PN28922

JUSTICE ROSS: Could I have the appearances in Melbourne? Mr Dowling?

PN28923

MR C DOWLING: Good morning, your Honour. Mr Dowling, appearing with Ms Burke, for United Voice.

PN28924

JUSTICE ROSS: Thank you.

PN28925

MR S MOORE: Good morning, your Honour, Moore, with Mr Bakri, initial Y, appearing for the SDA.

PN28926

JUSTICE ROSS: Thanks, Mr Moore.

PN28927

MR H DIXON: May it please, your Honour, I appear with my learned friend, Mr Gotting, for Ai Group.

PN28928

JUSTICE ROSS: Thank you.

PN28929

MR L IZZO: Izzo, initial L, appearing on behalf of ABI and New South Wales Business Chamber.

PN28930

MR N TINDLEY: Tindley, initial N, appearing on behalf of the Retail Association.

PN28931

MR S WELLARD: If it pleases, Wellard, initial S, for the Pharmacy Guild of Australia, the Australian Hotels Association and the Accommodation Association of Australia.

PN28932

JUSTICE ROSS: Thank you. Anyone else in Melbourne? Yes?

PN28933

MR S BARKLAMB: Thank you. Barklamb, initial S, for the Australian Chamber of Commerce and Industry.

PN28934

JUSTICE ROSS: Thank you. Anyone else in Melbourne? I think we have someone observing in Brisbane and Canberra; is that right, but no appearances? Are there any appearances?

PN28935

SPEAKER: No � yes.

PN28936

JUSTICE ROSS: No, yes, what?

PN28937

SPEAKER: From Brisbane, your Honour, no appearances.

PN28938

JUSTICE ROSS: Okay. Thank you. And are there any appearances in Sydney?

PN28939

MR A DUC: Yes, your Honour. Duc, D-u-c. I appear for Restaurants and Catering Industrial.

PN28940

JUSTICE ROSS: Thank you. I'll deal with some housekeeping matters. We asked the parties to indicate who wished to make oral submissions today. We've received indications from Ai Group, ABI, the Australian Retailers, the AHA and others, the SDA and United Voice; is that right? Is there anyone else who wishes to make an oral submission?

PN28941

MR DUC: Your Honour, Duc in Sydney. Restaurant and Catering would wish to make some very brief oral submissions.

PN28942

JUSTICE ROSS: And how long are you likely to be?

PN28943

MR DUC: Ten minutes, your Honour.

PN28944

JUSTICE ROSS: All right. A background paper, or a background document, was published on 5 May which sought to summarise the submissions, both the initial submissions, and in reply, and the responses to the questions on notice. Each subscriber was sent an email following the release of the background paper indicating that if any party considers that the paper did not accurately reflect their position then they should contact the award mod section of the Commission prior to today's hearing. There have been a couple of comments on the way through and we'll pick those up as we come to each party's submissions. I think we've received something from ABI, Ai Group and the SDA. We'll deal with those as we come to your submissions. Does anyone else have any comments or corrections on the background document? No?

PN28945

It looks it seems that we don't need to trouble you in respect of the take home pay order proposition as to whether or not it's an available option as it seems common ground that, for the reasons expressed in the range of submissions, take home pay orders are not an available option to mitigate the impact of the reduction in penalty rates. It also appears the Commonwealth has no present intention to amend the Act to provide the Commission with such a power so, in those circumstances, I don't think we need to consider that issue further unless a party has changed their position. We understand what everyone has said.

PN28946

It also appears to be generally common ground, though RCI takes a different view, but all of the other, both employer and union parties, contend that the Commission should take steps to mitigate the impact of the decision on the effected employees. There's obviously a range of positions about how that's done. There was one final matter that I don't quite follow. Mr Barklamb, in ACI's reply submission, I think at para 7, you say that the unions must bear the burden of convincing the Commission to depart from its provisional views. Speaking from myself I suppose there are two issues about that; I'm not sure of the utility in the notion of burden of proof in the context of an administrative tribunal dealing with a review, and there is authority suggesting it doesn't have the same role to play as it might in civil inter-parties litigation. But the second is, of course, it's not just the unions who are seeking to depart from the provisional view, so are a number of the employer organisations including AFEI, RCI, and so presumably if your point is good for one, it's good for all.

PN28947

MR BARKLAMB: Thank you, your Honour, for the question. Firstly, in regard to the usage of that term, that may have been a little inexact. It was an attempt to characterise how we say the proceedings should proceed in regard to the matters that were set out in, from memory, in the decision of section marked, next steps, which, from memory, was section 12, I think, of the large decision on the preliminary inclinations of the Commission not to delay implementation for a period, so not to have a couple of years of inaction before any phasing in of increases.

PN28948

Secondly, so from what I recall, a disinclination to have five or more annual increments. So just, I'm saying that there was an indication, as we read the decision, of a provisional view or an indication of the direction the Commission was mindful to go in, and we read the decision to say, or we read the situation, is perhaps a better way of putting it, that were a party to want to do something different to what was in the decision as it was issued that party really should satisfy the Commission or engage with the Commission on why it should take a different approach.

PN28949

JUSTICE ROSS: But that's not a ‑ ‑ ‑

PN28950

MR BARKLAMB: The submission didn't mean much more than that.

PN28951

JUSTICE ROSS: I'm not sure we said that. Where did we say that a party would have to satisfy us to take a different approach? I mean, expressing a provisional view is just that.

PN28952

MR BARKLAMB: It ‑ ‑ ‑

PN28953

JUSTICE ROSS: It's designed to provide a focal point for subsequent debate. It's not designed to close off ‑ ‑ ‑

PN28954

MR BARKLAMB: Sorry, your Honour. Perhaps we're at furious disagreement for the same purpose. I think, as you characterise it, a focal point is exactly what we were trying to pick up; that you would focus the attention of parties on an approach or on a set of provisional or possible approaches. Where a party is trying to do something different it needs to engage with the Commission and satisfy the Commission, if we read it correctly, that you need to do something other than what was, as you say, the approach you put in the decision.

PN28955

JUSTICE ROSS: For myself, I'm still not sure I'd agree with that summation either. I'm not sure it's satisfied ourselves to do something different. It's really, well, here's the provisional view, what do all the parties say about the range of issues? It's trying to get engagement on those issues as have the questions on notice.

PN28956

MR BARKLAMB: Perhaps, your Honour, and certainly the questions on notice had assisted in focusing everybody's minds on the specific. Perhaps the submission is not of a great deal of assistance. It was our reading of the various documentation and decisions that were issued; that is our summation of the situation, nothing more.

PN28957

JUSTICE ROSS: All right.

PN28958

MR BARKLAMB: As we saw it at that point.

PN28959

JUSTICE ROSS: No, the reason I raise it is I wanted to go to the order and I didn't want people to, you know, read tea leaves and think that there's somehow something magic in the order about onus, having regard to your submission, and there isn't, so ‑ ‑ ‑

PN28960

MR BARKLAMB: And I concede there is not.

PN28961

JUSTICE ROSS: Okay.

PN28962

MR BARKLAMB: Thank you, your Honour.

PN28963

JUSTICE ROSS: Thank you. Given the time indications it did seem, unless you've reached an agreed position about order? Have you?

PN28964

MR MOORE: Your Honour, I've spoken to Mr Dixon. There's a couple of matters in the SDA's submissions which we would seek to withdraw and not press. In the interests of efficiency it might be sensible, in my respectful view, for me to indicate those.

PN28965

JUSTICE ROSS: Sure.

PN28966

MR MOORE: It might only take me five minutes.

PN28967

JUSTICE ROSS: That's all right.

PN28968

MR MOORE: There's two matters, your Honour. In its primary submissions, dated 24 March this year, the SDA says in paragraph 8 ‑ ‑ ‑

PN28969

JUSTICE ROSS: Paragraph what, sorry?

PN28970

MR MOORE: Eight.

PN28971

JUSTICE ROSS: Eight, yes.

PN28972

MR MOORE: Yes.

PN28973

JUSTICE ROSS: Yes?

PN28974

MR MOORE: I won't read the whole paragraph ‑ ‑ ‑

PN28975

JUSTICE ROSS: Yes.

PN28976

MR MOORE: ‑ ‑ ‑ but the concluding sentence in the paragraph is that the decision should be set aside, and the following paragraph, which refers to the alternative position, makes clear that what's encapsulated in paragraph 8 is the SDA's primary position.

PN28977

In light of the SDA's intention to seek judicial review of the penalty rates decision as foreshadowed in correspondence ‑ ‑ ‑

PN28978

JUSTICE ROSS: Yes, the more recent one.

PN28979

MR MOORE: ‑ ‑ ‑ recently, the SDA doesn't press paragraph 8.

PN28980

JUSTICE ROSS: In its totality?

PN28981

MR MOORE: Correct.

PN28982

JUSTICE ROSS: So paragraph 8 in its totality and presumably paragraph 9 goes as well if that's ‑ ‑ ‑

PN28983

MR MOORE: Yes. Yes, that would be so, your Honour.

PN28984

JUSTICE ROSS: Okay.

PN28985

MR MOORE: And I should indicate of course, for the record, and I think it's set out in the correspondence, that all of the SDA's submissions in writing and oral are without prejudice to its foreshadowed application to seek judicial review.

PN28986

The second ‑ ‑ ‑

PN28987

JUSTICE ROSS: There's not much we can do about that anyway.

PN28988

MR MOORE: No. But just for the record, your Honour.

PN28989

JUSTICE ROSS: Yes. No, that's fine. I understand.

PN28990

MR MOORE: The second correction or change; the Commission will be aware that the SDA has sought a two year deferral in implementing the proposed reductions in penalty rates. That remains the SDA's position, but the grounds advanced to justify that deferral, which are set out in paragraph 46, or conveniently set out in paragraph 46 of the reply submissions, and there's five subparagraphs; subparagraph (b), so 46(b) sets out a rationale expressed by reference to the SDA's application in 2016/2017 annual wage review which has been flagged in the primary submissions as well as a foreshadowed further application in the year thereafter.

PN28991

I can inform the Commission that the SDA will be withdrawing that claim in the 2016 to 2017 annual wage review and as a consequence we don't rely upon the ground in paragraph (b) for the two year deferral, and that point is also elaborated upon in paragraph 10(b) of the primary submissions. So insofar as 10(b) advances that rationale for the two year deferral by reference to the foreshadowed application in the annual minimum wage review we don't rely upon that ground.

PN28992

One consequence of that change is that the red circling proposal advanced by the SDA, which is outlined in general terms at paragraph 14 of the primary submissions, 14(a) starts:

PN28993

Following proper and full determination proceedings of the annual wage review employers must continue to pay employees the rate of pay �

PN28994

Et cetera. Those opening words, "Following proper and full determination proceedings of the annual wage review" are also not relied upon. The red circling, we would say, would be fixed by reference to the rates applying as at the date of the decision, any further decision, the Commission issues to implement the penalty rates the decision.

PN28995

They are the corrections.

PN28996

JUSTICE ROSS: Thanks, Mr Moore. We received, you might just take this on notice, an email from Ms Burnley seeking some corrections to the background paper.

PN28997

MR MOORE: Yes. I can deal with that now, your Honour.

PN28998

JUSTICE ROSS: All right. No, that'd be fine. Thank you. I just couldn't quite follow what they were directed to.

PN28999

MR MOORE: I've taken some instructions about that this morning. The issues are these: on page 12 of the background paper paragraph 59 ‑ ‑ ‑

PN29000

JUSTICE ROSS: Yes.

PN29001

MR MOORE: ‑ ‑ ‑ has a table, and it's a question of nomenclature really, but in the table, under the heading, retail and pharmacy awards, in the second column it refers to a Sunday loading permanent; that because the rates there set out are in excess of 100 per cent that should be the Sunday rate for permanent. It's not the loading.

PN29002

JUSTICE ROSS: I see. Yes.

PN29003

MR MOORE: The same issue arises for the other headings in that table.

PN29004

JUSTICE ROSS: No, I follow, yes.

PN29005

MR MOORE: So it was that and I think the issue - also the same or a similar issue comes up in attachment B, table 2. Yes, tables 2, 3 and 4, in fact. So just to take table 2, in the first part of the table, Sunday rates, the second column, which is headed, Sunday loading permanent, again that should be Sunday rate.

