All Trades Queensland Pty Limited v Construction, Forestry, Mining and Energy Union

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

Review of:
All Trades Queensland Pty Limited [2016] FWC 2832

All Trades Queensland Pty Limited v Construction, Forestry, Mining and Energy Union, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union and Australian Manufacturing Workers’ Union [2017] FWCFB 132

File number: QUD 92 of 2017

Judges: FLICK, BARKER AND RANGIAH JJ

Date of judgment: 27 November 2017

Catchwords: INDUSTRIAL LAW – application for review of decision of Full Bench of Fair Work Commission – where Full Bench dismissed appeal from decision of Commissioner – where applicants sought approval of enterprise agreement – whether agreement passed “better off overall test” under s 193 of the Fair Work Act 2009 (Cth) – relevant comparator instruments to be used – operation of Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) – whether employees simultaneously covered by modern award and award-based transitional instrument – distinction between “application” and “coverage” of modern award to an employee – whether transitional instruments terminated by operation of sunsetting provisions

Legislation:
Evidence Act 1995 (Cth) s 191

Fair Work Act 2009 (Cth) ss 47, 48, 48(1), 57, 193, 193(1), 193(4), 193(5), 206

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) Sch 2, item 4(1)(b), Sch 3, items 20, 20(1), 20(1)(b), 29, 29(1), Sch 5, items 16, 16(3), 16(5), Sch 7, Pt 4, Sch 8, items 18, 18(2)(a), 18(2)(b)

Workplace Relations Act 1996 (Cth) (repealed)

Fair Work Legislation Amendment Regulations 2009 (No. 3) (Cth)

Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 (Cth) reg 3B.02

Explanatory Memorandum, Fair Work (Transitional Provisions and Consequential Amendments) Bill 2009

Cases cited:
All Trades Queensland Pty Limited [2016] FWC 2832

All Trades Queensland Pty Ltd v Construction, Forestry, Mining and Energy Union, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union and Australian Manufacturing Workers’ Union [2017] FWCFB 132

Saraswati v R (1991) 172 CLR 1 at 17; [1991] HCA 21

Date of hearing: 21 August 2017

Registry: Queensland

Division: Fair Work Division

National Practice Area: Employment & Industrial Relations

Category: Catchwords

Number of paragraphs: 60

Counsel for the Applicants: Mr J E Murdoch QC

Solicitor for the Applicants: Herbert Smith Freehills

Counsel for the First, Second and Third Respondents: Mr W Friend QC with Ms C Hartigan

Solicitor for the First, Second and Third Respondents: Hall Payne Lawyers

Counsel for the Fourth Respondent: The Fourth Respondent filed a submitting notice, save as to costs

ORDERS

QUD 92 of 2017

BETWEEN:
ALL TRADES QUEENSLAND PTY LIMITED
(ACN 115 379 461)

First Applicant

QUEENSLAND MASTER BUILDERS ASSOCIATION
(ABN 966 419 893 86)

Second Applicant

HOUSING INDUSTRY ASSOCIATION (ACN 400 631 752)

Third Applicant

AND:
CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION

First Respondent

COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA

Second Respondent

AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION KNOWN AS THE AUSTRALIAN MANUFACTURING WORKERS' UNION

Third Respondent

FAIR WORK COMMISSION
Fourth Respondent

JUDGES:

FLICK, BARKER AND RANGIAH JJ

DATE OF ORDER:

27 NOVEMBER 2017

THE COURT ORDERS THAT:
1.The applicants’ further amended originating application dated 6 June 2017 be dismissed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT
THE COURT:

