4 yearly review of modern awards—Construction awards
[2018] FWCFB 6019
•26 SEPTEMBER 2018
| [2018] FWCFB 6019 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.156 - 4 yearly review of modern awards
4 yearly review of modern awards—Construction awards
(AM2016/23)
Building, metal and civil construction industries | |
VICE PRESIDENT HATCHER | SYDNEY, 26 SEPTEMBER 2018 |
4 yearly review of modern awards – Group 4 Awards – Construction awards – Building and Construction General On-site Award 2010 – Joinery and Building Trades Award 2010 – Mobile Crane Hiring Award 2010 – Plumbing and Fire Sprinklers Award 2010 – substantive matters.
Paragraph | |
1. Introduction | [1] |
2. The legislative context | [12] |
3. Industry-specific redundancy scheme | [22] |
4. Living away from home | [85] |
5. Fares and travel patterns allowance | [157] |
6. Overtime – Time off instead of payment for overtime | [186] |
7. Coverage and classification issues | [203] |
8. Junior rates and other wage rate issues | [250] |
9. Allowances | [298] |
10. Ordinary hours of work | [373] |
11. Shiftwork | [414] |
12. Overtime | [421] |
13. Annual leave | [428] |
14. Forepersons and supervisors | [442] |
15. Alternative working arrangements | [452] |
16. Penalty rates | [457] |
17. Overtime – Plumbing Award | [461] |
18. Other matters | [466] |
19. Next steps | [468] |
1. INTRODUCTION
[1] Section 156 of the fair Work Act 2009 (Cth) (the Act) provides that the Fair Work Commission (the Commission) must conduct a 4 yearly review of modern awards (the Review) as soon as practicable after 1 January 2014. As detailed in a statement issued on 6 February 2014, 1 the Review consists of an Initial stage, dealing with jurisdictional issues, a Common issues stage and an Award stage.
[2] The Building and Construction General On-Site Award 2010 (Building Award), the Joinery and Building Trades Award 2010 (Joinery Award), the Mobile Crane Hiring Award 2010 (the Mobile Crane Award) and the Plumbing and Fire Sprinklers Award 2010 (Plumbing Award), collectively the “Construction Awards”, are in Group 4 of the Award stage.
[3] Interested parties have lodged a number of substantive claims for variations to the Construction Awards. A mention was held on 14 December 2015 to consider the programming of the substantive claims made in relation to Group 3 and Group 4 awards. In a statement issued on 24 February 2016, 2 the President, Justice Ross, noted that there were a number of claims to vary provisions of the Construction Awards. The Construction Awards were referred to Senior Deputy President Watson to convene a conference to categorise the various issues raised; to seek to resolve matters in dispute; and to identify matters that required referral to a separately constituted Full Bench.3
[4] Senior Deputy President Watson subsequently conducted a series of conferences with interested parties during March, April, June, July and August 2016.
[5] In a report issued on 5 August 2016, 4 the Senior Deputy President advised on the outcome of the conferences. The report outlined the claims with respect to the Construction Awards that remained outstanding, categorised those claims that were common across multiple awards, and proposed a process for determining the outstanding matters. A summary of proposed variations as at 5 August 2016 recording the outcomes of the conciliation process was attached to the report.5
[6] In a statement issued on 15 August 2016, 6 the President confirmed that a Full Bench would be constituted in respect of the Construction Awards based on the recommendations arising from the Senior Deputy President’s report.7 The President subsequently issued a memorandum on 22 August 20168 (the Memorandum) directing this specially constituted Full Bench to deal with the outstanding substantive Construction Awards claims as outlined in the attachment to the Memorandum.
[7] Directions in this matter were issued on 26 October 2016. 9 Parties seeking variations were directed to file comprehensive written submissions and any witness statements or documentary material by 2 December 2016. Evidence and/or submissions in reply were required to be filed by 10 March 2017. A number of parties seeking variations applied for and were granted extensions of time to file their material. Submissions and/or evidence in support of, or in opposition to, proposed variations were filed by the following parties:
• Housing Industry Association (HIA); 10
• Australian Workers’ Union (AWU); 11
• Australian Industry Group (Ai Group); 12
• Australian Manufacturing Workers’ Union (AMWU); 13
• Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU); 14
• Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU); 15
• Civil Contractors Federation (CCF); 16
• Master Builders Australia (MBA); 17
• Master Plumbers and Mechanical Contractors Association of NSW (MPMCA); 18
• Australian Business Industrial and the NSW Business Chamber; 19
• Master Plumbers Group (MPG); 20
• Beston Group (Vic) P/L (Beston Group); 21 and
• Mr Thomas Walsh. 22
[8] The matter was heard on 3-5 April and 10-12 April 2017. After the completion of the hearing, on 17 August 2017, we issued a statement 23 (August 2017 Statement) in which we expressed provisional views as to the potential resolution of a number of claims. This statement invited interested parties to file written submissions in relation to those provisional views, and additionally offered that if any party desired the opportunity to make oral submission as to those provisional views, a hearing date was reserved for that purpose on 17 November 2017.
[9] A number of written submissions were filed in response to the invitation in the statement, and there was a request for a further hearing. Accordingly we conducted a further hearing on the reserved date of 17 November 2017, at which a number of parties made oral submissions in response to the August 2017 Statement.
[10] On 6 December 2017 we issued a further statement 24 (December 2017 Statement) advancing a provisional proposal for the resolution of one particular issue. Conferences with the parties about that provisional proposal were conducted by Deputy President Gostencnik on 19 December 2017 and 25 January 2018.
[11] Before turning to the substantive claims before us, we propose to set out briefly the legislative context for the Review.
2. THE LEGISLATIVE CONTEXT
[12] Section 156(2) of the Act deals with what must be done in the Review:
(2) In a 4 yearly review of modern awards, the FWC:
(a) must review all modern awards; and
(b) may make:
(i) one or more determinations varying modern awards; and
(ii) one or more modern awards; and
(iii) one or more determinations revoking modern awards.
(c) must not review, or make a determination to vary, a default fund term of a modern award.
[13] Section 156(5) of the Act provides that in a Review each modern award must be reviewed in its own right. This does not however prevent the Commission from reviewing two or more modern awards at the same time.
[14] In the Review the Commission will proceed on the basis that prima facie the modern award being reviewed achieved the modern awards objective at the time it was made. 25 Variations to modern awards should be founded on merit based arguments that address the relevant legislative provisions, accompanied by probative evidence directed to what are said to be the facts in support of a particular claim. The extent of the argument and material required will depend on the circumstances.
[15] The modern awards objective set out in s.134 applies to the performance or exercise of the Commission’s modern award powers, which are defined to include the Commission’s functions or powers under Part 2-3 of the Act. The Review function in s.156 is contained in Part 2-3 of the Act and so will involve the performance or exercise of the Commission’s ‘modern award powers’. The modern awards objective therefore applies to the Review.
[16] The modern awards objective is set out in s.134(1). It states:
134 The modern awards objective
What is the modern awards objective?
(1) The FWC must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:
(a) relative living standards and the needs of the low paid; and
(b) the need to encourage collective bargaining; and
(c) the need to promote social inclusion through increased workforce participation; and
(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and
(da) the need to provide additional remuneration for:
(i) employees working overtime; or
(ii) employees working unsocial, irregular or unpredictable hours; or
(iii) employees working on weekends or public holidays; or
(iv) employees working shifts; and
(e) the principle of equal remuneration for work of equal or comparable value; and
(f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and
(g) the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards; and
(h) the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.
This is the modern awards objective.
[17] The modern awards objective is very broadly expressed,26 and is a composite expression which requires that modern awards, together with the National Employment Standards (NES), provide “a fair and relevant minimum safety net of terms and conditions”, taking into account the matters in ss.134(1)(a)–(h) of the Act.27 Fairness in this context is to be assessed from the perspective of the employees and employers covered by the modern award in question. 28 The obligation to take into account the s.134 considerations means that each of these matters, insofar as they are relevant, must be treated as a matter of significance in the decision-making process.29 No particular primacy is attached to any of the s.134 considerations, and not all of the matters identified will necessarily be relevant in the context of a particular proposal to vary a modern award. 30 It is not necessary to make a finding that the award fails to satisfy one or more of the s.134 considerations as a prerequisite to the variation of a modern award.31 The s.134 considerations do not set a particular standard against which a modern award can be evaluated; many of them may be characterised as broad social objectives.32 In giving effect to the modern awards objective the Commission is performing an evaluative function taking into account the matters in s.134(1)(a)–(h) and assessing the qualities of the safety net by reference to the statutory criteria of fairness and relevance. What is necessary is for the Commission to review a particular modern award and, by reference to the s.134 considerations and any other consideration consistent with the purpose of the objective, come to an evaluative judgment about the objective and what terms should be included only to the extent necessary to achieve the objective of a fair and relevant minimum safety net.33 In that task the matters which may be taken into account are not confined to the s.134 considerations.34
[18] Section 138 of the Act is also relevant. It emphasises the importance of the modern awards objective, in these terms:
138 Achieving the modern awards objective
A modern award may include terms that it is permitted to include, and must include terms that it is required to include, only to the extent necessary to achieve the modern awards objective and (to the extent applicable) the minimum wages objective.
[19] Section 138 provides that terms may only be included in a modern award to the extent necessary to achieve the modern awards objective. That which is “necessary” to achieve the modern awards objective is a value judgment to be made taking into account the s.134 considerations, to the extent that they are relevant, having regard to the context, including the circumstances pertaining to the particular modern award, the terms of any proposed variation and the submissions and evidence. 35 Where an interested party applies for a variation to a modern award as part of the 4 yearly review, the task is not to address a jurisdictional fact about the need for change, but to review the award and evaluate whether the posited terms with a variation meet the objective.36
[20] Section 136 sets out the terms that may or must be included in a modern award.
[21] We will now deal with each of the substantive claims before us, divided into their broad subject matter, in turn.
3. INDUSTRY-SPECIFIC REDUNDANCY SCHEME
Current provisions
[22] The Building Award, the Plumbing Award and the Joinery Award contain provisions for industry-specific redundancy schemes.
[23] The current industry-specific redundancy scheme in the Building Award is contained in clause 17, which provides:
17. Industry-specific redundancy scheme
17.1 The following redundancy clause for the on-site building, engineering and civil construction industry (as defined) is an industry-specific redundancy scheme as defined in s.12 of the Act. In accordance with s.123(4)(b) of the Act the provisions of Subdivision B—Redundancy pay of Division 11 of the NES do not apply to employers and employees covered by this award.
17.2 Definition
For the purposes of this clause, redundancy means a situation where an employee ceases to be employed by an employer to whom this award applies, other than for reasons of misconduct or refusal of duty. Redundant has a corresponding meaning.
17.3 Redundancy pay
(a) A redundant employee will receive redundancy/severance payments, calculated as follows, in respect of all continuous service with the employer:
Period of continuous service with an employer | Redundancy/severance pay |
1 year or more but less than 2 years | 2.4 weeks’ pay plus for all service in excess of 1 year, 1.75 hours pay per completed week of service up to a maximum of 4.8 weeks’ pay |
2 years or more but less than 3 years | 4.8 weeks’ pay plus, for all service in excess of 2 years, 1.6 hours pay per completed week of service up to a maximum of 7 weeks’ pay |
3 years or more than but less than 4 years | 7 weeks’ pay plus, for all service in excess of 3 years, .73 hours pay per completed week of service up to a maximum of 8 weeks’ pay |
4 years or more | 8 weeks’ pay |
(b) Provided that an employee employed for less than 12 months will be entitled to a redundancy/severance payment of 1.75 hours per week of service if, and only if, redundancy is occasioned otherwise than by the employee.
(c) Week’s pay means the ordinary time hourly rate at the time of termination multiplied by 38. Hour’s pay means the ordinary time hourly rate at the time of termination.
(d) If an employee dies with a period of eligible service which would have entitled that employee to redundancy pay, such redundancy pay entitlement will be paid to the estate of the employee.
(e) Any period of service as a casual will not entitle an employee to accrue service in accordance with this clause for that period.
(f) Service as an apprentice will entitle an employee to accumulate credits towards the payment of a redundancy benefit in accordance with this clause if the employee completes an apprenticeship and remains in employment with that employer for a further 12 months.