PN29006

JUSTICE ROSS: Yes.

PN29007

MR MOORE: In the lower part of that table under the heading, public holidays, where it has a permanent and casual, those numbers should be 242 per cent instead of 142 per cent; 234 per cent instead of 134 per cent, et cetera in both columns, if they are read to be the Sunday rate. Does that make sense?

PN29008

JUSTICE ROSS: Yes. It's really to make sure it's consistent throughout. If it's talking about the Sunday penalty rate simpliciter versus the rate that they actually get for working on a Sunday.

PN29009

MR MOORE: That's right. That's right.

PN29010

JUSTICE ROSS: Yes. No, I follow.

PN29011

MR MOORE: The same corrections, or the same issue arises in the following tables 3 and 4.

PN29012

JUSTICE ROSS: Yes.

PN29013

MR MOORE: But that's the extent of the matters we wish to correct, your Honour.

PN29014

JUSTICE ROSS: No, that's fine. I follow now.

PN29015

MR MOORE: Yes.

PN29016

JUSTICE ROSS: Thank you. What's the order from now? Is that � are you up ‑ ‑ ‑

PN29017

MR DIXON: We had understood that we may go first, subject to any preference from the Full Bench.

PN29018

JUSTICE ROSS: No, we don't have any preference. That's fine.

PN29019

MR DIXON: May it please the Full Bench, from the submissions filed on behalf of AiG, the Commission would appreciate that it opposes all attempts to frustrate or delay the implementation of the Full Bench decision. The background paper obviously summarises the submissions of the Ai Group where it has, in detail, set out its opposition to each of the various options that have been raised for your consideration today.

PN29020

JUSTICE ROSS: I might indicate there, Mr Dixon, we received your note that the background paper doesn't summarise the positions you put on public holidays. Those are the submissions of 27 March and 12 April.

PN29021

MR DIXON: Yes.

PN29022

JUSTICE ROSS: We have had regard to those. We were just trying to focus on the transition.

PN29023

MR DIXON: No. I fully appreciate that. Does the Commission need copies of that? We can hand up copies now or ‑ ‑ ‑

PN29024

JUSTICE ROSS: No, I think we have copies of that. Yes.

PN29025

MR DIXON: You have copies now. I was going to just touch on that. We appreciate that, your Honour. May I just say that the effect of AiG's submissions there, of course, is that in respect of public holidays, the Commission should give effect to his decision and those changes should be implemented with effect from 1 July 2017.

PN29026

The basis upon which Ai Group presses for implementation on 1 July are set out at paragraph 5 of the 27 March submission. The response to the SDA submissions about delay, which are referred to in the background paper at paragraph 60 through to 62, are dealt with in the AiG reply submissions on public holidays at paragraph 7 and following. But if the Commission has those and takes them into account, we have nothing further to address in relation to that matter.

PN29027

The Commission would appreciate that, in summary, the approach which Ai Group urges upon the Full Bench is as follows: first that proposes that the reduction in Sunday penalty rates take effect from 1 July 2017; and secondly, Ai Group proposes that the reduction in Sunday penalty rates to the Fast Food Award takes effect in two instalments; the first, a 12.5 per cent reduction on 1 July 2017; and the second, a 12.5 per cent reduction on 1 July 2018.

PN29028

We will not be addressing the Commission in any real detail in respect of the re-opening, the setting aside submissions, but there is one particular case which we want to draw to your attention. Ai Group deals with the re-opening arguments at paragraphs 17, 18 and 19 of their first submissions. The Commission has noted this in paragraph 118 of the background paper. The case to which we want to draw your attention to is Wenkart, W-e�n-k-a-r-t v Pantzer, P-a-n-t-z-e-r (No 3) [2013] FCAFC 162. At paragraphs 17 to 22, and may I hand a copy of the decision.

PN29029

This was a case which concerned an argument that the Full Court reconsider a paragraph of the principal judgment that had been handed down, and you will note from paragraph 17 that the court sets out relevant principles about a superior court having full power to really hear or review a case until judgment is drawn, passed or entered.

PN29030

There are then set out principles from the Full Court decision in Davis v Insolvency and Trustee Services Australia (No 2) (2011) 190 FCR 437. I don't take you to all of the relevant paragraphs but the particular paragraph which we wish to draw to the Full Bench's attention are paragraphs 20 and 21. You will see in paragraph 20 of the Full Court judgment their Honours said that:

PN29031

Here, of course, no orders have yet been made giving effect either to the principal judgment or to the second judgment. The present application is not an application to vary or to set aside orders prior to entry. Rather, it is an application that the Full Court reconsider �

PN29032

Et cetera. And then they say the same principles ought to apply. So we urge upon the Commission not to entertain any of the re-opening, setting aside matters at all, and we emphasise the heavy burden which parties must assume in order to persuade a court or tribunal that it should re-agitate issues that it has considered and upon which specific findings have been made, particularly in the absence of any identifiable error of fact, law, injustice, et cetera, matters that we have set out in some detail in our submissions.

PN29033

The second point that we wish to raise in relation to opposition to a two year delay, and in favour of an immediate implementation, is to highlight, if we may, matters which we know the Full Bench has certainly dealt with in detail in its judgment, and also which arise by implication in the background document that has been published.

PN29034

But one cannot escape, in our respectful submission, that support for the immediate implementation of the reduction of penalty rates supported by the following, at least, five matters: first, that there has been found that the current Sunday penalty rates are neither fair, nor relevant; secondly, that the current penalty rates overcompensate the employees who are paid the current Sunday penalty rate; thirdly, that the delay in the implementation of the reduction in current penalty rates will prolong the period that the Sunday penalty rates remain neither fair nor relevant; fourthly, the delay will delay the positive employment effects from the reduction; and lastly, that the unions have focused on the interests of the employees only and ignored the interests of employers, and we respectfully submit that that is contrary to the requirements of the Act, and the approach already clearly articulated in some significant detail by the Full Bench in various passages in the judgment.

PN29035

In respect of the latter point, the interests of employees and the interests of employers, or examining the matter from the perspective of the employers and the perspective of employees, the Ai Group accepts that one factor relevant to the date of implementing the reduction of the penalty is the interests of an employee, however, it is clear, in our submission, that the purpose of section 134(1)(d)(a) is to provide additional remuneration for employees working on a weekend. The purpose is directed at the employee. We accept that, but that still means that the Commission would consider the perspective of the employers and that was recognised by the Commission at paragraph 117 of the decision.

PN29036

Equally in respect of the transitional provisions, or consideration of transitional provisions, the purpose there, one can accept, would be to provide mitigation of hardship caused to employees working on Sundays. That comes from the judgment at paragraph 20/21. The purpose is directed at the employee but nonetheless it is necessary, in our respectful submission, to consider the perspective of employees.

PN29037

In this regard, we submit to the Full Bench that there is a distinction between the purpose of the transitional arrangements and the factors that influence the fairness of the transitional arrangements and it is plain that the purpose may focus on one group but the fairness may be influenced by factors outside that group including the interests of the employers. Contrary to the SDA's submissions, it is not appropriate, in our respectful submission, to totally subjugate the interests of the employers under the tests in either the date of implementation or the transitional arrangements that are put in place.

PN29038

There are three further submissions which we wish to make in opposition to the two year delay in the implementation of the reduction of penalty rates. First, Ai Group submits that it does not accept the hardship at the level implied by the SDA. By way of example the Ai Group does not accept that the hardship justifies a two year delay in the implementation of the reduction in Sunday penalty rates, and in that regard it has set out an analysis at attachment B of its submissions in reply to demonstrate the limit of hardship, with the maximum hardship being $4.05 per week for an adult level 1 employee working 15 hours per week.

PN29039

May I request that the Commission goes to attachment B? We have separate copies if that is necessary, because one issue that we discovered is that on the uploaded version printing it off, one couldn't get the entire table and if that is a problem that the Full Bench faces we have spare copies.

PN29040

JUSTICE ROSS: No, it's fine.

PN29041

MR DIXON: Fine. The Commission will see, in attachment B, on the second page that the calculations have been done in three parts; part 1 is on the second page, and there are various assumptions based on Ai Group's two-stage transition, and it proceeds on the basis that there would be a 2.45 per cent increase to the hourly rate on 1 July each year of the transition, and that assumption is based on the historical position set out in footnote 2. In respect of the Fast Food Award the increases of 2.54 per cent taking effect on 1 July 2015 and 2.37 per cent taking effect on 1 July 2016. That's been averaged at 2.45.

PN29042

JUSTICE ROSS: Is that your assumption about the outcome of annual wage reviews on those occasions; is that the ‑ ‑ ‑

PN29043

MR DIXON: That's a calculation based on the actual increase on those two earlier years, your Honour.

PN29044

JUSTICE ROSS: I know, but then you forward project it.

PN29045

MR DIXON: We can't predict precisely what would go forward.

PN29046

JUSTICE ROSS: No, no, no. Yes.

PN29047

MR DIXON: But at least it would be ‑ ‑ ‑

PN29048

JUSTICE ROSS: That's the basis of it. It's a historical ‑ ‑ ‑

PN29049

MR DIXON: That's the ‑ ‑ ‑

PN29050

JUSTICE ROSS: A forward projection based on historical movements.

PN29051

MR DIXON: Yes.

PN29052

JUSTICE ROSS: Yes.

PN29053

MR DIXON: We do know, your Honour, that CPI then was lower than what is now predicted at CPI.

PN29054

JUSTICE ROSS: Yes.

PN29055

MR DIXON: And I think that flows from the implementation that the Commission has indicated to the parties.

PN29056

JUSTICE ROSS: Yes.

PN29057

MR DIXON: There are a couple of other factors that I might just highlight. The Commission will bear in mind, from the decision, and this would be the Full Bench decision at 1273 about the profile of the Fast Food employees that 49.6 per cent worked between one and 15 hours, and 67.8 per cent worked one to 24 hours, and I mentioned that because these calculations are directed, in part, at that issue.

PN29058

The second point is that the Full Bench held, at paragraphs 1307 and 1309 that the typical level 1 fast food employee working at McDonald's on a weekend worked a shift of four to five hours' duration on a Sunday. Thirdly, although not directly relevant to the table, but relevant to the consideration of the impact, is the number of employees likely affected by a reduction. The Commission has noted in the background document that those directly affected would be estimated by Ai Group as 63,186, and that is dealt with at paragraph 44(c) of their reply submissions.

PN29059

But those submissions do not take account of the fact that not all persons employed as fast food employees work Sundays, or regularly work on Sundays, and the Commission made certain findings about that. Based on the Ai Group employee survey, which the Commission will recall was accepted as representative of employees in the major chains, 86 per cent of fast food employees, and that's at the decision at paragraphs 1266 and 1350, the finding by the Commission was that 58 per cent worked on Sundays; paragraph 1281 and 1354. So one would, on that view, need to factor in a reduction of some 40 per cent in relation to those likely directly affected.

PN29060

Can I then just explain to the Commission how the tables work? You probably have had a chance to look at it, and I won't dwell on it, but each of the three options have gone through, looked at level 1 employees by reference to age group and if one goes, for example, to the first table; level 1 part-time employee; an adult 21 years and older, there's an assumption there that they would work 15 hours. The first column would be 10 hours at ordinary hours. It would be Sunday hourly rate and then the total for the Sunday hourly rates, and then there has been factored in, in the second line, a 2.5 increase and applied the first penalty reduction of 12.5 per cent, which is the proposal that Ai Group urges upon the Commission, and then the same with 1 July 2018. So one will then see the difference in dollar terms per week for someone over the age of 21, as a part-time employee, being $4.05 or $4.50 after 1 July 2018, and that formula is then repeated for the lesser age groups, as you will see � sorry, it's first done in relation to casual employees and then it is done for each of the categories of 20 year olds by reference to the classifications in the award; part-time and casual.

PN29061

That takes one through then to all of those separate calculations, and the Commission will see pretty much that the percentage differences are all very much the same in respect of the different age groups with those assumptions built in and the highest difference would be the $4,50 for that group per week.