In 2016, All Trades Queensland Pty Limited (ATQ) applied to the Fair Work Commission, pursuant to the Fair Work Act 2009 (Cth) (FW Act), for approval of the All Trades Queensland Pty Ltd Apprentice/Trainee Enterprise Agreement 2015 (2015 agreement), a single-enterprise non-greenfields agreement. The 2015 agreement was drafted to apply to apprentices and trainees employed by ATQ in a wide range of industries, including the building and construction, and engineering and automotive industries. ATQ hires the services of trainees and apprentices to other businesses in Queensland.
The 2015 agreement was the latest in a series of enterprise-specific agreements applying to ATQ and its employees, following a 2006 agreement that came into effect under the then applicable provisions of the Workplace Relations Act 1996 (Cth) (WR Act); a 2009 agreement which was made and approved under the provisions of the FW Act; and a 2012 agreement approved under the FW Act. The 2015 agreement was intended to replace the 2012 agreement, the nominal expiry date of which was 31 October 2015.
The application for approval of the 2015 agreement was opposed in the Commission by the Construction, Forestry, Mining and Energy Union (CFMEU), the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) and the Automotive, Food, Metals, Engineering, Printing And Kindred Industries Union, known as the Australian Manufacturing Workers’ Union (AMWU) (together, the unions). A dispute arose as to what were the applicable comparator instruments for the purposes of the application of the “better off overall test” (BOOT) set out in s 193 of the FW Act. ATQ’s position was that the applicable comparator instruments were a number of Queensland State awards and orders preserved, as “notional agreements preserving State awards” (NAPSAs) by the FW Act. The unions’ common position was that the relevant instruments for the BOOT were the modern awards made under the FW Act and in operation since 1 January 2010, which covered the work to be performed by the employees under the 2015 agreement; and that the 2015 agreement was incapable of passing the BOOT by reference to those instruments.
At first instance, Commissioner Spencer accepted the unions’ argument and determined that the relevant modern awards were the comparator instruments. See All Trades Queensland Pty Limited [2016] FWC 2832. ATQ then sought leave to appeal to the Full Bench of the Commission. The Full Bench granted leave to appeal but dismissed the appeal, agreeing in essence with the Commissioner’s decision and reasons for it. See All Trades Queensland Pty Ltd v Construction, Forestry, Mining and Energy Union, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union and Australian Manufacturing Workers’ Union [2017] FWCFB 132. At the hearing before the Full Bench, ATQ’s position was supported by the Housing Industry Association (HIA), Queensland Master Builders’ Association (QMBA) and the Apprentice Employment Network.
By their further amended originating application, the applicants now apply in this Court for relief in the following terms:
A. The Applicants apply for each of the following declarations pursuant to section 39B of the Judiciary Act 1903 (Cth) (Judiciary Act), sections 21 and 22 of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) and sections 562 and 563 of the Fair Work Act 2009 (Cth) (FW Act), that:
1.an order declaring that, on the proper construction of Schedule 3.20 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act) and Regulation 3B.02 of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 (Cth) (Transitional Regulations), the following instruments (together the ABTIs):
a.AN140326 – Order – Apprentices’ and Trainees’ Wages and Conditions (Excluding Certain Queensland Government Entities) 2003 (One Big Order);
b.        AN140350 – Order – Supply of Tools to Apprentices (Tools Order);
c.AN140045 – Building Products, Manufacture and Minor Maintenance Award – State 2003;
d.        AN140043 – Building Construction Industry Award – State 2003;
e.AN140061 – Civil Construction, Operations and Maintenance General Award – State 2003;
f.        AN140107 – Engineering Award – State 2002;
g.        AN140128 – Furniture and Allied Trades Award – State 2003;
h.AP789529 – Metal, Engineering and Associated Industries Award 1998 – Part 1;
i.        AP790899 – National Training Wage Award 2000;
j.        AP792354 – Plumbing Industry (QLD and WA) Award 1999; and
k.AP824308 – The Vehicle Industry – Repair, Service and Retail Award 2002;
cover apprentices and trainees on competency based training arrangements employed by:
I.        All Trades Queensland Pty Limited (Employees); and
II.        the HIA in its group training scheme (HIAGT Employees);
2.an order declaring that, on the proper construction of s 193 of the FW Act, and Schedule 7.18 of the Transitional Act, the ABTIs cover the Employees and the HIAGT Employees to the exclusion of modern awards;
3.an order declaring that, on the proper construction of Schedule 7.18 of the Transitional Act, the proper instruments for the BOOT assessment for the All Trades Queensland Pty Ltd Apprentice/Trainee Enterprise Agreement 2015 are the ABTIs;
4.an order declaring that the Employees and HIAGT Employees are unmodernised award covered employees within the meaning of Schedule 7.20 of the Transitional Act;
5.an order declaring that, on the proper construction of s 193 of the FW Act, unmodernised award covered employees are not award covered employees for the purposes of s 206 of the FW Act; and
6.        such further or other declarations and orders as the Court thinks fit.
B. The First Applicant and the Second Applicant apply for the following relief:
1.pursuant to section 39B of the Judiciary Act, section 23 of the Federal Court Act and sections 562 and 563 of the FW Act, a writ of certiorari be issued to the Fourth Respondent removing into this Court the decision made by the Fourth Respondent on 7 February 2017 in the matter of All Trades Queensland Pty Limited v CFMEU, CEPU and AMWU [2017] FWCFB 132 and quashing that decision and the orders made at paragraph [69];
2.pursuant to section 39B of the Judiciary Act, section 23 of the Federal Court Act and sections 562 and 563 of the FW Act, a writ of certiorari be issued to the Fourth Respondent removing into this Court the decision made by the Fourth Respondent on 12 August 2016 in the matter of All Trades Queensland Pty Limited [2016] FWC 2832 and quashing that decision and the orders made at paragraph [226];
3.pursuant to section 39B of the Judiciary Act, section 23 of the Federal Court Act and sections 562 and 563 of the FW Act, a writ of mandamus be issued to the Fourth Respondent to hear and determine the First Applicant’s application for approval of the All Trades Queensland Pty Ltd Apprentice/Trainee Enterprise Agreement 2015 (AG2016/525) according to law; and
4.        such further or other declarations and orders as the Court thinks fit.
The question raised in this proceeding is whether the applicants are entitled to such relief.
AGREED FACTS
For the purpose of the hearing of the proceeding, the parties have agreed the following facts for the sole purpose of tendering a statement of agreed facts in evidence under s 191 of the Evidence Act 1995 (Cth):
The First Applicant
1.        The First Applicant:
a.        is a constitutional corporation;
b.is a national system employer within the definition of the Fair Work Act 2009 (Cth) (FW Act);
c.as at 27 March 2006 employed apprentices and trainees on competency based wage progression arrangements as referred to in item 16 of Regulation 3B.02 of the Transitional Regulations (Employees);
d.        as at 27 March 2006, together with its Employees, was covered by:
i.AN140326 – Order – Apprentices’ and Trainees’ Wages and Conditions (Excluding Certain Queensland Government Entities) 2003 (One Big Order); and
ii.        AN140350 – Order – Supply of Tools to Apprentices (Tools Order),
(together the CBT ABTIs); and
e.hires the services of the Employees to other businesses in Queensland, including members of both the Second Applicant and the Third Applicant.
The Second Applicant
2.        The Second Applicant:
a.is registered as an Industrial Organisation of Employers had corporate status under the Industrial Relations Act 1999 (Qld) which was continued by operation of s1033 of the Industrial Relations Act 2016 (Qld);
b.is a Recognised State Registered Association under the Fair Work (Registered Organisations) Act 2009 (Cth) (FW (RO) Act); and
c.        has members that are employers who:
i.employ apprentices and trainees in Queensland under competency based wage progression arrangements as referred to in item 16 of Regulation 3B.02 of the Transitional Regulations (QMBA Employees); and
ii.as at 27 March 2006, together with their relevant QMBA Employees, were covered by the CBT ABTIs (QMBA Members).
Third Applicant
3.        The Third Applicant:
a.        is a constitutional corporation;
b.operates a group training scheme (HIAGT) that directly employs apprentices and trainees in Queensland on competency based wage progression arrangements as referred to in item 16 of Regulation 3B.02 of the Transitional Regulations (HIAGT Employees); and
