No judgment structure available for this case.

[2016] FWC 2832 [Note: An appeal pursuant to s.604 (C2016/5213) was lodged against this decision - refer to Full Bench decision dated 7 February 2017 [[2017] FWCFB 132] for result of appeal.]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement

All Trades Queensland Pty Limited
(AG2016/525)

COMMISSIONER SPENCER

BRISBANE, 12 AUGUST 2016

Application for approval of the All Trades Queensland Pty Ltd Apprentice / Trainee Enterprise Agreement 2015 – threshold issue - underpinning industrial instruments for the purposes of the BOOT – Modern Awards or continuation of NAPSAs

Introduction

[1] An application has been made for approval of an enterprise agreement known as the All Trades Queensland Pty Ltd Apprentice/Trainee Enterprise Agreement 2015 (the proposed Agreement). The application was made by All Trades Queensland Pty Ltd (the Applicant/Employer/ATQ) pursuant to s.185 of the Fair Work Act 2009 (the Act). By agreement, the parties sought for the initial contested issue of the relevant industrial instruments to undertake the Better off Overall Test (BOOT) pursuant to s.193 of the Act. The test to be applied is:

193 Passing the better off overall test

When a non-greenfields agreement passes the better off overall test

(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.

…

[2] The proposed Agreement is a single-enterprise agreement and covers apprentices and trainees employed by the Applicant as defined in the Agreement. This matter traces the coverage of these employees in Queensland, where their conditions and training were specifically set out in various Queensland State Awards (detailed below), the Order – Apprentices’ and Trainees’ Wages and Conditions (Excluding Certain Queensland Government Entities) 2003 (referred to as the One Big Order or OBO) and the QIRC Order – Supply of Tools to Apprentices (referred to as the Tools Order). The Applicant argued that these instruments continued to have effect and were the correct reference instruments for the Better off Overall Test (the BOOT). The Respondents argued that the Modern Awards displaced these prior instruments and were the correct industrial instruments to apply to BOOT pursuant to s.193.

[3] The Construction, Forestry, Mining and Energy Union (the CFMEU), the Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (Electrical, Energy and Services Division, Queensland & Northern Territory Divisional Branch) (the ETU), the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers’ Union (the AMWU) and Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (Plumbing Division, Queensland & Northern Territory Divisional Branch) (the CEPU Plumbing Division) (the Respondents) filed Form F18 Statutory Declarations indicating that they disagreed with one or more of the answers given to questions in the Employer’s statutory declaration and did not support the approval of the proposed Agreement.

[4] In particular, the Respondents’ objection to the approval of the proposed Agreement related to the applicable reference instruments for the purposes of the Better off Overall Test (the BOOT), and whether the proposed Agreement passes the BOOT.

[5] The Applicant argued that the correct reference instruments for the BOOT are the Queensland State Awards and the Apprentices Orders as follows:

AN140045 - Building Products, Manufacture and Minor Maintenance Award – State 2003

AN140043 - Building Construction Industry Award – State 2003

AN140061 - Civil Construction, Operations and Maintenance General Award – State 2003

AN140103 - Electrical Contracting Industry Award – State

AN140107 - Engineering Award – State 2002

AN140128 - Furniture and Allied Trades Award – State 2003

AP789529 - Metal, Engineering and Associated Industries Award 1998 – Part 1

AP790899 - National Training Wage Award 2000

AP792354 - Plumbing Industry (QLD and WA) Award 1999

AP824308 - The Vehicle Industry – Repair, Services and Retail Award 2002

(collectively, the State Awards)

AN140326 - Order – Apprentices’ and Trainees’ Wages and Conditions (Excluding Certain Queensland Government Entities) 2003 (the One Big Order or OBO) and the QIRC Order – Supply of Tools to Apprentices (the Tools Order).

[6] However, the Respondents argued that the Modern Awards that came into effect on 1 January 2010 are the correct reference instruments, and that the proposed Agreement does not pass the BOOT when compared to these instruments:

The Manufacturing and Associated Industries and Occupations Award 2010

The Vehicle Manufacturing, Repair, Services and Retail Award 2010

The Electrical, Electronic and Communications Contracting Award 2010

The Plumbing and Fire Sprinklers Award 2010

The Building and Construction General Onsite Award 2010

The Joinery and Building Trades Award 2010.

(collectively, the Modern Awards)

[7] The Applicant’s first two agreements were as follows:

All Trades Queensland Pty Ltd Apprentice/Trainee Union Collective Agreement 2006 (the 2006 Agreement)

All Trades Queensland Pty Limited Apprentice/Trainee Union Collective Agreement 2009 (the 2009 Agreement), which was approved on 24 September 2009 1.

[8] The proposed Agreement is to replace the All Trades Queensland Union Collective Agreement 2012-2015 2, which was approved on 10 April 2013.

[9] The Respondent’s primary position was that the Commission cannot be satisfied that the agreement passes the BOOT, as the Employer has erroneously referred to a number of notional agreement preserving state awards (NAPSAs) as the relevant reference instruments rather than the relevant Modern Awards.

[10] It was submitted on behalf of the Joint Unions that the employees of ATQ are award covered employees for the purposes of the Better off Overall Test, and that the Commission must be satisfied, pursuant to s.193 that, at the test time (the time the application was made), each award covered employee would be better off overall if the Agreement applied to the employee than if the relevant Modern Award applied to the employee.

[11] Directions were set for the filing of materials in relation to the objections. The Applicant filed submissions and an Affidavit of Mr Kelvin Jakes, Human Resources Manager for the Applicant. The ETU, AMWU and CEPU Plumbing Division (the Joint Unions) filed joint submissions and the witness statements of Mr Scott Reichman, an Organiser employed by the ETU, Mr Scott Stanford, an Organiser employed by the AMWU and Mr Justin Maxwell, Apprentice Mentor employed by the CEPU Plumbing Division. The CFMEU filed submissions, but no witness evidence.

[12] The matter was listed for hearing. At the hearing, the parties, by consent, agreed on a process for hearing first the “threshold” issue of establishing the correct reference instruments for the purposes of the BOOT. It was agreed that once the threshold issue was determined, further material would be filed in relation to whether the proposed Agreement passed the BOOT.

[13] The Applicant was represented by Mr Michael Coonan, Partner, Herbert Smith Freehills and Ms Sarah Beer, solicitor, Herbert Smith Freehills and was instructed by Mr John Manning, Chief Executive of ATQ. The Joint Unions were represented by Ms Cate Hartigan, Counsel, instructed by Ms Kerry Inglis, Industrial Officer of the ETU, Ms Katelyn Allen, Industrial Officer of the AMWU and Ms Shannon Fogarty of the CEPU Plumbing Division. The CFMEU was represented by Mr Ashley Borg, Senior Industrial Officer.

[14] Following the hearing, the parties requested an opportunity to provide further submissions in relation to Schedule 7 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act), and additional submissions in relation to a document raised at the hearing; the Queensland Government's submissions with respect to the Annual Wage Review dated March 2015, and the Annual Wage Review decisions attached to the affidavit of Mr Kelvin Jakes. The parties reached an agreement on a further timetable for the provision of additional information and Directions, by consent, were set. Both parties filed further submissions and submissions in reply.

[15] The Joint Unions and the CFMEU’s position was that the proposed Agreement did not pass the BOOT, that is, employees of the Applicant would not be Better off Overall under the Agreement, compared with the Modern Awards. However, as stated above, the threshold issue of what the correct reference instruments are, is the subject of this Decision, with the issue of whether the Agreement passes the BOOT to be the subject of further evidence and hearing.

Background

[16] The proposed Agreement covers apprentices and trainees employed by All Trades Queensland. This is similar to the prior All trades Queensland Agreements. The Form F17 Statutory Declaration, filed with the application, states that the proposed Agreement will cover 1079 apprentices and trainees employed by the Applicant. It is necessary to trace the history as the treatment of some apprentices’ and trainees’ terms and conditions, in Queensland, has been dealt with by a unique competency based wage progression system, which arose from the State Awards and the Orders. This system was given specific treatment in the legislation, during the two major reforms to industrial relations that have occurred over the last decade.

[17] Accordingly, there is a series of legislative provisions (that is relevant to the determination of this application), which span the period of the last two legislative reforms.

[18] In summary, the Applicant argued, Item 16 in Regulation 3B.02 of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 (the Transitional Regulations), provided for continued coverage of the Order – Apprentices’ and Trainees’ Wages and Conditions (Excluding Certain Queensland Government Entities) 2003 (the OBO), as it set minimum terms and conditions for employees to whom a training arrangement applied. It was submitted that it also provided for competency-based wage progression, and it covered some employees and the employer immediately before 1 January 2010. They argued those employees employed by ATQ from 1 October 2009 were never covered by the 2006 Agreement and therefore were still covered by the OBO.

[19] The Applicant argued that the coverage of the Queensland State based industrial instruments are not displaced by the introduction of the Modern Awards because of Item 16 in Regulation 3B.02 and therefore, the reference instrument for the proposed Agreement should be the OBO, which “picks up” the Queensland State Awards, set out in [5] above.

[20] Under Schedule 8, clause 31 of the Workplace Relations Act 1996 (the WorkChoices Act), the Queensland State Awards, the OBO and the Tools Order are Notional Agreements Preserving State Awards (NAPSAs). Item 2(5)(a) of Schedule 3 of the Transitional Act classifies NAPSAs, as award-based transitional instruments (ABTIs).

[21] The Applicant’s argument was that those employees of ATQ, who were employed from 1 October 2009 and had never been covered by the 2006 Agreement, were covered by the NAPSAs/ABTIs at 31 December 2009 and therefore the NAPSAs/ABTIs continued to cover the employer from 1 January 2010.

[22] The Respondents argued that the operation of the 2006 Agreement had the effect of ceasing the operation of the NAPSAs/ABTIs under clause 38A of Schedule 8 of the Workplace Relations Act 1996. The 2009 Agreement, it was argued by the Respondents, had the same effect because it covered the same class of employees and therefore the operation of the NAPSAs/ABTIs was ceased immediately before 1 January 2010. Further, the CFMEU argued that the NAPSAs had terminated on 1 January 2014, by virtue of the “sunsetting” clause in Item 20 of Schedule 3 of the Transitional Act.

Timeline

16 September 2006 The 2006 Agreement was lodged

1 July 2009 Most of the Transitional Act, including Item 20 and Item 29 of Schedule 3 of the Transitional Act came into effect

The Transitional Regulations came into effect.

1 October 2009 The 2009 Agreement came into operation

1 January 2010 The Regulations in the Fair Work Legislation Amendment Regulations

2009 (No. 3) (SLI 391 of 2009) came into effect. This includesItem 16 of Regulation 3B.02.

Relevant legislative provisions

[23] The application was made under s.185 of the Act, as follows:

185 Bargaining representative must apply for the FWC’s approval of an enterprise agreement

Application for approval

(1) If an enterprise agreement is made, a bargaining representative for the agreement must apply to the FWC for approval of the agreement.

…

[24] Sections 186 and 187 set out the requirements for approval of an Agreement, including that the Agreement passes the Better off Overall Test, as follows:

Subdivision B—Approval of enterprise agreements by the FWC

186 When the FWC must approve an enterprise agreement—general requirements

Basic rule

(1) If an application for the approval of an enterprise agreement is made under subsection 182(4) or section 185, the FWC must approve the agreement under this section if the requirements set out in this section and section 187 are met.