PN29062

One then goes to part 2, and the same system has been adopted, or method has been adopted. You'll note that for part 2, the assumptions are two-page transition 2.5 per cent increase on each of the years, but this one works on the basis of 24 hours per week worked as 15 week day hours, four Saturday hours and five Sunday hours, and those calculations then, if one goes to the tables, follow the same result, but by reason of the employees working more week hours the impact is reduced, and you will note, for example, for a part-time adult employee, 21 years and over, there is each of the relevant dates, 1 July 2017 and 1 July 2018, a positive impact, and the same for casuals. When I say � sorry.

PN29063

JUSTICE ROSS: So is the short point that when you look at the information for this award about the number of hours worked by the majority of the employees and the pattern of those hours, and then you factor in an annual wage adjustment on each of the two years, you end up with either a small or no difference, depending on the classification in the total remuneration that's received by those employees? I follow that in monetary sense, but it will no doubt be put against you that there's still a consequence because the real value of those wages has eroded.

PN29064

MR DIXON: Your Honour, we, in part, put this material before the Commission to counter the suggestion of an exaggerated position about the actual impact.

PN29065

JUSTICE ROSS: Yes.

PN29066

MR DIXON: We accept that there is some impact but when the Commission is faced with a starting point that is presently unfair and they overcompensate then this provides the Commission with some foundation for evaluating the impact against maintaining unfairness and overcompensation, and we can't make positive judgments about what the future increases would be, but, even if they are as their previous levels, the impact is by way of the two year reduction that Ai Group put forward significantly less than what has been suggested to the Commission in the submissions, and, in our respectful submission, would fully meet and be in conformity with the findings of the Commission about overcompensation and unfairness and the like, and also takes into account the interests of employers and employees.

PN29067

JUSTICE ROSS: I follow.

PN29068

MR DIXON: So I just indicate that the last assumption would be someone working 24 hours, this is part 3, 19 week day hours and five Sunday hours, and the result is of a positive nature. With those assumptions built in and the same level of hours worked before and after.

PN29069

The second point we wish to make in response to the SDA is that the Ai Group does not accept that the intended application to increase � I can dispense with that now, given the concession that is made this morning that there was no point being made about the submissions to the review body for increasing wages.

PN29070

But the third point, now the second point, is the size of the reduction in Sunday penalty rates under the Retail Award compared to others. The SDA has emphasised the size of the reduction. The reduction here is only a 25 per cent reduction, not a 50 per cent reduction and that would also be relevant.

PN29071

In respect of the suggestion or submission by the SDA that clause 34.1(a) of the Restaurant and Catering Industry Award should be replicated here the SDA submits that the clause would, this is amongst other things, serve as an important role in educating employers and employees about their rights. Apart from the question of whether that flows, which we do not accept, one can dispense with that submission on the basis that a clause like that would not, in our respectful submission, be necessary to give effect to the modern award objectives.

PN29072

May I then deal very briefly with the � perhaps not a submission, but the stated position or intention of the SDA arising from recent correspondence to the Commission in respect of a stay. The SDA has, it appears, sought to indicate to the Commission that they seek a stay of the Full Bench order giving effect to its decision. It strikes of course that there is no power for the Full Bench to stay its determination. The stay power is only available in respect of an appeal or in respect of a review of the Full Bench decision or a Commission's decision, and if there's any authority needed for that, it's one of your Honour Presiding Ross J's decision in Grabovsky, G-r-a-b-o-v-s-k-y v United Protestant Association NSW Ltd [2015] FWC 5161 at paragraphs 18 to 20.

PN29073

JUSTICE ROSS: I take it there's no issue, or no contest, to the proposition that United Voice or the SDA could seek to stay any orders arising from this decision as part of their foreshadowed judicial review application?

PN29074

MR DIXON: Your Honour is correct.

PN29075

JUSTICE ROSS: The court would have the power to do that.

PN29076

MR DIXON: And I wish to say something about that in a moment if your Honour pleases.

PN29077

JUSTICE ROSS: Sure.

PN29078

MR DIXON: Dealing first with the suggestion that the Commission should defer its decision in any way to accommodate what's happening elsewhere, if it happens, the Commission should not, in our respectful submission, entertain any such further delay. Ai Group does not accept the position that there is jurisdictional error and Ai Group does not accept that the position in respect of jurisdictional error cannot be adequately dealt with by the Full Court in the event that an application is made. One would expect that the Full Bench here, and I say this respectfully, after the long period that has gone on, that the Commission is likely to hand down its decision here in the relatively near future. None of the ‑ ‑ ‑

PN29079

JUSTICE ROSS: That's a sufficiently ambiguous phrase so ‑ ‑ ‑

PN29080

MR DIXON: If the Commission were to grant the implementation of its decision to take effect from 1 July 2017 there is ample opportunity, following the decision, for parties to approach the Federal Court before their rights and obligations kick in and to seek an appropriate stay if an argument can be made. In our respectful submission, this is not a matter which, in any way, should influence the Commission.

PN29081

JUSTICE ROSS: Leave aside the question of power for the moment, and that might be a characterisation question, and this might be a proposition for the SDA and United Voice, but to the extent that we're asked to do something on the basis of an arguable case of error I'm not sure that's a position we should be commenting on.

PN29082

MR DIXON: With respect, your Honour, whether it is even appropriate to suggest that the Full Bench should comment on that ‑ ‑ ‑

PN29083

JUSTICE ROSS: I wasn't implying that it was suggested, but normally a stay would involve considerations of arguable case and balance of convenience, and it may be that the SDA and United Voice submissions can be � well, they might consider whether a stay in the formal sense is really what they seek or whether they're raising the question of there should be some period between the decision and the effective date of any orders. So, in other words, it's really a submission that we should endeavour to avoid handing it down at 5 o'clock on one day to operate from midnight or, you know, the following morning to ensure that they have an opportunity to approach the court and to seek a stay through that process.

PN29084

If that's the proposition, if that, in truth, is the substance of the argument then we can understand that, and what you've indicated is no more than your expectation that that would occur in any event, and therefore we don't need to entertain the propositions about whether there's power, on what basis should it be exercised. I just think we seem to be � we wander off into a completely different field if when properly analysed in substance the proposition that's been put by United Voice and SDA is that they've foreshadowed judicial review; they want an opportunity to seek to stay the decision. The consequence of that is they ask that we take that into account and that there be some time period between the decision and the implementation.

PN29085

In the normal course there would anyway because there are a range of other issues that there would need to be draft variation determinations published and an opportunity to comment in any event, so perhaps that's something that the SDA and United Voice can consider, come back on, and then if there's anything further from that we can hear from any other party who wants to say anything about it. But I just don't think, at this stage at least - let's not get into the weeds of the jurisdictional issues and the range of other complications. If we get a better appreciation as to what's actually being proposed and then you'll have an opportunity to say what you want to say about that.

PN29086

MR DIXON: Your Honour, may we just add this; that the course that your Honour outlined reflected our submissions in part, but what we do wish to urge upon the Commission is to not allow this stated intention that may have absolutely no merit at the end of the day to further delay ‑ ‑ ‑

PN29087

JUSTICE ROSS: Yes.

PN29088

MR DIXON: And of course the Commission won't express a view on that, but at the end of the day further delay the implementation, and if, as one would expect, there is enough time between the period 1 July is the effective date that we urge upon the Commission that should adequately look after their interests.

PN29089

JUSTICE ROSS: I wasn't suggesting that it'd be taking into account the foreshadowed application. It was really that in the normal course how we would approach it would be to publish draft determinations and provide an opportunity, and that period of time would also provide an opportunity for the unions, if they wished, to seek relief elsewhere. It's not that that would influence the process particularly; it's just that would be the likely process consistent with what we've done in other cases in any event.

PN29090

MR DIXON: If your Honour pleases. Yes. Can I then, in conclusion, ask the Members of the Full Bench to return to the background document and my submissions that I follow now are somewhat different from the query that the Full Bench had earlier in relation to onus of proof, but may I invite the Full Bench to go back to paragraph 4 which deals with the provisional views expressed by the Full Bench in the penalty rates decision, and the first of those provisional reviews in subparagraph (1) refers to the position of the productivity Commission and the provisional view expressed by the Commission that the proposal imposes an unnecessary delay, this is the 12 month delay, on the introduction of any reduction of penalty rates and would give rise to a sharp fall in earnings, et cetera.

PN29091

In our respectful submission, nothing has been put by any of the parties to dissuade the Commission of the view, the provisional view, that a 12 month or any longer delay will impose an unnecessary delay on the introduction. Secondly, the Commission dealt, at paragraph (2), with the take home pay orders issued, but obviously in the absence of any strong submission about take home pay orders one could nonetheless recognise that the view expressed that it would impose a regulatory burden on business remains relevant and the same ‑ ‑ ‑

PN29092

JUSTICE ROSS: No, that view is not directed at take home pay orders; that view is directed at red circling.

PN29093

MR DIXON: Sorry, red circling. I beg your pardon. I misread that. I apologise to the Commission. So for the red circling the Commission was of the view in relation to imposing a regulatory burden it's axiomatic that that would be the case and it's an undesirable factor and it has not been countered, in our respectful submission, in any of the submissions that I put to the Commission.

PN29094

Then in relation to subparagraph (4), where the Commission deals with the annual instalments, in that paragraph the Commission refers to at least two instalments and emphasises the circumstances applying to each modern award and the extent of reduction. In our respectful submission, the Fast Food Award, the circumstances which we've outlined, the smaller extent of the reduction and the actual impact on the two-year implementation that we demonstrate by way of attachment B and the absence of any compelling argument to further delay the unfairness would, in our respectful submission, lead the Commission to adopt Ai Group's submission of implementation over two years.

PN29095

Those are our submissions, if the Commission pleases.

PN29096

JUSTICE ROSS: Thank you. Mr Izzo?

PN29097

MR IZZO: Thank you, your Honour. If I could ‑ ‑ ‑

PN29098

JUSTICE ROSS: Sorry, Mr Izzo, it might assist SDA and United Voice if we can indicate we'll take a short five minute break at the conclusion of the employer submissions perhaps to allow you to consider what's fallen and we'll see where we go.

PN29099

MR IZZO: Thank you, your Honour.

PN29100

JUSTICE ROSS: Thanks.

PN29101

MR IZZO: Your Honour, if I could firstly just start by correcting a matter or some of the content of our reply submissions that were filed on 21 April? So we filed reply submissions on 20 April and then updated a table in those submissions, and refiled them on the 21st, and if I could take ‑ ‑ ‑

PN29102

JUSTICE ROSS: Sorry, is that the point, or is it a different point that you raise about page 30 of the background paper?

PN29103

MR IZZO: It's the same point, your Honour.

PN29104

JUSTICE ROSS: No, that's fine. Yes, thank you.

PN29105

MR IZZO: I thought it was an error of the Commission's, and then it occurred to me that it was our own error which has led to the issue - - -

PN29106

JUSTICE ROSS: No, that's fine.

PN29107

MR IZZO: - - - in the background paper. If I take you to, sorry, I'm just pulling up my submissions now, if I take you to the revised submissions that were filed, on page eight, there is a table that appears which is our estimate of the number of employees affected in the retail � or subject to the retail award.

PN29108

The total at the bottom of that table should say "71,692 to 164,002" and that is the total that we updated when we re‑filed the submissions. If I take you to the page earlier, which is page seven, you'll see towards the bottom of page seven we outline the Commission's question "Each party is advised to provide an estimate of the number of employees affected" and we summarise our position by saying "Total number of employees affected is 80,200 to 183,000".

PN29109

Those figures weren't updated and I think that's why the background paper equally adopts those figures, so those figures should be, again, 71,692 to 164,002 and those figures, page 30 of the background papers, should be changed to reflect those figures, and I do apologise, it appears that we updated our table but not the introductory paragraph.

PN29110

JUSTICE ROSS: Yes, no problem.

PN29111

MR IZZO: I propose to deal with four matters primarily today. Those matters are as follows, the claims by the union parties and the labour parties in each state and federally that the decision should be either reversed or set aside or the implementation of the decision should be stopped, like to address that matter.

PN29112

JUSTICE ROSS: I understood that's not � there's a change in the position in respect of that matter.

PN29113

MR IZZO: Well, I understand there's a change in the position with respect to the SDA. I was of the impression that both the United Voice and other people that have made a submission to the Commission are still - - -

PN29114

JUSTICE ROSS: There are certainly other parties but the SDA's position's changed, yes.

