4 yearly review of modern awards—Payment of Wages
[2020] FWCFB 5623
•26 OCTOBER 2020
| [2020] FWCFB 5623 |
| FAIR WORK COMMISSION |
STATEMENT |
Fair Work Act 2009
s.156—4 yearly review of modern awards
4 yearly review of modern awards—Payment of Wages
(AM2016/8)
JUSTICE ROSS, PRESIDENT | MELBOURNE, 26 OCTOBER 2020 |
4 yearly review of modern awards – Payment of wages – Payment of wages and other amounts model term.
[1] The purpose of this Statement is to provide an update on the status of the payment of wages common issue and to notify interested parties of our decision not to proceed with the ‘Payment of wages and other amounts’ model term at this time.
[2] On 1 December 2016 we issued a decision (the December 2016 decision) 1 dealing with various ‘payment of wages’ issues in modern awards. The December 2016 decision dealt with penalties for late payment of wages and annual leave loading. Those issues have been determined and variation determinations issued.2 In the December 2016 decision we also set out model terms in relation to:
• payment of wages and other amounts; and
• payment on termination of employment.
Payment on termination of employment clause
[3] In the December 2016 decision, we confirmed our provisional view that each modern award should provide for the payment of wages and other amounts owing to an employee on termination of employment and that such a term should prescribe a timeframe within which termination payments are to be made.
[4] In a decision issued on 17 July 2018 we finalised the payment of wages on termination of employment model term. 3 The model term was subsequently inserted (in some cases with minor modifications) in the 86 modern awards which were silent in respect of the time period within which termination payments are to be made.4
[5] The remaining 36 modern awards contained terms which provided for the payment of wages and other amounts on the termination of employment. Of these 36 awards, 34 have been varied to include the model term (or a variant of it). Applications to insert the model term in the remaining 2 awards were rejected. 5 The proceedings in relation to the payment of termination of employment model term are now complete.
Payment of wages and other amounts model clause
[6] In the December 2016 decision 6 we expressed the provisional view that all modern awards should include a term providing for the method and frequency of payment as well as placing a limit on payment in arrears.7 We also considered that there is utility in establishing a model ‘payment of wages and other amounts’ award term as follows:8
‘X. Payment of wages and other amounts
X.1 Pay periods and pay days
(a) The employer must pay each employee no later than 7 days after the end of each pay period:
(i) the employee’s wages for the pay period; and
(ii) all other amounts that are due to the employee under this award and the NES for the pay period.
(b) An employee’s pay period may be:
(i) one week;
(ii) two weeks; or
(iii) subject to paragraph (e), one month.
(c) The employer must notify each employee in writing of their pay day and pay period.
(d) Subject to paragraph (e), the employer may change an employee’s pay day or pay period after giving 4 weeks’ notice in writing to the employee.
(e) An employer may only change from a one week or two week pay period to a one month pay period by agreement with affected employees. If employees in a particular classification were paid monthly prior to [insert date of commencement of this clause], the employer may continue to pay employees in that classification monthly without further agreement.
(f) Where an employee’s pay period is one month, two weeks must be paid in advance and two weeks in arrears.
X.2 Method of payment
Payments under clause x.1(a) must be made by electronic funds transfer to the account at a bank or financial institution nominated by the employee, or by cash or cheque.’
[7] In the December 2016 decision we expressed the provisional view that there would be benefit in either replacing existing provisions for the payment of wages in all modern awards with the model term (once finalised), or with a version of the model term appropriately adapted to the existing award payment arrangements. 9
[8] Parties were asked to file written submissions in relation to the provisional views expressed in the December 2016 decision.
[9] A number of submissions were received and a summary of these submissions was published on 20 March 2017 10 (and a revised version of the summary was published on 22 March 2017).11 A further hearing was held on 23 March 2017, followed by a conference of interested parties on 4 May 2017.
[10] At the 23 March 2017 hearing we noted that there appeared to be a measure of agreement between the parties about some matters of principle. At [8]-[12] of a statement issued on 26 April 2017 we identified those areas of agreement and highlighted the areas of disagreement. 12
[11] The purpose of the 4 May 2017 conference was to provide parties with an opportunity to confirm the issues that were agreed and to identify those which may require determination. At the conference, parties confirmed that there was agreement in some areas and other matters were disputed. It was agreed that a further update on the outstanding issues would be provided at a mention on 22 August 2017.
[12] At the mention on 22 August 2017, 13 the parties requested further time to have discussions about the outstanding issues.
[13] A further mention was held on 11 September 2017, 14 at which the parties advised that there were outstanding issues which required determination. A general agreement emerged regarding the directions for the finalisation of the outstanding matters.
[14] A statement and directions were published on 19 September 2017. 15 A number of submissions were received in response and a revised summary of these submissions was published on 30 November 2017.16 Submissions in reply were received from a number of parties.
[15] Further consideration of the ‘payment of wages and other amounts’ model term was delayed until completion of the outstanding matters in relation to the payments on termination of employment model term. We have now completed those matters.
[16] It is apparent from the submissions filed that the content of any ‘payment of wages and other amounts’ model term is heavily contested. ABI and Ai Group advance a ‘Joint Employer Model Clause,’ while the ACTU advances its own model term. There are substantive differences between the two model terms. One of the few matters about which the major parties are agreed is the need for caution in the implementation of any model term across the award system. As ABI put it:
‘2.1 On its face, the introduction of a model term across all awards appears beneficial as it achieves a level of uniformity in the regulatory framework regarding a particular subject matter. It is acknowledged that uniformity of regulation can assist reduce confusion and may contribute to a better level of public awareness regarding certain regulations.