Note: The FWC may approve an enterprise agreement under this section with undertakings (see section 190).

Requirements relating to the safety net etc.

(2) The FWC must be satisfied that:

(a) if the agreement is not a greenfields agreement—the agreement has been genuinely agreed to by the employees covered by the agreement; and

(b) if the agreement is a multi-enterprise agreement:

(i) the agreement has been genuinely agreed to by each employer covered by the agreement; and

(ii) no person coerced, or threatened to coerce, any of the employers to make the agreement; and

(c) the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and

(d) the agreement passes the better off overall test.

…

(underline added)

187 When the FWC must approve an enterprise agreement—additional requirements

Additional requirements

(1) This section sets out additional requirements that must be met before the FWC approves an enterprise agreement under section 186.

…

[25] Section 193 of the Act contains the Better off Overall Test:

193 Passing the better off overall test

When a non-greenfields agreement passes the better off overall test

(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.

…

Award covered employee

(4) An award covered employee for an enterprise agreement is an employee who:

(a) is covered by the agreement; and

(b) at the test time, is covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and

(iii) covers his or her employer.

…

(underline added)

[26] Section 47 of the Act sets out when a Modern Award applies to an employer or employee. A Modern Award only has to cover, not apply to an employee for the purposes of the BOOT above. However, Section 47 of the Act is referenced in Item 16 of Regulation 3B.02 of the Transitional Regulations, discussed below, and therefore is extracted as follows:

47 When a modern award applies to an employer, employee, organisation or outworker entity

When a modern award applies to an employee, employer, organisation or outworker entity

(1) A modern award applies to an employee, employer, organisation or outworker entity if:

(a) the modern award covers the employee, employer, organisation or outworker entity; and

(b) the modern award is in operation; and

(c) no other provision of this Act provides, or has the effect, that the modern award does not apply to the employee, employer, organisation or outworker entity.

Note 1: Section 57 provides that a modern award does not apply to an employee (or to an employer, or an employee organisation, in relation to the employee) in relation to particular employment at a time when an enterprise agreement applies to the employee in relation to that employment.

Note 2: In a modern award, coverage of an outworker entity must be expressed to relate only to outworker terms: see subsection 143(4).

…

[27] Section 48 of the Act sets out when a Modern Award covers an employer or employee. This is relevant for the BOOT test.

48 When a modern award covers an employer, employee, organisation or outworker entity

When a modern award covers an employee, employer, organisation or outworker entity

(1) A modern award covers an employee, employer, organisation or outworker entity if the award is expressed to cover the employee, employer, organisation or outworker entity.
…

Effect of other provisions of this Act, FWC orders or court orders on coverage

(2) A modern award also covers an employee, employer, organisation or outworker entity if any of the following provides, or has the effect, that the award covers the employee, employer, organisation or outworker entity:

(a) a provision of this Act or of the Registered Organisations Act;

…

(3) Despite subsections (1) and (2), a modern award does not cover an employee, employer, organisation or outworker entity if any of the following provides, or has the effect, that the award does not cover the employee, employer or organisation or outworker entity:

(a) a provision of this Act;

(b) an FWC order made under a provision of this Act;

(c) an order of a court.

Modern awards that have ceased to operate

(4) Despite subsections (1) and (2), a modern award that has ceased to operate does not cover an employee, employer, organisation or outworker entity.

Modern awards cover employees in relation to particular employment

(5) A reference to a modern award covering an employee is a reference to the award covering the employee in relation to particular employment.

WorkChoices Legislation

[28] The following provisions of the Workplace Relations Act 1996 (referred to as the WorkChoices Act) were referred to in relation to the creation of Notional Agreements Preserving State Awards (NAPSAs), which are those State Awards and Orders as listed in paragraph 5 above:

SCHEDULE 8
Transitional treatment of State employment agreements and State awards
…
Part 3 -- Notional agreements preserving State awards

Division 1 -- What is a notional agreement preserving State awards?

Subdivision A -- What is a notional agreement preserving State awards?

31 Notional agreements preserving State awards

If, immediately before the reform commencement, the terms and conditions of employment of one or more employees in a single business or a part of a single business:

(a) were not determined under a State employment agreement; and

(b) were determined, in whole or in part, under a State award (the original State award ) or a State or Territory industrial law (the original State law );

a notional agreement preserving State awards is taken to come into operation on the reform commencement in respect of the business or that part of the business.

[29] It was undisputed by the parties that the Queensland State Awards and the OBO and Tools Order were NAPSAs within the meaning of clause 31 of Schedule 8. Section 4 of the WorkChoices Act defined ‘state award’ as an award, order, decision or determination of a State industrial authority, which includes the OBO and the Tools Order.

[30] The following provision of the Workplace Relations Act 1996 was amended. Prior to the amendment (details below), Schedule 8, Part 3, Division 2, clause 38A read as follows in relation to the length of operation of NAPSAs:

Part 3 -- Notional agreements preserving State awards

Division 2 -- Effect and operation of a notional agreement preserving State awards

38A Operation of a notional agreement preserving State awards

(1) A notional agreement preserving State awards ceases to be in operation at the end of a period of 3 years beginning on the reform commencement.

(2) A notional agreement preserving State awards ceases to be in operation in relation to an employee if a workplace agreement comes into operation in relation to the employee.

Note: The reference in subclause (2) to a workplace agreement includes a reference to a workplace determination (see section 113F).

(3) A notional agreement preserving State awards ceases to be in operation in relation to an employee if the employee becomes bound by an award.

(4) If the notional agreement has ceased operating in relation to an employee because of subclause (2) or (3), the agreement can never operate again in relation to that employee.

(underline added)

[31] In the current circumstances the Respondents emphasised the (relevance in terms of this provision, of) intervening approval of the 2006 Agreement for the purposes of s.38A(2). However, the Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008 amended Schedule 8, Part 3, Division 2, clause 38A of the Workplace Relations Act 1996. The amendment extended the operation of NAPSAs until 31 December 2009 and provided for NAPSAs being able to operate again. The amended provision read as follows:

Part 3 -- Notional agreements preserving State awards

Division 2 -- Effect and operation of a notional agreement preserving State awards

38A Operation of a notional agreement preserving State awards

(1) A notional agreement preserving State awards ceases to be in operation at the end of:

(a) unless paragraph (b) applies, 31 December 2009; or

(b) if a later date is prescribed by the regulations--that later date.

(2) A notional agreement preserving State awards ceases to be in operation in relation to an employee if a workplace agreement or a pre‑transition workplace agreement comes into operation in relation to the employee.

Note: The reference in subclause (2) to a workplace agreement includes a reference to a workplace determination (see section 506).

(3) A notional agreement preserving State awards ceases to be in operation in relation to an employee if the employee becomes bound by an award.

(4) If the notional agreement has ceased operating in relation to an employee because of subclause (2) or (3), the agreement can never operate again in relation to that employee.

(5) Despite subclause (4), a notional agreement that has ceased operating because of subclause (2) can operate again if:

(a) the notional agreement ceased to operate because it was replaced by a pre‑transition workplace agreement (the replacement workplace agreement ); and

(b) the replacement workplace agreement later ceased to operate because it did not pass the fairness test.

Note: See sections 346Y, 346YA and 346Z of the pre‑transition Act.

(6) Despite subclause (4), a notional agreement that has ceased operating because of subclause (2) can operate again if:

(a) the notional agreement ceased to operate because it was replaced by a workplace agreement or a pre‑transition workplace agreement; and

(b) the workplace agreement or pre‑transition workplace agreement ceased to operate after the commencement of this subclause.

(underline added)

[32] The Respondents argued that, by virtue of subsections (2) and (4) of Clause 38A above, that the NAPSAs ceased to operate when the 2006 Agreement came into operation, in relation to an employee and could never again operate in relation to that employee.

[33] The Applicant argued that subsections (2) and (4) of Clause 38A did not apply to those employees who were employed after 1 October 2009 (the date the 2009 Agreement came into operation), as those employees were never covered by the 2006 Agreement, and for the purposes of Clause 38A(2), the 2009 Agreement was not a workplace agreement and therefore did not have the same effect as the 2006 Agreement.

Fair Work Transitional Act Provisions

[34] The Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act), under Item 2(5)(a) of Schedule 3, classifies NAPSAs as Award-Based Transitional Instruments (ABTIs) as follows:

(5) Transitional instruments are classified as follows:

(a) awards, State reference transitional awards or common rules, and notional agreements preserving State awards, are award-based transitional instruments;

…

“Sunsetting” Clause

[35] The following provisions from the Transitional Act were relied on by the Respondents. They relate to the interaction between NAPSAs, Award Based Transitional Instruments (ABTIs), Modern Awards and Enterprise Agreements:

Schedule 3—Continued existence of awards, workplace agreements and certain other WR Act instruments

Part 3—Variation and termination of transitional instruments

20 Sunsetting rules for various transitional instruments

Notional agreements preserving State awards

(1) A notional agreement preserving State awards (other than a notional agreement that is an enterprise instrument) terminates:

(a) on the 4th anniversary of the FW (safety net provisions) commencement day; or

(b) if the regulations prescribe a later day—on that later day.

…

(underline added)

21 Effect of termination

If a transitional instrument terminates, it ceases to cover (and can never again cover) any employees, employers or other persons.

[36] The CFMEU relied on this “sunsetting” clause to argue that the NAPSAs no longer applied, and were terminated after 1 January 2014, the 4^th anniversary of the FW (safety net provisions) commencement day. The CFMEU submitted that, whilst Item 16 of Regulation 3B.02 of the Transitional Regulations expressly excluded Item 29 of Schedule 3 of the Transitional Act (which related to Modern Awards – see Item 29 of Schedule 3 extracted below), Item 16 of Regulation 3B.02 did not exclude Items 20 or 21 of the Transitional Act.

[37] The Applicant argued that Item 16 of Regulation 3B.02 of the Transitional Regulations overrode this “sunsetting” clause, as it specifically provided for continued coverage in certain circumstances. The relevant Transitional Regulations provisions are set out below.

Fair Work Transitional Regulations

[38] The following provisions of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 (Transitional Regulations)were relied on by the Applicant as the basis for the continued coverage of the ABTIs/NAPSAs. Regulation 3B.02 has the effect of inserting Item 16 (extracted below) into Schedule 5 of the Transitional Act with effect from 1 January 2010. Accordingly, the reference to Item 29 of Schedule 3 is to the Transitional Act (Item 29 of Schedule 3 is extracted above). The Applicant argued that Item 16 provided for continued coverage of the NAPSAs/ABTIs. The Joint Unions argued that the NAPSAs/ABTIs did not immediately cover any employees or the Applicant immediately prior to 1 January 2010, as the 2009 Agreement had the same effect as the 2006 Agreement, and therefore the operation of the ABTI was ceased. Regulation 3B.02 provides as follows:

Regulation 3B.02

Part 5 Continued coverage under award-based transitional instruments

…

16 Continued coverage

(1) Despite item 29 of Schedule 3, an award-based transitional instrument that:

(a) sets minimum terms and conditions for an employee to whom a training arrangement applies; and

(b) either:

(i) provides for competency-based wage progression; or

(ii) provides solely for the provision of tools for use by apprentices; and

(c) covered an employee or employer immediately before 1 January 2010;

continues to cover the employee or employer

…

(5) Despite section 47 of the FW Act, a modern award that would, but for this subitem, apply to the employee does not apply for the period during which the award-based transitional instrument covers the employee.