c.as at 27 March 2006, together with the HIAGT Employees was covered by the CBT ABTIs.
Respondents
4.Each of the First Respondent, Second Respondent and Third Respondent is a Registered Organisation under the FW (RO) Act entitled to represent one or more of the Employees, QMBA Employees, HIAGT Employees.
Relevant Instruments
5.The CST ABTIs provide for competency based wage progression of apprentices and trainees in Queensland as referred to in item 16 of Regulation 3B.02 of the Transitional Regulations.
6.As at 27 March 2006 the First Applicant, the QMBA Members, HIAGT, and the HIA Members were employers within the scope of:
a.AN140045 – Building Products Manufacture and Minor Maintenance Award – State 2003;
b.        AN140043 – Building Construction Industry Award – State 2003;
c.AN140061 – Civil Construction, Operations and Maintenance General Award – State 2003;
d.        AN140107 – Engineering Award – State 2002; and
e.AN140128 – Furniture and Allied Trades Award – State 2003, (together the Relevant ABTIs).
7.        On 1 January 2010, the following modern awards commenced operation:
a.the Manufacturing and Associated Industries and Occupations Award 2010;
b.        the Vehicle Manufacturing, Repair, Services and Retail Award 2010;
c.the Electrical, Electronic and Communications Contracting Award 2010;
d.        the Plumbing and Fire Sprinklers Award 2010;
e.        the Building and Construction General Onsite Award 2010; and
f.        the Joinery and Building Trades Award 2010,
(together the Modern Awards).
8.Pursuant to item 16 of Regulation 3B.02 of the Transitional Regulations, as from 1 January 2010, the CST ABTIs continued to cover the First Applicant.
(NB: The parties disagree as to whether:
a.the CBT ABTIs have ceased by operation of the sunsetting provisions in item 20 of schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendment) Act and no longer cover the employers and employees referred to in paragraph 10; and/or
b.the Modern Awards and CBT ABTIs provide concurrent coverage; and/or
c.if there is concurrent coverage, coverage of the CBT ABTI’s displaces or is displaced by concurrent coverage by the modern awards).
Previous ATQ Agreements
9.On 18 September 2006, the All Trades Queensland Pty Limited Apprentice/Trainee Union Collective Agreement 2006 (2006 Agreement) commenced. The 2006 Agreement
a.covered its apprentices and trainees within the construction, engineering, electrical contracting, automotive, civil and other trades;
b.had a nominal expiry date three years from the date on which it was lodged with the OEA; and
c.was a workplace agreement for the purposes of subsection 38A(2) of schedule 8 of the WR Act.
10.On 1 October 2009, the All Trades Queensland Pty Limited Apprentice/Trainee Union Collective Agreement 2009 (2009 Agreement):
a. an agreement made under the FW Act;
b.came into operation, being 7 days after it was approved by the FWC under the FW Act; and
c.        applied to the First Applicant and the Employees.
11.In relation to the 2009 Agreement, the First Applicant submitted an employer’s declaration under section 185 of the FW Act. That declaration listed the following instruments as the relevant instruments covering the Employer and the Employees for the purposes of the relevant no-disadvantage test:
a.        Building Construction Industry Award State NAPSA Qld;
b.Building Products, Manufacture and Minor Maintenance Award State NAPSA Qld;
c.Civil Construction, Operations and Maintenance General Award State NAPSA Qld;
d.        Clerical Employees Award State NAPSA Qld;
e.        Electrical Contracting Industry Award State NAPSA Qld;
f.        Engineering Award State NAPSA Qld;
g.        Furniture and Allied Trades Award NAPSA Qld;
h.General Stores, Warehousing and Distribution Award State NAPSA Qld;
i.        Nursery Award State NAPSA Qld; and
j.        Order Apprentices and Trainees Wages and Conditions.
12.In relation to the 2009 Agreement, each of the First Respondent, Second Respondent and Third Respondent filed an employee organisation declaration under section 185 of the FW Act in support of the application and the employer’s declaration.
13.On 17 April 2013, the All Trades Queensland Union Collective Agreement 2012-2015 (2012 Agreement) approved by the Fair Work Commission (FWC) came into operation. A correction to this decision was made on 24 April 2013. The 2012 Agreement applied to ATQ and the Employees.
14.In relation to the 2012 Agreement, the First Applicant submitted an employer’s declaration under section 185 of the FW Act. That declaration listed the following instruments as the relevant instruments for the purposes of the BOOT:
a.Building Products, Manufacture and Minor Maintenance Award – State 2003;
b.        Building Construction Industry Award – State 2003;
c.Civil Construction, Operations and Maintenance General Award – State 2003;
d.        Electrical Contracting Industry Award – State;
e.        Engineering Award – State 2002;
f.        Furniture and Allied Trades Award – State 2003;
g.        Metal, Engineering and Associated Industries Award 1998 – Part 1;
h.        National Training Wage Award 2000;
i.        Plumbing Industry (Qld and WA) Award 1999; and
j.Wages and Conditions (excluding certain Queensland Government Entities) 2003 and the QIRC Order – Supply of Tools to Apprentices.
15.In relation to the 2012 Agreement, each of the First Respondent, Second Respondent and the Third Respondent filed an employee organisation declaration under section 185 of the FW Act in support of the application and the employer’s declaration.
The 2015 Agreement
16.On 25 February 2016, a majority of the Employees approved the All Trades Queensland Pty Ltd Apprentice/Trainee Enterprise Agreement 2015 (2015 Agreement). On 9 March 2016, the First Applicant applied to the FWC for approval of the 2015 Agreement under section 185 of the FW Act (Approval Application).
17.In relation to the 2015 Agreement, the First Applicant submitted an employer’s declaration under section 185 of the FW Act. That declaration listed the following instruments as the relevant instruments for the purposes of the BOOT:
a.Building Products, Manufacture and Minor Maintenance Award – State 2003;
b.        Building Construction Industry Award – State 2003;
c.Civil Construction, Operations and Maintenance General Award – State 2003;
d.        Electrical Contracting Industry Award – State;
e.        Engineering Award – State 2002;
f.        Furniture and Allied Trades Award – State 2003;
g.        Metal, Engineering and Associated Industries Award 1998 – Part 1;
h.        National Training Wage Award 2000;
i.        Plumbing Industry (Qld and WA) Award 1999;
j.        The Vehicle Industry – Repair, Service and Retail Award 2002;
k.        the One Big Order; and
l.        the Tools Order.
18.Each of the First Respondent, Second Respondent and Third Respondent filed an employee organisation declaration under section 185 of the FW Act in objection to the Approval Application and claimed that the BOOT should be conducted against the modern awards.
Decisions of the FWC
19.On 12 August 2016, in All Trades Queensland Pty Limited [2016] FWC 2832 (First Decision), Commissioner Spencer issued a decision which found that:
a.        the ABTIs had ceased to operate on 1 January 2014;
b.the modern awards covered ATQ and its employees that previously were covered by the CBT ABTIs; and
c.the BOOT for the 2015 Agreement should be applied against the modern awards.
20.On 1 September 2016, the First Applicant filed a notice of appeal of the First Decision to the Full Bench of the FWC. The Second Applicant and the Third Applicant appeared before the appeal to the Full Bench of the FWC and made submissions that the CBT ABTIs still covered QMBA Members, HIA and HIA Members.
21.On 7 February 2017, in All Trades Queensland Pty Limited v CFMEU, CEPU and AMWU [2017] FWCFB 132 (Full Bench Decision), the Full Bench dismissed the First Applicant’s appeal and referred the matter back to Commissioner Spencer for final determination in accordance with the Full Bench Decision.
22.      The application of the BOOT is yet to be heard by Commissioner Spencer.
Current Position
23.      The First Applicant:
a.has paid the Employees the rates of pay contained in the respective 2006, 2009, and 2012 Agreements; and
b.        continues to pay the Employees on that basis.
24.The Third Applicant has been paying the HIAGT Employees the modern award rates from 30 January 2017.
25.      The First Respondent and the Second Respondent have publically stated that:
a.significant amounts of back-pay are owed to apprentices and trainees in Queensland who were previously accepted as covered by the CBT ABTIs;
b.claims in relation to this back-pay obligation would be pursued before the courts; and
c.        claims for back-pay could be in the millions of dollars.
26.Neither of the First Respondent, Second Respondent and/or Third Respondent have commenced proceedings themselves or on behalf of their members seeking back pay for the relevant apprentices and trainees.
STATUTORY SETTING IN WHICH ISSUES ARE RAISED