17.4 Redundancy pay schemes
(a) An employer may offset an employee’s redundancy pay entitlement in whole or in part by contributions to a redundancy pay scheme.
(b) Provided that where the employment of an employee is terminated and:
(i) the employee receives a benefit from a redundancy pay scheme, the employee will only receive the difference between the redundancy pay in this clause and the amount of the redundancy pay scheme benefit the employee receives which is attributable to employer contributions. If the redundancy pay scheme benefit is greater than the amount payable under clause 17.3 then the employee will receive no redundancy payment under clause 17.3; or
(ii) the employee does not receive a benefit from a redundancy pay scheme, contributions made by an employer on behalf of an employee to the scheme will, to the extent of those contributions, be offset against the liability of the employer under clause 17.3, and payments to the employee will be made in accordance with the rules of the redundancy pay scheme fund or any agreement relating thereto. The employee will be entitled to the fund benefit or the award benefit whichever is greater but not both
(c) The redundancy pay scheme must be an Approved Worker Entitlement Fund under the Fringe Benefits Tax Regulations 1992 (Cth).
17.5 Service as an employee for the Crown in the Right of the State of Western Australia, the Crown in the Right of the State of New South Wales, Victorian Statutory Authorities, or the Crown in the Right of the State of Victoria will not be counted as service for the purpose of this clause.
17.6 Employee leaving during notice period
An employee whose employment is to be terminated in accordance with this clause may terminate their employment during the period of notice and if this occurs, the employee will be entitled to the provisions of this clause as if the employee remains with the employer until expiry of such notice. Provided that in such circumstances, the employee will not be entitled to payment instead of notice.
17.7 Transfer of business
(a) Where a business is, before or after the date of this award, transferred from an employer (in this subclause called the old employer) to another employer (in this subclause called the new employer) and an employee who at the time of such transfer was an employee of the old employer in that business becomes an employee of the new employer:
(i) the continuity of the employment of the employee will be deemed not to have been broken by reason of such transfer, and
(ii) the period of employment which the employee has had with the old employer or any prior old employer will be deemed to be service of the employee with the new employer,
for the purpose of redundancy pay entitlements under this clause.
(b) In this subclause, business includes trade, process, business or occupation and includes part of any such business and transfer includes transfer, conveyance, assignment or succession whether by agreement or by operation of law. Transferred has a corresponding meaning.
[24] The above provision contains three critical features which were at the heart of the contested claims in these proceedings:
(1) The definition of redundancy in clause 17.2 applies to a termination of employment, even where initiated by the employee. However, it does not include a termination of employment for reasons of misconduct or refusal of duty. It is not limited, as is the NES redundancy entitlement in s 119, to a situation where the employee’s employment is terminated at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone (except where this is due to the ordinary and customary turnover of labour) or because of the employer’s bankruptcy or insolvency.
(2) The scale of redundancy payments in clause 17.3(a) is, at a number of service points, less than that provided for in the NES scale in s.119.
(3) There is no exemption from the obligation to pay redundancy pay for small business employers (employers employing fewer than 15 employees), unlike the NES provision in s.121(1)(b).
[25] It should be noted at this point that s.123(4)(b) provides that the NES redundancy provisions do not apply to an employee to whom an industry-specific redundancy scheme in a modern award applies.
[26] Clause 18 of the Plumbing Award also contains an industry-specific redundancy scheme which is substantially the same as that in the Building Award and in particular has the same three features as identified above. Clause 12 of the Mobile Crane Award contains a very different industry-specific redundancy scheme which, in clause 12.2, defines retrenchment as meaning the termination of an employee who is made redundant in identified circumstances. Clause 12.4(a) of the Mobile Crane Award provides for retrenchment payments which are less generous than the NES scale at one year’s service but significantly more generous for longer periods of service. It contains no exemption for small business employers. Finally, clause 17.1 of the Joinery Award simply provides that “redundancy pay is provided for in the NES”, but clause 17.3 also provides for redundancy entitlements for employees of “small employers” as follows:
17.2 Small employer
(a) For the purposes of clause 17.2(b), small employer means an employer to whom Subdivision B of Division 11 of the NES does not apply because of the provisions of s.121(1)(b) of the Act.
(b) Despite the terms of s.121(1)(b) of the Act, the remaining provisions of Subdivisions A, B and C of Division 11 of the NES apply in relation to an employee of a small employer covered by this award except that the amount of redundancy pay to which such an employee is entitled must be calculated in accordance with the following table:
Employee’s period of continuous service with the employer on termination | Redundancy pay period |
Less than 1 year | Nil |
At least 1 year but less than 2 years | 4 weeks pay |
At least 2 years but less than 3 years | 6 weeks pay |
At least 3 years but less than 4 years | 7 weeks pay |
At least 4 years and over | 8 weeks pay |
The claims
[27] The HIA’s primary claim was that clause 17 of the Building Award should be removed in its entirety, so that the NES redundancy provisions would be applicable. Its alternative position was that the provision should be varied to replace the definition of redundancy in clause 17.2 and to add an exemption for small employers and an incapacity to pay provision. It proposed two versions of a replacement clause 17.2. The first was:
“For the purpose of this clause, redundancy means:
• a situation where employment ceases at the initiative of an employer other than for reasons of misconduct or refusal of duty, or
• where employment ceases because of the insolvency or bankruptcy of the employer.
Redundant has a corresponding meaning.”
[28] The second version was:
“Clause 17 does not apply where the employment ends at the initiative of the employee.”
[29] The HIA’s proposed small employer exemption was:
“For the purposes of this clause small employer means an employer to whom the NES does not apply because of the provisions of s.121(1)(b) of the Act.”
[30] The HIA’s proposed incapacity to pay provision was:
“(a) If an employee is entitled to be paid an amount of redundancy pay by the employer because of clause 17; and
(b) the employer:
(i) obtains other acceptable employment for the employee; or
(ii) cannot pay the amount.
(c) On application by the employer, the FWC may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that the FWC considers appropriate.
(d) The amount of redundancy pay to which the employee is entitled under clause 17 is the reduced amount specified in the determination.”
[31] The MBA advanced a claim that clause 17 of the Building Award should be varied in a number of respects. Firstly it proposed that the definition of “redundancy” in clause 17.2 should be removed and replaced with the following:
“17.2 Definition
For the purpose of this clause, redundancy means a situation where an employee is dismissed, other than for reasons of misconduct or refusal of duty:
(a) At the initiative of the employer because they no longer require the work performed by the employee to be done by anyone;
(b) At the initiative of the employer because operational or similar circumstances at the project or site on which the employee is working are such that the employer no longer requires the employee to perform work and there is not an agreement between the employer and the employee for future employment on an alternative or site or project; or
(c) The employer ceases to exist and/or no longer requires the engagement of employees.
Redundant has a corresponding meaning.”
[32] Secondly, it proposed that the severance pay scale in clause 17.3 be removed and replaced with the following:
“17.3 Redundancy Pay
17.3(a) A redundant employee will receive redundancy/severance payments, calculated as follows, in respect of all continuous service with the employer:
Period of continuous service with an employer | Redundancy/severance pay |
| Less than 2 | Nil |
| 2 years or more | 4.8 weeks’ pay plus, for all service in excess of 2 years, 1.6 hours pay per completed week of service up to a maximum of 7 weeks’ pay |
| 3 years or more | 7 weeks’ pay plus, for all service in excess of 3 years, .73 hours pay per completed week of service up to a maximum of 8 weeks’ pay |
| 4 years or more | 8 weeks’ pay |
17.3(b) Week’s pay means the ordinary time hourly rate at the time of termination multiplied by 38. Hour’s pay means the ordinary time hourly rate at the time of termination.
17.3(c) Redundancy/severance entitlements under clause 17.3 do not apply if, immediately before the time of the termination due to redundancy, or at the time when the person was given notice of the termination due to redundancy:
(a) the employee’s period of continuous service with the employer is less than 24 months; or
(b) the employer employs fewer than 5 employees.”
[33] The CCF’s primary proposal was that clause 17.2 of the Building Award be replaced with the following definition:
“17.2 For the purposes of this clause, redundancy means a situation where an employee ceases to be employee by an employer to whom this award applies, other than for reasons of misconduct or refusal of duty or if the employee terminates the employment relationship of his/her own accord. Redundant has a corresponding meaning.”
[34] Alternatively, the CCF proposed either the provision be varied to provide that an employee would only receive redundancy pay if the redundancy was occasioned other than by the employee, or that clause 17 be removed entirely and replaced with a provision that simply referred to the NES.
[35] The MPG sought the variation of the industry-specific redundancy provisions of the Plumbing Award by either the removal of clause 18, limiting its application, or altering the definition of redundancy to ensure that employees who resign are not entitled to the payment of redundancy pay. Its preferred outcome was a variation to limit the application of clause 18 of the Plumbing Award to plumbing and mechanical services employees employed on a daily hire basis, a sprinkler fitter and/or a sprinkler fitter’s assistant, leaving plumbing and mechanical services employees employed on a weekly hire basis reliant on the NES redundancy provisions.
Evidence
HIA witnesses
[36] The HIA called evidence from two witnesses in support of its claim. Rick Sassin, who held the position of HIA Executive Director - Tasmania, gave evidence in his witness statement 37 that most businesses operating in the residential construction sector were small businesses. He said that in his time at the HIA, he had spoken with at least half a dozen members about the industry-specific redundancy scheme and provided them with information and advice about their obligations. He said members were often shocked and surprised that the redundancy payment obligations applied even if an employee resigned, and felt that this was unfair and very onerous. Mr Sassin said that he had discussed with members the option of making payments into a redundancy fund, and it seemed difficult to them to contemplate further regular payments on top of the 9.5% superannuation contribution and 2% into TasBuild for long service leave.
[37] Huan Do, the HIA Workplace Advisor for the South Australian and Northern Territory region, said in his witness statement 38 said that the HIA had about 3000 members in the region, and he spoke to about 80 members per week and also engaged with members at member events. He said he took about 5-10 calls from members per month about the industry-specific redundancy scheme, mostly from small businesses. Some operated in the residential construction industry and some in the commercial sector, and they often had long term employees. He reported that members were shocked and surprised that they were required to pay redundancy pay to an employee who was resigning, and often advised that they simply could not afford the payment. He said that members felt that it was “double dipping” for employees who had left for another job to have a redundancy pay entitlement, and the overwhelming feedback was that members would not take on employees because of the obligations imposed by the industry-specific redundancy scheme.
MBA witnesses
[38] The MBA called evidence from Peter Glover, the Director of Construction for the Master Builders Association of NSW. In his witness statement 39 he said that he strongly supported the MBA’s application to vary the Building Award and the Joinery Award to establish an exemption for businesses with 5 employees or less from paying redundancy pay for their employees. He said that in his experience employers with very small numbers of employees were often faced with less regular work and needed more flexibility in managing their staffing arrangements. Currently all employers had to make redundancy contributions for their employees through monthly payments into an industry redundancy scheme or set aside redundancy payments for any employee who had resigned from employment after 12 months. Mr Glover opined that small businesses had reduced cash flow compared to larger ones, and having to make regular redundancy contributions could deter them from employing more staff. He said there was no reason why the FW Act exemption for employers with 15 or less employees should not apply to very small businesses in the building and construction sector. Mr Glover was not cross-examined in relation to the redundancy issue.
CCF evidence
[39] David Castledine, the Chief Executive Officer of the NSW Branch of the CCF, gave evidence by affidavit concerning the CCF’s proposal to vary the definition of redundancy in the Building Award. 40 Mr Castledine described his engagement with members on the CCF on the issue of redundancy, and such members had repeatedly expressed the view that the current redundancy provisions were not equitable insofar as they required redundancy payments to employees who resigned of their own volition, constituted an unreasonable financial burden on employers and the industry, cause considerable negative employee management issues, and dissuaded the employment of full-time staff in favour of labour hire and casual staff. He said that his CCF equivalents in other states had advised of similar feedback from members. He referred to a survey of NSW members in the civil construction and maintenance industry which he had managed that supported the view that the redundancy provisions of the Building Award were unreasonable, not achieving any of the modern award objectives and should be changed, and said the survey of all CCF branches confirmed that this view was widely held across Australia. He opined that the redundancy provisions were not equitable, permitted a person who had resigned to receive redundancy pay, increased the cost of infrastructure and discouraged full-time employment and investment in the workforce. The CCF’s proposed variation would help address the issues raised and would help make the infrastructure industry much more efficient and thus deliver value for money for much needed public and private infrastructure in Australia. Mr Castledine was not required to attend for cross-examination.