(underline added)

Modern Award Interaction with ABTIs

[39] Item 29 of Schedule 3 operates such that ABTIs cease to cover an employee (and the employer in relation to that employee) if a Modern Award that covers the employee comes into operation. The Applicant argued that Item 29 of Schedule 3 was specifically overridden by the operation of Item 16 of Regulation 3B.02 of the Transitional Regulations (set out further below), which provides for continued coverage of ABTIs in circumstances, which the Applicant argued applied in this case.

Schedule 3—Continued existence of awards, workplace agreements and certain other WR Act instruments

Part 5—Transitional instruments and the FW Act
Division 2—Interaction between transitional instruments and FW Act modern awards, enterprise agreements and workplace determinations

29 Modern awards and award-based transitional instruments

Modern awards other than the miscellaneous modern award

(1) If a modern award (other than the miscellaneous modern award) that covers an employee, or an employer or other person in relation to the employee, comes into operation, then an award-based transitional instrument ceases to cover (and can never again cover) the employee, or the employer or other person in relation to the employee.

…

[40] The Applicant argued that Item 16 of Regulation 3B.02 was satisfied such that, despite Item 29 of Schedule 3 above, the ABTIs continued to cover the employer after the Modern Awards came into operation that covered the employees.

[41] The Applicant argued that Item 31 in Schedule 3 of the Transitional Act detailed the distinction between an instrument “applying” to an employee and “covering” an employee.

31 FW Act enterprise agreements and workplace determinations, and award based transitional instruments

If an enterprise agreement or workplace determination (under the FW Act) applies to an employee, or an employer or other person in relation to the employee, then:

(a) an award based transitional instrument ceases to apply to the employee, and the employer or other person in relation to the employee; but

(b) the award based transitional instrument can (subject to the other provisions of this Part) continue to cover the employee, and the employer or other person in relation to the employee.

Note: Subject to the other provisions of this Part, the award based transitional instrument can again start to apply to the employee, and the employer or other person in relation to the employee, if the enterprise agreement or workplace determination (under the FW Act) ceases to apply to the employee.”

(underline added)

[42] The Applicant argued that the 2009 Agreement applied to the employees, but that the NAPSAs/ABTIs covered some employees and also the Employer ATQ, immediately before 1 January 2010, and therefore Item 16 of Regulation 3B.02 provided for the continued coverage of the ABTIs after 1 January 2010.

[43] The Applicant’s submission was that the NAPSAs/ABTIs were listed as reference instruments in the application for the approval of the 2009 Agreement. The Respondents argued that this was not determinative of “coverage”, and they relied on the following Items in Schedule 7 of the Transitional Act, in relation to the instruments cited in the application for approval of the 2009 Agreement, for the purposes of the No Disadvantage Test.

Schedule 7—Enterprise agreements and workplace determinations made under the FW Act

Part 2—Transitional provisions relating to the application of the no disadvantage test to enterprise agreements made and varied during bridging period

Division 2—The no-disadvantage test

4 When does an agreement pass the no disadvantage test?

(1) An enterprise agreement passes the no disadvantage test if FWA is satisfied that the agreement does not, or would not result, on balance, in a reduction in the overall terms and conditions of employment of the employees who are covered by the agreement under any reference instrument relating to one or more of the employees.

(2) For the purposes of subitem (1):

(a) a law of a State or Territory that:

(i) relates to long service leave; and

(ii) applied, immediately before the application was made for approval of the agreement under section 185 of the FW Act, to an employee referred to in that subitem, or would have applied to such an employee if he or she had been employed by the employer at that time;

is taken, to the extent that it provides for long service leave, to be a reference instrument relating to the employee; and

(b) if, apart from this subitem, the only reference instrument relating to the employee is a designated award for the employee—the designated award is to be disregarded to the extent (if any) that it provides for long service leave.

Note: An enterprise agreement made during the bridging period will prevail over a law of a State or Territory, to the extent of any inconsistency, so far as that law deals with long service leave (see item 17).

(3) An enterprise agreement or a variation of an enterprise agreement is taken to pass the no disadvantage test if there is no reference instrument in relation to any of the employees who are covered by the agreement.

(4) To avoid doubt, if there is a reference instrument in relation to one or more, but not all, of the employees referred to in subitem (1):

(a) if the agreement passes the no disadvantage test under subitem (1)—it passes the test in relation to all employees who are covered by the agreement; or
(b) if the agreement does not pass the no disadvantage test under subitem (1)—it does not pass the test in relation to any employees who are covered by the agreement.

Note 1: In addition to the no disadvantage test, during the bridging period, the Australian Fair Pay and Conditions Standard prevails over an enterprise agreement to the extent to which the Australian Fair Pay and Conditions Standard provides a more favourable outcome for the employee or employees—see subitem 27(1).

Note 2: From the FW (safety net provisions) commencement day, a term of an enterprise agreement has no effect to the extent it excludes the National Employment Standards or any provision of the National Employment Standards (see sections 55 and 56 of the FW Act).

Note 3: This item applies to an enterprise agreement as proposed to be varied in a corresponding way to the way in which it applies to an enterprise agreement—see subitems 3(2) and (3).

Note 4: See item 10 for how FWA makes decisions under this item.

(5) For the purposes of determining whether an enterprise agreement as proposed to be varied passes the no disadvantage test, FWA must disregard any individual flexibility arrangement that has been agreed to by an affected employee and his or her employer under the flexibility term in the agreement.

5 Reference instruments etc.

(1) A reference instrument, in relation to employees who are covered by an enterprise agreement, is:

(a) any relevant general instrument; or

(b) if there is no relevant general instrument—any designated award;

for one or more of the employees.

(2) A relevant general instrument, for an employee who is covered by an enterprise agreement, is an award based transitional instrument:

(a) that regulates, or would but for an enterprise agreement or another industrial instrument having come into operation regulate, any term or condition of employment of persons engaged in the same kind of work as that performed or to be performed by the employee under the enterprise agreement; and

(b) that applied, or would but for an enterprise agreement or another industrial instrument having come into operation have applied, to the employee’s employer immediately before the day on which the application for approval of the agreement was made under section 185 of the FW Act.

[44] The Respondents argued that the relevant general instruments for the purposes of the No Disadvantage test were not required to cover the employees or the employer, and therefore were not indicative of coverage at the time of the 2009 Agreement approval.

Explanatory Statement – Insertion of Item 16 of Regulation 3B.02

[45] The Explanatory Statement with respect to the Fair Work Legislation Amendment Regulations 2009 (No. 3) (Sli No 391 Of 2009) which amended the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 to include Regulation 3B.02 is relevantly extracted as follows:

“Item [4] – After regulation 3B.01

This item inserts new regulation 3B.02 after regulation 3B.01 of the Transitional Regulations.

Regulation 3B.02 – References to award-based transitional instruments and continued coverage under award-based transitional instruments

This item inserts new regulation 3B.02 in the Transitional Regulations to provide for continued coverage under transitional instruments for employees to whom a training arrangement applies. It also deals with references to award-based transitional instruments in modern awards.

This regulation modifies Schedule 5 to the Transitional Act by inserting new item 15 after item 14 of Part 4, along with new Parts 5 and 6 (consisting of new items 16 and 17 respectively).

…

New item 16 of Schedule 5 to the Transitional Act continues coverage of transitional instruments for certain employees to whom a training arrangement applies.

Most modern awards will commence operation on 1 January 2010 and many contain terms and conditions for employees to whom a training arrangement applies. As a result, from 1 January 2010, most employees to whom training arrangements apply and who are currently covered by award-based transitional instruments, will instead by covered by modern awards.

This item ensures that for employees to whom a training arrangement applies (and their employer), an award-based transitional instrument continues to cover the parties where the instrument:

•sets minimum terms and conditions for employees to whom a training arrangement applies;
•provides for competency-based wage progression or provides solely for the provision of tools for apprentices; and
•covered the employee or employer immediately before 1 January 2010.

Competency-based wage progression enables employees to whom training arrangements apply to access higher pay rates if they attain certain skills levels ahead of time, thereby completing their traineeship or apprenticeship more quickly. Employees still progress on a time-served basis if they do not achieve competency in the relevant stage of their training arrangement.

This regulation ensures employees who currently have access to competency-based wage progression continue to have access to those arrangements for the duration of their traineeship or apprenticeship. Similarly, entitlements for apprentices to be provided with tools by their employer will continue to apply for the duration of their apprenticeship.

Affected employees will also continue to be covered by the transitional APCS that covered them immediately before 1 January 2010.

This regulation makes clear that while an employee is covered by an award-based transitional instrument satisfying the above criteria, a modern award does not apply. This is the case despite the rule in section 47 of the Act which specifies when a modern award that covers an employer or employee will apply to the employer or employee.

In respect of any other employees who are not employees to whom a training arrangement applies, an employer will be covered by the relevant modern award applicable to their industry or the employee’s occupation. The employer will also be covered by any continuing transitional instruments in respect of future employees at their workplace to whom training arrangements apply…”

(underline added)

[46] The Applicant argued that it was the intention of the Legislature that the competency based wage progression system was preserved and that this was reflected in the Explanatory Statement. The Respondents made no submissions in relation the explanatory statement.

[47] However, the Respondents did address the relevant legislative provisions regarding the commencement of the Modern Awards from 1 January 2010 and the application of such.

Summary of the Joint Union’s Argument

[48] Ms Hartigan, on behalf of the Joint Unions, submitted that the NAPSAs ceased to operate when the 2006 Agreement came into operation, by way of section 38A(2) of the Workplace Relations Act 1996 (WorkChoices Act), that stated as follows:

…

(2) “A notional agreement preserving State awards ceases to be in operation in relation to an employee if a workplace agreement comes into operation in relation to the employee…

[49] It was further submitted that, once that workplace agreement comes into operation, the NAPSAs can never operate again. Section 38A(4) of the WorkChoices Act is extracted as follows:

…

(4) If the notional agreement has ceased operating in relation to an employee because of subclause (2) or (3), the agreement can never operate again in relation to that employee….

[50] Ms Hartigan submitted that the relevant words in s.38A of the WorkChoices Act are can never operate again in relation to that employee, and submitted that the use of the word “employee” is relevant with regard to what is the applicable workplace agreement. Ms Hartigan submitted that the applicable workplace agreement (the 2006 Agreement) was a union collective agreement according to the definition in section 4 of the Workplace Relations Act 1996.

[51] A workplace agreement was defined in section 4 of the Workplace Relations Act 1996 as follows:

workplace agreement means:
(a) an AWA; or
(b) a collective agreement.
Note: Section 324 affects the meaning of workplace agreement.

[52] It was submitted on behalf of the Joint Unions that the class of employee covered by that 2006 Agreement were those employees engaged as apprentices and trainees by ATQ at that time, which was provided in the definition provision in the 2006 Agreement.