As the Full Bench observed in its reasons refusing the appeal from the Commissioner’s decision, the statutory framework applicable to the determination of the question is complex. We consider, with respect, that the Full Bench appropriately outlined and described the framework at [5] to [36] of its reasons for decision, in the following terms:
[5] … Sections 186 and 187 of the FW Act set out the requirements which must be satisfied in order for an enterprise agreement to be approved by the Commission. Section 186(2)(d) requires that the Commission be satisfied that the agreement passes the BOOT. The content of the BOOT is set out in s.193, which relevantly provides:
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.
Prospective award covered employee
(5)       A prospective award covered employee for an enterprise agreement is a person who, if he or she were an employee at the test time of an employer covered by the agreement:
(a)       would be covered by the agreement; and
(b)       would be covered by a modern award (the relevant modern award ) that:
(i)     is in operation; and
(ii)     would cover the person in relation to the work that he or she would perform under the agreement; and
(iii)    covers the employer.
Test time
(6)       The test time is the time the application for approval of the agreement by the FWC was made under subsection 182(4) or section 185.
…
[6]       Section 193 essentially requires a comparison to be undertaken between the entitlements of the enterprise agreement and those of any modern award(s) which cover the employees to which it is sought that the agreement apply. Relevant modern awards are therefore the comparator instruments for the purpose of the required comparison.
[7] By way of background, modern awards were made as a result of the conduct of the award modernisation process mandated by Part 10A of the WR Act, which was the immediate statutory predecessor of the FW Act. All current modern awards commenced effect on 1 January 2010. Each modern award (consistent with s.143 of the FW Act) contains coverage terms which set out (relevantly) the employees and employers which are covered by it. The employers and employees covered are usually expressed as classes by reference to a particular industry or a particular type of work.
[8]       The FW Act draws a critical distinction between when a modern award or an enterprise agreement covers an employee and when it applies to an employee. Section 48 deals with when a modern award covers an employer, employee and others relevantly as follows:
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;
(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.
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.
[9] Section 47, which deals with when a modern award applies to an employer, employee and others, relevantly provides:
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.
...
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.
[10] Sections 53 and 52, which respectively set out when an enterprise agreement covers an employee (and others) and when it applies, substantially reflect for relevant purposes the definitional structure of ss.48 and 47. Section 53 relevantly provides:
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.
...
Effect of provisions of this Act, FWC orders and court orders on coverage
(3)       An enterprise agreement also covers an employee, employer or employee organisation if any of the following provides, or has the effect, that the agreement covers the employee, employer or organisation:
(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.
(4)       Despite subsections (1), (2) and (3), an enterprise agreement does not cover an employee, employer or employee organisation if any of the following provides, or has the effect, that the agreement does not cover the employee, employer or organisation:
(a)     another provision of this Act;
(b)     an FWC order made under a provision of this Act;
(c)     an order of a court.
Enterprise agreements that have ceased to operate
(5)       Despite subsections (1), (2) and (3), an enterprise agreement that has ceased to operate does not cover an employee, employer or employee organisation.
Enterprise agreements cover employees in relation to particular employment
(6)       A reference in this Act to an enterprise agreement covering an employee is a reference to the agreement covering the employee in relation to particular employment.
[11] Section 52 provides:
52   When an enterprise agreement applies to an employer, employee or employee organisation
When an enterprise agreement applies to an employee, employer or organisation
(1)       An enterprise agreement applies to an employee, employer or employee organisation if:
(a)     the agreement is in operation; and
(b)     the agreement covers the employee, employer or organisation; and
(c)     no other provision of this Act provides, or has the effect, that the agreement does not apply to the employee, employer or organisation.
Enterprise agreements apply to employees in relation to particular employment
(2)       A reference in this Act to an enterprise agreement applying to an employee is a reference to the agreement applying to the employee in relation to particular employment.
[12] Section 57 deals with the interaction between modern awards and enterprise agreements, and operates to ensure that a modern award and an enterprise agreement cannot simultaneously apply to an employee as follows:
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.
[13] Section 57 is one of a number of ‘interaction rules’ which are set out in Pt.2-1 Div.3 of the FW Act and deal with the interaction between the National Employment Standards established in Pt.2-2, modern awards and enterprise agreements.
[14] Although under ss.48 and 53 respectively a modern award and an enterprise agreement may both cover an employee at a given time, because the terms of both instruments are expressed to cover the employee in relation to particular employment, only the enterprise agreement (while it is in effect) will apply to the employee. For the purpose of the BOOT in s.193, a modern award will be required to be used as the comparator instrument if it covers any employees to which the agreement, if approved, will apply. The comparator modern award need not apply to the employees. Often it will not, for example when there is an earlier enterprise agreement which covers and applies to the relevant employees.
[15] The operation of s.193 is modified by certain provisions of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) so that in some circumstances a NAPSA together with a ‘transitional APCS’ are to be used as the comparator instruments. NAPSAs were established by Schedule 8 of the WR Act, as amended by the Workplace Relations Amendment (Work Choices) Act 2005 (Work Choices Act), as transitional instruments applicable to employees brought into the federal industrial relations system who previously had their terms and conditions determined by a State award. Thus clause 31 of Schedule 8 provided:
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.
[16] At the time the Work Choices Act amendments came into effect, cl.38A of Sch.8 of the WR Act provided that a NAPSA ceased to have operation three years after the ‘reform commencement date’ (27 March 2006) or earlier in relation to an employee if a workplace agreement made under the WR Act came into operation in relation to the employee, and that once a NAPSA ceased operating in relation to an employee it could never operate again in relation to that employee. However cl.38A was subsequently amended by the Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008 so that it provided as follows:
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.
[17] Part 7, Division 2, Subdivision H of the WR Act, as amended by the Work Choices Act, also established a new class of instruments known as ‘APCSs’ (Australian Pay and Classifications Scales). Section 208 brought into existence, in relation to any ‘pre-reform wage instrument’, a ‘preserved APCS’ which contained the wage rate and classifications, casual loading provisions, certain training provisions, frequency of payment provisions and the coverage provisions of the relevant ‘pre-reform wage instrument’. The expression ‘pre-reform wage instrument’ included State awards (including orders, determinations and decisions of State industrial authorities) and certain other State laws and instruments dealing with employment conditions. Thus derived from any award or order of a State industrial authority was both a NAPSA and a preserved APCS, so that every NAPSA had a related preserved APCS. It may be noted that preserved APCSs only ever existed notionally for legal purposes, and were never given any authoritative documentary existence.
[18] The WR Act was replaced by the FW Act (except for Schedule 1 of the WR Act, which became the Fair Work (Registered Organisations Act) 2009). The Transitional Act was enacted as cognate legislation in order to deal with various matters in the transition from the WR Act industrial relations regime to the FW Act regime and other matters consequential to the FW Act. The Transitional Act was assented to on 25 June 2009. Schedule 1 to the Transitional Act effected the repeal of most of the WR Act. Schedule 3 to the Transitional Act is entitled ‘Continued existence of awards, workplace agreements and certain other WR Act instruments’. Item 2(1) of Sch.3 provides:
(1) Each WR Act instrument (see sub-item (2)) that becomes a transitional instrument (see subitems (3) to (4A)) continues in existence in accordance with this Schedule from when it becomes a transitional instrument, despite the WR Act repeal.
[19] Item 2(2)(b) of Sch.3 provides that a NAPSA is a WR Act instrument, and item 2(3)(a) provides that each WR Act instrument that was in effect immediately before the ‘WR Act repeal day’ (1 July 2009), except a Division 2B State reference transitional award, becomes a transitional instrument. Item 2(5) classifies a NAPSA as an ‘award-based transitional instrument’ (ABTI).