[40] David O’Connor, the Executive General Manager of Diona Pty Ltd (Diona), a design and construction service provider for medium-to-large utility infrastructure projects, also gave evidence by affidavit. 41 He said that civil construction workers employed by Diona were covered by an enterprise agreement underpinned by the Building Award, and that the redundancy obligations in the Building Award imposed an unreasonable financial burden on business. The provisions did not enable Diona to minimise its redundancy obligations despite its policy of ensuring employer-initiated redundancies were minimised by proactively retaining its crews during periods of downturn. The provisions did not encourage a stable workforce, discouraged investment in workplace skills, discouraged engagement of permanent employees, provided no incentive to commit to long term employment, and was contributing to the current skills shortage in the industry. It was also particularly unfair on small businesses which Diona utilised as subcontractors. The CCF’s proposed amendment would ensure protection for workers when they were made redundant, cause employers in the industry to engage permanent employees in preference to casuals, remove the financial incentive for employees to move from one employer to another after only one year’s service, and result in a more stable workforce and encourage businesses to train and develop their workforces. Mr O’Connor was not required to attend for cross-examination.
[41] John Hovey, the Managing Director of the Hovey Group of Companies, gave evidence 42 that his business had recently lost a Certificate IV trained employee, who had been on a 457 visa and was now a permanent resident, to a Local Government body. The employee had left of his own accord, and the requirement to pay a redundancy package to the employee placed an unreasonable financial burden on the business. Mr Hovey referred to 2015 HILDA data which showed that average job tenure was 3.3 years, making an average of 14-15 employers from age 18 to retirement, and said that flexibility was fast becoming more important than stability and loyalty. Mr Hovey went so far as to say: “Industry is being milked by the employee to better themselves at the expense of the employer. It could be viewed as being unethical and immoral”. Mr Hovey was not required for cross-examination.
[42] Peter Middleton, the former Managing Director and the current Director of Woden Contractors, gave evidence concerning problems with the definition of redundancy in the Building Award.43 Mr Middleton noted that the current definition of redundancy is “perverse”; operates as a disincentive to companies to invest significant time and money to training young industry entrants; and undermines the aim of encouraging long-term employment.
[43] Mr Middleton contended that the employers who strive to act responsibly in terms of offering employees stable work are hampered by employees who are motivated to leave their employment for the purpose of accessing a bonus of up to eight weeks of pay, despite not being made redundant in the true sense. Mr Middleton also noted that this leads to a culture where employers decide against training young employers, and instead seek to poach skilled workers as required.
[44] Mr Middleton said that Woden Contractors has been severely financially burdened by the redundancy provision, and in 2016 alone the company was required to pay a total of 45 weeks redundancy pay to eight employees who left of their own accord. He said that this was a major cost impost and worked against the company’s desire to continue with its long-term policy of training industry entrants when other competitors were able to avoid these overhead costs. Mr Middleton proposed that the current redundancy provisions be amended to exclude those employees who resign on their own accord. Mr Middleton further proposed that an accompanying mechanism be implemented in relation to the redundancy trust to ensure that payments made by an employer on behalf of an employee are returned where an employee resigns.
[45] During cross-examination by the AWU, Mr Middleton clarified that in 2016 at Woden Contractors the redundancy payments resulted in a cost of approximately $50,000.00, along with having to wear the significant cost of retraining replacement employees. Mr Middleton further conceded that 2016 was a “particularly bad year” and that those employees likely resigned from Woden Contractors in order to access higher wages on another project, rather than just on the basis of accessing the redundancy payment.
[46] Mr Middleton was not able to provide evidence about any redundancies in the years other than 2016 or of a specific employee who had left on the basis of accessing a redundancy payment. Mr Middleton noted that there was a long history of people in the industry from time to time accessing that redundancy money for whatever personal reason.
[47] The CCF also undertook a survey of its members’ opinions concerning the definition of redundancy. 44
Submissions
HIA submissions
[48] HIA submitted that clause 17 as it currently stands no longer met the modern awards objective, and that the award safety net should be reflective of the safety net established by the legislature in the NES. The industry-specific redundancy scheme when first introduced into building and construction awards in 1989 was a system not dissimilar to portable long service leave which enabled an employee to accrue service in the industry and be paid a “redundancy payment” when they decided to leave the industry, not when employment ended with a particular employer. This changed with a consent variation in 1990 which provided for payment at the end of service with an employer, but it was never intended that it be triggered at the initiative of the employee. However the result was a definition of redundancy that meant that the employer was obliged to pay severance whether the employee was terminated by the employer, resigned, retired, lost a required qualification, became totally incapacitated for work, died or was retrenched. Disputation in the industry had moved away from the circumstances that led to the inclusion of the industry-specific redundancy scheme and as such the premise on which it was introduced no longer prevailed. The HIA submitted that its proposed variations were consistent with the modern awards objective; in particular the existing provision did not promote the flexible work practices and the efficient and productive performance of work, adversely affected business costs (up to $7,000 depending upon the length of service) leading to the possibility of business closure and creating a disincentive to employ, in circumstances where there was no incapacity to pay exemption.
ABI and NSWBC submissions
[49] ABI and NSWBC support the HIA’s proposed variations, submitting that the HIA had advanced a meritorious case and demonstrated that the variations met the modern awards objective.
MBA submissions
[50] The MBA submitted that its proposed variations did not affect the operation of existing redundancy pay schemes, and was limited to the industry-specific scheme in the Building Award. The proposed small employer exemption in particular would not change the industry-specific character of the scheme, and was appropriate for an industry in which, ABS data showed, businesses employing less than 5 employees made up about 90% of the industry on a national scale. The definition of redundancy in clause 17.2 was not an accurate definition of circumstances conventionally accepted as representing a redundancy and was out of step with other modern awards.
CCF submissions
[51] The CCF submitted that the redundancy standards established by the Termination, Change and Redundancy Case were based on compensating employees who had been terminated at the initiative of the employer when the employee was no longer required. The current provisions in the Building Award had been historically justified as necessary to meet the unique characteristics of the industry including the itinerant, intermittent and project-based nature of employment. However, the CCF submitted, the employment landscape had changed dramatically with a more mobile workforce and less reliance by employees on long term permanent employment, and was now not significantly different to other industries. Redundancy trust funds such as ACIRT, ReddiFund and BIRST which were created to protect employee redundancy entitlements against rogue employers and company insolvency had furthered the inappropriate idea that in the construction industry employees should be entitled to redundancy entitlements upon termination of employment for any reason other than misconduct. Since the Building Award had been made in 2009, the nature of the work in the industry had changed with far more work undertaken by large contractors using, in lieu of employed staff, smaller employers in sub-contractor arrangements. These smaller employers were less prone to the highs and lows of the industry. Employers were also less willing to release employees on whom they had invested heavily in terms of training and development. Construction was not the only industry which included project based activities, but was the only sector which utilised this definition of redundancy. The provisions encouraged employees to resign to avoid misconduct proceedings, to gain access to the redundancy money for personal reasons or to resign and then reapply for their old jobs. As a result, many employers preferred to use casual employees as a risk minimisation strategy. There was overwhelming industry support for an alteration to the current redundancy definition which, the CCF submitted, was contrary to the modern awards objective.
MPMCA submissions
[52] The MPMCA supported the submissions of MBA in relation to clause 17 of the Building Award, and supported the variation of the industry-specific redundancy scheme as it appears in both the Building Award and Plumbing Award.
MPG submissions
[53] MPG submitted that its preferred outcome earlier described for the Plumbing Award would recognise the unique circumstances that apply to daily hire employment whilst also recognising that employees on a weekly hire basis are no different to employees covered by other awards.
CFMMEU submissions
[54] The CFMMEU opposed the proposed variations of the HIA, the MBA and the CCF. It submitted that the current redundancy provision had received extensive consideration during the award modernisation process conducted under Pt 10A of the Workplace Relations Act 1996 (WR Act) in 2009, and also during the transitional review of awards in 2013. In decisions issued during both processes, the continuing validity and appropriateness of the industry-specific redundancy scheme was affirmed, and no new argument had now been raised. It was not contended that the previous decisions were wrong. The proposals advanced constituted significant changes to the Building Award, but cogent reasons had not been advanced for departing from the previous decisions nor had there been probative evidence advanced justifying the significant change proposed.
AWU submissions
[55] The AWU opposed the proposed variations, and submitted that the case presented by the HIA, the MBA and the CCF amounted to no more than a preference from some employers for the current redundancy entitlements to be reduced and a complaint that the scheme covered dismissals beyond the standard definition.
CEPU submissions
[56] The CEPU submitted that none of the employer parties had advanced any cogent reasons in support of the variations they were seeking, and as a result the past decisions in relation to the industry-specific redundancy scheme must stand.
Consideration
[57] The inclusion of industry-specific redundancy schemes in modern awards is authorised by s.141 of the Act, which provides:
141 Industry-specific redundancy schemes
When can a modern award include an industry-specific redundancy scheme?
(1) A modern award may include an industry-specific redundancy scheme if the scheme was included in the award:
(a) in theaward modernisation process; or
(b) in accordance with subsection (2).
Note: An employee to whom an industry-specific redundancy scheme in a modern award applies is not entitled to the redundancy entitlements in Subdivision B of Division 11 of Part 2-2.
Coverage of industry-specific redundancy schemes must not be extended
(2) If:
(a) a modern award includes an industry-specific redundancy scheme; and
(b) the FWC is making or varying another modern award under Division 4 or 5 so that it (rather than the modern award referred to in paragraph (a)) will cover some or all of the classes of employees who are covered by the scheme;
the FWC may include the scheme in that other modern award. However, the FWC must not extend the coverage of the scheme to classes of employees that it did not previously cover.
Varying industry-specific redundancy schemes
(3) The FWC may only vary an industry-specific redundancy scheme in a modern award under Division 4 or 5:
(a) by varying the amount of any redundancy payment in the scheme; or
(b) in accordance with a provision of Subdivision B of Division 5 (which deals with varying modern awards in some limited situations).
(4) In varying an industry-specific redundancy scheme as referred to in subsection (3), the FWC:
(a) must not extend the coverage of the scheme to classes of employees that it did not previously cover; and
(b) must retain the industry-specific character of the scheme.
Omitting industry-specific redundancy schemes
(5) The FWC may vary a modern award under Division 4 or 5 by omitting an industry-specific redundancy scheme from the award.
[58] Section 142 received some consideration in two Full Bench decisions made in the conduct of the 4 yearly review required by s.156 of the Act concerning the industry-specific redundancy scheme contained in the Black Coal Industry Award 2010. Two propositions can be derived from those decisions. First, in the latter of those two decisions issued on 22 January 2017, 45 the Full Bench said:
“[59] We also reject the notion that having an industry-specific redundancy scheme with provisions that are more generous than the NES is inherently inconsistent with the modern awards objective. The legislative scheme, when combined with the award modernisation request made by the Minister, makes clear provision for such arrangements in modern awards where they are an established feature of an industry.”
[59] That is, there is nothing inherently illegitimate about the maintenance of an industry-specific redundancy scheme in a modern award that is more generous, in part or whole, than the NES standard established in s 119 of the Act and which had properly been included in the award pursuant to s 141(1) or (2). Merely because it is more generous than the NES does not by itself mean that it offends the modern awards objective.
[60] Second, the limited power in s.141(3)(a) to vary an industry-specific redundancy scheme by varying the amount payable was discussed in the first of the two Black Coal Industry Award decisions issued on 10 April 2015. 46 In that matter, there was a question of whether there was power under s.141(3)(a) or any other provision of the Act to remove a discriminatory aged-based cap on the scale of redundancy payments in the award provision. The Full Bench said (emphasis added):
“[43] Contrary to the submissions of the CMIEG, there are ample sources of power in the FW Act to remove clause 14.4(c): under our general power in s.156(2)(b)(i) to vary modern awards as part of the 4 yearly review, under the power in s.141(3)(a) to vary an industry-specific redundancy scheme to vary the amount of any redundancy payment in the scheme (which would necessarily occur by removal of the age cap), and under s.160(1) to correct the error of clause 14.4(c)’s inclusion in the Award.”