[53] The 2006 Agreement states that it covers the Employer, the 4 Respondent Unions, and “The apprentices and trainee's of the employer, as defined in this agreement”. The Definitions section of the 2006 Agreement defines employees as “persons engaged as an apprentice or trainee in accordance with the Act.” The 2006 Agreement also includes a definition of a school based apprenticeship or traineeship as follows:

“School based apprenticeship or traineeship means a contract of training and paid employment where a school student's time table or curriculum reflects a combination of work, training and school study, which together lead to the award of a senior certificate or its equivalent, and progress towards, or the attainment of, a vocational qualification.”

[54] The 2006 Agreement was lodged on 16 September 2006 and had a nominal expiry date of three years from that point. It operated until the commencement of the 2009 Agreement, on 1 October 2009. Ms Hartigan submitted that the same class of employees covered by the 2006 Agreement was covered by the 2009 Agreement, as the definition of “employee” in the 2009 Agreement mirrored the 2006 Agreement definition of employee, and the employer party remained the same. Therefore, the Joint Unions argued that the employees were covered by the 2009 Agreement, and not the NAPSAs/ABTIs, on 31 December 2009 and that the criteria under Item 16 of Regulation 3B.02 were not met for there to be continued coverage of the ABTIs.

[55] Ms Hartigan submitted, in response to the Applicant’s argument that there was a window between 1 October 2009 and 31 December 2009, during which the NAPSAs recommenced, that it must be accepted by the Applicant that section 38A of the WorkChoices Act had the effect that the NAPSAs ceased to operate when the 2006 Agreement came into operation. As extracted earlier, the relevant parts of s.38A are as follows:

…

(2) A notional agreement preserving State awards ceases to be in operation in relation to an employee if a workplace agreement or a pre‑transition workplace agreement comes into operation in relation to the employee.

…

(4) If the notional agreement has ceased operating in relation to an employee because of subclause (2) or (3), the agreement can never operate again in relation to that employee….

[56] Accordingly, it was argued on behalf of the Joint Unions that, on commencement of the 2006 Agreement (on 16 September 2006), the NAPSAs ceased to operate in relation to the employees, in accordance with s.38A(2) above and could never again operate in relation to those employees as per s.38A(4).

[57] In response to the Applicant’s submission that the NAPSAs recommenced upon 1 October 2009, the Join Unions submitted this was incorrect for two reasons.

[58] Firstly, it was submitted that the operation of clause 38A of the WorkChoices Act had the effect of ceasing the operation of the NAPSAs with respect to the class of employees covered by the 2006 Agreement. The class was identified by Ms Hartigan as those employees engaged as apprentices and trainees by ATQ. It was submitted that, if it didn't have that effect, s.38A “would do no work”. Ms Hartigan submitted that s.38A clearly provided that the NAPSAs will cease to operate and will never operate again with regard to an employee who is covered by a workplace agreement because a workplace agreement had come into operation satisfying s.38A(2). In this case, Ms Hartigan submitted, it was the collective agreement (the 2006 Agreement) that had come into operation and the operation of the NAPSAs had ceased.

[59] Mr Hartigan submitted this position was further supported by the 2006 Agreement itself, because clause 3 of the 2006 Agreement identified that it was a stand-alone document and that the relevant industrial instruments, as defined by the Workplace Relations Act 1996, (including NAPSAs), do not apply. Clause 3 of the 2006 Agreement is extracted as follows:

“…

This agreement is a stand alone document which overrides and replaces any/all industrial instrument as defined in the Workplace Relations Act 1996 and covers all of the terms and conditions of employment for all employees as defined in this agreement. Provided further that the provisions of the Act shall apply where the provisions of the agreement are inconsistent with the Act, the agreement shall prevail…”

[60] The second ground, submitted by Ms Hartigan, opposing the recommencement of the application of the NAPSAs, was that the 2009 Agreement operated to continue to exclude coverage of all industrial instruments, including the NAPSAs, because of the class of employee that was covered by the 2009 Agreement (the same as the 2006 Agreement), that is apprentices or trainees. Consequently, Ms Hartigan submitted, as at 31 December 2009, the NAPSAs did not cover the employees as they had ceased to operate in relation to that class of employees by virtue of the 2006 Agreement and s.38A of the WorkChoices Act (which stated that a NAPSA ceases to be in operation in relation to an employee if a workplace agreement … comes into operation in relation to the employee), and therefore from 1 January 2010, the employees and ATQ were covered by the relevant Modern Awards and not the NAPSAs.

[61] It was submitted on behalf of the Joint Unions that, as was the 2006 Agreement, the 2009 Agreement was stand-alone agreement by operation of Clause 3, and that the 2009 Agreement overrode and replaced any and all industrial instruments. The Joint Unions argued that this included the NAPSAs.

[62] Further, it was submitted on behalf of the Joint Unions that the 2009 Agreement, like the 2006 Agreement, did not purport to incorporate or in any other way reference the NAPSAs.

[63] Providing evidence for the Respondent, Mr Reichman, an Organiser employed by the ETU, stated in his Affidavit at paragraphs 11 to 13, as follows:

“11. My understanding of the 2009 Agreement, gained during the course of my work representing members employed by ATQ, was that it was a stand-alone Agreement.

12. Clause 3 of the 2009 Agreement states that it was a stand-alone document, and it did not seek to rely on any pre-reform award or NAPSA as an underpinning industrial instrument.

13. Relevantly, the 2009 Agreement does not include the pre-reform awards or NAPSAs as schedules to the Agreement, which, as I understood the Workchoices legislation, would have meant that they no longer applied.” 3

[64] Therefore, it was argued that the 2009 Agreement did not seek to rely on the NAPSAs as underpinning the industrial instrument, nor include the NAPSAs as schedules to the agreement. Ms Hartigan submitted that the same argument was applicable to the 2006 Agreement.

[65] The Joint Unions submitted that it followed that the Agreement “covers” all of the terms and conditions of employment for all employees. It was submitted on behalf of the Joint Unions that the use of the word “coverage” is a word that is used in the industrial arena in a manner which identifies that the Agreement is a stand-alone agreement, and that no other industrial instruments operate with regard to it. Further, Ms Hartigan submitted that the Agreement used the word “coverage” to ensure that all minimum terms and conditions can only be those as prescribed in the 2009 Agreement. Therefore, it was submitted, the 2009 Agreement, and not the NAPSAs/ABTIs covered the employees and the Applicant immediately prior to 1 January 2010, and Item 16 of Regulation 3B.02 did not apply to continue the coverage of the ABTIs.

[66] Further submissions in reply, in relation to Schedule 7 of the Transitional Act, were filed on behalf of the Joint Unions on 24 May 2016. The Joint Unions submitted that Items 4 and 5 of Schedule 7 of the Transitional Act were relevant in response to the Applicant’s purported reliance on the Form F17 Employer’s Declaration which listed the NAPSAs/ABTIs as the reference instruments for the 2009 Agreement approval No Disadvantage Test.

[67] With reference to Item 5 of Schedule 7, it was submitted by the Joint Unions that a reference instrument is not defined as an Award or a NAPSA that covered the employees, but rather the definition in Schedule 7, Part 2, Division 2, section 5 is much less stringent. Schedule 7, Part 2, Division 2, section 5 is repeated here for ease of reference:

5 Reference instruments etc.

(1) A reference instrument, in relation to employees who are covered by an enterprise agreement, is:

(a) any relevant general instrument; or

(b) if there is no relevant general instrument—any designated award;

for one or more of the employees.

(2) A relevant general instrument, for an employee who is covered by an enterprise agreement, is an award based transitional instrument:

(a) that regulates, or would but for an enterprise agreement or another industrial instrument having come into operation regulate, any term or condition of employment of persons engaged in the same kind of work as that performed or to be performed by the employee under the enterprise agreement; and

(b) that applied, or would but for an enterprise agreement or another industrial instrument having come into operation have applied, to the employee’s employer immediately before the day on which the application for approval of the agreement was made under section 185 of the FW Act.

(underline added)

[68] It was submitted on behalf of the Joint Unions that the above Item 5(2)(a) requirement that a ”relevant general instrument” regulate terms and conditions of employees engaged “in the same kind of work” was akin to regulation “within an industry”. Further, Ms Hartigan submitted that section 2(b) does not use the word “coverage” and that there was no requirement for the employee’s employer to be covered. The term used is “applied”.

[69] The Joint Unions submitted that the purpose of Schedule 7 related to the bridging period (prior to the commencement of Modern Awards on 1 January 2010) where regard could not be had to Modern Awards for the purposes of the No Disadvantage Test. Ms Hartigan submitted that the definition of a reference instrument in Item 5(2)(b) identified that an enterprise agreement or another agreement may interfere in the regulation or the application of the award-based transitional instrument. That was submitted to be an important point by the Joint Union, because the Transitional Act recognised that an agreement may, by its application, exclude those award-based transitional instruments.

[70] Accordingly, it was submitted that, from 1 January 2010, or immediately before 1 January 2010, the employee and the employers were covered by the 2009 Agreement and that Item 16 of Regulation 3B.02 of the Transitional Regulations did not apply as Item 16(1)(c) was not met, that is, an ABTI did not cover any employees or the employer immediately before 1 January 2010.

16 Continued coverage

(1) Despite item 29 of Schedule 3, an award-based transitional instrument that:

(a) sets minimum terms and conditions for an employee to whom a training arrangement applies; and

(b) either:

(i) provides for competency-based wage progression; or

(ii) provides solely for the provision of tools for use by apprentices; and

(c) covered an employee or employer immediately before 1 January 2010;

continues to cover the employee or employer…

[71] Ms Hartigan referred to the application and Form F17 Employer Declaration filed in support of the current application in respect of whether the NAPSAs/ABTIs met the requirement under Item 16(1)(b)(i) that they provide for competency-based wage progression. Ms Hartigan submitted that the evidence in the F17 could not satisfy the Commission that the OBO provided for competency-based wage progression.

[72] Ms Hartigan referred to clause 4.3.1. of the OBO, which is extracted as follows:

“…
Progression through the wage levels shall be based upon the attainment of competencies or minimum training requirements or other arrangements such as the expiry of a period of time, that are specified in the relevant schedule…”

[73] Ms Hartigan submitted that this clause identified that wage progression is not just based on competency, but also could be minimum training or the expiration of time.