[20] Item 3 of Sch.3 defines when a transitional instrument covers, and when it applies, to an employee or employer. Item 3 relevantly provides:
3   The employees, employers etc. who are covered by a transitional instrument and to whom it applies
(1)       A transitional instrument covers the same employees, employers and any other persons that it would have covered (however described in the instrument or WR Act) if the WR Act had continued in operation.
Note 1:        The expression covers is used to indicate the range of employees, employers etc. to whom the instrument potentially applies (see subitem (2)). The employees, employers etc. who are within this range will depend on terms of the instrument, and on any relevant provisions of the WR Act.
Note 2: Depending on the terms of a transitional instrument and any relevant provisions of the WR Act, the instrument’s coverage may extend to people who become employees after the instrument becomes a transitional instrument.
(2)       A transitional instrument applies to the same employees, employers and any other persons the instrument covers as would, if the WR Act had continued in operation, have been:
(a) required by the WR Act to comply with terms of the instrument; or
(b) entitled under the WR Act to enforce terms of the instrument.
Note:           The expression applies is used to indicate the range of employees, employers etc. who are required to comply with, or can enforce, the terms of a transitional instrument.
...
[21] Item 3(4)(c) provides that the item has effect subject to Div.2 of Pt.5 of Sch.3, which ‘deals with interaction between transitional instruments and FW Act modern awards, workplace determinations and enterprise agreements’. We will later refer to items 29 and 31 of Sch.3, which are contained in this Division.
[22] Item 20(1) of Sch.3 provides:
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.
[23]     The ‘FW (safety net provisions) commencement day’ referred to is 1 January 2010, so the 4th anniversary referred to is 1 January 2014.
[24] Item 21 of Sch.3 provides:
21   Effect of termination
If a transitional instrument terminates, it ceases to cover (and can never again cover) any employees, employers or other persons.
[25] Two other provisions of Sch.3 have the effect that a NAPSA, as an ABTI, may cease to cover or to apply to particular employees prior to the termination date provided for in item 20. Firstly, item 29 relevantly provides:
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.
The miscellaneous modern award
(2)       While an award-based transitional instrument that covers an employee, or an employer or other person in relation to the employee, is in operation, the miscellaneous modern award does not cover the employee, or the employer or other person in relation to the employee.
...
[26]     Secondly, item 31 provides:
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.
[27] The relevant effect of the provisions of Sch.3 to the Transitional Act referred to is therefore, in summary, that it extended the operation of each NAPSA which remained in operation immediately before 1 July 2009 until 1 January 2014 or any later date prescribed by regulations made pursuant to the Transitional Act, provided that before that date the NAPSA will cease to cover any employee who becomes covered by any modern award (other than the miscellaneous modern award) which comes into operation. Once any such NAPSA terminates, it ceases to cover and can never cover again any employees, employers or other persons. A NAPSA will, prior to its termination date, also cease to apply to an employee if an enterprise agreement or workplace determination applies to the employee, but will resume applying to the employee if the enterprise agreement or workplace determination ceases to apply.
[28] A preserved APCS is not specified as a transitional instrument under Sch.3. APCSs are dealt with separately in Sch.9, Minimum Wages. Item 5(3) of Sch.9 continues the existence of APCSs under the FW Act as ‘transitional APCSs’, which are a subcategory of ‘transitional minimum wage instruments’. Under item 11 of Sch.9, a transitional APCS ceases to cover an employee when a modern award that covers the employee comes into operation. Under item 7(1) and (4) of Sch.9, a transitional APCS may only be terminated by order of the Commission under item 3 of Sch.5 or item 9 of Sch.6 in specified circumstances which it is not presently necessary to describe.
[29] This position concerning the coverage of ABTIs and preserved APCSs was modified by reg.3B.02 of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 (Transitional Regulations). Regulation 3B.02 was added to the Transitional Regulations by the Fair Work Legislation Amendment Regulations 2009 (No. 3), which was made by the Governor-General on 14 December 2009 and took effect on 1 January 2010. The regulation modified Schedule 5 of the Transitional Act by adding additional items and Parts. Relevantly, reg. 3B.02 added Part 15, item 16, which provides:
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
(2)       Despite the rule in item 11 of Schedule 9, an employee who is covered by the award-based transitional instrument is also covered by a transitional APCS that would have covered the employee immediately before 1 January 2010.
(3)       The award-based transitional instrument and transitional APCS also cover an employee to whom a training arrangement applies:
(a)       who is employed, on or after 1 January 2010, by an employer who is covered by the award-based transitional instrument; and
(b)       who would have been covered by the award-based transitional instrument and transitional APCS under subitems (1) and (2) if the employee had been employed immediately before 1 January 2010.
(4)       For subitems (1) to (3), the award-based transitional instrument and transitional APCS only cover an employer in respect of an employee to whom a training arrangement applies.
(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.
[30] Reg.3B.02 was expressed as having been made pursuant to item 8(1) of Sch.2 to the Transitional Act, which provides:
8 Regulations relating to matters dealt with in the transitional Schedules
(1)       The regulations may modify provisions of the transitional Schedules.
...
[31] Item 18 of Sch.7 of the Transitional Act deals with the application of the BOOT to enterprise agreements made after the end of the ‘bridging period’ if one or more of the employees covered by the agreement is an ‘unmodernised award covered employee’. Item 18 is within Part 4 of Sch.7, which is entitled ‘Transitional provisions to apply the better off overall test after end of bridging period if award modernisation not yet completed’. The ‘bridging period’ was the period starting on 1 July 2009 and ending immediately before 1 January 2010.
[32]     Item 18 relevantly provides:
18 Application of better off overall test to making of enterprise agreements that cover unmodernised award covered employees
(1)       This item applies in relation to an enterprise agreement made after the end of the bridging period if one or more of the employees covered by the agreement is an unmodernised award covered employee.
Non-greenfields agreements
(2) Despite section 193 of the FW Act, if the enterprise agreement is not a greenfields agreement, the agreement passes the better off overall test under that section only if:
(a)       the FWC is satisfied as referred to in subsection (1) of that section in relation to the agreement; and
(b)       the FWC is satisfied, as at the test time, that each unmodernised award covered employee, and each prospective unmodernised award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant award-based transitional instrument and transitional APCS applied to the employee.
...
FWC may assume employee better off overall in certain circumstances
(4)       For the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award or relevant award-based transitional instrument and transitional APCS applied to that class, the FWC is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee.
...
[33]     The expression ‘unmodernised award covered employee’ is defined in item 20 of Sch.7 as follows:
unmodernised award covered employee, for an enterprise agreement, means an employee who:
(a)       is covered by the agreement; and
(b)       at the test time, is covered by an award-based transitional instrument (the relevant award-based transitional instrument) 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.
[34]     Item 20 also defines the expression ‘prospective unmodernised award covered employee’ as follows:
prospective unmodernised award covered employee, for an enterprise agreement, means a person who, if he or she were an employee at the test time of an employer covered by the agreement:
(a)       would be covered by the agreement; and
(b)       would be covered by an award-based transitional instrument (the relevant award-based transitional instrument ) that:
(i)     is in operation; and
(ii)     would cover the person in relation to the work that he or she would perform under the agreement; and
(iii)    covers the employer.
[35]     ‘Test time’ is defined in item 20 to mean, for the purpose of item 19, the time the application for approval of the agreement by the Commission was made under s.185 of the FW Act.
[36] It is clear that the application of item 18 depends on the relevant enterprise agreement covering employees who are also covered by an ABTI. If no employee is covered by an ABTI, then whether any employee is covered by a preserved APCS is irrelevant. If item 18 applies, then paragraph (a) of item 18(2) still requires (in accordance with s.193(1) of the FW Act) that, for modern award-covered employees, the BOOT must be passed using the relevant modern award as the comparator instrument, and paragraph (b) requires, for employees covered by an ABTI, that the BOOT must be passed using the relevant ABTI and its associated transitional APCS as the comparator instrument.
THE COMMISSIONER’S DECISION