[61] Any variation which has the necessary effect of reducing the amount of any redundancy payment payable under the industry-specific scheme would therefore be authorised by s 141(3)(a). That would encompass the proposed variations before us to change the definition of redundancy in clause 17.2, and to introduce a small-business exemption, because if granted they would have the necessary effect of reducing, to zero, the redundancy payment entitlements of those categories of employees affected by the variations.
[62] In the course of conducting the award modernisation process under Pt 10A of the WR Act, a full bench of the Australian Industrial Relations Commission (AIRC) also issued a decision in which consideration was given to that which was capable of constituting, or being included in, an industry-specific redundancy scheme under s 141. We will refer to that decision in the context of the history of the scheme in the Building Award, to which we now turn.
[63] The industry-specific scheme in the Building Award originated from a decision of an AIRC Full Bench issued on 22 March 1989. 47 The Full Bench dealt with applications to vary a number of awards operating in the building and construction industry to provide for redundancy entitlements. The Full Bench characterised the applications this way:
“With the main exception of the period of notice, and the application of the clause to employers with less than fifteen employees, the applicants seek a clause which is in many other respects, similar to that determined by a Full Bench of this Commission on 2 August 1984 in the Termination, Change and Redundancy Case (TCR).
In respect of these two areas, the applicants seek, firstly, alteration to the period of notice to reflect, it is submitted, the special characteristics of the building and construction industry and secondly, the elimination of the restriction on the size of the enterprise before the employer is bound by the terms of the clause.”
[64] It is apparent from the decision that when the Full Bench was referring to the “periods of notice”, it meant the scale of severance payments. The Full Bench’s primary conclusions about the claim were as follows:
“No party or intervener opposed the concept of a redundancy scheme in the building and construction industry.
We have decided to adopt a redundancy payment scheme designed to meet the needs of this industry.
Given the decision we make, we do not propose to detail the various arguments on each point, suffice to say however, that we have considered each of those points and weighed them against the argument presented by the applicants.
We now turn to consider the type of redundancy provision which should be awarded.
As outlined earlier, the principal argument put by Mr Rothman was the unique pattern of employment in the building and construction industry. Although there is some substance to this argument, it does not have universal application and there are many areas which have a stable long-term workforce.
Nevertheless, the extent of interface between diverse forms of contracts of employment create the need for appropriate provisions to be applied. Further, when consideration is given to the fact that in many instances employees of subcontractors journey into other sectors of industry, it can be seen that care must be taken not to provide fertile ground for the creation of disputes in those other sectors.
Because of the nature of this industry and the mixture of types of employers with the range of employment practices, together with their impact on other sectors, we are not prepared to order two standards to operate essentially side by side. Such an approach, in our view, would be naive and conducive to industrial disputes.
Further, we remain unconvinced against the background of the inquiry, that the itinerant employment patterns, as evidenced in some sectors, are appropriate for long-term industrial relations stability and employer/employee relations.
Accordingly, we will only provide one general standard of benefits, namely that determined by the Full Bench in the TCR Case. This, of course, will have appropriate modifications made to suit the employment terms and conditions applying in this industry.
It is clear that many employees work in the building and construction industry for extended periods and are employed by many employers in the normal course of employment. This fact is supported by a number of agreements about employment related matters, for example, the treatment of superannuation, long service leave in some States, and the redundancy agreements made by the Australian Federation of Construction Contractors (AFCC) and the Master Builders’ Association of Victoria (MBAV), all of which recognise labour mobility.
We have decided to recognise this concept of employment and to make special provision for the accrual of redundancy benefits for employees working in this industry and therefore we determine:
• An employee will be entitled to accrue redundancy benefits up until he or she leaves the industry.
• An employer will be required to provide a statement of service of an employee on each occasion that employee’s service is terminated.
• When an employee decides that he or she no longer wishes to work in the industry, he or she shall produce to his or her current employer a statutory declaration to that effect.
• The employee will then be entitled to redundancy benefits commensurate with his/her years of service in the industry.
• For the purposes of implementation, credit will be given for service which an employee has given to his/her current employer.
[65] The Full Bench dealt specifically with the proposed exemption for small employers:
“We now consider the argument advanced by the applicants that the scheme should not contain an exemption for employers who employ fifteen or less persons.
In this connection, we find the arguments advanced by Mr Rothman persuasive. Indeed, a number of employers have been prepared to concede this claim. Accordingly, and given the special characteristics of employment in this industry, the scheme to be provided in the various awards will not provide an exemption for employers who engage fifteen or fewer employees.”
[66] The “arguments advanced by Mr Rothman” were summarised earlier in the decision as follows:
“As to the claim that the clause should apply to enterprises with less than fifteen employees, Mr Rothman submitted that the nature of employment in the building and construction industry was quite different from an established business in other industry sectors. He submitted that unlike other sectors, the nature of subcontracting produced fluctuations in employee numbers.
Further, it was submitted that on any building site there could be several contractors and/or subcontractors with widely varying employee numbers. As a consequence, if the Commission adopted the “fifteen or less” criterion, its application could cause disputes because of different conditions applying on the one site.”
[67] Two propositions emerge from the Full Bench’s reasoning:
• the structure of the scheme was tailored for industry employment made up of a sequence of relatively short engagements with a number of different employers; and
• there was no exemption for employers with 15 or less employees because subcontractor employers had significant fluctuations in the number of their employees (depending on the work cycle) and because the potential of disputes arising from large and small contractors working on a single construction site.
[68] The 1989 decision was subsequently the subject of proceedings initiated in the High Court for judicial review, and the AIRC was initially restrained from making orders to give effect to its decision. The restraint was subsequently lifted. Then, in a decision issued on 19 October 1989, the AIRC (Grimshaw C) dealt with employer applications to vary the same awards to provide for redundancy entitlements. It is apparent that the proceedings covered much of the same ground as had been traversed by the Full Bench; in this respect the Commissioner said:
“The Commission is satisfied that the parties, interveners and much of the submissions, evidence and exhibits presented in the current case are similar if not identical in many respects to what was before the Full Bench and it is for that reason I do not intend to identify laboriously all that has been presented again, suffice to say the presentation of material documentary and orally was exhaustive.”
[69] The Commissioner reiterated a number of the conclusions of the Full Bench, and granted a redundancy clause for the relevant awards which contained the following features. First, it defined “redundancy” as “a situation where an employee ceases to be employed for any reason and the employee elects to no longer seek work in the industry (as defined in clause 38A(2)(c) hereof).” The definition in (c) relevantly provided that “continuous service” for the purpose of the clause was to mean “the accumulated periods of continuous service (as elsewhere defined in this award) of an employee in the industry covered by this award which various periods will accumulate until the employee elects to no longer seek work in the industry”, and that “industry” meant “all work covered by this award, or other Federal and State awards, which make provisions for payment of severance pay benefits calculated by reference to an employee’s accrued service in the building and construction industry” subject to identified exceptions including in respect of employees for periods in which contributions had been made into any of a number of named redundancy/severance pay funds. The severance pay scale was that determined in the Termination, Change and Redundancy Case.
[70] There followed employer applications to vary the clause, which were dealt with in a decision of Commissioner Palmer issued on 10 October 1990. 48 The employer applications were rejected, but the Commissioner identified a number of problems in the operation of the provision awarded by Commissioner Grimshaw the year before. In relation to the definition of redundancy, the Commissioner said that it needed alteration because “[i]n its current form it lends itself to ambiguous applications well beyond redundancy - even being said to extend entitlements in circumstances of (termination for) serious misbehaviour where no case for redundancy exists.” The Commissioner described a number of events in the proceedings before the AIRC which it is not necessary to recount here before referring to the fact that the parties had ultimately reached a unanimous agreement concerning variations to the existing redundancy provision. That agreement, which the Commissioner adopted, amended the award definition of redundancy in a way which, as he described it, “places the initiation of the redundancy provision with the employer rather than the employee as at present and which exempts dismissal for misconduct or refusal of duty from the redundancy provision”, and involved “reversion to “service with an employer” as the basis for the accrual of redundancy entitlements as opposed to service “in the industry” as at present”. The agreement also involved a scale of severance payments which was described as a “pro rata application of the TCR scale with a maximum payment of eight weeks pay after four or more years of service” and as one which “in economic terms ... reduces the benefit otherwise payable to employees in almost all circumstances”.
[71] Notwithstanding the Commissioner’s characterisation of the agreed position as requiring the redundancy provision to be initiated by the employer, this was not reflected in the terms of the final award variation order developed by the parties and made by the AIRC. The order issued on 24 October 1990, 49 which replaced the existing clause 38A, Redundancy of The National Building Trades Construction Award 1975 with a new provision, in all substantial respects was the same as the current clause 17 of the Building Award, including its definition of redundancy.
[72] The industry-specific redundancy scheme established in 1990 was next the subject of consideration by the AIRC during the award simplification process conducted pursuant to item 51 of Pt 2 of Sch 5 of the Workplace Relations and Other Legislation Amendment Act 1996. Two decisions are relevant. In respect of the scheme as it appeared in a number of plumbing awards, Commissioner Wilks issued a decision on 11 November 1998 in which he dealt with a submission that the provision was not, properly speaking, a redundancy provision constituting an “allowable award matter” under s.89A(2)(m) of the WR Act capable of being retained in an award. This submission was advanced on the basis that the redundancy definition in the provision made it applicable beyond a situation of genuine redundancy. The Commissioner rejected the submission, relevantly stating that:
“True it is that the term ‘redundancy’ has a general meaning, however, as shown above, full benches of this Commission as well as single members have differentiated the employment circumstances in this industry from the general application of the concept.
...
The statute itself therefore distinguishes between the particular condition of employment of employees covered by this award and those elsewhere.
This demonstrates in my view, the correctness of the view that there is not a one-size-fits-all definition of any of the `concepts’ contained in s89A(2) in industrial relations practice in Australia, but at least several within at least some of those concepts.
Principle 9 of the Award Simplification decision states in part-: ‘In each award, account will need to be taken of any special circumstances which might be relevant.’
Relevant special circumstances taken into account in the circumstances of this award, in particular in relation to this clause are those which have been the subject of consideration by full benches of the Commission over the development of the redundancy provision, for example the large number of small employers, the itinerant nature of the work, the fact that employees may be employed by many different employers each of whom may be engaged for relatively short periods in plumbing and related work in projects which have a relatively short life. In reaching the conclusion I have, all of these factors have been taken into account, as has all of the other material put to me.”
[73] In the second decision issued on 23 July 1999, 50 the approach taken by Commissioner Wilks described above was followed by Commissioner Merriman in relation the National Building and Construction Award 1990. The Commissioner said:
“Clause 15 – Redundancy
[17] All parties agree that the subject of redundancy is allowable, however, the definition as contained within this award was argued by the Government and some Employers to be inconsistent with the Test case and not “consistent with the use of concepts in industrial practice in Australia”. Commissioner Wilks in the Plumbing Industry Award decision [Print Q8609 p33] provides a number of reasons as to why he believes the redundancy provision in that award, which is consistent with this award, is consistent with the use of the concepts in industrial practice in Australia and, therefore, consistent with the Full Bench decision in the CBOA case. In addition to the reasons provided by Commissioner Wilks, the Commission is of the view that a substantial part of the redundancy provisions and entitlements within this award would be allowable under s.89A(n) - notice of termination. The entitlements, given the reasons that they are paid, flow in some circumstances following the giving of notice where in other circumstances they flow from the cessation of the work. For these reasons the Commission is prepared to maintain the existing clause in the award in its current form because, in the Commission’s view, it is allowable pursuant to s.89A(2)(m) and (n).”
[74] When the award modernisation process required by Pt 10A of the WR Act was conducted by the AIRC, the continuation of the redundancy provision as an industry-specific redundancy provision in the building and construction industry modern award in development arose for consideration. The Award Modernisation Full Bench said (omitting footnotes):
“[75] We have decided to include the current industry award redundancy provisions in the modern award as an industry-specific redundancy scheme.