[74] Ms Hartigan then referred to Schedule 22 – Utilities and Services Industries of the OBO, and clause 2.1, which states as follows:

“…
The wage progression arrangements for apprenticeships based on the following qualifications, including those contained in the above training package and any additional qualification/s which may be added to the training package from time to time shall be in accordance with the provisions in clause 2.1.1…”

[75] It was submitted that clause 2.1.1 clearly identified that wage progression is based on the expiration of time and specifically progresses on a 12-monthly basis. Clause 2.1.1 is extracted as follows:

2.1.1 Wage Progression

2.1.1 Wage Progression Wage Level	*Minimum Training Requirements*	*% of Tradesperson Rate in the Relevant Industrial instrument*	*Classification on Exit*
1	On entry into the apprenticeship	40	N/A
2	After 12 months continuous service from commencing the apprenticeship	55	N/A
3	After 12 months continuous service from commencing wage level 2	75	N/A
4	After 12 months continuous service from commencing wage level 3	90	N/A
Exit I (AQF III)	Trade Outcome: After 12 months continuous service from commencement of wage level 4 and on the certification of attainment of demonstrated completion of the relevant apprenticeship. See clause 2.1.2 for further information.	100	C10/Grade 5 ECIA or its equivalent
Exit II (AQF III)	Advanced Trade Outcome: After 12 months continuous service from commencement of wage level 4 and on the certification of attainment of demonstrated completion of the relevant apprenticeship. See clause 2.1.2 for further information.	105	C9/Grade 6 ECIA or its equivalent
5	On entry to Level 5 Apprenticeship	100	N/A
Exit III AQF III/IV #1	Dual Trade Outcome: After 12 months continuous service from commencing wage level 5 and on the certification of attainment of demonstrated completion of the relevant apprenticeship. See clause 2.1.2 for further information.	115	C7/Grade 7 ECIA or its equivalent.

#1 The AQF IV Dual Trade outcome is not recognised as a C7 wage outcome under the Manufacturing, Engineering and Related Services Training Package.

NOTE: Apprentices paid under the Electrical Contracting Industry Award or its successor shall receive the following proportion of the additional payment ($53.50) applicable to an Electrical Worker Grade 5:

First Year/level 32% = $17.12/week

Second Year/level 44% = $23.54/week

Third Year/level 60% = $32.10/week

Fourth Year/ level 71% = $37.99/week

[76] Ms Hartigan referred to the Form F17 Declaration filed with the application for approval of the current Agreement, and in particular, Question 3.2 which asked the Applicant to list the pre-reform award(s) or NAPSA(s) that covered the employer and any of the employees covered by the proposed agreement as at 31 December 2009. The Applicant listed those Queensland State Awards, the OBO and the Tools Order.

[77] The Form F17 set out details about competency-based progress specifically in relation to electrical apprentices. Ms Hartigan noted that clauses 9.1 and 9.2 of the Electrical Contracting Industry Award – State 2003 were referred to by the Applicant as being relevant to the question of whether that Award provided for competency based wage progression. Ms Hartigan submitted that these clauses were not relevant, because they relate to training generally and did not specifically relate to apprentices and trainees.

[78] Therefore, Ms Hartigan submitted, clauses 9.1 and 9.2 of the Electrical Contracting Industry Award – State 2003 do not provide for competency based wage progression.

[79] Ms Hartigan also noted, that at Question 3.3 of the Form F17, which is headed "Translating Classifications" that there was information provided as to classifications in the proposed Agreement compared to the classifications in the OBO, attached as Appendix A to the Form F17. However, it was submitted that, from the Joint Union’s perspective, the table at Appendix A did not identify classifications in the OBO or the Agreement, rather, it identified trade callings. It was submitted that the information provided under Question 3.3 was not an answer to the information sought and was not evidence that established or could establish to the Commission's satisfaction, the translation of the classifications.

[80] It was submitted that it was contextually relevant that the Joint Unions had put the Applicant on notice in respect to the issue of the reference instruments, and were involved in Commission proceedings in relation to bargaining disputes about the issue. It was a matter, it was submitted, that was clearly going “backwards and forwards” between the parties. Further, Ms Hartigan submitted that it was clear from the Minutes of the meeting held on 10 June 2015 that Mr Reichman was raising the applicability of the Modern Awards as early as that time. Further, it was submitted that it was clear from the use of the word "Award rates" that the Joint Unions were at all times referring to the Award rates, as being applicable.

[81] Further submissions were filed on behalf of the Joint Unions in relation to the Annual Wage Review submissions made by the Queensland Government in March 2015 and in relation to recent Annual Wage Review Decisions. It was submitted by the Joint Unions that these documents were not relevant to the issue for determination, that is, whether the transitional instruments apply to the Applicant.

[82] The Joint Unions submitted that they did not contest that the transitional instruments may apply to apprentices and trainees who are employed/engaged by other entities in Queensland, however, who may be subject to difference circumstances than those of ATQ that have been assessed against the context of the Agreements and legislative provisions. It was further footnoted that Item 20 of the Transitional Act provided a sunset clause for the operation of NAPSAs on 1 January 2014, unless the Regulation provided for another date.

Summary of the CFMEU’s Argument

[83] Mr Borg adopted and relied on the submissions of the Joint Unions, in relation to the CFMEU’s objections against the approval of the proposed Agreement and noted that, whilst Ms Hartigan’s submissions may be confined to the Awards of the Joint Unions, Mr Borg adopted those comments in relation to those Awards that apply to the membership of the CFMEU.

[84] Mr Borg made further and alternative submissions, focussing primarily on Item 16 of Regulation 3B.02 of the Transitional Regulations, which is repeated as follows:

16 Continued coverage

(1) Despite item 29 of Schedule 3, an award-based transitional instrument that:

(a) sets minimum terms and conditions for an employee to whom a training arrangement applies; and

(b) either:

(i) provides for competency-based wage progression; or

(ii) provides solely for the provision of tools for use by apprentices; and

(c) covered an employee or employer immediately before 1 January 2010;

continues to cover the employee or employer.

…

(5) Despite section 47 of the FW Act, a modern award that would, but for this subitem, apply to the employee does not apply for the period during which the award-based transitional instrument covers the employee…

[85] Mr Borg submitted that, to fulfil the criteria in this Item, the instrument needed to provide the competency-based wage progression or, in the alternative, it needed to provide solely for the provision of tools for the use of apprentices.

[86] In relation to subparagraph (5) of Item 16, Mr Borg emphasised that a Modern Award does not apply for the period during which the ABTI covers the employee. Mr Borg submitted that the continued coverage of certain instruments, namely those that provide the competency-based wage progression or for the provision of tools for the use of apprentices, was limited.

[87] Mr Borg submitted that the only instruments that can fulfil those criteria in Regulation 3B.02 are the OBO or the Tool Order, insofar as, and in particular the OBO, provides for competency-based wage progression. Mr Borg referred to clause 4.3.1 of the OBO and submitted that it clearly provided for competency-based wage progression and that is how it fulfils that criterion of Item 16 of Regulation 3B.02.

[88] However, Mr Borg submitted that none of the State Awards (that the Applicant states are applicable) that are referenced in F17 Employer’s Declaration actually fulfil that criteria themselves and that the only instruments that might apply are the OBO and the Tools Order, by way of the plain language of the Item 16 itself.

[89] Mr Borg submitted that Item 16 did not apply the State Awards to all apprentices and trainees; rather, it allowed for the continued coverage of instruments that provide specifically for competency-based wage progression and supply of tools to apprentices.

[90] By way of example, it was submitted that the Building Construction Industry Award State 2003 did not provide specifically for competency-based wage progression or the supply of tools to apprentices. Mr Borg submitted that the Applicant relied on Item 16 of Regulation 3B.02 in order to underpin or provide as reference instruments those State Awards which did not apply in the circumstances, and therefore, the State Awards have no role in the application of the BOOT.

[91] Mr Borg referred to the definition of NAPSAs, contained in Schedule 8, Part 3, Division 1, Item 31 of the Workplace Relations Act 1996, which is repeated as follows:

31 Notional agreements preserving State awards

If, immediately before the reform commencement, the terms and conditions of employment of one or more employees in a single business or a part of a single business:

(a) were not determined under a State employment agreement; and

(b) were determined, in whole or in part, under a State award (the original State award ) or a State or Territory industrial law (the original State law );

a notional agreement preserving State awards is taken to come into operation on the reform commencement in respect of the business or that part of the business.

[92] Mr Borg submitted that the OBO and the Tools Order only continue to apply not only in relation to Item 16 of Regulation 3B.02, but only also insofar as they are NAPSAs and insofar as they are given continued operation.

[93] Mr Borg referred to Clause 3.11 of the OBO, which states:

“3.1.1 Employment conditions for apprentices and trainees employed in areas of employment covered by an Industrial instrument shall be as provided in the Industrial instrument except where amended by the terms of this Order or the Act, or the Training and Employment Act 2000, as amended from time to time.”

[94] Mr Borg anticipated that the Applicant would make the argument that by virtue of Clause 3.1.1 of the OBO, the State Awards are somehow called up but that this mischaracterised the operation of Clause 3.1.1. Mr Borg submitted that Clause 3.1.1 did not simply refer to the industrial instruments, rather, it made the “calling-up” of those Awards conditional also upon the terms of the Order or the Act.

[95] Mr Borg noted that since the drafting of the Order there had been legislative reforms which fundamentally altered the operation of the Act. Mr Borg argued that it followed that Clause 3.1.1 was subject to those Acts of Parliament post WorkChoices. Mr Borg submitted that this was significant because even if the State Awards were called up by the OBO, they would be characterised as NAPSAs, and NAPSAs, by way of Schedule 3, Part 3, Item 20 the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 have been sunsetted, as follows:

20 Sunsetting rules for various transitional instruments

Notional agreements preserving State awards

(1) A notional agreement preserving State awards (other than a notional agreement that is an enterprise instrument) terminates:

(a) on the 4th anniversary of the FW (safety net provisions) commencement day; or

(b) if the regulations prescribe a later day—on that later day.

…

[96] Mr Borg adopted Ms Hartigan’s submission that once a transitional instrument terminates, it ceases to cover, and can never again cover any employees or employers or other person.

[97] Mr Borg also referred to Schedule 3, Part 3, Item 21, which is as follows:

21 Effect of termination

If a transitional instrument terminates, it ceases to cover (and can never again cover) any employees, employers or other persons.

[98] It was submitted that, whilst Regulation 3B.02 excludes the operation of Item 29 of Schedule 3 to the Transitional Act, it did not exclude Items 20 or 21 of Schedule 3 to the Transitional Act.

[99] It was submitted by the CFMEU that despite the terms of Item 16 of Regulation 3B.02, neither the old State Awards, nor the OBO or the Tools Order cover the employer or the employees, because of Items 20 and 21 and in such circumstances, section 47 of the Fair Work Act 2009 applies such that the Modern Awards apply to the employer and employees.

[100] Section 47 of the Fair Work Act 2009 is extracted as follows:

47 When a modern award applies to an employer, employee, organisation or outworker entity

When a modern award applies to an employee, employer, organisation or outworker entity

(1) A modern award applies to an employee, employer, organisation or outworker entity if:

(a) the modern award covers the employee, employer, organisation or outworker entity; and

(b) the modern award is in operation; and

(c) no other provision of this Act provides, or has the effect, that the modern award does not apply to the employee, employer, organisation or outworker entity.

Note 1: Section 57 provides that a modern award does not apply to an employee (or to an employer, or an employee organisation, in relation to the employee) in relation to particular employment at a time when an enterprise agreement applies to the employee in relation to that employment.

Note 2: In a modern award, coverage of an outworker entity must be expressed to relate only to outworker terms: see subsection 143(4).

Modern awards do not apply to high income employees

(2) However, a modern award does not apply to an employee (or to an employer, or an employee organisation, in relation to the employee) at a time when the employee is a high income employee.

Modern awards apply to employees in relation to particular employment

(3) A reference in this Act to a modern award applying to an employee is a reference to the award applying to the employee in relation to particular employment.