The Commissioner found that the relevant NAPSAs covered ATQ’s employees immediately before 1 January 2010. She considered that when the 2006 agreement ceased to operate on 1 October 2009, ATQ’s employees reverted to coverage by the NAPSAs pursuant to cl 38A(6) of Sch 8 of the WR Act. She considered the 2009 agreement, while it applied to ATQ’s employees, did not displace the coverage of the NAPSAs. As a result, the requirements for the application of item 16 of Sch 5 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act) were satisfied.
The Commissioner then concluded that the sunset provision of item 20 of Sch 3 was not displaced in its operation by item 16 of Sch 5, finding, at [185] to [196] of her reasons, so far as is relevant, as follows:
[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.
...
[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.
The Commissioner then added, at [221] and [222], that she considered the relevant modern awards covered the employees of ATQ regardless of the application or coverage of the relevant NAPSAs:
[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.
THE FULL BENCH’S DECISION
In the appeal to the Full Bench, ATQ contended that the Commissioner had erred, on the following grounds, in concluding that the relevant NAPSAs terminated on 1 January 2014:
ŸItem 16 of Sch.5 as enacted by reg.3B.02 manifested an intention to continue coverage of ABTIs of the nature of the relevant NAPSAs without there being any termination date for this continued coverage.
ŸItem 16 was directly contradictory of item 20 of Sch.3.
ŸThis conflict was to be resolved on the basis that item 16 of Sch.5, which was a later provision directed at a specifically identified situation, prevailed over item 20 of Sch.3, which was an earlier provision expressed in general terms. There was an implied repeal of item 20 of Sch.3 to the extent that it was in conflict with item 16 of Sch.5.
ŸItem 16 of Sch.5 was also inconsistent with the continued application of any modern award to any employee to which an ABTI continued to apply because of the item. No modern award applied to any such employee.
Before the Full Bench, the HIA, QMBA, and Apprentice Employment Network supported ATQ’s appeal and submissions. Together, they identified what were referred to as the wider ramifications of the Commissioner’s decision, namely, that many employers of trainees and apprentices in Queensland had operated under the belief that item 16 of Sch 5 continued the operation and application of the relevant NAPSAs (and associated Australian Pay and Classification Scales (APCS)) beyond 1 January 2014; and pointed to the fact that advice from the Fair Work Ombudsman and submissions made by the Queensland Government to the Annual Wage Review in 2015 were consistent with that belief.
The unions contended before the Full Bench that the Commissioner’s decision was correct and made submissions consistent with the Commissioner’s reasoning.
In giving leave to appeal but dismissing the appeal, the Full Bench considered that the critical question was whether the relevant modern awards relied upon by the unions covered the employees to whom the 2015 agreement would apply if approved (regardless of whether the NAPSAs covered or applied to such employees). At [50] of its reasons, the Full Bench said that s 193(1) of the FW Act requires the relevant modern award to be the comparator instrument for the BOOT in respect of award covered employees and prospective award covered employees. It said that under s 193(4) award covered employees and their employer must at the test time be covered by an operative modern award (which is the “relevant modern award” for the purpose of s 193(1)), and under s 193(5) prospective award covered employees must, if they were employed at the test time, be covered by a modern award together with the employer.
The Full Bench, at [51], drew attention to s 48(1) of the FW Act, which provides that a modern award “covers” an employee and an employer if it is expressed to cover them. The Full Bench considered it was clear that the modern awards relied upon by the unions were, at the test of time, expressed to cover various categories of employees to whom the 2015 agreement would apply if approved. The Full Bench considered it was not necessary to examine the coverage provision of each of the modern awards relied upon since ATQ did not submit that any of them were not expressed to cover employees to whom the 2015 agreement would apply. The Full Bench gave one example to support its observation, by reference to the Building and Construction General Onsite Award 2010.
At [53], the Full Bench said the question was then whether anything in the Transitional Act alters the clear position established by s 193 of the FW Act and an examination of the coverage provisions of the relevant modern awards. It considered that, because the Transitional Act is legislation which is cognate to the FW Act, and because both Acts operate as component parts of an overall scheme of industrial relations legislation, they should generally be interpreted in a co-ordinated way as far as their respective texts permit. Further, the Full Bench said, item 4(1)(b) of Sch 2 of the Transitional Act provides that expressions used in a Schedule that are defined in the FW Act are to bear the same meaning in the Schedule as they do in the FW Act unless a contrary intention appears. The Full Bench therefore considered the definitional distinction between when a modern award applies to an employee and employer, and when it covers them, as established by s 47 and s 48 respectively, should be applied to the Transitional Act, and it could not find any contrary intention in that regard in the FW Act.
The Full Bench then considered, at [54], that item 16 of Sch 5, while it operates to continue the coverage of award-based transitional instruments (ABTIs) to which it applies, does not displace the coverage of any modern award to an employee. It considered that, critically, item 16(5), while it provides that a modern award shall not apply to an employee while an ABTI still covers the employee, does not provide that a modern award shall not continue to cover the employee. The Full Bench rejected a submission by ATQ that it was necessarily implicit in item 16 that a modern award could not continue to cover where there was coverage by an ABTI. It considered there was no inherent conflict in there being coverage of an employee by two different instruments, since coverage is only concerned with the potential, and not actual, application of the instrument. It said, by way of example, that a modern award will continue to cover an employee even though an enterprise agreement is the legally effective regulatory instrument because it both covers and applies to the employee. It considered difficulty could only arise if two instruments both applied to the employee, and the legislative scheme resolves the potential conflict by interaction rules which generally ensure that one of the instruments does not apply – such as, for example, s 57 of the FW Act. It considered item 16(5) to be an interaction rule of that type.
At [55], the Full Bench said that the use of an ABTI (including a NAPSA) and a transitional APCS as the comparative instrument for the purposes of the BOOT is authorised only by item 18 of Sch 7 to the Transitional Act. It stated that item 18 is a provision within Pt 4 of Sch 7, the heading to which – “Transitional provisions to apply the better off overall test after end of bridging period if award modernisation not yet completed” – indicates that the purpose of the provisions in that Part was to deal with the approval process for enterprise agreements made after 1 January 2010, in the event that the award modernisation process had not been completed by that date. It considered that that conclusion tends to be confirmed by [348] of the Explanatory Memorandum to the Fair Work (Transitional Provisions and Consequential Amendments) Bill 2009.
The Full Bench then said, at [56], that since the award modernisation process did in fact complete by that date, it was not clear that an interpretation of item 18 which would, notwithstanding this, give it work to do after 1 January 2010 was consistent with that intention. It added, that, in any event, item 18(2)(a) maintains the requirement that s 193(1) must be satisfied in order for an agreement that covers any “unmodernised award covered employee” to be approved. It said that that means that for any employee covered by a modern award, the BOOT must be undertaken using the relevant modern award as the comparator instrument. That means, even assuming that the 2015 agreement does cover any “unmodernised award covered employee”, the BOOT must nonetheless be applied using the relevant modern award as the comparator instrument in respect of any employees covered by the 2015 agreement who are also covered by a modern award (whether or not such employees might also be covered by an ABTI).
The Full Bench considered that item 18(2)(b) adds an additional requirement that for any “unmodernised award covered employee”, the BOOT must also be passed using the relevant ABTI and the associated transitional APCS as comparators. It said that at the time the Transitional Act was enacted, containing as it did item 18 of Sch 7, it may not have been contemplated that an employee might simultaneously be covered by a modern award and an ABTI, so that both (a) and (b) of item 18(2) would need to be satisfied. The Full Bench observed that the potential situation was only brought about by the later enactment of Sch 5 item 16 by virtue of reg 3B.02 of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 (Cth) (Transitional Regulations). The Full Bench considered, that, notwithstanding this, there was no inherent impracticability or absurdity about the proposition that the BOOT might have to be applied twice to any employees covered by both a modern award and an ABTI, such that it would cause the Full Bench to search for an alternative interpretation of the relevant provisions that is contrary to the clear language actually used.
At [57], the Full Bench, following consideration of the operation of the Transitional Act, accepted the unions’ second contention – that item 16 of Sch 5, even if it applied to the NAPSAs, did not have the effect of displacing the coverage, as distinct from the application, of the relevant modern awards – and considered that the Commissioner’s additional conclusion, referred to above at [11], was correct. While the Full Bench considered that conclusion was sufficient to dispose of the appeal by dismissing it, it further considered that because, in ultimately dealing with the application for approval of the 2015 agreement, it would be necessary to determine whether item 18 of Sch 7 has any application to the 2016 agreement, it should express its view as to whether the relevant NAPSAs continued to cover any employees of ATQ. That involved the Full Bench considering whether the effect of item 16 of Sch 5, as enacted by reg 3B.02, was to modify the effect of item 20 of Sch 3 such that the NAPSAs did not terminate on 1 January 2014.
In dealing with that further question, which is the primary issue raised in this proceeding before this Court, the Full Bench rejected the case put on behalf of ATQ.
The Full Bench noted, at [59], the subject matter of Sch 3 to the Transitional Act was concerned with continuing the legal existence of various types of instruments that were made under the WR Act upon the FW Act coming into effect, subject to various conditions and limitations. It noted that item 2 gave continued existence to NAPSAs but that item 20(1) brought that existence to an absolute end at the later date of 1 January 2014 or a later date prescribed by the Transition Regulations. It added that item 21 confirms what might otherwise be regarded as obvious, namely, that once the existence of a transitional instrument terminates, it ceases to cover and can never cover again any employees, employers or other persons.
The Full Bench, at [60], then noted item 29 of Sch 3, which fell within Div 3 of the Schedule and said that it may be gleaned from the title to that Division and the provisions contained within it, that it was concerned with establishing interaction rules between transitional instruments which are given legal existence and instruments made under the FW Act’s provisions. It noted that those interaction rules were concerned with the coverage and application of various categories of instruments to employers, employees and others at particular times and in particular circumstances, but were not concerned with their existence as legal instruments.
The Full Bench said, at [61], that item 29(1) was to be interpreted in that context and was concerned with the coverage of ABTIs in relation to particular employers, employees and others who have become covered by a modern award, and “mandates that in that circumstance the coverage of the ABTI ceases in respect of any such person and cannot thereafter recommence”. The Full Bench there added that item 29(1) does not itself bring an end to the legal existence of a relevant ABTI as a whole, only its coverage of particular persons. It said that in circumstances where scope of coverage may not be co-extensive with that of a modern award, the provision allows for the possibility that some persons previously covered by an ABTI may cease to be covered by it because they have become covered by a modern award, but other persons continue to be covered by the ABTI while it retains legal existence because they have not become covered by a modern award.
As to the terms and proper construction of item 16 of Sch 5, the Full Bench, at [62], considered it important to note that reg 3B.02, which introduced it, was not made in exercise of the power in item 20(1)(b) of Sch 3 (supported by the general power in s 4(a) of the Transitional Act to make regulations “prescribing matters ... required or permitted by this Act to be prescribed”) to prescribe a day later than 1 January 2014 for the termination of NAPSAs. It said the regulation expressly stated that it was made in exercise of the power contained in item 8(1) of Sch 2 to make regulations modifying provisions in the Schedules to the Transitional Act.
It then noted, at [63], the terms of item 16(1) commences with the words “Despite item 29 of Schedule 3 …”. The Full Bench observed that the terms of item 16(1) demonstrated that it was concerned with the continuation of the coverage by certain ABTIs of a specified category of person in a manner which is inconsistent with, and therefore modifies, the effect of item 29 of Sch 3. At [63], it additionally noted that there was no statement in item 16 of any purpose to modify the effect of item 20 of Sch 3, and that the provisions of item 16 did not deal with the subject matter of item 20(1), namely the termination of NAPSAs, the legal existence of which were continued as transitional instruments by item 2(1) of Sch 3. The Full Bench also considered that no part of item 16 expressly or by effect sought to modify item 21 of Sch 3. It therefore concluded:
Item 16(1) is therefore to be understood as no more than a modification of the interaction rule in item 29(1) of Sch.3 concerning an ABTI which remains in existence in accordance with the other provisions of Sch.3 and a modern award which comes into effect.