[76] Section 141 of the Fair Work Bill 2009 permits the inclusion of such a scheme in a modern award. The consolidated request deals with industry-specific redundancy schemes in the following way:
‘Termination and Redundancy
36. The NES excludes employees from redundancy entitlements where their award contains an ‘industry-specific redundancy scheme’. An ‘industry-specific redundancy scheme’ in a modern award will operate in place of the NES entitlement in these circumstances.
37. An ‘industry-specific redundancy scheme’ is one identified as such in a modern award.
38. The Commission may include an ‘industry-specific redundancy scheme’ in a modern award.
39. In determining whether particular redundancy arrangements constitute an ‘industry-specific redundancy scheme’, the Commission may have regard to the following factors:
• when considered in totality, whether the scheme is no less beneficial to employees in that industry than the redundancy provisions of the NES; and
• whether the scheme is an established feature of the relevant industry.’
[77] We are satisfied that the redundancy scheme in the building industry award redundancy provisions is an established feature of the building and construction industry. Having regard to the arbitral history and general application of the current redundancy prescriptions within awards in the building and construction industry the scheme is properly described as an industry-specific redundancy scheme.
...
[80] Whilst, as noted in our 23 January 2009 statement, the current award prescription does not reflect the standard for larger employers arising from the Redundancy Case 2004 decision, when regard is had to the slightly more beneficial scale of benefits in earlier years, the broader application of the benefit and the pattern of limited periods of continuous service within the industry to which the building and construction redundancy provisions were directed we are also satisfied that when considered in totality, the scheme is no less beneficial to employees in the industry than the redundancy provisions of the NES. In relation to the pattern of service in the industry, we have relied on to the data supplied by Incolink, BERT and CoINVEST contained in the CFMEU submission of 11 March 2009.
[81] The Master Builders Australia (MBA) and some other employer bodies contended that the building industry arrangements cannot constitute an industry-specific redundancy scheme. It was pointed out that the application of the scheme extends beyond redundancy as defined by the NES. Some suggested that the definition of redundancy in the current award provisions should be modified to reflect the NES. We do not accept these submissions. There are several reasons. First, in determining whether a particular scheme is an “industry-specific redundancy scheme” the Commission can have regard to the factors mentioned in the passage we have set out above. Having regard to those factors, we are satisfied that they apply to the scheme. Secondly the definition of redundancy in the NES does not apply to an industry-specific scheme. Clause 64, which is in Subdivision C—Limits on scope of this Division – of the NES, provides that Subdivision B does not apply to an employee covered by a modern award which includes an industry-specific redundancy scheme. While Subdivision B sets out the circumstances in which the NES entitlement to redundancy pay arises and to the amount of the entitlement that sub-division does not apply to an industry-specific redundancy scheme. It follows that an industry-specific redundancy scheme can deviate from the NES redundancy prescription in relation to both the circumstances in which the benefits arise and the amount of the benefits. Thirdly, the ability to include an industry-specific redundancy scheme in a modern award implies that the scheme as a whole can be included. A modified scheme might not meet the criterion, found in the consolidated request, that the scheme be a feature of the industry. Finally, the building industry scheme clearly falls within the definition of industry-specific redundancy scheme in s.12 of the Fair Work Bill 2009, the relevant part of s.12 reads:
‘industry-specific redundancy scheme means redundancy or termination payment arrangements in a modern award that are described in the award as an industry-specific redundancy scheme.’
[82] The modern award has clarified provisions permitting some other payments to be offset against payments required under the industry-specific redundancy scheme. Payments made to an employee from a redundancy pay fund, where such payments are made, or contributions on behalf of an employee to such a fund where no payments are made upon termination can be offset.”
[75] The following critical propositions can be derived from the above decision:
(1) The existing redundancy provision could validly constitute an industry-specific redundancy scheme under s 141 of the FW Act (as it is now) notwithstanding its broad definition of redundancy, in large part because of the definition of the expression “industry-specific redundancy scheme” in s 12. That is, the scheme could differ from the NES provisions both as to the circumstances in which the entitlement to redundancy pay arose and the amount of the benefits to be paid.
(2) In determining whether the provision satisfied the requirement in the consolidated Ministerial request that the scheme, considered in totality, be no less beneficial to employees in the industry than the NES provisions, the Full Bench took into account not just the severance pay scale but also the broader application of the provision and the pattern of limited periods of continuous service in the industry to which the provision was directed. The broader application of the provision was of course the result of its definition of redundancy and its application to employers with less than 15 employees. That is, these were matters which were justified by the pattern of service in the industry and were necessary to reach the conclusion that the provision was no less beneficial than the NES.
(3) The Full Bench’s conclusion concerning the pattern of service in the industry was reached on the basis of data supplied by some of the industry redundancy funds.
(4) The Full Bench expressed doubt as to whether a modified version of the existing scheme would constitute a “feature of the industry” as required in the consolidated request. It was satisfied that the existing scheme was an established feature of the building and construction award.
[76] Finally, clause 17 was considered in the transitional review conducted pursuant to Schedule 5 Item 6 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 in the context of applications made by the HIA to alter the redundancy definition to one reflective of the NES definition in s.119 of the Act and to exempt from the redundancy pay obligations employers who employ less than 20 employees. In a decision issued by Fair Work Australia (FWA) (Senior Deputy President Watson) on 15 July 2013, 51 this application was rejected for the following reasons:
“[203] The decision of the Award Modernisation Full Bench in respect of the terms of the industry-specific redundancy scheme, including its broader application arising from the definition of “redundancy”, specifically considered the terms and history of the redundancy prescriptions within modern awards in the building and construction industry and deviations within it from the NES. Most significantly the Award Modernisation Full Bench considered and rejected the suggestion that the definition of “redundancy” should be modified to reflect the NES, the very argument agitated in the current proceedings by the HIA, without identifying any changed circumstances or any other cogent reason to support variation of the Building On-site Award.
[204] The decision of the Award Modernisation Full Bench in respect of the small business exemption in the Building On-site Award is consistent with its general approach to the small business exemption within modern awards, reflected in its 19 December 2008 decision in relation to the making of Priority modern awards. The approach taken—that as a general rule the small business exemption will be maintained, except for pre-modern awards and industries in which there was no small business exemption prior to the Redundancy Case 2004 - had regard to the full arbitral and legislative history of redundancy pay for employees of small business.
[205] The HIA has done nothing more than to re-argue some of the issues raised and determined by the Award Modernisation Full Bench in including in the Building On-site Award the industry-specific redundancy scheme, in the terms of clause 17. The HIA has put no cogent reasons for altering the terms of clause 17 of the Building On-site Award which were the product of extensive debate and a considered decision by the Award Modernisation Full Bench. This claim by the HIA is refused.”
[77] The claims of the HIA, the MBA and the CCF before us must be considered in light of the history described above.
[78] We do not consider that the evidence adduced by the claimant organisations has sufficient probative value to cause us to conclude that there has been any change of significance in the building and construction industry since the Building Award took effect on 1 January 2010. Apart from generalised assertions and opinions lacking an identifiable foundation, there was no actual evidence that the patterns of employee service that characterise the industry - that is, the commonality of relatively short periods of service for sequential employers across a longer period of industry service - have altered significantly since the industry-specific scheme was established in its current form in 1990 or since the Building Award was made in 2009. The two HIA witnesses gave evidence that a number of HIA members were hostile to the current provisions, which may well be the case, but no objective information was provided as to the way in which the industry-specific scheme operated in practice which demonstrated adverse effects liable to be taken into account under s 134(1) of the Act. There was no evidence, for instance, about the frequency with which redundancy payments had to be made to employees who had resigned from their employment, the cost that might actually be involved in this, and how that related to the cost structure of the business as a whole. There was no evidence that the operation of the industry-specific scheme in its totality across an entire workforce would exceed the cost of the NES provisions in their totality.
[79] The evidence of the MBA and CCF witnesses was of a similar character and did not take the matter any further. In particular the assertion of the CCF witnesses that the industry-specific scheme discouraged full-time employment and investment in the workforce were not supported by any factual material showing the makeup of the workforce in terms of the various types of employment utilised, the training expenditure of employers in the industry, or any changes in these matters over time (including since when the Building Award was first made). Nor were the assertions that the scheme contributed to the cost of infrastructure supported by any financial analysis which quantified its overall costs in the context of the total cost of infrastructure vis-a-vis the NES entitlements. Mr Hovey was the only witness who gave an actual example of a resigning employee receiving a redundancy payment under the industry-specific scheme, but his assertion that this constituted an “unreasonable financial burden” was not quantified by reference to the cost of the payment in the context of the costs of the business as a whole. Nor was there any evidence about the frequency of redundancy payments to resigning employees, or indeed whether this had ever occurred before. The CCF survey was merely a collection of opinions and not of factual information.
[80] It has therefore not been demonstrated that the presumption that the inclusion of clause 17 in the Building Award satisfied the modern awards objective in s 134(1) at the time the award was made should be displaced, or that there has been any relevant change in circumstances since the award was made. We have no reason to conclude that the original rationale for the features of the scheme, including the frequency of short periods of employee service across sequential employers in the industry, the significant fluctuations in the size of employee numbers in a business depending upon work demand, and the prevalence of small contract businesses working alongside larger contractors on building and construction sites, does not remain wholly valid today. Nor has it been established, having regard to the totality of the industry-specific scheme including its partially less beneficial severance pay scale, that the scheme has an overall cost that would be significantly in excess of the NES scheme if at all.
[81] We do not consider therefore that there is any basis to conclude that the removal of clause 17 of the Building Award is necessary to meet the modern awards objective, having regard to the considerations identified in s 134(a)-(h) of the Act. Indeed there is one matter which causes us to conclude that the removal of the scheme would not achieve the objective, having regard in particular to the consideration of “employment costs” in s 134(1)(f). Although it was not the subject of any significant evidence, we understand it not to be in dispute that a significant number of employers in the industry make payments into an industry redundancy scheme. Clause 17.4 provides that redundancy pay entitlements under the clause may be offset by contributions to any such scheme. No such provision is made in Pt 2-2 Div 11 of the Act in respect of the redundancy payments required by s.119, leading to the result that absent clause 17 employers contributing to redundancy schemes will effectively be required to make a double payment for any redundancy which occurs.
[82] In respect of the claim to alter the definition of redundancy, it may be accepted that the definition adopted in the form of the 1990 variation did not apparently match the intention of Commissioner Palmer that the scheme only apply to employer-initiated terminations of employment. However that may be, the definition is a foundational element of the industry-scheme which itself, as the Award Modernisation Full Bench found in 2009, has become an established feature of the building and construction industry. Moreover it is part of the broader application of the scheme which the Full Bench found it necessary to take into account in order to reach the conclusion that the scheme was not less beneficial than the NES provisions. That is a matter relevant to the requirement for fairness in the modern awards objective. Changing the definition would, we consider, alter the industrial balance of the scheme and its historic industry-specific character. The same conclusion may be reached in respect of the proposed exemption of small employers, as proposed in different forms by the HIA and the MBA. Further, as already stated, it has not been demonstrated that the rationale for not excluding small employers does not remain as valid in today’s circumstances as it was found to be in 1990.
[83] As was found to be the case in the Transitional Review, we consider that the cases advanced by the HIA, the MBA and the CCF amount to little more than a re-agitation of the issues heard and determined by the Award Modernisation Full Bench. No cogent reasons have been advanced to depart from the conclusions reached by the Full Bench, and the evidence has not demonstrated any relevant change in circumstances. We do not consider that any variation to clause 17 is necessary in order for the Building Award to meet the modern awards objective, or that the variations proposed by the claimants would necessarily achieve the objective. The claims to vary clause 17 of the Building Award are therefore rejected.
[84] With respect to the Plumbing Award, we consider that the same conclusions apply for the same reasons, and the MPG claims are rejected.