[101] Mr Borg referred to the two-yearly review of Modern Awards and raised that competency-based wage progression is now provided for in the Building and Construction General On-site Award 2010. Mr Borg submitted that this applied nationally, and was done during the 2012 review of Modern Awards, to accommodate for the “sunsetting” of NAPSAs/ABTIs. It was submitted that the Modern Award Review brought competency-based wage progression out of the state system, out of the Transitional Act, and into Modern Awards themselves.

[102] In particular, Mr Borg referred to clause 15.9 of the Building and Construction General On-site Award 2010, which deals specifically with competency-based wage progression. Clause 15.9 states as follows:

15.9 Competency based progression

[15.9 inserted by PR545521 ppc 0Jan14; corrected by PR545884 ppc 01Jan14]

(a) For the purpose of competency based wage progression in clause 19.7 an apprentice will be paid at the relevant wage rate for the next stage of their apprenticeship if:

(i) competency has been achieved in the relevant proportion of the total units of competency specified in clause 19.7 for that stage of the apprenticeship. The units of competency which are included in the relevant proportion must be consistent with any requirements in the training plan; and

(ii) any requirements of the relevant State/Territory apprenticeship authority and any additional requirements of the relevant training package with respect to the demonstration of competency and any minimum necessary work experience requirements are met; and

(iii) either:

(A) the Registered Training Organisation (RTO), the employer and the apprentice agree that the abovementioned requirements have been met; or

(B) the employer has been provided with written advice that the RTO has assessed that the apprentice meets the abovementioned requirements in respect to all the relevant units of competency and the employer has not advised the RTO and the apprentice of any disagreement with that assessment within 21 days of receipt of the advice.

(b) If the employer disagrees with the assessment of the RTO referred to in clause 15.9(a)(iii)(B) above, and the dispute cannot be resolved by agreement between the RTO, the employer and the apprentice, the matter may be referred to the relevant State/Territory apprenticeship authority for determination. If the matter is not capable of being dealt with by such authority it may be dealt with in accordance with the dispute resolution clause in this award. For the avoidance of doubt, disputes concerning other apprenticeship progression provisions of this award may be dealt with in accordance with the dispute resolution clause.

(c) For the purposes of this clause, the training package containing the qualification specified in the contract of training for the apprenticeship, sets out the assessment requirements for the attainment of the units of competency that make up the qualification. The definition of “competency” utilised for the purpose of the training packages and for the purpose of this clause is the consistent application of knowledge and skill to the standard of performance required in the workplace. It embodies the ability to transfer and apply skills and knowledge to new situations and environments.

(d) The apprentice will be paid the wage rate referred to in clause 15.9(a) from the first full pay period to commence on or after the date on which an agreement or determination is reached in accordance with clause 15.9(a)(iii) or on a date as determined under the dispute resolution process in clause 15.9(b).

[103] Mr Borg conceded that this was a circumstantial point but noted that the purpose of his submission was to emphasise the fact that the OBO and the Tools Order, even if they were to be retained by Item 16 of Regulation 3B.02, have now, in any event, been “sunsetted” by Schedule 3, Part 3, Item 21 of the Transitional Act and have been supplanted by those Modern Awards which have been amended to accommodate for competency-based wage progression.

[104] Further, Mr Borg in his written submissions, referred to Clause 19.7(c) of the Building and Construction General On-site Award 2010, as being consistent with the argument that Item 16 of Regulation 3B.02 was designed as a temporary provision.

(c) Transitional provisions competency based progression

[19.7(c) varied by PR994519, PR503624; substituted by PR544640, PR545521 ppc 01Jan14]

(i) An apprentice is entitled to progress through the wage structure based on achievement of competency in accordance with the terms of an award made under the Workplace Relations Act 1996 (Cth) that would have applied to the employee immediately prior to 27 March 2006, a notional agreement preserving a State award that would have applied to the employee immediately prior to 1 January 2010 or a Division 2B State award that would have applied to the employee immediately prior to 1 January 2011:

if the employee had at that time been in their current circumstances of employment and no agreement-based transitional instrument, enterprise agreement or Division 2B State employment agreement had applied to the employee; and

that would have entitled the apprentice to progress through the wage structure based on achievement of competencies.

(ii) Clause 19.7(c) ceases to operate on 31 December 2014.

(underline added)

[105] The CFMEU submitted that, as 31 December 2014 had now passed, the exclusion no longer applied under the Building and Construction General On-site Award 2010.

[106] It is noted that Clause 19.7(c) would not have been relevant to the employees of the Applicant, as immediately prior to 1 January 2010, the 2009 Agreement had applied to their employment.

[107] In summary, Mr Borg submitted that the exclusion in Item 16 of Regulation 3B.02 no longer applies, and the Building and Construction General On-site Award 2010, as well as other Modern Awards both cover and apply to Queensland apprentices, and therefore the relevant Modern Awards are those relevant instruments for the purposes of applying the BOOT.

Summary of the Applicant’s Argument

[108] The Applicant submitted that there was no dispute that the One Big Order (the OBO) or the NAPSAs were award-based transitional instruments (ABTIs). Item 2(5)(a) of Schedule 3 of the Transitional Act classifies notional agreements preserving State awards (NASPAs), as award-based transitional instruments (ABTIs).

[109] Mr Coonan, on behalf of the Applicant, referred to Schedule 3, Item 29 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act), which has the effect that an ABTI ceases to cover an employee, an employer of that employee, if a Modern Award covers the employee and is repeated as follows for ease of reference:

29 Modern awards and award-based transitional instruments

Modern awards other than the miscellaneous modern award

(1) If a modern award (other than the miscellaneous modern award) that covers an employee, or an employer or other person in relation to the employee, comes into operation, then an award-based transitional instrument ceases to cover (and can never again cover) the employee, or the employer or other person in relation to the employee.

Note: A modern award cannot be expressed to cover an employee who is covered by a transitional instrument that is an enterprise instrument or a State reference public sector transitional award (see subsections 143(8) and (10) of the FW Act).

[110] Mr Coonan submitted that, drawing from the above provision, a Modern Award must be able to cover the employee, and it was submitted that the references are quite succinct in relation to the employee and the employer of that employee.
[111] The Applicant submitted that in none of the instruments; the Workplace Relations Act 1996, the Forward to Fairness Act, the Fair Work Act 2009 or the Transitional Act, could be found the words “class of employee”. Mr Coonan stated that “class of employee” was used in the submissions made on behalf of the Joint Unions by Ms Hartigan and submitted that it was necessary to look at each of the clauses and build on the words that are used and not “some form of industrial parlance”.

[112] Mr Coonan referred to Item 16 of Regulation 3B.02 of the Transitional Regulations, which provides for continued coverage of an ABTI in certain circumstances, despite Item 29 of Schedule 3 of the Transitional Act, and is repeated as follows:

16 Continued coverage

(1) Despite item 29 of Schedule 3, an award-based transitional instrument that:

(a) sets minimum terms and conditions for an employee to whom a training arrangement applies; and

(b) either:

(i) provides for competency-based wage progression; or

(ii) provides solely for the provision of tools for use by apprentices; and

(c) covered an employee or employer immediately before 1 January 2010;

continues to cover the employee or employer.

[113] It was submitted on behalf of the Applicant that there was no dispute that the ABTIs set minimum terms and conditions for an employee to whom a training arrangement applied under Regulation 3B.02 Item 16(1)(a). Mr Coonan submitted that only the CFMEU had raised the issue about whether the OBO or the NAPSAs contain competency-based wage progression in writing prior to the hearing, until Ms Hartigan has raised them in the Joint Unions’ final submissions.

[114] Mr Coonan referred to paragraph 92 of Mr Kelvin Jakes' statement and submitted that Mr Jakes was not cross-examined or challenged in relation to the underlined statement below, and in relation to which no contrary evidence had been brought. Paragraph 92 states as follows:

“92. In response, I rely on ATQ’s Employer’s Declaration (filed on 9 March 2016). The table in Appendix A of ATQ’s Employer’s Declaration (filed on 9 March 2016) clearly sets out the specific schedule in the Order which was the NAPSA that covered Apprentices and Trainees employed by ATQ. The table further details the relevant NAPSA that contains the ordinary time rates referenced by the Order to determine the rate of pay for the year of apprentice. Further, the Order provides for competency based wage progression, as do the NAPSAs. In addition, the Australian Qualifications Framework (AQF), which has been in operation since before 2009 for electrical apprenticeships, has not changed and continues to provide for competency based progression, rather than annual progression. I have enquired of the trade callings on the AQF website as approved by the regulating body ANTA. I also rely on the detailed explanation set out in part 3.2 of ATQ’s Employer’s Declaration which also relevantly references the specific clauses in the Electrical Contracting Industry Award State – 2003 (NAPSA) covering electricians. Accordingly the table in question should be clear. With the exception of the further clarity for commercial construction and Host enterprise agreements as referred to in paragraphs 67 and 103, the classification structure remains unchanged from that used in the 2009 and 2012 Agreements which the ETU did not oppose (see Annexures ‘KJ-5’ and ‘KJ-9’ in which the ETU declared that it supported the approval of the 2009 Agreement and the 2012 Agreement).”

[115] As an example, Mr Coonan submitted that clause 4.3 of the Construction Award 2003, in relation to trainees, referred to picking up the OBO which contains competency-based arrangements. However, Mr Coonan submitted that the Applicant had given evidence that had not been challenged, that the OBO contains and the NAPSAs contain competency-based arrangements, and that it was unfair now to make submissions without the evidence to support it and where it was contrary to the evidence.

[165] An enterprise agreement does not have the same effect as a workplace agreement under clause 38A of the Workplace Relations Act. Therefore, those employees of the Applicant who were never covered by the 2006 Agreement never had clause 38A apply to them. The evidence given in relation to whether there were employees who met this criteria, that is, who were employed from 1 October 2009, was not contested by the Respondents.

[166] Further, it is not accepted that the 2009 Agreement had the same effect as the 2006 Agreement because they covered the same class of employee. The “class of employee” is not referred to in the legislation.

[167] However, section 53 of the Fair Work Act 2009 sets out when an enterprise agreement covers an employee, as follows:

53 When an enterprise agreement covers an employer, employee or employee organisation

Employees and employers

(1) An enterprise agreement covers an employee or employer if the agreement is expressed to cover (however described) the employee or the employer.

[168] Clause 3 of each of the 2006 and 2009 Agreements provides that the agreement “covers all the terms and conditions of employment for all employees…”.

[169] The parties did not raise the operation of section 53 in respect of whether the 2009 Agreement (an enterprise agreement) covered the employees immediately before 1 January 2010. Further, no submissions were made in respect of whether the 2009 Agreement took precedence over the NAPSAs if both covered the employees. For the purposes of section 53 of the Act, the 2009 Agreement is expressed to cover the employee or the employer in Clause 3.

[170] An employee is able to be covered by two or more industrial instruments (for example, an Agreement and a Modern Award), where only one applies to their employment.

[171] The employees who commenced on or after 1 October 2009 (who were not covered by the 2006 Agreement), were covered by both the 2009 Agreement and the NAPSAs immediately before 1 January 2010.