PN29115

MR IZZO: I accept that, your Honour. That's the first matter. The second matter is to address the Commission's power to implement transitional arrangements and I propose to deal with that because it's specifically relevant to one of the SDA's proposal. I'd thirdly like to address the number of employees affected in the retail award and lastly, I'd like to briefly touch upon some submissions that have been made by the union parties about public holiday penalty rates.

PN29116

If I can start with the submissions that have been received regarding reversing/setting aside the decision, however one might want to term it, we say that there are two areas of law which would apply to any consideration by the Commission of whether it should set aside its decision and we say the first of those is an express statutory provision in the Fair Work Act which is section 603 of the Fair Work Act and the second is that there are a limited class of common law principles which courts and tribunals have determined would warrant departing from a decision that has been made.

PN29117

If I can start firstly with section 603 of the Fair Work Act, we say that it provides an express power to vary or revoke a decision of the Commission but I would like to clarify submissions in relation to how section 603 applies here. We say that 603, there is no power for the purposes of the present case because it is unambiguous, on the face of section 603, that the power to revoke or vary decisions is not available for decisions that arise under part 2-3 of the Fair Work Act and part 2-3 is the part which relates to the exercise of modern award powers by the Commission.

PN29118

What that means is that if section 603 is unavailable, then if the decision is to be varied or revoked at all, this course of action must arise on some other basis and that's as far as we wish to press our submission in relation to section 603. Really, it is a submission that it's simply not relevant to the present proceedings. What that brings us to is the limited class of common law principles that justify departing from a decision.

PN29119

The class of principles have been conveniently summarised by Ai Group in its submissions dated 21 April 2017 at paragraph 17 of their submissions and I don't intend to repeat what they have put down but I do wish to note that they have called up, in their first two categories, what we say are the primary two bases you might ordinarily find, or the most common two bases, and that is where it has clearly been demonstrated that there is a misapprehension of the law or where it has been clearly been demonstrated that there is some misapprehension of the facts in the process of making the decision.

PN29120

The application of those common law principles, they have been applied in Fair Work Commission cases previously and I just want to give the Commission a reference to a Fair Work Commission case that summarises the principles much in the same way as AiG have, and that is the decision Mr Dixon referred to earlier, Grabovsky v United Protestant Association of New South Wales which was a decision of your Honour, Ross J, (2015) FWC 5161 and in that decision, your Honour broadly summarised the exceptional grounds that would be required, and that is at paragraphs 38 or 39 of the decision.

PN29121

What we say derives from these principles is that it goes without saying that a court or tribunal would only ever set aside its decision in exceptional circumstances and our position is that none of the classes of circumstances that usually warrant setting aside a decision are applicable to the present case and that's why we say the Commission should not go down that path.

PN29122

If I can address one matter that does appear to have continually been raised by the SDA and United Voice, there has been a submission that continues to be echoed that the Fair Work Commission has either failed to properly take into account section 134(1)(a) of the Fair Work Act or otherwise has erroneously concluded that it was unnecessary to take into account the requirements of section 134(1)(a).

PN29123

As you'd be aware, 134(1)(a) is part of the modern award's objective and it is the part of the modern award's objective that directs the Commission's attention to the needs of the low paid. We say that an argument that the Commission hasn't properly considered or taken into account the needs of the low paid is unsustainable. One only needs to have a cursory review of the decision to identify the needs of the low paid regularly feature as a factor in the decisions � sorry, in the body � the Fair Work Commission's decision making.

PN29124

By way of example only, paragraphs that expressly call out the needs of the low paid in the decision at paragraphs 84, 128, 165, 180, 817, 1136, 1356, 1656, 1826, 1998, all of those paragraphs, and that's not all of them, but that is a smattering of the paragraphs that not just refer to the needs of the low paid but in many cases, they actually demonstrate that the Commission's thinking in relation to where it should set the penalty rate has actually been influenced by that particular factor.

PN29125

With that in mind, it cannot credibly be argued that the Commission's decision failed to take into account the needs of the low paid. This was an overriding concern that we say permeates the whole decision. Having said that, I go back to what I said earlier which is there is therefore no grand misapprehension of the facts, no misapprehension of the law that's been identified or any of the other classes, the limited classes, of circumstances that would warrant setting aside the decision or not implementing it, and for that reason we urge the Commission not to accede to the requests that have been filed in that regard.

PN29126

That's all I'd like to say about that matter. If could now deal with the power to implement transitional arrangements and if I could ask your Honours to open to section 136 of the Fair Work Act to address this matter. Section 136 provides an exhaustive list of those terms that may be included in a modern award. It specifically states that a modern award must only include terms that are permitted or acquired by subdivision B, subdivision C, section 55 or part 2-2.

PN29127

If we just take some of these one by one, subdivision C deals with terms that must be included in a modern award. That's your terms such as coverage clauses, consultation clauses, dispute resolution clauses. It is uncontroversial that what we are presently discussing, that is a transitional arrangement for penalty rates, is not a term that must be included within subdivision C. Section 55 deals with the national employment standards and how it interacts with modern awards or enterprise agreements.

PN29128

Again, penalty rates and transitional arrangements are not a matter dealing with the NES. They don't interact with the NES and so in that regard section 55 is not relevant. The same applies for part 2-2 which, again, deals with the NES. What that means is that if a power to insert transitional arrangements in awards is to exist at all, it must be found within subdivision B of this part and so we should turn to subdivision B where the principle section is section 139.

PN29129

On my copy of the Act it's overleaf, so section 139 is the critical section which sets out what terms may be included in modern awards. Again, the first matter that is telling is none of the subsections of 139 expressly refer to transitional arrangements. There is no express power to include a transitional arrangement in a modern award under 139.

PN29130

What that means is that if a transitional arrangement is to be implemented, the term will still need to be about a matter set out in section 139. If it is not about a matter set out in section 139, then the only other basis upon which it could be included is section 142 which deals with terms that are essential for the purposes of making other terms within a modern award work and we say that too is not really relevant here, so we're back at 139.

PN29131

The most relevant subsection of 139 is the term or the clause which deals with penalty rates. It's clear you can have a term about penalty rates and if I can take you to the attachment to the background document, attachment B, we have the various transitional proposals made by the parties. We say that each of these transitional proposals, the ones actually outlined in the attachment are broadly capable of being included in a modern award because when you look at each of the terms, they are, broadly speaking, terms about penalty rates so if I can start with the AHA proposal in the table at page 44 of the background paper, you see it has a date and it has a penalty.

PN29132

It's clear that that term is a term about a penalty rate and the same goes for the CCIQ proposal. Overleaf we have the SDA proposals, Ai Group proposals. Eventually we get to the ABI and New South Wales Business Chamber proposals. They all are expressed in a way that it is clear that the clause is about a penalty rate. I make that submission in respect of all of them. I have a slightest level of apprehension about the United Voice proposal because the way it's worded, it appears to be more about reductions in penalty rates than really setting out the penalty rate but if there was any anxiety about that, the clause proposed by United Voice could easily be moulded to fit the format that is being proposed in the others.

PN29133

Broadly speaking, those proposals that are outlined in attachment B we say there is a power to include them but this - - -

PN29134

JUSTICE ROSS: Just while we're looking at that CCIQ, and I think there's another employer party that does this as well, and I'm assuming it's just an error, they're seeking a reduction or a phasing � sorry, a reduction that wasn't contemplated in the penalty rate decision. That is, for casuals in the hospitality award to drop from 175 to 150. I'm assuming that's just a mistake.

PN29135

MR IZZO: I assume so, your Honour.

PN29136

JUSTICE ROSS: They're not seeking to re-open the case to run that argument.

PN29137

MR IZZO: I can't speak for CCIQ but I assume that that's not their intention.

PN29138

JUSTICE ROSS: (Indistinct)

PN29139

MR BARKLAMB: Your Honour, perhaps if I take that on notice and communicate that to the Queensland Chamber and ask them to communicate with the Bench.

PN29140

JUSTICE ROSS: All right, and we can make it a general question because I thought AFEI had said something similar but on the face of this document it seems that it's a CCIQ point but I'm just assuming it's just a mistake and that's fine.

PN29141

MR BARKLAMB: Thank you, your Honour.

PN29142

JUSTICE ROSS: All right, thank you. Sorry, Mr Izzo.

PN29143

MR IZZO: The reason I've gone to this effort of demonstrating why I say that all of these transitional proposals do fall within power is because they can be contrasted with what the SDA has proposed in its primary submission at paragraph 14. If I could take you to the SDA proposal for existing employees at paragraph 14 of its submission, from what I understand from Mr Moore's clarification, the first line of paragraph 14(a) is now removed, but our concern still remains.

PN29144

The clause now reads "Employers must continue to pay employees the rate of pay prescribed by the relevant award as at that time for Sunday work until such time that the rate of pay for Sunday work under the Award equals or exceeds the preserved rate". We say that that is not a term about penalty rates. That is a term about preserving existing employment arrangements, it is a term about transition but is not a term about penalty rates and therefore it does not fall within the power conferred by section 139.

PN29145

The task of the Commission is really, in each of these cases, to characterise what the term is about. We've gone, at some length in our submissions, to talk about the scope of what about, may include and doesn't, but really, at the end of the day what you're being asked to do is characterise what this term is about and we say it's about transition which, itself, is not a matter about which there is a specific power for the Commission to insert clauses on.

PN29146

The same applies for subclause (b). It says "Employers will not dismiss (indistinct) in their employment or alter to their prejudice the position of any employee entitled to be paid the preserved rate by reason of, or for reasons which include, that entitlement". We say that's a term about victimisation, it's a term about protecting workplace rights. It's not a term about penalty rates or any of the other matters that fall within section 139.

PN29147

JUSTICE ROSS: Well, I suppose, yes, it may be argued that it's a term that comes in under 142 if you accept the argument that the first part of the term falls within 139.

PN29148

MR IZZO: Part (a)?

PN29149

JUSTICE ROSS: Yes.

PN29150

MR IZZO: If we took that onboard, your Honour, (b) could come - - -

PN29151

JUSTICE ROSS: I understand you don't accept the first bit but if that first bit was within power, then what would you say to the argument that the second bit is to � well, it would, on the face of it at least, seem to be incidental? I suppose the debate becomes then - - -

PN29152

MR IZZO: Whether it's essential.

PN29153

JUSTICE ROSS: - - - is it essential for the purpose of making and operating in a practical way?

PN29154

MR IZZO: I think - - -

PN29155

JUSTICE ROSS: But you can see that there would be a range of submissions on that point at least.

PN29156

MR IZZO: Yes. I think it could well be incidental which then means the question is, is it essential for the modern award's objective to be met? We would say it isn't for the very reason that you already have general protections provisions in the Fair Work Act and that the Commission, if it was considering including this type of term in the Award, it would really need to be satisfied, at an evidentiary level, that there is some grave concern or there's some pattern of conduct out there that warrants the Commission, in many ways, simply reiterating the general protections provisions in the Award and it's not clear why that would be so essential so as to be included in the modern award and so for that reason, we do say there's no power for section 14(b) to be included but we do maintain our view that when you properly characterise what 14(a) is dealing with, it's dealing with transition and preservation of rights.

PN29157

The SDA in response to our submissions has said that it relies on section 165 of the Fair Work Act. We don't see how that, in any way, changes the position. Section 165 provides that the Commission may specify when determinations take effect. We don't cavil with that but at the end of the day, all terms included in the modern award must fall within one of those terms permitted by section 136 and now that we know that section 139 is really all that's left, you really need to be satisfied it falls within section 139 or 142, as your Honour's mentioned.

PN29158

The mere existence of section 165, which says that you can specify when a determination takes effect, that doesn't remedy the issues that we've identified with the SDA's proposed clause. If I could now move to the number of retail employees that are affected by the decision. I confirm our estimate is 71,692 to 164,002 employees. Two other organisations have provided estimates in relation to the retail award. Those are the SDA and the Retail Employers.

PN29159

We have concerns in relation to the SDA calculations. The SDA calculations combine fast food, retail and pharmacy employees covered by those three awards so they provide a combined figure. They do not make an attempt to distinguish between employees in the retail sector versus fast food versus pharmacy. They also make no attempt to distinguish between employees who sometimes work Sundays and employees who don't sometimes work Sundays.