It followed, in the view of the Full Bench, that there was no inconsistency between item 20 of Sch 3 and item 16 of Sch 5, which required an implication to be drawn that the latter modified the effect of the former.
The Full Bench, at [65]‑[66], also had regard to the explanatory statement for the Fair Work Legislation Amendment Regulations 2009 (No. 3), which it considered tended to confirm the ordinary meaning of the reg 3B.02 provisions. It said it confirmed the purpose of item 16 was to allow ABTIs of the specified type to continue to cover relevant employees and employers upon the commencement of modern awards. It also observed that the explanatory statement suggested that it was not intended that the provision have a long term effect insofar as it was directed at allowing the existing traineeships and apprenticeships to be completed in accordance with pre-existing arrangements, although the Full Bench said it must be acknowledged that item 16(3) of Sch 5 continues the coverage of relevant ABTIs for persons employed after 1 January 2010 who meet the specified conditions.
Finally, the Full Bench, at [67], noted the way in which the BOOT was applied to the 2012 agreement, the Fair Work Ombudsman’s advice and submissions made by the Queensland Government to the Annual Wage Review 2015, but said such matters were incapable of affecting the conclusions reached concerning the proper interpretation and application of the Transitional Act provisions.
DID THE COMMISSION COMMIT ANY JURISDICTIONAL ERROR?
ATQ and QMBA contend that the Commissioner, by holding that the operation of the NAPSAs/ABTIs ceased on 1 January 2014 as they were “sunsetted” by the sunset provision, erred.
They also contend that the Full Bench erred in finding that item 16 of Sch 5 does not operate to extend the legal existence of any NAPSA beyond the 1 January 2014 date specified in item 20 of Sch 3.
Their case is that the conclusion of the Full Bench, at [64], that item 16 of Sch 5 did not modify item 20 of Sch 3, is unsustainable, and that it was not really a matter of modification or appeal by implication, but modification by express words.
Thus, these applicants submit that the Commission erred in determining that the modern awards are the correct reference instruments for the purposes of the BOOT in respect of the 2015 agreement; and that the Commissioner and the Full Bench ought to have concluded that the CBT ABTIs and the relevant ABTIs were the only relevant instruments for the purposes of the BOOT.
In both instances, they contend, the Commission committed jurisdictional error in that it misunderstood and misapplied the relevant statutory provisions by committing themselves to a course beyond jurisdiction, that is, to require that the BOOT be conducted by comparing the 2015 agreement with industrial instruments that were not lawfully the appropriate comparators, and by failing to require that the BOOT be conducted by comparison to the ABTIs, which were the comparators required by the FW Act.
We do not agree that the Commission, either at first instance or by the Full Bench, committed the jurisdictional errors contended for by the applicants. We consider the primary analysis provided by the Commissioner and the Full Bench in arriving at their decisions was correct.
We have set out s 193 of the FW Act at [8] above. By subs (1) it is clear that an enterprise agreement that is not a greenfields agreement, as in this case, passes the BOOT if the Commission 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. As the unions have submitted, the critical question for consideration is whether the relevant modern award covered the employees to whom the enterprise agreement will apply if approved. The Full Bench, at [50] to [53], to which we have referred to at [15] to [17] above, correctly stated this approach.
Only when that question of coverage is determined is it necessary to turn to the question, whether the Transitional Act or the Transitional Regulations alter that approach.
We agree with the contention made on behalf of the unions that there is nothing in the Transitional Act or Transitional Regulations that alters that approach. The relevant NAPSAs are not to be used as comparator instruments for the purpose of the BOOT, because:
(1)by operation of item 20(1) of the Transitional Act, the relevant NAPSAs “sunsetted”, to use the language of the parties, and terminated on 1 January 2014; and
(2)in any event, even if item 16(5) of the Transitional Act applied, it did not have the effect of displacing coverage of the relevant modern awards because of the terms of s 48 of the FW Act, which is set out above in [8], as the Full Bench explained.
Item 20 of Sch 3 has the effect that the NAPSAs ceased operating on 1 January 2014. By operation of item 21, they can never again cover employees.
While the applicants rely on item 16 to contend that it states a rule that prevails over item 20, that argument is not compelling. It is put on the basis that item 16 prevails over item 20 because it “impliedly” modifies or repeals item 20 in order to overcome an inconsistency between the two. The inconsistency is said to be that item 20 terminated the NAPSA on 1 January 2014, whereas item 16 imposed no cut off or “sunsetting” date on the continuing of the ABTIs preserved by that provision.
We agree with the argument put on behalf of the unions that the construction contended for by the applicants does not have regard to the language used in the relevant provisions and each have work to do. Item 16, by its terms, expressly modifies the effect of item 29 of Sch 3. Item 16(1) commences by stating that “Despite item 29 of Schedule 3 …” and then proceeds to deal with matters relevant to and affecting item 29. Item 16(5) expressly excludes the operation of s 47 of the FW Act, which section is also set out above at [8].
Item 16 does not refer to or deal with the matters set out in item 20. Item 20 remains unaffected by the operation of item 16.
As the Full Bench pointed out, reg 3B.02, which introduced item 16, was made pursuant to item 8(1). We accept the submission that if the regulation was intended to modify the Transitional Act in the exercise of the power conferred by item 8(1), such a modification should be clear and identifiable and not found to have been achieved by implication because of apparently inconsistent language. A repeal by implication is rarely readily accepted. See Saraswati v R (1991) 172 CLR 1 at 17; [1991] HCA 21 (Gaudron J). It should not be considered to have been affected by item 16.
To the extent that the applicants argue that, by operation of item 16(5), modern awards do not apply to or cover ATQ and its employees, we note that the express language of item 16(5) modifies the effect of s 47 of the FW Act, which deals with when a modern award applies to an employee. A modern award may not apply pursuant to item 16(5) if the ABTI applies to the employees. However coverage of the modern award, rather than application, is the relevant consideration for the purpose of the BOOT. Item 16(5) does not, in that regard, refer to, and consequently does not modify, the effect of s 48, which deals with when a modern awards covers an employee. The Full Bench explained this correctly in its reasons.
Accordingly, despite the operation of item 16(5), a modern award can continue to cover an employee for the period during which an ABTI covers the employee. We agree with the Full Bench that there is no inherent conflict in there being coverage of an employee by two different instruments, given that coverage is concerned with the potential, rather than the actual, application of the instrument. As the unions submit, a difficulty would only arise if two instruments both purported to apply to the employee. Even if item 16 prevailed over item 20 of the Transitional Act, item 16(5) would not operate to cease coverage of the modern awards.
Thus, we also accept the submission that item 20 of the Transitional Act and item 16 of reg 3B.02 are not necessarily inconsistent and can operate independently of each other.
We do not accept the submission made on behalf of the applicants that item 16 impliedly modifies or repeals item 20.
ATQ and QMBA additionally challenge the view of the Full Bench, expressed at [56] of its reasons, that item 18(2)(b) of Sch 7 of the Transitional Act adds an additional requirement in that both paras (a) and (b) would have to be satisfied for an agreement to pass the BOOT. They contend this means a “double BOOT test” – both the modern award and the ABTI would be used as comparators. They submit the Full Bench was in error in reaching that conclusion, because s 193(1) of the FW Act only applies to “each award covered employee” and “each prospective award covered employee”. They say that if the proposition that the apprentices and trainees are not covered by a modern award is correct, then step (a), requiring application of the BOOT on the modern awards, does not apply.
These applicants, therefore, submit that the relevant employees are not covered by the modern awards because they are covered by the ABTIs. Thus, they fall within the definition of “unmodernised award covered employees” under item 20 of Sch 7 of the Transitional Act. They contend the expressions “award covered employee” in s 193(1) and “unmodernised award covered employee” are mutually exclusive.
These applicants draw attention to the term “award covered employee” as defined in s l93(4) of the FW Act to be:
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.
They contend that, conversely, an “unmodernised award covered employee” is defined in item 20 of the Transitional Act as follows:
unmodernised award covered employee, for an enterprise agreement, means an employee who:
(a)       is covered by the agreement; and
(b)at the test time , is covered by an award-based transitional instrument (the relevant award-based transitional instrument) 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.
They submit that the juxtaposition of the definitions provides support for the proposition that an employee is either in one category or another – never both. Hence, they say, the Full Bench finding that the BOOT has to be applied to two instruments, that is, to the modernised awards and then to ABTIs, is unsound.
The unions submit that consideration of item 18 of Sch 7 in the context of the application made by the applicants is irrelevant because of the sunsetting provision in item 20 of Sch 3.
The unions further submit that item 18 is a transitional provision. As the Full Bench relevantly noted, at [55], item 18 is a provision within Pt 4 of Sch 7 which is entitled “Transitional provisions to apply the better off overall test after end of bridging period if award modernisation not yet completed”. The Full Bench noted that the heading indicated the purpose of the provisions under the heading was to deal with the approval process of enterprise agreements made after 1 January 2010 in the event that the award modernisation had not been completed by that date. The Full Bench further noted, at [56], that given the award modernisation process had completed by that date, it was not clear that an interpretation of item 18 which would give it work to do after 1 January 2010 was consistent with that intention.
We accept the unions’ submission that the applicants’ contention, that the Full Bench’s reasoning with respect to the operation of item 18 was incorrect, cannot be sustained because it is based on an incorrect presumption that the employees were not award covered employees. The employees were covered by the modern awards within the meaning of s 48 of the FW Act. The Full Bench’s reasoning, at [56] of its decision, is correct. We agree that the Full Bench correctly concluded that item 18 of Sch 7 has no application in the approval of the 2015 agreement.
It follows that, the employees are award covered employees for the purpose of s 206 of the FW Act.
CONCLUSION AND ORDERS
For these reasons the applicants’ application should be dismissed.
We will hear from the parties as to the question of costs.