[172] Therefore, it is accepted that the requirements for Item 16 are met; Item 16 operates such that the NAPSAs/ABTIs continued to cover the Applicant after 31 December 2009 (despite Item 29 of Schedule 3 of the Transitional Act). While the NAPSAs/ABTIs continued to cover the Applicant, the Modern Award did not apply (Item 16(5) of Regulation 3B) to the employees.

[173] In terms of the operation of subclause (6) of s.38A of Schedule 8, which commenced in 2008, the insertion of Clause 38A(6) operates such that the NAPSAs/ABTIs can operate again in respect of the employees under the 2006 Agreement, when the 2006 Agreement ceased to operate (on 1 October 2009).

[174] Therefore, it is able to be concluded that, while the 2009 Agreement applied to all employees at 31 December 2009, all employees were covered by the ABTI from 1 October 2009 (via the window for the revival of NAPSAs), when the 2006 Agreement ceased to operate, and therefore the ABTIs continued to cover all employees and the employer despite Item 29 of Schedule 3 of the Transitional Act. However, for the purposes of Item 16(1)(c), it is only necessary that an employee was covered by the ABTI immediately before 1 January 2010.

[175] It is noted that, had the 2006 Agreement kept operating until after 1 January 2010 (another 3 months), that is, had the 2009 Agreement not been approved until 2010, Item 16 of Regulation 3B.02 would not have applied in this instance, and the ABTIs/NAPSAs would not have covered any employees or the Applicant from 1 January 2010.

2009 Agreement Reference Instruments

[176] The Joint Unions relied on Schedule 7 of the Transitional Act to demonstrate that reference instruments (as listed in the F17 in the 2009 Agreement approval application) are not an indication of coverage. Item 4 of Schedule 7 contains the No Disadvantage Test, relevant to enterprise agreements made and varied during the bridging period. Item 5 defines the reference instrument for the purposes of the No Disadvantage Test.

[177] Item 5 of Schedule 7 provides that a relevant general instrument, for an employee who is covered by an enterprise agreement, is an award based transitional instrument (such as the OBO):

(a) that regulates, or would but for the enterprise agreement or another industrial instrument having come into operation regulate, any term or condition of employment of persons engaged in the same kind of work as that performed or to be performed by the employee under the enterprise agreement; and

(b) that applied, or would but for an enterprise agreement or another industrial instrument having come into operation have applied, to the employee’s employer immediately before the day on which the application for approval of the agreement was made under section 185 of the FW Act.

[178] Looking at subsections (a), the NAPSAs/ABTIs, but for the 2009 Agreement and 2006 agreement (and for the 2006 Agreement, with the operation of s.38A of WorkChoices), would have regulated the terms and conditions of employment of persons engaged in the same kind of work as employees under the 2009 Agreement.

[179] As for subsection (b), but for the 2006 Agreement, the NAPSAs/ABTIs would have applied to the employer immediately before the day on which the application for approval of the 2009 Agreement was made.

[180] The definitions in Schedule 7, Part 2, section 3 define industrial instrument as including a workplace agreement. The 2006 Agreement was a workplace agreement.

[181] The Joint Unions’ submitted that subsections (a) and (b) do not require a consideration of coverage by a NAPSA/ABTI for that NAPSA/ABTI to be a reference instrument.

[182] The Joint Unions submitted that Item 5(2)(b) of Schedule 7 recognised that an agreement may, by its application, exclude those award-based transitional instruments. However, all this section recognises, is that where an enterprise agreement or other industrial instrument applies, an ABTI does not apply. This does not address the question of coverage.

[183] The citing of the NAPSAs/ABTIs as the reference instruments in the 2009 Agreement approval application is not conclusive of coverage.

[184] Further, it is noted that the test is no longer the No Disadvantage Test, but the Better off Overall Test. The BOOT does not refer to reference instruments, as it compares an agreement with the relevant modern award.

The “sunsetting” provision (Item 20, of Schedule 3 – Transitional Act)

[185] Item 16 in Regulation 3B.02 of the Transitional Regulations expressly excludes the operation of Item 29 of Schedule 3 if the criteria are met. This has the effect that the ABTI continues to cover the Applicant even if a Modern Award comes into operation.

[186] Item 16 of Regulation 3B.02 of the Transitional Regulations does not expressly exclude the operation of Item 20 of Schedule 3 (the sunsetting clause) of the Transitional Act, like it does Item 29.

[187] Item 20 of Schedule 3 operates such that a NAPSA terminates on the 4^th anniversary of the safety net commencement (the 4^th anniversary being 1 January 2014) or if regulations prescribe a later day – on that later day.

[188] If it was the intention to continue the operation of the ABTIs that met the criteria in Item 16 of Regulation 3B.02, it is surprising that Item 16 does not express an exclusion for Item 20 as well as Item 29.

[189] However, in considering the full clause of Item 20, it must be considered whether the Regulations prescribe a “later day” for the termination of the NAPSA. Item 16 of Regulation 3B.02 does not prescribe a “later day”, it only indicates that an ABTI “continues to cover” under certain circumstances.

[190] In considering the material in evidence before the Commission, it appears that it is the Fair Work Ombudsman’s advice to the Applicant that the Regulations do not have an end date and will continue to apply until the Regulations are changed, however, the Fair Work Ombudsman does not specifically make any reference or consideration of Item 20, Schedule 3 (the sunsetting clause). The advice is not specifically given in relation to the Applicant’s circumstances or the matter before the Commission. That is, the advice does not take into account the 2006 or the 2009 Agreements in the chronology of considerations and the specific date of the sunsetting clause as applicable to the termination of NAPSAs.

[191] Referring to the Explanatory Statement in relation to the introduction of Item 16 of Regulation 3B.02, the Applicant argued that it reflected a shift in policy whereby the ABTIs are expressly identified to be continued. However, it is also noted that the Explanatory Statement contains the following extract that may lead a reader to believe the ABTIs were to continue for a limited duration only, to accommodate the apprenticeships being undertaken and the transition of the system to the Federal jurisdiction:

“This regulation ensures employees who currently have access to competency-based wage progression continue to have access to those arrangements for the duration of their traineeship or apprenticeship. Similarly, entitlements for apprentices to be provided with tools by their employer will continue to apply for the duration of their apprenticeship…”

[192] From the above, it would seem that the purpose of the Regulation was to ensure the continuation of the protection of the unique system for those already participating in it.

[193] Further, the submissions to Annual Wage Review on behalf of the Queensland Government dated March 2015 reflect the Queensland Government’s general view that the ABTIs continue to cover employers and employees. This submission does not make reference to the specific intervention of enterprise agreement or the sunsetting clause.

[194] The Applicant’s submitted that Item 16 of Regulation 3B.02 “carved out” ABTIs that provided for competency-based wage progression to protect them from the operation of Item 29 of Schedule 3. The Applicant submitted that Item 20 of Schedule 3 (the “sunsetting clause”) was enacted as a general provision in the original Transitional Act, commencing on 1 July 2009. Because Item 16 was taken to be inserted into the Transitional Act after it had commenced (Regulation 3B.02 taking effect on 1 January 2010), it should be understood as creating an exception to the sun-setting provision.

[195] It was submitted that the “saving” of a NAPSA under Item 16 puts that NAPSA in a different category, and further, the exception had been kept separate (the insertion of the content of Regulation 3B.02 was taken to occur in Schedule 5 of the Transitional Act) from the sun-setting provision in Schedule 3 of the Transitional Act.

[196] In the current circumstances, Items 20 and 21 of Schedule 3 of the Transitional Act “sunsetted” the NAPSAs that continued to cover the Applicant under Item 16 of Regulation 3B.02. Item 16 of Regulation 3B.02 clearly excluded the operation of Item 29 of the Transitional Act, but did not exclude Items 20 or 21 of the Transitional Act. Considering the current circumstances against the provisions, Item 16 of Regulation 3B.02 provides for continued coverage of the OBO and the Tools Order, until all NAPSAs terminated 4 years after the FW (safety net provisions) commencement day, that is, 4 years after 1 January 2010, being 1 January 2014.

[197] In addition, the amendment to Clause 15.9 of the Building and Construction General On-Site Award 2010 of 1 January 2014, is reflective of the intention for the competency-waged based system to move out of the State Awards and into Modern Awards. The “sunsetting date” for NAPSAs of 1 January 2014 coincides with the date the Building and Construction General On-Site Award began to provide for competency based wage progression.

[198] It has already been noted above that Clause 19.7(c) of the Building and Construction General On-Site Award 2010, which provides for continuation of a competency based-wage progression until 31 December 2014 in certain circumstances, would not have applied to employees of the Applicant, as the 2009 Agreement applied to the employees immediately prior to 1 January 2010.

[199] The CFMEU’s argument is adopted , that is, that Item 16 of Regulation 3B.02 was intended to continue coverage of the OBO and the Tools Order until 1 January 2014, at which time NAPSAs “sunsetted” under Item 20 of Schedule 3 of the Transitional Act. From 1 January 2014, the Building and Construction General On-Site Award 2010 among other Modern Awards, provided for competency based wage progression under Clause 15.9. Clause 19.7(c) of that Award also provided for the continuation of a competency wage based progression under NAPSAs for those employees not covered by an enterprise agreement, but only until 31 December 2014.

[200] The CFMEU submitted that the sunsetting of the NAPSAs resulted in the application of the Modern Award to the employer and employees (in current consideration) under s.47 of the Fair Work Act 2009. However, section 57 of the Act provides that a Modern Award does not apply to an employee at a time when an enterprise agreement applies:

57 Interaction between modern awards and enterprise agreements

(1) A modern award does not apply to an employee in relation to particular employment at a time when an enterprise agreement applies to the employee in relation to that employment.

(2) If a modern award does not apply to an employee in relation to particular employment because of subsection (1), the award does not apply to an employer, or an employee organisation, in relation to the employee.

[201] Therefore, it must follow that the Modern Award currently covers (rather than applies) to the employees and the Applicant, by way of s.48 of the Act, but that the 2012 Enterprise Agreement currently applies.

[202] The Joint Unions, in their further submissions filed on 20 May 2016, did not contest that the transitional instruments may apply to apprentices and trainees engaged by other entities in Queensland not subject to the same circumstances, however, they footnoted the operation of Item 20, Schedule 3 in their written submissions.

[203] It is accepted that the NAPSAs as set out in [5] above, have terminated pursuant to the sunsetting clause;Item 20 of Schedule 3 of the Transitional Act. Item 16 is expressed to be an exception to Item 29 of Schedule 3. There is no exclusion from Item 20 of the ABTIs described in Item 16.

Other matters

[204] With respect to the Joint Unions’ argument that the Commission could not be satisfied as to the classifications provided in the F17 Employer Declaration, this is not relevant to the threshold issue of which reference instruments are correct for the purposes of the BOOT. This may be a consideration raised in submissions for the BOOT determination.

Conclusion

[205] The following reasons are provided in addition to those throughout the Decision. The issue for determination is what the correct industrial instruments are for the purposes of the Better off Overall Test under s.193 of the Act, as follows:

193 Passing the better off overall test

When a non-greenfields agreement passes the better off overall test

(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.