PN29160

We say in light of those matters, the estimate that's been provided by the SDA is unhelpful for determining the answer to the Bench's question which is how many employees subject to the retail award will be affected by the decision. If I then turn to the Retail Employers, they've taken a slightly different approach to ABI and New South Wales Business Chamber. The reason that our two approaches differ is that the Retail Employers have started with a slightly different starting point.

PN29161

They take the non-managerial workforce in the retail sector. They then add to it the small number of managers who have their pay set by the Award and they go and conduct their calculation. We instead started with the entire retail sector and then took out certain portions of that sector in accordance with the matters set out in our table in our submissions. That's why you see a slight divergence between us.

PN29162

What we say though is that the difference isn't substantial. If you look at the low range, we both say the low range number, or the low estimate for how many people affected, were both in the 70,000 range. When you get to the higher range, our estimate is slightly higher where we say up to 160,000 employees whereas the SDA say about 108,000, so there's about a 50,000 person differential.

PN29163

Again, that's because we had a slightly different starting point but what we would say is this, there's only two parties that have genuinely interacted with the question with respect to the retail award, provided detailed calculations, those two parties are the Retail Employers and ABI and NSWBC and so we would commend you to those two estimates in relation to the number of people affected by the retail award.

PN29164

If I could next move to the submissions that have been made about public holiday penalty rates. We had understood from the decision that the Commission has determined that public holiday penalty rate reductions will commence from 1 July 2017. As this issue has been decided by the Commission, we, again, submit that exceptional grounds would be required to depart from the Commission's decision. You would need, again, one of those limited circumstances like a clearly demonstrated misapprehension of fact or law to depart from the decision.

PN29165

It appears that the union parties are urging the Commission to re-visit this issue but as I've said before, we don't see any exceptional circumstances warrant such an approach. In any event, if for some reason the Commission was to re‑consider this matter, what we do wish to put on the record is that there are a number of cogent reasons why transition would not be appropriate or necessary with respect of public holiday penalty rates and there's three key ones.

PN29166

The first is that depending on the state in which you live or in which you work, I suppose, is the more pertinent test, there's approximately 10 public holidays that apply to one's employment per year. That's to be contrasted with 52 Sundays per year so when we talk about the magnitude of the impact on employee pay, public holidays is substantially less than Sunday.

PN29167

Secondly, the evidence that's been filed in these proceedings has identified, in many cases, low levels of employment on public holidays in the retail sector. To mention one element of the evidence only, the Baxter statement that we filed demonstrated that a number of employers close their doors on particularly the more important public holidays, as they viewed it, the Christmas Day, Boxing Day, Anzac Day and there were low level of employment on those days.

PN29168

Again, the impact of the reduction will be lessened, and thirdly, the actual reductions themselves are less in respect of public holidays than they are in respect in the Sunday rate. The public holiday reduction across the board is 250 percent penalty to 225. That constitutes, in total, a 10 percent reduction to the wage rates on that day. By contrast, the Sunday retail penalty rates going from 200 percent to 150, in total that represents a 25 percent reduction of the total payments on that day and so the actual quantum of the reduction is much less, it's less than half in percentage terms, for public holidays.

PN29169

We say that having regard to those three matters, there is a significant merit basis to resist any claim to transition public holiday penalty rates. They should come in forthwith.

PN29170

Prior to turning � I was just going to conclude by addressing our proposed transitional arrangement but before doing that, if I could just briefly address the question of the stay based on the interaction that we've had to date. We broadly endorse the comments that have been made by Mr Dixon in relation to whether a stay should be granted and so I won't repeat any of that. We say that everything that was submitted by AiG are entirely appropriate reasons why the Commission should not defer its decision.

PN29171

But I would like to emphasise this point, in any event, it is likely that there will be some period between the issuing of the determinations and the determinations taking effect. As is the case with the annual wage review, it is not ordinarily the Commission's process to hand down a determination with respect to wage rates on one day that take effect the very next day for the very reason that part employers, employees, organisations supporting employers and employees, the Fair Work Ombudsman, there's a number of bodies that need to get their houses in order, so to speak, to ensure that employment arrangements reflect the new determinations.

PN29172

That is ordinarily the Commission's practice. We, with respect, had assumed there would be a similar process adopted here. Having regard to that, there will be opportunity for the relevant union parties to go to the Federal Court should they wish and seek a stay if the ordinary course is adopted and so that is a factor that really, in addition to the other matters that Mr Dixon has raised, that do not warrant any granting of a stay or any deferral of the determinations.

PN29173

If I could finally then turn to our proposed transitional arrangements. We have proposed that the retail Sunday penalty rate should be reduced in the following manner. For permanents and casuals, the rate should go down from 200 percent to 175 percent on 1 July this year. For permanents, on 1 July 2018 there will be a further reduction where the rate goes from 175 percent to 150 percent.

PN29174

We have proposed this transitional arrangement because we say it appropriately balances what are the two driving factors that really will primarily influence the Commission's approach here and that is mitigating on the one hand the adverse effects of the decision on employees. Whilst not going so far in the Commission's mitigation attempts, that it actually prejudices the employment and regulatory benefits associated with the decision.

PN29175

It has already been pointed out by the Commission that currently the safety net is not fair or relevant and so absent any other circumstance, it should be rectified and so there is a need to balance those two matters. The Commission, in its background paper, asked whether parties agreed that that was the appropriate test to adopt, that those are the two matters that should be balanced.

PN29176

What we say about that is clearly the test that the Commission needs to direct itself to are those set out in the legislative provisions but we should be very conscious of the fact that the two driving factors here really are balancing regulatory benefits gained from reducing the rate with the adverse effects. Your task, if it is to achieve a modern award's objective, is largely going to be to balance those two factors and we say that the proposal we have put forward is the best proposal for adequately balancing the respective issues that this Bench needs to address. There's no further questions?

PN29177

JUSTICE ROSS: Thank you, Mr Izzo. Mr Tindley?

PN29178

MR TINDLEY: Thank you. There are just a couple of matters that the Retail Association would like to cover and they are both relatively brief. One task that the Retail Associations undertook in our primary submission was to analyse the impact of the reductions using the transitional provisions that we propose applying a 2.5 percent increase to the minimum wage on the employees who gave evidence in this matter.

PN29179

The SDA has criticised that. They've criticised it in their reply submissions by saying, effectively saying, that we didn't call those employees to talk about the impact of reductions on them. We called them to deal with four matters, the existing penalty rate, and this is set out paragraph 68 of their reply submissions. That is that the existing penalty rates are an essential part of the minimum safety net, there needs to be proper compensation for the negative impacts of working unsociable hours, there's an inability to offset the negative impacts of working unsociable hours and there is limited or no choice regarding working unsociable hours.

PN29180

It seems therefore unusual or perhaps extraordinary that the SDA would say that that evidence wasn't called to identify the extent of the impact when each of those witnesses gave evidence of their view of the extent of the impact and the SDA, at two paragraphs earlier at paragraph 66 of their reply submission, talks about individual employees suffering extreme hardship as a result of the reductions.

PN29181

We say that in regards to the SDA's commentary about the purpose for which they led that evidence, there's inconsistencies between paragraph 66 and paragraph 68 of their reply submissions. The only other matter that we wish to touch on is that of shift workers, so the Commission asked the SDA to confirm whether it had an opposing view to that of the Retail Associations that the Sunday penalty rate reductions applied equally to shift workers, and the SDA's view is that they oppose the position put by the Retail Associations and, in essence, they advance two arguments in support of this.

PN29182

The first of those is that shift work is distinct and separate to day work and that there's been long established recognition by the Commission of the unique and particular challenges faced by shift workers and evolution of the work conditions directed at those special features. The second proposition, or the second basis for their opposition, is that the Retail Associations did not advance any evidence or argument in support of the proposed changes to penalty rates for shift workers.

PN29183

In relation to that first proposition, it appears what the SDA is saying is that there should be particular consideration of shift workers and they should have a particular penalty rate which takes into account both the dis-utility of Sunday work and the dis-utility of being a shift worker generally. We accept that proposition and our application to vary the award considered in light of the decision that the Commission made reflects that, that we are not asking for the Sunday penalty rates for shift workers to equal the Sunday penalty rate for non-shift workers.

PN29184

Interestingly, the award currently provides, at least for permanent shift workers, a penalty rate that is the equal of the rate that applies to non-shift workers, so there is, at least in terms of the general retail industry award as it currently sits, no distinction between the rates applied to permanent shift workers and permanent non-shift workers on Sundays.

PN29185

Our proposed variation would apply a differential treatment between shift workers and non-shift workers and that would be consistent with the differential treatment between shift workers and non-shift workers at other times of the week, including ordinary times during the week where there's a differential of 30 percent including on Saturdays, with the permanent employees there's a differential of 25 percent.

PN29186

In terms of the argument that there's been no evidence in support of the change, the evidence led by the parties in relation to the retail award dealt with the dis-utility associated with Sunday work and the findings were that the dis-utility associated with Sunday work did not warrant the current penalty rate. We say that that naturally flows on. We say that shift workers are compensated in two areas.

PN29187

They are compensated for the dis-utility associated with being a shift worker and the dis-utility associated with Sunday work, having accepted that the dis-utility associated with Sunday work is lower than what the modern award or the general retail industry award currently provides, then it follows that that has an impact, a downward impact, on the penalty for shift workers working on Sundays.

PN29188

JUSTICE ROSS: But I take it you accept the proposition there's no evidence as to the number of shift workers in the retail award or any employment effect that might flow from such a reduction?

PN29189

MR TINDLEY: That's accepted, yes. Save that there's a general proposition which the Bench accepted that retail businesses set their labour needs against labour costs, so we think it flows from that that a reduction in any penalty rate will have some, or is likely to have some, positive employment impact. Unless there are any questions, nothing further.

PN29190

JUSTICE ROSS: Thank you, Mr Tindley. Ms Wellard.

PN29191

MS WELLARD: I intend to be very brief and simply say that the Pharmacy Guild of Australia relies on the submissions that it has filed, as does the Australian Hotels Association and the Accommodation Association. All of those employer parties support and adopt the submissions of the Ai Group put this morning with respect to the re‑opening of the decision and also the deferment of the operative date of any determination.

PN29192

Just one point was raised with respect to � or that I wish to raise with respect to the transitional arrangements for the pharmacy award, the reduction in that award is 50 percent rather than 25 percent which is common to most. The Pharmacy Guild does seek a two year introduction of that 50 percent reduction. The pharmacy industry, or the community pharmacy, is different to many of the other industries that � or the awards that were subject to these proceedings in that the opening hours in pharmacy on a Sunday is just not the same as it is in hospitality restaurants or in the retail sector generally, and it was a significant feature of the case and the evidence before this Commission that employers would more likely open for longer hours in the community pharmacy sector on a Sunday if the penalty rates were reduced.

PN29193

Any delay in the reduction of the penalty rates beyond two years is likely to have an increase on the impact on employers or the disability of employers to open on Sundays and the consequential effect on access to health to the public. If it pleases.

PN29194

JUSTICE ROSS: Thank you, Ms Wellard. Anyone else in Melbourne? No? Restaurant and Catering Industrial in New South Wales.

PN29195

MR DUC: Thank you, your Honour. Your Honour, we rely on the submissions that were filed on 21 April 2017 and my submissions will be to six points. Firstly, your Honour, the association rejects the submission by United Voice to set aside the decision and supports the written submissions of the Australian Chamber of Commerce and Industry and Ai Group.

PN29196

Secondly, your Honour, the Association rejects the submission by United Voice to retract the invitation that has been extended to the association to further pursue its claim. The Commission gave thoughtful consideration to the nature of the evidence that had been provided by Restaurant and Catering and is giving the association a further opportunity to provide further evidence to the Commission in order for the Commission to satisfy its statutory obligations.

PN29197

Thirdly, your Honour, the association affirms that the claim in the proceedings amounts to the alternative application that was considered in the 2014 transitional review. In respect of the claim in these proceedings, the issue raised by the Bench at paragraph 1142 to 1159 concerns the inadequacy of the evidence that was provided by the association and the failure of the association to address the consequences of that 2014 penalty rates decision.