4. LIVING AWAY FROM HOME
Current provisions
[85] Clause 24 of the Building Award contains a comprehensive suite of provisions applying to employees required to perform construction work on sites sufficiently distant from their usual place of residence that the employees cannot return home each night. Clause 24 currently provides:
24. Living away from home–distant work
24.1 Qualification
(a) This clause operates when an employee is employed on construction work at such a distance from the employee’s usual place of residence or any separately maintained residence that the employee cannot reasonably return to that place each night, provided that:
(i) the employee is not in receipt of relocation benefits;
(ii) the employee is maintaining a separate place of residence to which it is not reasonable to expect the employee to return each night; and
(iii) the employee has provided the details of their usual place of residence, or any separately maintained address to the employer.
(b) The employee is not entitled to payment under this clause if the employee has knowingly made a false statement regarding the details required in clause 24.2.
24.2 Employee’s address
(a) On engagement, an employee must provide the employer with their address at the time of application, the address of any separately maintained residence and, if requested, reasonable documentary proof of those details.
(b) No subsequent change of address will entitle an employee to the provisions of this clause unless the employer agrees.
24.3 Entitlement
(a) Where an employee qualifies under clause 24.1 the employer will:
(i) pay a living away from home allowance of $494.94 per complete week. In the case of broken parts of the week the living away from home allowance will be $70.81 per day. This allowance may be increased if the employee satisfies the employer that the employee reasonably incurred a greater outlay than that prescribed; or
[422] Clause 36.7 of the Building Award provides:
36.7 Except in an emergency, no trainee will work or be required to work overtime or shiftwork at times which would prevent the employee’s attendance at a Registered Training Organisation, as required by any statute, award or regulation.
The claim
[423] MBA proposed that clause 15.3(b) and (c) be deleted and clause 36.7 be varied as follows:
“36.7 Except in an emergency, no trainee or apprentice will work or be required to work overtime or shiftwork at times which would prevent the employee’s attendance at a Registered Training Organisation, as required by any statute, award or regulation.”
Submissions
MBA
[424] MBA submitted that the variation proposed sought only to consolidate clauses 36.7 and 15.3(b) of the Building Award, on the basis that clause 15.3(b) was essentially a replication of clause 36.7 and should be deleted.
AWU
[425] The AWU submitted that whilst there was some overlap between clause 15.3(c) and clause 36.7 of the Building Award, clause 15.3(b) operated quite differently. Clause 15.3(b) imposed a restriction on an employer requiring an apprentice under the age of 18 years to work overtime or shiftwork, which applied generally and did not require any connection to training obligations. The AWU further submitted that MBA’s claim was misleading and should be rejected as no amendment was required to the current conditions.
CFMMEU
[426] The CFMMEU opposed the claim and submitted that MBA provided no evidence to support the proposed variation. It also submitted that the variation added nothing to the interpretation of the award and could mislead employers and apprentices as to what special provisions applied to apprentices in regard to overtime and shiftwork.
Consideration
[427] We do not consider that there is any overlap in the existing provisions which requires modification in order to achieve the modern awards objective. The provisions have separate work to do. Clause 15.3(b) requires overtime and shiftwork for apprentices under the age of 18 to be voluntary. Clause 15.3(c) prohibits an apprentice (of any age) being required to perform overtime or shiftwork so as to prevent attendance at their Registered Training Organisation except in an emergency. Clause 36.7 prohibits a trainee (of any age) being required to perform overtime or shiftwork so as to prevent attendance at their Registered Training Organisation except in an emergency. MBA’s claim is rejected. However we will add a cross-referencing note to clause 36.7 as follows: “Note: overtime and shiftwork for apprentices is dealt with in clause 15.3”.
13. ANNUAL LEAVE
Current provisions
[428] Clause 38 of the Building Award contains annual leave provisions. Those relevant to the claims of the parties are set below:
“38.1 Leave entitlement
(a) Annual leave is provided for in the NES.
(b) For the purpose of the additional week of leave provided by the NES, a shiftworker means a continuous shiftworker as defined in this award.
38.2 Payment for annual leave
(a) Instead of the base rate of pay as referred to in s.90(1) of the Act, an employee under this award, before going on annual leave, must be paid, in advance, the amount which they would have received for working ordinary time hours if they had not been on leave.
(b) In addition to the payment prescribed in clause 38.2(a), an employee must receive during a period of annual leave a loading of 17.5% calculated on the following rates, loadings and allowances if such rates, loadings and allowances would have been received by the employee for working ordinary time hours had the employee not been on annual leave:
• clause 19.1(a)—Minimum wages;
• clause 21.2—Industry allowance;
• clause 21.3—Underground allowance;
• clause 20.1—Tool and employee protection allowance;
• clause 24—Living away from home—distant work;
• clause 25—Fares and travel patterns allowance; and
• clause 19.2—Leading hands.
This loading will also apply to proportionate leave on lawful termination.
(c) Instead of the payment in respect of annual leave loading provided for in clause 38.2(b), an employee who would have worked on shiftwork had they not been on leave and where the employee would have received shift loadings prescribed by clause 34—Shiftwork, had they not been on leave during the relevant period and such loadings would have entitled them to a greater amount than the loading of 17.5%, then the shift loading as prescribed in clause 34 will be included in the rate of wage prescribed by clause 38.2(b) instead of the 17.5% loading.
(d) Electronic funds transfer (EFT) payment of annual leave
Despite anything else in this clause, an employee paid by electronic funds transfer (EFT) may be paid in accordance with their usual pay cycle while on paid annual leave.”
The claims
[429] MBA sought to add the following sentence to clause 38.1(a): “Provided that continuous service for purposes of this clause is as defined in clause 3.1 of this award”.
[430] HIA sought to amend clause 38.2(b) of the Building Award to remove the inclusion of the fares and travel patterns allowance from the calculation of annual leave loading.
Evidence
MBA
[431] Mr Glover gave evidence 111 to the effect that MBA’s suggested amendment would be a useful signpost and would have the effect of drawing attention to the definition of continuous service in clause 3.1.
HIA
[432] HIA relied on the evidence given by Ms Marantz, to demonstrate that individual flexibility agreements in the industry commonly provided for higher rates of pay in compensation for, among other things, the removal of the annual leave loading.
Submissions
MBA
[433] MBA submitted that the definition of continuous service in the Building Award is consistent with and no different in material effect to the definition that existed in the NES, albeit they were expressed differently. It submitted that the benefit of making the proposed variation was to point users of the Building Award to the definition in the award with which they were currently familiar.
HIA
[434] In support of its proposed variation to clause 38.2(b), HIA submitted that, in practice, many employees in the residential construction industry used individual flexibility arrangements to manage their annual leave loading and incorporate it into one higher “all up rate”. It further submitted that, as the fares and travel patterns allowance is not taken into account under clause 25.10(c) of the Building Award in the calculation of annual leave, its inclusion in calculating annual leave loading is confusing and imposes an unjustifiable regulatory burden on businesses. HIA also submitted that the removal of the requirement to factor in this allowance into the calculation of annual leave loading will make the provision simpler to administer and make the Building Award easier to understand.
ABI and NSWBC submissions
[435] ABI and the NSWBC supported the HIA’s proposed variation to clause 38.2(b).
AWU
[436] The AWU was not opposed to MBA’s amendment to clause 38.1 of the Building Award.
[437] The AWU submitted that HIA has not provided any evidence to substantiate its claim with respect to clause 38.2(b), stating that the only justification provided is an alleged administrative burden on employers. It submitted that, given the sophistication of payroll systems which are readily available to employers today, this variation would save a very small amount of working time for the person or persons processing annual leave payments. The AWU submitted that a significant reduction to the minimum terms and conditions of employment for employees covered by the Building Award cannot be necessary for this reason alone.
CFMMEU
[438] The CFMMEU submitted that it did not believe the MBA’s proposed variation was necessary but made no other submission on the issue. In relation to the HIA’s proposed variation, it submitted that it would reduce the award safety net. No evidence had been advanced to support the proposed variation, which had been advanced in similar terms in the 2012 Award Review and rejected.
CEPU
[439] The CEPU submitted that HIA’s proposed variation was previously sought during the 2012 Award Review process and, as no supporting evidence or cogent reasons for the variation had been provided, it should be rejected now.
Consideration
[440] We do not consider that MBA’s proposed variation is necessary to meet the modern awards objective. There is no relevant deficiency in the drafting of clause 38.1 which requires clarification. In any event, clause 38.1(a) does not confer a substantive entitlement. It merely points the reader to where the annual leave entitlement is to be found.
[441] In relation to the HIA’s claim, we consider that the references to the rates, loadings and allowances in clause 38.2(b) are unnecessarily complex. Clause 38.2(a) requires annual leave pay to be calculated on the basis of the amount the employee would have received for working ordinary time hours if the employee had not been on leave. Clause 38.2(b) provides that the 17.5% loading should be calculated on the specifically identified rates, loadings and allowances, and not (in accordance with standard industrial practice) calculated simply on the amount payable under clause 38.2(a). There is no discernible rationale for the loading to be calculated on a different basis under clause 38.2(b) to the base payment under clause 38.2(a). Clause 38.2(b) should simply provide that the 17.5% loading is to be calculated and paid by reference to the amount identified in clause 38.2(a). We consider therefore that clause 38.2(b) should be varied to provide: “In addition to the payment prescribed in clause 38.2(a), an employee must receive during a period of annual leave a loading of 17.5% calculated on that payment.”
14. FOREPERSONS AND SUPERVISORS
Current provisions
[442] Clause 43 of the Building Award relates to forepersons and supervisors in the metal and engineering construction sector. Clause 43.2(a) sets weekly minimum wage rates (expressed as the higher of an average of weekly wage rates of the persons supervised plus a weekly increment, or a specified weekly rate) for forepersons and supervisors. Clause 43.2(b) then provides:
“43.2 Wages
…
(b) Employees paid the wage rates in clause 43.2(a) will not receive overtime payments, shift work premiums, special rates, meal allowances, allowances for travelling and board, motor allowances, first aid allowances and other additional amounts specified in clauses 25—Fares and travel patterns allowance, 24—Living away from home—distant work, and 22—Special rates.”
[443] Clause 43.5 provides:
“43.5 Conditions of employment
(a) The conditions of employment that apply to employees covered by this part will not be less favourable than those prescribed under this award.
(b) Where it has been the custom to do so and the employer and employee agree, time off with pay may be taken instead of payment for overtime work, shift work, or work on Sundays or holidays. The amount of time taken is to be equivalent to the pay the employee would otherwise have received for working overtime.”
The claim
[444] The AMWU proposed to delete clause 43.2(b) and replace it with the following:
“43.2 Wages
…
(b) The calculation of the minimum wage rates in accordance with 43.2(a) will not include overtime payments, shift work premiums, special rates, meal allowances, allowances for travelling and board, motor allowances, first aid allowances and other additional amounts specified in clauses 25—Fares and travel patterns allowance, 24—Living away from home— distant work, or 22—Special rates.
Note: This does not mean that these entitlements are not applicable to Forepersons and Supervisors. They are only excluded for the purpose of calculating the minimum wage in accordance with 43.2(a). See also clause 43.5.”
Submissions
AMWU
[445] The AMWU submitted that its proposed variation would remove any apparent restriction on the payment of the entitlements identified in clause 43.3(b) to forepersons and supervisors and clarify that the provision only excluded these payments from the calculation of the minimum wage payable under clause 43.2(a). It would also remove the apparent contradiction with clause 43.5(a), which required the conditions of employment of forepersons and supervisors to be not less than those prescribed elsewhere in the award. If forepersons and supervisors did not receive the entitlements identified in clause 43.2(a), they would be worse off contrary to clause 43.5.
MBA
[446] The MBA did not oppose the AMWU’s proposal.
Ai Group
[447] The Ai Group opposed the variation sought by the AMWU. It submitted that the propositions advanced by the AMWU were unsupported assumptions, and that if the Full Bench had intended to replicate Appendix B of the National Metal and Engineering On-site Construction Industry Award 2002 in the modern award then it would have done so. The Ai Group submitted that there was no contradiction between clause 43.2(b) and clause 43.5, and that clause 43.2(b) was clear in that employees who were paid the additional rates were not entitled to receive overtime and other such payments. The AMWU had failed to establish that there had been an error or that its claim was necessary to ensure that the award achieved the modern awards objective, and accordingly the claim should be rejected.
HIA
[448] The HIA submitted that the adoption of the proposed variation would represent a significant change to the Building Award, and that the AMWU had failed to provide substantive evidence in support of this change.