I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick, Barker and Rangiah.
Associate:
Dated: 27 November 2017

[2017] FCAFC 189

27 November 2017

Key Legal Topics

Areas of Law

Employment & Labour Law

Legal Concepts

Collective Bargaining

Appeal

Jurisdiction

Statutory Interpretation

Better Off Overall Test (BOOT)

Review of:	All Trades Queensland Pty Limited [2016] FWC 2832 All Trades Queensland Pty Limited v Construction, Forestry, Mining and Energy Union, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union and Australian Manufacturing Workers’ Union [2017] FWCFB 132
File number:	QUD 92 of 2017
Judges:	FLICK, BARKER AND RANGIAH JJ
Date of judgment:	27 November 2017
Catchwords:	INDUSTRIAL LAW – application for review of decision of Full Bench of Fair Work Commission – where Full Bench dismissed appeal from decision of Commissioner – where applicants sought approval of enterprise agreement – whether agreement passed “better off overall test” under s 193 of the Fair Work Act 2009 (Cth) – relevant comparator instruments to be used – operation of Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) – whether employees simultaneously covered by modern award and award-based transitional instrument – distinction between “application” and “coverage” of modern award to an employee – whether transitional instruments terminated by operation of sunsetting provisions
Legislation:	Evidence Act 1995 (Cth) s 191 Fair Work Act 2009 (Cth) ss 47, 48, 48(1), 57, 193, 193(1), 193(4), 193(5), 206 Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) Sch 2, item 4(1)(b), Sch 3, items 20, 20(1), 20(1)(b), 29, 29(1), Sch 5, items 16, 16(3), 16(5), Sch 7, Pt 4, Sch 8, items 18, 18(2)(a), 18(2)(b) Workplace Relations Act 1996 (Cth) (repealed) Fair Work Legislation Amendment Regulations 2009 (No. 3) (Cth) Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 (Cth) reg 3B.02 Explanatory Memorandum, Fair Work (Transitional Provisions and Consequential Amendments) Bill 2009
Cases cited:	All Trades Queensland Pty Limited [2016] FWC 2832 All Trades Queensland Pty Ltd v Construction, Forestry, Mining and Energy Union, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union and Australian Manufacturing Workers’ Union [2017] FWCFB 132 Saraswati v R (1991) 172 CLR 1 at 17; [1991] HCA 21
Date of hearing:	21 August 2017
Registry:	Queensland
Division:	Fair Work Division
National Practice Area:	Employment & Industrial Relations
Category:	Catchwords
Number of paragraphs:	60
Counsel for the Applicants:	Mr J E Murdoch QC
Solicitor for the Applicants:	Herbert Smith Freehills
Counsel for the First, Second and Third Respondents:	Mr W Friend QC with Ms C Hartigan
Solicitor for the First, Second and Third Respondents:	Hall Payne Lawyers
Counsel for the Fourth Respondent:	The Fourth Respondent filed a submitting notice, save as to costs

JUDGES:	FLICK, BARKER AND RANGIAH JJ
DATE OF ORDER:	27 NOVEMBER 2017