PN29198

It's noted that the Commission required the association to provide evidence to show the number of full time and part time employees covered by the restaurant award or the number of level three to level six casual employees. The proportion of levels one and two employees and (b) any evidence of positive employment effects or service improvements as a consequence of the reduction in the Sunday penalty rates resulting from the 2014 penalty rates decision, and that's found at paragraphs 1151 to 1153.

PN29199

The association submits that part of the problem for the evidence and the provision of the evidence was the timeframe between the implementation of the 2014 penalty rates case decision on 1 July 2014 and the commencement of these proceedings in January 2015 and the association did not have enough time to provide and obtain the requisite evidence I've mentioned previously. That was one reason why the evidence was not satisfactory.

PN29200

Secondly, in relation to the Commission stating that it requires a significant amount of extensive lay evidence, then if the association is to be granted a further opportunity to press its claim, then the Commission has identified at paragraph 1158 that it expects significantly more extensive lay evidence as to the issue that was presented in these proceedings. One reason why extensive evidence was not led, I'm instructed, was because the Commission had provided a view at the directions hearing on 20 February 2015 where it was indicated that the evidence from lay witnesses was - - -

PN29201

JUSTICE ROSS: I'm not sure any of this is going to help us reach a view about the issues that are before us now. It's not really your opportunity to explain why you didn't do what you didn't do. I don't see how any of that is relevant to what we have to decide in these proceedings now.

PN29202

MR DUC: Thank you, your Honour. I'm addressing the issue of the fact that the association's been provided the opportunity to progress its claim. United Voice has filed submissions to say that it objects to that and I'm addressing that question which is 1.1 of the 5 April directions.

PN29203

JUSTICE ROSS: I'm still none the wiser but anyway probably quicker for you just to finish, I think.

PN29204

MR DUC: Thank you, your Honour. Your Honour, in relation to the evidence that would be provided if the association is provided another opportunity in order to progress its claim, the association would seek clarity that the evidence that will be led at that proceeding is in relation to paragraph 1157 of that decision and we would seek confirmation that the requirements comprise the totality of the association's evidentiary burden. Your Honour, apart from that, we rely on the submissions filed on 21 April.

PN29205

JUSTICE ROSS: All right, thank you.

PN29206

MR DUC: Thank you, your Honour.

PN29207

JUSTICE ROSS: Are there any other employer interests? As I indicated, we might stand down for five minutes to give you a chance to have a think about that. If you need longer, let my associate know. Thanks.

SHORT ADJOURNMENT�� [12.01 PM]

RESUMED�� [12.08 PM]

PN29208

JUSTICE ROSS: Yes, Mr Moore.

PN29209

MR MOORE: Thank you, your Honour. Your Honour, the SDA relies upon its primary submissions as filed and its reply submissions amended in the way in which I outlined at the commencement this morning. I think how I'll use the time today is principally just to respond to the matters raised from the other side of the bar table insofar as we've got something extra to say. We feel like we've addressed many of the issues in our written submissions. I'm not going to go over those submissions and repeat them.

PN29210

Can I deal with this question of a stay. The whole topic is, in our review, entirely premature. Since it's been raised, I'll address it. To be clear, we don't say that the foreshadowed judicial review application, that that fact is relevant to the content and timing of the transitional arrangements to be fixed. My learned friend, Mr Dixon, made a submission which gave me the impression that that might have been a view that the Ai Group had and I just want to make that clear.

PN29211

Secondly, all we've done in the correspondence provided to the Commission is to flag our intentions and to indicate that subject to the timing that unfolds, it may be necessary to seek a stay. Whether or not it is necessary, of course, depends upon a number of matters. For example, if the Tribunal was persuaded of the merit of the two year deferral, well I would think that a judicial review application could be heard and determined within that time and we wouldn't be troubling anyone for a stay.

PN29212

We look forward to that possible outcome. In the event that something that determinations � in the event that a decision issues in the near term and determinations are proposed to commence also in the fairly near term, what we've indicated is that to protect the position of the unions and the persons whom they represent, the intent will be to seek a stay. Whether or not that stay is sought from this place or elsewhere is a debate for another day.

PN29213

JUSTICE ROSS: It's not something we need to address at all in the decision we're making in relation to what's before us at the moment? As I understand your point that once that decision comes down, you'll assess what's done and what time period is available and then you'll make a decision at that point as to whether to approach the Commission or the court - - -

PN29214

MR MOORE: That's right.

PN29215

JUSTICE ROSS: - - - for a stay. For our present purposes, we need do nothing about that?

PN29216

MR MOORE: That's our position save for one caveat, your Honour. Your Honour I think made some remarks to the effect that the normal practice, or the practice customarily that one sees, that when the Commission hands down a decision in which there might be a question of review or appeal, if it's a single member, one typically sees there's an allowance of time for parties to seek stays and the like.

PN29217

In the event that the Commission is minded to � issues a further decision in the near term and there is - the determinations are proposed to commence, let us say, on 1 July 2017, we would suggest that it would be prudent and appropriate for the Commission to allow sufficient time for at least my client, I think United Voice, to make whatever applications appropriate in the nature of a stay.

PN29218

JUSTICE ROSS: You may have misunderstood what I was saying. It was that it wasn't that there was a period of time between the decision and the operative date of any order to allow parties to seek an appeal or a review. It was rather that in these review proceedings, the practice has been to publish draft variation determinations after any decision is made around matters such as those that are before us at the moment, and then provide a period of time for that order to be settled, if you like, and I was really making the observation that that period of time to enable the order to be settled would also serve the purpose that you've raised.

PN29219

It's not intended for the purpose of providing the time period to seek a stay in whichever forum but as a practical matter, it would have that outcome.

PN29220

MR MOORE: Thank you for that, your Honour. I apologise, I did misunderstand that.

PN29221

JUSTICE ROSS: No, that's fine.

PN29222

MR MOORE: But that, we have no difficulty with what your Honour has just said.

PN29223

JUSTICE ROSS: All right, but for our purpose, the more important thing is we don't need to get embroiled in any of this at this stage and if we need to get into it later, we will but let's wait and see?

PN29224

MR MOORE: That's exactly right.

PN29225

JUSTICE ROSS: Okay, thank you.

PN29226

MR MOORE: I'm going to deal with the topics in different order in which they were addressed today. Can I deal with the point raised by Mr Izzo for the ABI. We've said in our submissions that the Ai Group is correct in that section 165 is a source of power for the Tribunal to make transitional orders and we've addressed that in our submissions, and we've also addressed how such � that head of power at section 165 would also provide support for an order which red circles, as it were, existing employees. I accept however that I think Mr Izzo is probably correct, that section 165 isn't a complete answer, that the term would still need to meet the requirements of section 139, and we say that just does not present any difficulty at all in terms of the red circling proposal. And can I just clarify that in paragraph 14 of our principle submissions where we refer to red circling, we haven't attempted to draft the clause. We have identified the substance of the provision that such a clause would be directed at. So it's misleading to put that in front of us as if it's something in the nature of a draft.

PN29227

So the question is, would a term of the type proposed in a general way by the SDA providing for red circling be a clause about the matter of penalty rates? And for my part it's hard to see how it's about anything else other than penalty rates because what it does in substance, and of course, what the Commission needs to do is to look at the subject matter of the clause, not the drafting of it � the subject matter of the clause is to say existing employees at date X get a penalty rate of Y, and another class of employees get a different penalty rate. So it is about the subject matter of penalty rates. So I don't see that that presents any difficulty in terms of what the Commission can include in a determination in this proceeding if it's otherwise minded to adopt that approach.

PN29228

The other subject matter referred to in paragraph 14 is a clause providing some protection to employees as a result of the red circling and there was some exchange with Your Honour about that. We would say that a provision in those terms, while it plainly echoes protection elsewhere in the Act, is essential in the circumstances where a number of parties have advanced submissions that if one has a differential in penalty rates entitlements between classes of employees those with the higher penalty rate are, it's said, to be in some risk of less favourable treatment because of their greater entitlement. So there is a particular need to protect and insulate the interests of those employees which would render a clause to that effect as being essential and therefore properly able to be included as an incidental term. Mr Izzo referred to the question of public holidays and the debate around transitional arrangements in respect of the proposed reduced public holiday rates. For our part, and as we've explained in the submissions, we don't read the decision as determining the commencement of those reductions. That's the view that we've adopted.

PN29229

The Retail Associations advanced a submission � well, can I deal with the matter of shift workers. We don't, with respect, really understand the position of the Retail Associations on that matter. The Retail Associations accept what was said today that the position of shift workers and non-shift workers is different. No argument or evidence was led about shift workers in this case. So it's an entirely different controversy. Shift workers are a species of worker which it's well recognised have particular attributes and experiences which typically justify an entitlement to a different rate of pay. In those circumstances, the circumstances where the Commission has made no findings about shift workers it would be inappropriate, entirely inappropriate for the Bench to issue any determinations which deal with shift workers and we otherwise rely upon what we've said in our submissions on that score.

PN29230

It was said by the Retail Associations that there's an inconsistency between paragraph 66 and 68 of the SDA's reply submissions. This is about the relevance � or the relevance that the Retail Association seek to what they seek to make of the lay evidence called by the SDA. That is a controversy without any substance. There is no inconsistency in the SDA's argument. We have said � the SDA's lay evidence was led in support of the contention set out in paragraph 68. What we've gone on to say is that the evidence of the subjective experiences of a small number of employees was led to demonstrate and personalise the disutility of Sunday work. That's how the Commission treated the evidence. That's how it was put forward. It wasn't put forward as some sort of measure of - some sort of representative measure of the extent of those matters across the retail workforce. And that's how the Retail Associations want to, wrongfully, we say, rely upon that evidence in this proceeding.

PN29231

Going to the tables referred to by my learned friend, Mr Dixon, around the impact of the penalty rate reductions in the fast food award, we say that those tables need to be treated with care for two, or for at least one reason. One is that as I recollect them the category of employee with the shortest number of hours referred to therein is an employee who works ten hours on week days and five hours on Sunday, and as I recollect the evidence, and I'm not sure if the Commission made findings about this, there's a significant number of fast food workers who work less than ten hours, and on weekends. Now obviously, as a matter of mathematics, the more hours you work on a Sunday, to take the extreme case, you do six hours a week and it's a Sunday, well, the effect of the cuts is obviously going to be magnified and the tables don't address that scenario. We also note in passing that it's interesting that the Ai Group has proposed, as part of its calculations, an increase in annual minimum wages of, I think, 2.45 per cent � I'm sorry, has assumed, projected an increase of that quantum. We note that their position in the annual wage review is to seek a 1.5 per cent wage increase and if they're successful, well, the adverse effects will be all the greater.

PN29232

Can I deal with a few other matters, briefly. The Commonwealth, in their submissions say at page 7, and I don't need members of the Bench to open the submissions but they say that there would be a range of complexities that would arise from red circling. Plainly, red circling, as compared to no red circling, introduced an element of complexity. We don't accept, however, that any such arrangements would be unworkable, for the reasons that we've set out in our submissions, and it's appropriate that we clarify in a general way how that red circling might work in terms of some of the questions raised by the Commonwealth. What the SDA proposes in relation to red circling is that if an employee who is red circled changes employer then the preserved rate would no longer apply, but that whilst the employee remains employed by the employer, in whatever position, the preserved rate would apply to their employment until the rates catch up. That's not spelt out in our submissions and the Commonwealth asks the question and says, well, how would this work? And that's what we had in mind.

PN29233

JUSTICE ROSS: So when you say, in whatever position, do you mean classification as well as employment - - -

PN29234

MR MOORE: That would be - - -

PN29235

JUSTICE ROSS: Employment category, also?

PN29236

MR MOORE: Indeed, Your Honour.

PN29237

JUSTICE ROSS: Okay.

PN29238

MR MOORE: My language is perhaps loose.

PN29239

JUSTICE ROSS: No, no, no. I wasn't - - -

PN29240

MR MOORE: In saying, "position", I meant to identify any change of classification or employment category.

PN29241

JUSTICE ROSS: Thank you.