Consideration
[449] It may readily be accepted that there are difficulties in the way that clause 43 is drafted. Clause 43.2(b), read literally, provides that forepersons and supervisors are not to receive the range of entitlements referred to. It is difficult to identify what offsetting advantage such employees receive under the clause to justify the loss of these entitlements, since presumably the additional remuneration referred to in clause 43.2(a) is to take account of the additional work value involved in supervisory duties rather than to “buy out” the benefits specified in clause 43.2(b). Clause 43.5(a) is confusing, because it refers to employees “covered by this part” (presumably “this part” being clause 43 as a whole), and it refers to conditions of employment applying to such employeesbeing no less favourable “than those prescribed under this award”, without identifying the conditions of employment. Clause 43.5(a) tends to support the proposition that the entitlements referred to in clause 43.2(b) are not intended to be applicable at all to forepersons and supervisors. But this is at odds with clause 43.5(b) which allows, by custom and agreement, time off to be taken in lieu of overtime and shift work – entitlements which, under clause 43.3(2)(b) are said not to be payable to forepersons and supervisors.
[450] Clause 43 as it stands does not meet the modern awards objective at least because it fails to set a simple and easy to understand standard for compliance. However we do not consider that the difficulties we have identified should be resolved simply by varying the provision in the manner proposed by the AMWU. There are more significant difficulties in clause 43 which the AMWU variations would not resolve. The prescribed method of calculating the wages of forepersons and supervisors is inherently complex. It is doubtful whether the provision properly sets a safety net minimum rate in accordance with the modern awards objective. Clause 43 also sets specific provisions for the payment of wages to forepersons and supervisors (clause 43.3) and notice periods (clause 43.4), for reasons that are not apparent.
[451] Our provisional view is that the appropriate course is to restructure and simplify clause 43 so that it does no more than set properly fixed minimum rates for forepersons and supervisors, either by way of a minimum weekly rate of pay or an allowance. The dollar amounts currently prescribed by clause 43.2 would appear to be appropriate for this purpose. We will invite further submissions in relation to this provisional view before we make a final decision.
15. ALTERNATIVE WORKING ARRANGEMENTS
Current provision
[452] Clause 31 of the Joinery Award concerns alternative working arrangements. Relevantly, clause 31.1 provides as follows:
31. Alternative working arrangement
31.1 By written agreement between the employer and the employees, the ordinary hours of work may be altered from those allowed under clauses 28–Ordinary hours of work and rostering, 29–Breaks or 30–Overtime to suit the needs of a particular enterprise, factory, workshop or section, provided that:
…
(b) the agreement must be made by at least 60% of employees in the enterprise, factory, workshop or section affected by the alteration; and
…
The claim
[453] The MBA proposed that clause 31.1(b) be varied so that the requirement for agreement of at least 60% of employees be changed to a majority of employees.
Submissions
MBA
[454] MBA submitted that a 60% majority for a facilitative provision was unnecessary and contrary to the standard of a simple majority in award provisions of this nature.
CFMMEU
[455] The CFMMEU opposed the proposed variation and submitted that as the MBA had provided no empirical or probative evidence to justify a variation to the award the variation should be rejected.
Consideration
[456] We cannot identify any reason the agreement of at least 60% of employees in a facilitative provision is necessary to meet the modern awards objective. The variation proposed by the MBA shall be made.
16. PENALTY RATES
Current provisions
[457] Clause 32 of the Plumbing Award provides as follows:
32. Penalty rates
32.1 Weekend work
(a) All employees who are directed by the employer to work ordinary hours between midnight on a Friday and midnight on a Saturday will receive:
(i) plumbing and mechanical services in Victoria - a 50% loading calculated on their minimum hourly rate of pay for the first ordinary hour worked provided that this clause will cease to operate on 31 December 2014; or
(ii) plumbing and mechanical services in Victoria - a 50% loading calculated on their minimum hourly rate of pay for the first ordinary hour worked provided that this clause will cease to operate on 31 December 2014; or
(iii) all other employees - a 50% loading calculated on their minimum hourly rate of pay for the first two ordinary hours worked; and
(iv) a 100% loading calculated on their minimum hourly rate of pay for the remaining ordinary hours worked thereafter.
(b) All employees who are directed by the employer to work ordinary hours between midnight on a Saturday and midnight on a Sunday will receive a 100% loading calculated on their minimum hourly rate of pay for such ordinary hours worked.
(c) All employees who are required to work overtime on a weekend will be paid in accordance with clause 33.
(d) An employee directed to work ordinary hours in accordance with this clause will be allowed a meal break in accordance with clause 30.1 and a daily rest break in accordance with clause 30.3.
32.2 Shiftwork
(a) Where an employee is:
(i) given no less than 48 hours’ notice prior to the commencement of shiftwork by the employer: and
(ii) directed by the employer to work ordinary hours between midnight on Sunday and midnight on Friday for five or more consecutive shifts:
the employee will receive a loading of 33% calculated on their ordinary hourly rate of pay for such ordinary hours worked.
(b) Where an employee is:
(i) given less than 48 hours’ notice prior to the commencement of shiftwork by the employer; or
(ii) directed by the employer to work ordinary hours between midnight on Sunday and midnight on Friday for less than five consecutive shifts;
the employee will receive a loading of 50% for the first two hours and 100% thereafter calculated on their minimum hourly rate of pay for such ordinary hours worked.
(c) Where an employee, after having worked a shift, finishes at a time when reasonable means of transport are not available, the employer will provide the employee with a conveyance to their home or pay the employee their current wage for the time reasonably spent occupied in reaching their home.
(d) An employee directed to work ordinary hours in accordance with this clause will be allowed:
(i) an unpaid meal break of not less than 30 minutes, to be taken no more than five hours after the commencement of the employee’s shift; and
(ii) a paid rest break of not more than 10 minutes, to be taken no more than two hours after the commencement of the employee’s shift.
32.3 Public holidays
(a) All employees who are directed to work ordinary hours on a public holiday or substitute days as prescribed in clause 37—Public holidays, will receive a 150% loading calculated on their minimum hourly rate of pay, for such ordinary hours worked.
(b) A plumbing and mechanical services employee required to perform any work on a public holiday will be afforded at least four hours’ work or paid for four hours at the appropriate rate.
(c) An employee directed to work ordinary hours in accordance with this clause will be allowed a meal break in accordance with clause 30.1 and a daily rest break in accordance with clause 30.3.
32.4 Loadings
(a) All loadings will be exclusive of each other (i.e. only one loading will be payable at any given time).
(b) Loadings will not apply where overtime is payable.”
[458] The MPG sought to replace clause 32 of the Plumbing Award with the following clause:
“32.1 Shiftwork
Between Midnight on Sunday and Midnight on Friday
(a) Where an employee is directed by the employer to work ordinary hours between midnight on Sunday and midnight on Friday, and such employee is:
(i) given no less than 48 hours’ notice prior to the commencement of shiftwork by the employer; and
(ii) such work is for five or more consecutive shifts;
the employee will receive a loading of 33% calculated on their ordinary hourly rate of pay for such ordinary hours worked,
or,
where such employee is:
(iii) given less than 48 hours’ notice prior to the commencement of shiftwork by the employer; or
(iv) directed by the employer to work ordinary hours between midnight on Sunday and midnight on Friday for less than five consecutive shifts;
the employee will receive a loading of 50% for the first two hours and 100% thereafter calculated on their minimum hourly rate of pay for such ordinary hours worked.
Between midnight on a Friday and midnight on a Saturday
(b) Where an employee is directed by the employer to work ordinary hours between midnight on a Friday and midnight on a Saturday, such employee will receive:
(i) a 50% loading calculated on their minimum hourly rate of pay for the first two ordinary hours worked; and
(ii) a 100% loading calculated on their minimum hourly rate of pay for the remaining ordinary hours worked thereafter.
Between midnight on a Saturday and midnight on a Sunday
(c) Where an employee is directed by the employer to work ordinary hours between midnight on a Saturday and midnight on a Sunday, such employee will receive a 100% loading calculated on their minimum hourly rate of pay for such ordinary hours worked.
Public holidays
(d)(i) Where an employee is directed to work ordinary hours on a public holiday or substitute days as prescribed in clause 37—Public holidays, such employee will receive a 150% loading calculated on their minimum hourly rate of pay, for such ordinary hours worked.
(d)(ii) A plumbing and mechanical services employee required to perform any work on a public holiday will be afforded at least four hours’ work or paid for four hours at the appropriate rate.
32.2 Travel
(a) Where an employee, after having worked a shift, finishes at a time when reasonable means of transport are not available, the employer will provide the employee with a conveyance to their home, or pay the employee their current wage for the time reasonably spent occupied in reaching their home.
32.3 Loadings
(a) All loadings will be exclusive of each other (i.e. only one loading will be payable at any given time).
(b) Loadings will not apply where overtime is payable
32.4 Breaks
(a) An employee directed to work ordinary hours in accordance with clause 32.1 – Shiftwork will be allowed a meal break in accordance with clause 30.1 – Meal Breaks and a daily rest break in accordance with clause 30.3 – Daily Rest Breaks.
32.5 Overtime
(a) An employee directed to work overtime after having worked / or before working ordinary hours in accordance with clause 32.1 – Shiftwork, will be paid in accordance with clause 33 - Overtime.”
Submissions
[459] The MPG submitted that its proposed variation to clause 32 was not intended to vary or remove any entitlements, but to make the clause more “user friendly”. ABI, the NSWBC and the CEPU supported the variation.
Consideration
[460] The variations proposed will be made subject to a review by the Commission’s plain language drafting expert. We note the current award uses both “minimum hourly rate” and “ordinary hourly rate”. The use of these terms will be addressed within the context of the technical and drafting matters before the Group 4 Award Stage Full Bench. A determination will then be issued to give effect to the variations.
17. OVERTIME – PLUMBING AWARD
[461] The MPG proposed that clause 33 of the Plumbing Award, which is concerned with overtime entitlements, be varied to provide that “each day’s overtime stands alone”. This was agreed to by ABI, the NSWBC and the CEPU.
[462] We are not satisfied that the agreed variation should be made. Clause 29 of the Plumbing Award deals with ordinary hours of work, and relevantly provides as follows:
29. Ordinary hours of work over a four week work cycle
29.1 The average ordinary hours worked will be 38 per week for a four week work cycle.
29.2 Subject to the provisions of this clause, ordinary working hours will be worked in a 20 day, four week cycle, Monday to Friday inclusive, with 19 days of eight hours each, between the hours of 7.00 am and 6.00 pm, with 0.4 of one hour each day worked accruing to be paid as a rostered day off (RDO) in each cycle.
29.3 Ordinary working hours
Subject to clause 29.4—Early start and clause 32—Penalty rates, ordinary hours are worked between 7.00 am and 6.00 pm Monday to Friday inclusive.
29.4 Early start
By agreement between the employer and its employees, the working day may begin at 6.00 am or at any other time between that hour and 8.00 am and the working time will then begin to run from the time so fixed. The daily rest breaks, meal breaks and finishing time must be adjusted accordingly.
...
29.6 Alternative methods of arranging ordinary hours and rostered days off
(a) An employer and the majority of its employees may agree to an alternate method of arranging ordinary hours of work, and arranging RDOs.
(b) Matters upon which agreement may be reached include:
(i) how the hours are to be averaged within a work cycle;
(ii) the duration of the work cycle, provided that such duration will not exceed three months;
(iii) rosters which specify starting and finishing times;
(iv) substitution of RDOs;
(v) accumulation of RDOs;
(vi) arrangements which allow for flexibility in the taking of RDOs; and
(vii) the arrangement of ordinary hours which exceed eight hours on any day, provided such hours are within the spread of hours in clauses 29.3 or 29.4.
[463] Clause 33.1(a) provides for overtime penalty rates to be paid “In respect of all time worked beyond the ordinary hours of work prescribed in clause 29, Ordinary hours of work over a four week cycle…”.