…

[206] The Applicant’s main argument was that the OBO, the Tools Order and the State Awards continued to cover some employees and the employer by virtue of Item 16 of Regulation 3B.02 of the Transitional Regulations, and therefore they were the correct reference instruments for the purposes of the BOOT. In considering the criteria contained in Item 16 of Regulation 3B.02, it has been satisfied that the OBO and the Tools Order are award based transitional instruments (ABTIs) and that Clause 3.11 of the OBO “picks up” or “calls up” the State Awards. As per the criteria under Item 16 of Regulation 3B.02, the ABTIs set minimum terms and conditions for an employee to whom a training agreement applies, and provide either for competency based wage progression; or solely for the provision of tools for use by apprentices.

[207] To satisfy Item 16 of Regulation 3B.02, an ABTI must have also covered an employee or employer immediately before 1 January 2010. The distinction between “applies” and “covers” has been addressed. Item 31 of the Transitional Act provides for the circumstance where a NAPSA no longer applies, but continues to cover employees and the employer in respect of those employees, where an enterprise agreement applies to employees.

[208] Both the 2009 Agreement and the ABTIs/NAPSAs covered some (if not all) employees and the employer immediately before 1 January 2010. This has been dealt with in the Decision, given the WorkChoices Act (Clause 38A of Schedule 8) provides for the cessation of the operation of a NAPSA where a workplace agreement is in operation, as is the case with the 2006 Agreement in the current circumstances. The Joint Unions submitted that s.38A of the WorkChoices Act had the effect of ceasing the operation of the NAPSAs with respect to the class of employees covered by the 2006 Agreement (and it was argued that this class included those employees covered by the 2009 Agreement), and that otherwise the WorkChoices provision would have no effect.

[209] The Joint Unions also submitted that the 2006 Agreement and the 2009 Agreement were stand-alone agreements by operation of Clause 3 (of the Agreements), and that the 2009 Agreement overrode and replaced any and all industrial instruments, which included the NAPSAs.

[210] However, there is nothing in the legislative provisions which refers to the “class” of employees and I am satisfied that there were employees who were never covered by the 2006 (workplace) Agreement (these were employees employed from 1 October 2009) and therefore the ABTIs covered those employees immediately before 1 January 2010.

[211] The criteria under Item 16 of Regulation 3B.02 were satisfied such the ABTIs continued to cover the Applicant from 1 January 2010, and that the Modern Awards did not apply, as per Item 16(5). Item 29 of Schedule 3, however, does not specify that the ABTIs continue to cover employees in lieu of Modern Awards. There is nothing in either Item 16 of Regulation 3B.02 or Item 29 of Schedule 3 to indicate that the Modern Awards do not cover employees where an ABTI continues to cover employees. Accordingly, both the ABTIs/NAPSAs and the Modern Awards covered the Applicant from 1 January 2010.

[212] However, the operation of NAPSAs/ABTIs ceased on 1 January 2014; they were “sunsetted” by Item 20 of Schedule 3 of the Transitional Act. Item 20 provides that NAPSAs terminate on the 4^th anniversary of the FW (safety net provisions) commencement day, unless the Regulations prescribe a later day. The 4^th anniversary was 1 January 2014. The Regulations do not prescribe a later day. The Regulation could have prescribed a later date or indicated that an ABTI was not to “sunset” despite the sunsetting provision. Whilst there is an express exclusion with respect to the operation of Item 29 of Schedule 3 in Item 16 of Regulation 3B.02, there is no such exclusion for Item 20, which means that Item 16 is subject to Item 20.

[213] In accordance with the specific legislative provisions and interaction between Item 16 of the Transitional Regulations and Items 20 and 29 of the Transitional Act, and given the nature of the provisions and regulations as “transitional provisions”, Item 16 of Regulation 3B.02 does not operate indefinitely and therefore the NAPSAs have terminated, from 1 January 2014.

[214] Further, s.193 of the Act, being the application of the BOOT, requires that an agreement passes the BOOT if the Commission is satisfied that relevant employees are better off overall under the agreement than if the relevant Modern Award applied to the employee. The test is undertaken in respect of award covered employees for an enterprise agreement, being employees who are covered by the Agreement and are covered by a Modern Award.

[215] The Joint Unions submitted that the employees of ATQ were award covered employees for the agreement. Section 193(4) of the Act defines an award covered employee for an enterprise agreement as follows:

Award covered employee

(4) An award covered employee for an enterprise agreement is an employee who:

(a) is covered by the agreement; and

(b) at the test time, is covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and

(iii) covers his or her employer.

[216] Section 193(4)(a) requires that, for an employee to be an award covered employee, they must be covered by the Agreement. Section 53 of the Act sets out when an enterprise agreement covers an employee, as follows:

53 When an enterprise agreement covers an employer, employee or employee organisation

Employees and employers

(1) An enterprise agreement covers an employee or employer if the agreement is expressed to cover (however described) the employee or the employer.

[217] Clause 1 of the proposed Agreement states:

“1. Parties to Agreement

This Agreement is made between:

i. (The Employer) ALL TRADES QUEENSLAND PTY LIMITED ABN 99 115 379 461 and

ii. The apprentices and trainee’s of the employer, as defined in this agreement.”

[218] Section 53 of the Act importantly includes the words “however described” in relation to an agreement expressing that it covers the employee or employer. Neither party made submissions as to whether the proposed Agreement was expressed to cover the employee or employer, for the purpose of section 53. It is considered that the Agreement is expressed to cover the employer and the employees under Clause 1, especially when the following clause of the Agreement is considered:

“3. Relationships to Award, Agreements and Other Documents:

…

(b) Subject to the terms of this Agreement, this Agreement replaces and operates to the exclusion (to the full extent permitted by law) all other awards, collective agreements and industrial instruments.”

[219] Section 193(4) of the Act also requires, for an employee to be an award covered employee, that employees are covered by a Modern Award that is in operation and covers the employee in relation to the work he or she is to perform under the agreement and covers his or her employer. Section 48 of the Act describes when a modern award covers an employer and employee:

48 When a modern award covers an employer, employee, organisation or outworker entity

When a modern award covers an employee, employer, organisation or outworker entity

(1) A modern award covers an employee, employer, organisation or outworker entity if the award is expressed to cover the employee, employer, organisation or outworker entity.

Note: In a modern award, coverage of an outworker entity must be expressed to relate only to outworker terms: see subsection 143(4).

Effect of other provisions of this Act, FWC orders or court orders on coverage

(2) A modern award also covers an employee, employer, organisation or outworker entity if any of the following provides, or has the effect, that the award covers the employee, employer, organisation or outworker entity:

(a) a provision of this Act or of the Registered Organisations Act;

(b) an FWC order made under a provision of this Act;

(c) an order of a court.

(3) Despite subsections (1) and (2), a modern award does not cover an employee, employer, organisation or outworker entity if any of the following provides, or has the effect, that the award does not cover the employee, employer or organisation or outworker entity:

(a) a provision of this Act;

(b) an FWC order made under a provision of this Act;

(c) an order of a court.

…

(underline added)

[220] The Respondents submitted that the relevant Modern Awards are as follows:

The Manufacturing and Associated Industries and Occupations Award 2010

The Vehicle Manufacturing, Repair, Services and Retail Award 2010

The Electrical, Electronic and Communications Contracting Award 2010

The Plumbing and Fire Sprinklers Award 2010

The Building and Construction General Onsite Award 2010

The Joinery and Building Trades Award 2010.

[221] There is nothing in the Fair Work Act 2009 that makes reference to NAPSAs or prior legislative provisions to exclude coverage of Modern Awards. It is noted that Item 16 of Regulation 3B.02 only referred to the ceasing of the application of Modern Awards during the period that ABTIs continued to cover, and did not cease the coverage of Modern Awards.

[222] Accordingly, the employees are considered to be award covered employees for an enterprise agreement under s.193(4), being employees who are covered by the proposed Agreement and are covered by a Modern Award.

[223] At the time of the referral and transition to the Federal system, the Modern Awards did not provide for competency based wage progression for apprenticeships or traineeships. Modern Awards were ultimately varied to account for these specific types of training arrangements. The transitional provisions in the Modern Awards have ceased as Modern Award transition is now completed and for the aforementioned reasons, NAPSAs bear no on-going relevance to the application of the BOOT.

[224] In conclusion, for the reasons stated above, and taking into account all of the material, for the purposes of the Better off Overall Test as per s.193, the industrial instruments for comparison against the Agreement provisions are the relevant Modern Awards, as set out in [6] of this Decision.

[225] A Directions hearing will be listed in relation to the determination of whether the Agreement passes the BOOT.

[226] I Order accordingly.

COMMISSIONER

Appearances:

Mr M. Coonan, Partner, Herbert Smith Freehills, on behalf of All Trades Queensland Limited.

Ms C. Hartigan, of counsel, on behalf of the Joint Unions (the ETU, AMWU and the CEPU Plumbing Division).

Mr A. Borg, on behalf of the CFMEU.

Hearing details:

2016.

Brisbane.

5 May.

Final written submissions:

Applicant on 26 May 2016.

Joint Unions on 24 May 2016 .

1 All Trades Queensland Pty Limited [2009] FWA 369.

2 All Trades Queensland Pty Limited [2013] FWCA 2153.

3 Affidavit of Scott Reichman filed 14 April 2016.

4 Hillpalm Pty Ltd v Heaven's Door Pty Ltd (2004) 220 CLR 472, 506 (Kirby J, in dissent), adopted in City of Canada Bay Council v F & D Bonaccorso Pty Ltd (2007) 71 NSWLR 424, 442 [64] (Mason P, Tobias JA, and Young CJ in Equity).

Printed by authority of the Commonwealth Government Printer

Key Legal Topics

Areas of Law

Employment & Labour Law

Legal Concepts

Threshold Issue
Modern Awards
Apprentice/Trainee Enterprise Agreement

Actions

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Citations

All Trades Queensland Pty Limited [2016] FWC 2832

Most Recent Citation

All Trades Queensland Pty Limited v Construction, Forestry, Mining and Energy Union [2017] FWCFB 132

Cases Citing This Decision

5

All Trades Queensland Pty Limited v Construction, Forestry, Mining and Energy Union [2017] FCAFC 189

Annual Wage Review 2017–18 [2018] FWCFB 3500

Annual Wage Review 2016–17 [2017] FWCFB 3500

Cases Cited

5

Statutory Material Cited

0

All Trades Queensland Pty Limited [2009] FWA 369

All Trades Queensland Pty Limited [2013] FWCA 2153

Hillpalm Pty Ltd v Heaven's Door Pty Ltd [2004] HCA 59

All Trades Queensland Pty Limited

[2016] FWC 2832

12 AUGUST 2016

DECISION

Introduction

Background

Timeline

Relevant legislative provisions

WorkChoices Legislation

Fair Work Transitional Act Provisions

“Sunsetting” Clause

Fair Work Transitional Regulations

Modern Award Interaction with ABTIs

Explanatory Statement – Insertion of Item 16 of Regulation 3B.02

Summary of the Joint Union’s Argument

Summary of the CFMEU’s Argument

Summary of the Applicant’s Argument

2009 Agreement Reference Instruments

Other matters

Conclusion

Key Legal Topics

Areas of Law

Employment & Labour Law

Legal Concepts

Threshold Issue

Modern Awards

Apprentice/Trainee Enterprise Agreement