PN29242

MR MOORE: Returning to some submissions made by the Ai Group in their written submissions, at paragraph 25B it said that the proposed delay in the commencement of the reductions in penalty rates would mean that those reductions would not have started during the likely length of engagement of the typical level 1 employer under the Fast Food Industry Award. And they refer to the evidence about the typical length, short length of employment of such employees. We say that that might be so but that's not a cogent or relevant reason for the Commission to take into account because it would be tantamount to saying that in exercising the Commission's power to fix the transitional arrangements the Commission should be informed of a concern to ensure that each award covered worker should be subjected to the very proposed reductions, and we say that that's a purpose or consideration alien to the framework, the statutory framework.

PN29243

At paragraph 26 the Ai Group complains there's no evidence that employees in the fast food industry made financial arrangements on the basis that they receive penalty rates. Well, we say it's an obvious point that employees make financial arrangements on the basis of their current income and there is no need for evidence about an employee saying, for example, well, because of the penalty rates I make particular financial commitments.

PN29244

At paragraphs 57 to 59 of their submissions, the Ai Group submit that the meal breaks clause and clause 26.1(a)(iii) operate to limit the incidence of Sunday work. We don't accept that that's so. They don't provide any effective limit on the incidence of Sunday work in any substantive manner. All that clause 26.1(a)(3) does is limit work on a particular day to 11 hours, and all that clause 27 does is provide that employers are entitled to meal breaks which correspond with the number of hours they work. That doesn't provide any protection at all in relation to Sundays, in particular. And we've made submissions, analogue submissions, if you like, in relation to the Retail Award and the limited nature of the protection, the modest protection, I think is how we described it, of the Sunday work provisions in the General Retail Industry Award, and I won't repeat them now.

PN29245

Just to deal briefly with some submissions advanced by ABI in the New South Wales chamber, it's said at paragraph 4.9 that, "It is only the unique category of employees who predominantly work all or most of their hours on a Sunday who will see a material level of change in their earnings." We reject that submission. The Commission's acceptance at paragraph 1446 that 31 to 35 per cent of the total retail workforce usually work on a Sunday hardly suggests that we're hardly here dealing with a unique category of employee. And what is meant by, "a material level of change in earnings", is not explained by the ABI, and ignores or glosses over entirely the Commission's findings about the adverse effects of the proposed cuts which we address at length in the submissions.

PN29246

The ABI says at page 8 of its submissions that the number of employees who sometimes work on Sundays is between 15 per cent and 35 per cent and that's a reference to the comparison of the Peetz/Watson number of 35 per cent and the Productivity Commission number of 15 per cent. We say that the Commission should act on the basis of its finding based upon the evidence of Professor Peetz and Dr Watson that it's 31 to 35 per cent. And it's important to note that the ABI doesn't fairly characterise that evidence. That evidence was, as the Commission correctly recounts in the decision, that 31 to 35 per cent of the total retail workforce usually worked on a Sunday. They didn't give evidence about how many employees sometimes work on a Sunday, and that number would obviously be greater than 31 to 35 per cent.

PN29247

The last point I think I want to make is just to note the submission by ACCI at paragraphs 51 to 53 which appears under the heading, "Politicising the Commission." Insofar as it's there being said that the position adopted by my client in this place is directed as securing an outcome in the political domain, that claim is wholeheartedly refuted. The SDA makes no apologies for doing everything it can in this place within the framework of the Act to protect the interests of low paid workers and its members and any suggestion that the position it's adopting is informed by extraneous considerations of a political nature are entirely misconceived and refuted. Unless the Commission has anything for me, that's all we have to say.

PN29248

JUSTICE ROSS: Thank you. Thank you, Mr Moore. Mr Dowling?

PN29249

MR DOWLING: Thank you, Your Honour. United Voice relies on its written submissions. They are the primary submissions dated 24 March of 2017 and the reply submissions dated 20 April 2017, subject to a small number of issues that I will augment. Can I say firstly, dealing with the issue of the stay that's arisen this morning, consistent with the position of the SDA, the position of United Voice was that out of courtesy it flagged to the Commission that it would seek judicial review and in doing so it sought the opportunity to make that application in between the making of the decision and the implementation of the legal effect of the decision if that was necessary. Of course, as you've heard this morning many of the parties have said it won't be necessary but only if it's necessary, did United Voice seek that opportunity and to reassure your Honour, we don't ask that the Commission do anything in respect of its decision dealing with the transitional arrangements dealing with the stay or the need for a stay. That will arise only if it's necessary at some later stage.

PN29250

Can I say, secondly, arising from a number of matters raised by Mr Duc this morning in reference to question 1.1 that was put to all of the parties, we think it's clear but just to be cautious, the understanding of United Voice is that the issues concerning both clubs and restaurants will be dealt with on a separate occasion by a Full Bench constituted for that purpose. And by those two issues, I mean, whether clubs will take up option 1 or option 2 presented to them, and whether restaurants will seek to

PN29251

re-agitate the review.

PN29252

Can I just add to that, we rely in part from what your Honour said at the mention on 28 March of this year, indicating that that would be the course. Can I just add to that, as we understand it, the representatives for clubs, those concerned with the Clubs Award have indicated that they will take up option 2 which is rolling the Clubs Award, if I can describe it that way, into the Hospitality Award. For our part we see that as now quite a different issue to the re-agitating of the unsuccessful review but out of the interests of efficiency we are content for the Full Bench that deals with this question, whether the restaurant parties will be given a second opportunity, that that same Full Bench can deal with this issue of whether the Clubs Award should or could be rolled into the Hospitality Award. So even though we see them as discrete and different issues we're content for the same Full Bench to deal with both of those issues. Thank you, your Honour.

PN29253

As to the particular transitional arrangements, the written submissions, the first written submissions of United Voice of 24 March deal with that issue at paragraphs 11 through to 20, and the reply submissions enhance those submissions at paragraphs 6 through to 9, and we rely on those written submissions. A number of submissions have been made by several parties about the effect of the reduction, the monetary effect of the reduction. Can we just say, insofar as United Voice is concerned the only relevant award, of course, that suffered the reduction was the Hospitality Award. United Voice led evidence from a number of Hospitality Award lay witnesses. Only three of those are relevant because only three of them were permanent employees, the others were casuals. The casuals will not suffer reduction.

PN29254

In respect of the permanent employees, can we remind the Commission that the evidence establishes that Ms Amit Gounder will suffer a reduction of $73.88 per fortnight, or $36.94 per Sunday as a result of her reduction from 175 to 150, and the Commission will find the evidence of Ms Gounder summarised at paragraph 812 of the decision. Ms Rachael Lees-Wartz(?) will suffer a reduction of $26.32 per Sunday and the Commission will find her evidence summarised at paragraph 815 of the decision, and lastly, Mr Petrov, his evidence is that he will suffer a reduction of $58.74 per Sunday, or $3,054 per annum and his evidence is summarised at paragraph 796 of the decision.

PN29255

Can I nextly move to what was described in the decision as the "employment effect." A number of the parties have made a decision encouraging the Commission to more promptly implement the reduction in penalty rates so as to more promptly enable the positive employment effects, and for reference the ABI make that submission at paragraph 4.3 of their submissions dated 24 March. The ARG make a similar submission at paragraph 47 of their primary submissions, and the Australian Chamber of Commerce and Industry make that submission at paragraph 8 of their submission dated 22 March in 42C of their submission dated 21 April 2017. And we say in response to those submissions that they need to be read in the context of the conclusions that the Commission made about the employment effect and we refer the Commission to paragraph 680 of its decision where it there said:

PN29256

The Lewis report is further limited due to several of the assumptions that underpin the model, each of which are likely to overstate any employment effects. Further, the employment lay evidence before us suggests that past penalty rate adjustments, up or down, have not had significant employment effects.

PN29257

Nextly, at paragraph 686, the Commission concluded:

PN29258

The magnitude of the employment effect is difficult to quantify as a result of the competing substitution effects described in the PC final report.

PN29259

And lastly, at paragraph 689 and subparagraph (2) within that paragraph, there the Commission concluded:

PN29260

Any potential positive employment effects from a reduction in penalty rates are likely to be reduced due to substitution and other effects.

PN29261

JUSTICE ROSS: Sorry, what's the last reference?

PN29262

MR DOWLING: Paragraph 689, and there are two subparagraphs that appears within that paragraph 1 and 2, and it's the second that we direct the Commission's attention to.

PN29263

JUSTICE ROSS: Thank you.

PN29264

MR DOWLING: Nextly, can I deal with the debate, if that's the correct way to describe it, between those matters that the Ai Group says should be taken into account in setting the transitional arrangements, and what the ABI and New South Wales Business Chamber says is the appropriate approach. This is summarised in the background paper at paragraph 9. There the Commission set out the position of Ai Group and at paragraph 10 have there set out the submission of ABI. Can we say that United Voice rejects the approach of ABI, and adopts the considerations proposed by the Ai Group with the following modifications.

PN29265

In respect of subparagraph (b), and that is the consideration dealing with fairness between both the employer and the employee, we adopt that part, at least, of the SDA's submission that establishes that the Commission concluded the position of the employees particularly relevant. We don't put it any more highly than that but we adopt that part of the SDA's submission.

PN29266

As to paragraph (c) and addressing the objects of the relevant part, we refer and rely on our written submissions at paragraph 19 that refer to those objects including the Modern Award's objectives. And lastly, paragraph (h), that consideration where the Ai Group encourage or perhaps require the Full Bench to adopt the approach of other Full Benches in staggering the introduction of reductions, if it is intended that that consideration means anything more than considering analogous situations and is said to impose a requirement on the Commission to do it in a way consistent with the way it's previously done it, then we say that approach is wrong. It's the word, "require", that we have drawn a distinction, or say is incorrect.

PN29267

Can I then nextly deal with the question that is directed, or was directed at United Voice and that is question 3.4 of the background paper. We have endeavoured to respond to this in our written reply submissions at paragraph 23 to 25, subject to two matters that I want to add. That is the question that raised with United Voice � you might recall, United Voice adopted what it was the Productivity Commission report had said in respect of a delay in the implementation. The Productivity Commission report had proposed a delay of 12 months. United Voice had proposed a delay of 24 months, and the question was properly asked, how is it you rely on the Productivity Commission report when your delay is twice as long as that proposed by the Productivity Commission report? The response we gave in the written submissions which were - - -

PN29268

JUSTICE ROSS: There were two points of distinction. There was the length of the delay and then you had phasing after.

PN29269

MR DOWLING: Yes.

PN29270

JUSTICE ROSS: Where they didn't have phasing after.

PN29271

MR DOWLING: That's right. That's right. As to the first, what we sought to do and what we had endeavoured to do was simply adopt the principle that a delay is necessary. As to the second, and this perhaps responds to some matters that are raised by the Commission in its preliminary position which is set out at paragraph 4 of the background paper and paragraph 2021 from the decision, picking up on what your Honour said a moment ago, one of the reasons that the Commission was not minded to adopt in its preliminary conclusion the position of the Productivity Commission and allow the delay was because the Commission was concerned, on a preliminary basis, that there would then be a sharp fall after that period. Of course, the proposal put by United Voice would avoid that because it has a delay followed by an implementation.

PN29272

Secondly, the other relevant preliminary conclusion reached in respect of the Commission about � or in response to the Productivity Commission report delay, one of the things it pointed to and one of the things that United Voice points to, is that would provide employees with an opportunity to seek and obtain training and the preliminary position put by the Commission was that because these people have a modest income that they may in fact not be able to afford training of that sort and that might be a reason why the delay might not be necessary for them. But we simply make the point that there are many and varied training options that might be free, affordable or subsidised and it would not be right for the Commission to conclude that because these employees are low paid, therefore they can't afford training and therefore that is a reason against a delayed implementation.

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Can I then address � this is really in response to a submission made by the Restaurant, Catering Industrial Association and it deals with the estimate of the number of employees affected by the cuts. In its submission dated 28 April 2017 the Restaurant, Catering and Industrial Association made a submission that in terms of the number of award reliant employees in respect of the Restaurant Industry Award, the figure was 17.8 per cent, and I should note that figure is repeated in the background paper between pages 30 and 31. The authority relied upon by Restaurant and Catering Industrial for that submission was the table that appears at page 148 of the decision. Can we just make clear that that figure is a misreading of the table. What the table sets out is the top 10 modern awards used in the Accommodation and Food Services with a percentage of award reliant organisations. The table then sets out the percentage of organisations within AFS that use the Restaurant Award. So the result of that is that 17.8 per cent of the organisations within the AFS use that award. That is something very different to the submission put by the Restaurant, Catering and Industrial Association that only 17.8 per cent of the employees in the sector, relevantly are award reliant. So we say that is a mistake.