[464] The current position is therefore as follows. Clause 29.1 provides for averaging of the 38-hour week across a 4-week cycle. Clause 29.2 establishes a default means of doing this by which employees work 19 8-hour days and enjoy a rostered day off in each 4-week cycle. Clause 29.3 provides that ordinary hours are to be worked between the hours of 7.00am to 6.00pm, subject to an agreed early start under clause 29.4 Clause 29.6 provides for alternate methods of working the 38-hour week over a 4-week cycle by agreement with the majority of employees, which may include working days which exceed 8 hours provided that they are worked within the prescribed span of ordinary hours. Overtime under clause 33.1(a) is therefore payable in the following circumstances:
• for work performed in excess of 152 hours over a 4-week cycle;
• for work performed outside the span of 7.00am to 6.00pm, Monday to Friday, subject to any early start adjustment to the span pursuant to clause 29.4;
• under the default method of working ordinary hours in clause 29.2, for work in excess of 8 hours in a rostered working day;
• if an alternative method of arranging working hours is adopted pursuant to clause 29.6, for work in excess of the daily rostered working hours on a working day (which may exceed 8 hours).
[465] We consider the current provisions, as described, to be clear and consistent with the modern awards objective. The proposed variation is not directed to any identifiable problem, uses archaic language and on one view would prevent longer than 8-hour days being worked as part of an alternate method of working the 38-hour week without overtime penalty rates being required to be paid. For these reasons we consider that clause 33.1 if varied as proposed would not meet the modern awards objective.
18. OTHER MATTERS
National Training Wage
[466] Claims concerning the National Training Wage provisions of the Building Award will be the subject of a separate decision.
Payment of wages
[467] We note that a number of claims relating to payment of wages under the Building Award are currently before a separate Payment of Wages Full Bench for determination.
19. NEXT STEPS
[468] Draft determinations will be issued to give effect to the variations to the Construction Awards identified at paragraphs [139], [143], [145]-[146], [153], [156], [184], [202], [294], [365]-[366], [420], [427], [441], [456] and [460] above. Interested parties will be given a period of 14 days to comment on the form of these draft determinations. The variations shall take effect on and from 1 December 2018.
[469] In relation to the matters identified in paragraphs [151]-[152], [244], [246], [372], [412]-[413] and [451] above, interested parties may file any written submissions within 28 days of the date of this decision. Any request for a further hearing in relation to any of these matters may be made in the same time period and will be considered by us.
VICE PRESIDENT
Printed by authority of the Commonwealth Government Printer
<PR700840>
Appearances:
S. Crawford, solicitor, for the AWU
R. Boanza and T. Angelopoulos for the CCF
P. Coffey and G. Noble for the CEPU
S. Crawshaw SC and S. Maxwell for CFMMEU
P. Krajewski for the FPA
M. Adler for the HIA
S. Schmitke and R. Sostarko for MBA
P. Eberhard for the MPG
V. Paul for AiG
L. Hogg for ABI and the NSWBC
M. Nguyen for the AMWU
C. Coate for the NFIA
Hearing details:
2017.
Melbourne:
3 - 5 April, 10 - 12 April
1 [2014] FWCFB 916
2 [2016] FWC 1191
3 [2016] FWC 1191 at [13]
4 Report to the Full Bench – Construction Awards
5 Summary of proposed variations – construction awards 5 August 2016 at attachment A to Report to the Full Bench – Construction Awards
6 [2016] FWC 5694
7 [2016] FWC 5694 at [3]
8 Memorandum – construction awards
9 AM2016/23 – Directions
10 Submission, 2 December 2016; Submission in Reply, 16 March 2017
11 Submission, 2 December 2016; Submission in Reply, 10 March 2017
12 Submission, 2 December 2016; Submission in Reply, 14 March 2017
13 Submission, 9 December 2016 , Submission in Reply, 17 March 2017; Submission in Reply, 24 March 2017
14 Submission, 9 December 2016; Submission in Reply, 10 March 2017
15 Submission in Reply, 10 March 2017
16 Submission, 9 December 2016
17 Submission, 12 December 2016; Submission, 16 December 2016; Submission in Reply 27 March 2017
18 Submission – 9 December 2016
19 Submission in Reply, 20 March 2017
20 Submission, 20 December 2016
21 Submission, 2 February 2017
22 Submission, 17 March 2017
23 [2017] FWCFB 4239
24 [2017] FWCFB 6487
25 Preliminary Jurisdictional Issues [2014] FWCFB 1788 at [24]
26 Shop, Distributive and Allied Employees Association v National Retail Association (No 2) (2012) 205 FCR 227 at [35]
27 [2017] FWCFB 1001 at [128]; Shop, Distributive and Allied Employees Association v The Australian Industry Group [2017] FCAFC 161 at [41]–[44]
28 [2018] FWCFB 3500 at [21]-[24]
29 Edwards v Giudice (1999) 94 FCR 561 at [5]; Australian Competition and Consumer Commission v Leelee Pty Ltd [1999] FCA 1121 at [81]-[84]; National Retail Association v Fair Work Commission (2014) 225 FCR 154 at [56]
30 Shop, Distributive and Allied Employees Association v The Australian Industry Group [2017] FCAFC 161 at [33]
31 National Retail Association v Fair Work Commission (2014) 225 FCR 154 at [105]-[106]
32 See National Retail Association v Fair Work Commission (2014) 225 FCR 154 at [109]-[110]; albeit the Court was considering a different statutory context, this observation is applicable to the Commission’s task in the Review
33 Ibid at [28]-[29]
34 Shop, Distributive and Allied Employees Association v The Australian Industry Group [2017] FCAFC 161 at [48]
35 See generally: Shop, Distributive and Allied Employees Association v National Retail Association (No.2) (2012) 205 FCR 227
36 Ibid at [46]
37 Exhibit 26, Statement of Rick Sassin dated 30 November 2016.
38 Exhibit 27, Witness Statement of Huan Do dated 29 November 2016.
39 Exhibit 38, Witness Statement of Peter Glover dated 9 December 2016; Transcript 5 April 2017 PN2398-PN2551
40 Exhibit 24, Affidavit of David Castledine affirmed 7 December 2016.
41 Exhibit 19, Affidavit of David O’Connor affirmed 6 December 2016.
42 Exhibit 21, Affidavit of John Hovey affirmed 7 December 2016.
43 Exhibit 2, Witness Statement of Peter Middleton dated 8 December 2016; Transcript 3 April 2017 PN341-PN430
44 Exhibit 6
45 [2017] FWCFB 584
46 [2015] FWCFB 2192
47 [1989] AIRC 175
48 [1990] AIRC 1101
49 Print J5115
50 Print R7494
51 [2013] FWC 4576
52 Exhibit 11, Witness Statement of Frank O’Grady dated 2 December 2016; Transcript 4 April 2017 PN1164-PN1239
53 Exhibit 12, Witness Statement of Dean Reilly dated 2 December 2016, Transcript 4 April 2017 PN1257-PN1378
54 Exhibit 13, Witness Statement of Josh Burling dated 6 December 2016, Transcript 4 April 2017 PN1381-PN1404
55 Exhibit 14, Witness Statement of Roland Cummins dated 6 December 2016; Transcript 4 April 2017 PN1410-PN1439
56 Exhibit 31, Witness Statement of Danny Callaghan dated 1 December 2016; Transcript 4 April 2017, PN1671-PN1712
57 Exhibit 30, Witness Statement of David Kelly dated 1 December 2016; Transcript 4 April 2017 PN1601-PN1661
58 Exhibit 35, Witness Statement of Graham Pallot dated 7 December 2016; Transcript 5 April 2017 PN2137-PN2250
59 Exhibit 36, Witness Statement of Paul Ferreira dated 2 December 2016; Transcript 5 April 2017 PN2258-PN2318
60 Exhibit 37, Witness Statement of Kris Woodward dated 2 December 2016; Transcript 5 April 2017 PN2332-PN2390
61 Exhibit 16, Witness Statement of David Kirner dated 1 December 2016.
62 Exhibit 10, Witness Statement of Jeffrey Sharp dated 9 December 2016; Transcript 4 April 2017 PN1091-PN1153
63 Exhibit 38, Witness Statement of Peter Glover dated 9 December 2016; Transcript 5 April 2017 PN2398-PN2551
64 [2017] FWCFB 4239
65 Thorne v Kennedy [2017] HCA 49 at [30]-[32]
66 See Thiess Pty Ltd Wheatstone Project Agreement 2012 [2012] FWAA 7466
67 Exhibit 28, Witness Statement of Kristie Burt dated 30 November 2016
68 Exhibit 25, Witness Statement of Kirsten Lewis dated 29 November 2016.
69 Exhibit 38, Witness Statement of Peter Glover dated 9 December 2016; Transcript 5 April 2017 PN2398-PN2551
70 Exhibit 39
71 Exhibit 18, Statement of Brendan Holl (undated)
72 54 FLR 358
73 [2015] FWCFB 4466
74 [2015] FWCFB 4466 at [307]
75 See [2015] FWCFB 4466 at [307]
76 [2016] FWCFB 4258
77 [2016] FWCFB 7737
78 Exhibit 33, Witness Statement of Cameron Spence dated 9 December 2016; Transcript 5 April 2017 PN1858-PN2124
79 [2015] FWCFB 4466 at [307]
80 [2015] FWCFB 4466 at [298]-[307]
81 Exhibit 43, Witness Statement of Jeff Buhler dated 30 November 2016; Transcript 5 April 2017 PN2700-PN2725
82 Exhibit 42, Witness Statement of Anthony Callinan dated 30 November 2016; Transcript 5 April 2017 PN2636-PN2697
83 Exhibit 41, Witness Statement of Geoff Muller, dated 1 December 2016; Transcript 5 April 2017 PN2563-PN2624
84 Exhibit 38, Witness Statement of Peter Glover dated 9 December 2016; Transcript 5 April 2017 PN2398-PN2551
85 [2013] FWCFB 2894
86 [2013] FWC 4576
87 [2012] FWAA 10317
88 [2013] FWCFB 2894
89 [2013] FWCFB 2894 at [27]-[28]
90 Alpine Resorts Award 2010 [2018] FWCFB 4984 at [53]; cf. Horticulture Award 2010 [2017] FWCFB 6037
91 Exhibit 32, Witness Statement of Robert Wilson dated 9 December 2016; Transcript 5 April 2017 PN1793-PN1842
92 Exhibit 38, Witness Statement of Peter Glover dated 9 December 2016; Transcript 5 April 2017 PN2398-PN2551
93 Exhibit 23, Affidavit of David Castledine affirmed 7 December 2016
94 Exhibit 20, Affidavit of David O’Connor affirmed 7 December 2016
95 Exhibit 22, Affidavit of John Hovey affirmed 7 December 2016
96 Exhibit 15, Witness Statement of Liam O’Hearn (undated); Transcript 4 April 2017 PN1445-PN1531
97 Exhibit 17, Statement of Robert Cameron (undated)
98 ABS Cat.6291.0.55.003 – EQ12 – Employed persons by Age and Industry division of main job (ANZSIC)
99 ABS Cat.6227.0.30.001-201705 – Education and Work, Australia, May 2017
100 Horticulture Award 2010 [2009] AIRCFB 966 at [18]
101 Exhibit 1, Witness Statement of David Solomon, dated 16 December 2016; Exhibit 3, Reply Witness Statement of David Solomon; Transcript 3April 2017 PN288-PN333; PN458-PN803
102 Exhibit 38, Witness Statement of Peter Glover dated 9 December 2016; Transcript 5 April 2017 PN2398-PN2551
103 Exhibit 4, Statement of Dr. Gerard Ayers (undated); Transcript 3 April 2017 PN813-PN956
104 Exhibit 25, Witness Statement of Kirsten Lewis dated 29 November 2016
105 [2017] FWCFB 4239 at [2]
106 [2017] FWCFB 6487
107 Exhibit 29, Witness Statement of Laura Marantz dated 1 December 2016
108 Exhibit 33, Witness Statement of Cameron Spence dated 9 December 2016; Transcript 5 April 2017 PN1858-PN2124
109 Exhibit 38, Witness Statement of Peter Glover dated 9 December 2016; Transcript 5 April 2017 PN2398-PN2551
110 Exhibit 38, Witness Statement of Peter Glover dated 9 December 2016; Transcript 5 April 2017 PN2398-PN2551
111 Exhibit 38, Witness Statement of Peter Glover dated 9 December 2016; Transcript 5 April 2017 PN2398-PN2551
13
23
0