(i) and 17.3(a)(ii); Hospitality Industry (General) Award 2020 (Hospitality Award), clause 25.2(f).

 53   For example: Clubs Award, clauses 17.3(a)(i) and 17.3(a)(ii); Hospitality Award, clause 25.2(e); Business Equipment Award 2020 (BE Award) clauses 16.1(h) and 16.3(d).

 54   For example: Clubs Award, clauses 17.3(a)(i) and 17.3(a)(ii); BE Award, clauses 16.1(c) and 16.3(c).

 55   For example: Clubs Award, clauses 17.3(a)(i) and 17.3(a)(ii); Hospitality Award, clause 25.2(b); BE Award, clauses 16.1(a) and 16.3(a).

 56   For example: Clubs Award, clause 17.3(a)(ii).

 57   For example: Clubs Award, clause 17.3(a)(ii).

 58   For example: BE Award, clause 16.3(e).

 59   [2009] AIRCFB 922.

 60   [1990] AIRC 163 (28 February 1990).

 61   UWU submission, 29 June 2021 at [49].

 62   UWU submission, 29 June 2020 at [50].

 63   UWU submission, 29 June 2021 at [52].

 64   We note that the cross-referencing at [52] of the UWU submissions of 29 June 2021 is incorrect. The UWU confirmed that the references at paragraphs 52(b) and (c) were intended to be to paragraphs 40(a) and (c) of the submissions respectively.

 65   The UWU submission of 29 June 2021 refers to the note under clause 30. The UWU confirmed that the reference was intended to be to the note under clause 23.

 66   RCI submission, 2 July 2021 at [29]-[33].

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

 68   (2017) 265 IR 1 at [128]; Shop, Distributive and Allied Employees Association v The Australian Industry Group [2017] FCAFC 161 at [41]–[44]

 69   [2018] FWCFB 3500 at [21]-[24]

 70   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]

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

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

 73   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

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

 75   [2017] FWCFB 1001 at [166]

 76  RCI submission, 31 May 2021 at [27(c)(i)].

 77   RCI submission, 31 May 2021 at [38(c)(iii)].

 78   RCI submission, 31 May 2021 at [38(d)(ii)].

 79   RCI submission, 31 May 2021 at [27(g)(iii)].

 80   RCI submission, 2 July 2021 at [39]-[40].

 81   [2021] FWCFB 3500.

 82   [2021] FWCFB 3500 at [256].

 83   PR729382.