2.2 However, in the context of a modern award safety net, it should not be assumed that uniformity automatically equates with simplicity…
2.5 Furthermore, there may be industry considerations which warrant the adoption of a particular approach in one industry, which are not present in other industries. A common approach which does not reflect these industry specific differences risks disruption in those industries, and one which does risks over-regulation…
2.7 For these reasons, it is respectfully submitted that caution should be adopted before industry specific terms are replaced with a model term and that it is important that the impact of the model term is considered on an award-by-award basis.’ 17
[17] The propositions advanced by ABI are consistent with the views expressed by Ai Group and the ACTU.
[18] Ai Group submits:
‘5. Both current payment practices and current award regulation of such matters vary across industries. Accordingly, the impact of the implementation of the model term should, to some extent, be considered on an award by award basis. Although we have not undertaken a comprehensive assessment of the consequences of introducing the provisional model term into each award, it appears that there are elements of the proposed clause that would be problematic in the context of some industries and occupations.
6. Achieving a greater degree of standardisation across award terms regulating payment of wages may assist in ensuring the modern awards system is simple and easy to understand. However, this factor alone does not necessarily warrant making significant changes to the safety net that could disrupt current practices, impose an additional regulatory burden upon employers and restrict the use of flexible arrangements regarding payment of wages.
7. Even if it there may be some benefit to adopting a model clause across the system, the Commission must be satisfied that each award, if varied, will only include terms to the extent necessary to achieve the modern awards objective.’ 18
[19] In its submission of 30 October 2017, the ACTU said:
‘…commonality and equity ought not be entirely equated: industry considerations may require different standards to be adopted based on circumstances that indicate a fair minimum in one sector does not translate to a fair minimum benefit in another…
We believe that an award by award process, examining the existing terms, how the concepts expressed in the model term (even if not the terms verbatim) compare to the existing terms and the relative impact on interested parties of any change is warranted, if not mandatory, in order to satisfy the Commission that a variation to each such award is necessary to meet the modern awards objective.’ 19
[20] The ACTU encapsulated its submission in the proposition that we should ‘not attempt to fix something that isn’t broken’. 20 The ACTU went on to identify seven modern awards which were silent on the issues sought to be addressed by a model term and which, it contended, ought to be varied to insert a term in the form proposed by the ACTU.
[21] Similarly, Ai Group identified some deficiencies in existing payment of wages terms:
‘… many existing payment of wages clauses appear to be unjustifiably restrictive. A review of payment of wages should not simply entail the introduction of new regulation to address perceived gaps in the current regulatory framework, but also a reconsideration of the necessity to retain archaic and overly prescriptive elements of the current provisions, the existence of which may owe more to the views of the parties to relevant predecessor instruments than to their industrial merit, as contemplated within the context of the current statutory regime and the modern awards objective. A consideration of such matters should inform the development of a model term.’ 21
[22] We observe at the outset that we have no desire to ‘fix something that is not broken’. We also acknowledge the broad consensus that the implementation of any model term will require a contextual evaluation against any existing modern award that may be varied in these proceedings. It seems to us that an award by award approach is appropriate.
[23] We see little utility in determining the content of any model term in such circumstances. It seems to us that the preferred approach is that any deficiencies in existing payment of wages terms, or indeed the absence of such terms, be addressed by application.
[24] If any party wishes to address perceived deficiencies in an existing award term (for example, as identified by Ai Group) or to insert a ‘model’ term into an award (as proposed by the ACTU), they should file an application to vary. For our part we have decided not to determine the form of a payment of wages and other amounts model term at this time. We do not propose to take any further steps on our own initiative in respect of this matter. The issues we have raised may be addressed by applications to vary particular modern awards under s.157 of the Fair Work Act 2009.
PRESIDENT
Printed by authority of the Commonwealth Government Printer
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1 [2016] FWCFB 8463.
2 Schedule of determinations, 16 December 2016.
3 [2018] FWCFB 3566.
4 See [2018] FWCFB 3566, [2018] FWCFB 4735.
5 Dry Cleaning and Laundry Industry Award 2020 and the Supported Employment Services Award 2020 - see [2020] FWCFB 1311 at [252] – [261] and [373] – [383] and [2020] FWCFB 5275 at [4].
6 [2016] FWCFB 8463.
7 Ibid, at [33].
8 Ibid, at [33] - [34].
9 Ibid, at [47].
10 Summary of Submissions, 20 March 2017.
11 Revised Summary of Submissions, 22 March 2017.
12 [2017] FWCFB 2290.
13 Transcript – 22 August 2017.
14 Transcript – 11 September 2017.
15 [2017] FWCFB 4817.
16 Revised Summary of Submissions, 30 November 2017.
17 ABI submission, 2 February 2017, at paras 2.1-2.2, 2.5 and 2.7.
18 Ai Group submission, 23 December 2017 at paras 5-7.
19 ACTU submission, 30 October 2017 at paras 16-17.
20 ACTU submission, 30 October 2017 at para 9.
21 Ai Group submission, 7 November 2017 at para 9.
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