PN29274

As to award reliance in the restaurant subcategory of AFS, we can assist the Commission with at least this information. We know that award reliance in the AFS is high, and at least 45.4 per cent of all employees in AFS are award reliant, and can I just reference the United Voice final submissions at paragraph 110 which details that information. We know agreement reliance is low and 32 per cent of all employees in AFS are agreement reliant, and the Commission will find that at paragraph 112 of the final submissions of United Voice in the substantive hearing. And lastly, we know that individual arrangements cover 22.5 per cent of all employees in that subcategory of AFS, and again the United Voice final submissions at paragraph 110 detail that information.

PN29275

Can I then raise � I only have two matters. The next concerns a submission that was made by ABI this morning and directed really at the SDA, rather than at United Voice but because it flows from the Restaurants Award can I just identify for the Commission, this was the submission that was directed to the SDA in response to its initial or primary submissions at paragraph 14B, which was that provision that it sought to include to protect employees and any action taken against them as the result of the reduction in penalty rates, and it was said by Mr Rizzo that that was not permissible either under 139 or 142. Can I just for information direct the Full Bench's attention to clause 34.1(a) of the Restaurants Award which was a clause inserted as a result of the 2014 Full Bench decision concerning that award, and that provides:

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No existing employee classified as level 3 or above shall be moved down to a pay grade levels 1 or 2, or be discriminated against in the allocation of work as the result of the variation of clause 34.1 by the full Bench of the Fair Work Commission in Proceeding C[2013]6610.

PN29277

That proceeding is the Full Bench decision giving effect to the reduction in penalty rates in respect of that award. So the Full Bench, for their part, did not have any difficulty with the provision protecting employees in that way. Lastly, can I just deal with � a number of parties had made a submission, and by way of example, this is a submission made by ABI in their reply submissions at paragraph 4.3, that the reduction in penalty rates as the result of the decision will be offset or compensated for by any increase arising as the result of the annual wage review. Now in our submission that is really nothing more than a slight of hand. If it is the case that the offset provided by the annual wage review increases compensating for the reduction in penalty rate, then of course that person who has suffered the reduction in penalty rate is not getting the full effect of the increase in the annual wage review, and in that way that does not properly compensate of offset, in the words used by ABI, so we say that the Fair Work Commission should be cautious in ordering any more immediate transitional arrangement because of the annual wage review increase. Unless there are any questions they are the submissions of United Voice.

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JUSTICE ROSS: Thank you, Mr Dowling.

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MR DOWLING: Thank you, your Honour.

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JUSTICE ROSS: Any party reply?

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MR DIXON: Yes - - -

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JUSTICE ROSS: Certainly.

PN29283

MR DIXON: Correct. One thing, yes, your Honour. In relation to the submission by our friends concerning the inhibiting effect of paid meal breaks, there's evidence quoted in the Full Bench decision of paragraph 13.10.

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JUSTICE ROSS: Can I ask you about the proposition that was put by Mr Dowling that at paragraph 43(h) if your initial submissions. You there look at the matters which we should have regard to. I wasn't sure whether the language, "require", was used but it's in the introductory words. It said that "Ai Group submits that the Full Bench must act consistently with", and then when you read down, "the approach adopted by other Full Benches." But do we take that to be that we should have regard to the approach taken by other Full Benches but it's not put that we have some legal obligation to act consistently with them, or are we wrong about that?

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MR DIXON: Yes and no, if I may put it that way, your Honour. In part, we accept what your Honour says but the Commission would, in our respectful submission, unless another Full Bench decision is distinguishable either legally or factually in the usual course, follow that full Bench decision.

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JUSTICE ROSS: It's plainly factual and distinguishable. It's a different award, it's a different level, it's a different outcome. I mean - - -

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MR DIXON: But the reasoning adopted where it is found that an award is no longer fair because it overcompensates, should lead to a reduction in those rates.

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JUSTICE ROSS: I follow, so it's not the � but I thought you relied on it for the number of forward steps because - - -

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MR DIXON: Yes. Yes.

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JUSTICE ROSS: And there, you rely at 51, paragraph (h), on the position in the minority and I'm not sure � which do we follow, the - - -

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MR DIXON: I fully accept that. We made an error, to start with and we corrected it by reference to the minority, so you would have regard to the fact that two members might do and you're not bound by that.

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JUSTICE ROSS: But on what you've just said, we should follow the majority.

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MR DIXON: You should follow the majority or have regard for what the majority did if � whatever way one puts those two options, if you look at the decision in the Restaurant and Catering Industry decision the Full Bench said, overcompensates, we're going to reduce it, and we reduce the � it was reduced immediately. My recollection, and I think my recollection is fairly sound on this basis, that that issue, and also the limitation to level 1 was not debated in front of the Full Bench. It decided how to deal with that aspect. But in relation to the need for a reduction we would say the Commission is bound by it. We say take into account the fact that there were members who considered that it could be phased in, no more than that.

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JUSTICE ROSS: What's the authority for the proposition we are bound as a matter of law?

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MR DIXON: For which of the propositions, your Honour?

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JUSTICE ROSS: Well, both.

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MR DIXON: Both.

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JUSTICE ROSS: By anything that the previous Full Bench has said? Comity would � you'd have regard to it unless you were persuaded not to but where does the doctrine of precedence apply in a strict legal sense here?

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MR DIXON: I'm not suggesting that the doctrine of precedence applies but the Commission has, in my respectful submission, fairly consistently adopted a view that where there is another Full Bench decision where the reasoning can, without distinction, be applied to a later case that the Full Bench would, unless it is satisfied that the earlier decision is wrong, adopt that position. And there were a range of cases dealing with the notice of representational rights issue.

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JUSTICE ROSS: Yes. No, no, I - - -

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MR DIXON: But I forget the names of those cases.

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JUSTICE ROSS: No, I follow the general proposition but the difference there is, they're interpreting a statute and forming a view and the statutory framework hasn't changed. Here you're grabbing a decision made during a different statutory framework, the transitional review, a different award, a different outcome in terms of the differential � that wasn't put to the parties, and apparently when the phasing wasn't debated by the parties either. Don't all those factors rather suggest that its precedent value might be a bit limited?

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MR DIXON: The transitional position, in our respectful submission, no, your Honour, because that simply meant that at that point, in relation to an award that was being reviewed, the Commission came to the view that there was overcompensation and it had to be reduced.

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JUSTICE ROSS: All right. Was the timing and transitional arrangements, were they the subject of any debate in those proceedings by the parties?

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MR DIXON: I can't fully recall except that the decision � there was no strong suggestion by any party that I can recall that there should be a phasing in. I accept that.

PN29306

JUSTICE ROSS: No. Well � yes, okay.

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MR DIXON: But - - -

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JUSTICE ROSS: But in any event, look, this is one of a number of matters.

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MR DIXON: Sure.

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JUSTICE ROSS: And we've taken up enough time on it.

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MR DIXON: All I might say in response, finally, if I may, your Honour, is that that Full Bench clearly, in light of its findings that it was overcompensated, was prepared to immediately implement the decision recognising that that would not create the level of unfairness that has been argued here. If the Commission pleases.

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JUSTICE ROSS: Mr Rizzo?

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MR IZZO: Your Honour, I briefly wish to address some of the matters that have been raised by the SDA and United Voice. The first relates to Mr Moore's comment in relation to the public holidays penalty rate and what decision has or hasn't been made by the Full Bench about how any reduction in the public holiday penalty rate is to be implemented. I was a little surprised by Mr Moore's submission that in his view, or in the view of the SDA, the Commission has not yet determined how it should implement the public holiday penalty rate. I just wish to draw the Bench's attention to paragraph 2032 of the 23 February decision which states as follows:

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As mentioned in chapter 9, we have decided to reduce the public holiday penalty rate for full time and part time employees from 250 to 225 per cent in a number of modern awards before us. These variations will commence on 1 July 2017. Draft determinations will be published shortly. Interested parties will have seven days to comment on the draft variation determinations before they are finalised.

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We say that that paragraph clearly demonstrates the Commissioner has decided what it is going to do. The determination is published for comment but the language used in that element of the decision is very different to the language, for instance, used in relation to Sunday rates where provisional views were expressed, and so for that reason we maintain that you'd still need to be satisfied that there's some exceptional circumstance to go back and revisit when the public holiday penalty rates come into play. That's the first matter.

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The second matter is that Mr Dowling mentioned that the reduction of penalty rates and the impact of that reduction on workforce participation needs to be considered in context of the decision and the findings that were made in the decision and he gave this Bench references to some of the findings that have been made about the impact of the decision. Whilst I accept that - - -

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JUSTICE ROSS: Is this the part of Mr Dowling's submission that was responding to those employer submissions suggesting that there should be a quicker transitional period to enable the employment of benefits to take effect more quickly?

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MR IZZO: Yes.

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JUSTICE ROSS: Yes, all right.

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MR IZZO: Yes, your Honour. I accept in part what Mr Dowling said but if you take the Retail Award, for instance, the findings aren't just those that have been made on the common evidence. There were then further findings made in relation to the Retail Award and I would draw the Bench's attention to paragraph 1666 of the decision which states that:

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On the basis of the common evidence we conclude the reductions in the penalty rate in the Retail Award is likely to lead to some additional employment. We are fortified in that conclusion by the evidence called by ABI and the retail employers.

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And then the decision goes on at 1670 to specifically identify evidence that identified penalty rates, reducing labour by resulting in closing stores, restricting trading hours on Sundays, limiting the activities performed so that Sundays are effectively limited to customer service and selling, having less experienced junior employees on, and having owners work more in the business, and all of those findings are at paragraph 1670. So I accept Mr Moore's submission but it's only half of what you need to look at. You also need to look at the award specific findings that are made.

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JUSTICE ROSS: Does the conclusion change though? Aren't we still using the same language but rather saying we're fortified in the conclusion we breached on the common evidence, having regard to the evidence in retail? Is it a different conclusion? Are you putting that in retail it's expressed in a way that's different to the conclusion on the common findings?

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MR IZZO: I think that is the case, your Honour, that there is a common evidence finding about what arises from the common evidence which is, the language is somewhat more constrained than the language that's used when we deal with the Retail Award and there are specific findings and specific impacts on employment in the Retail Award that aren't there for the common evidence, so I do think that language demonstrates a slightly higher impact than that if we just look at the common evidence.

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The third and final matter I wish to address is one of Mr Dowling's final comments regarding the fact that the annual wage reviews will offset the reduction in penalty rates and he was critical of that submission by the employer parties, and he said in reality it doesn't offset because then the employees don't get the benefit of the annual wage review. And I think that echoes in some sense what Mr Moore said when he mentioned something about in real terms, or the fact that the effect that when � if you use the annual wage review to offset part of the penalty rate increase then their wages won't be increasing in real terms, or will be going down in real terms, compared to inflation and so on.

PN29326

I think the point I'd just like to make in response to that is that the reason why the annual wage review is important is that the main adverse impact here really is a reduction in take home pay. Employees are currently used to a certain level of income and we have accepted that if you take that income below what they are currently getting, it's something that I think we have to accept might not have been planned for in the past, therefore there may be some adverse impact. And so it's really that reduction in take home pay that should be the Commission's focus. Yes, their pay might not go up in future, as much as it would have otherwise but the impact of that is going to be far less because they're not currently receiving the amounts that will derive from the future annual wage increases.

PN29327

So when we talk about an adverse impact it is the take home pay that is really the critical issue here and that is an issue that can be offset by annual wage reviews and the reality is, the extent to which the annual wage review will offset the reduction in penalty rates is really going to be dependent on the employee's spread of hours. The more hours they work on a Sunday compared to the rest of the week, yes, there might be a greater impact. If you take a full time employee the impact will be very minimal because most of the hours will not be on a Sunday. They'll be at other times the penalty rates don't apply. So that's the point I wish to make in response to that. They were the only submissions in reply.

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JUSTICE ROSS: Thank you. Anyone else in Melbourne? No? Any other party? No? All done? All right, if there's nothing further, thank you for your assistance. We'll adjourn and reserve.

ADJOURNED INDEFINITELY�� [1.05 PM]