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Annualised Wage Arrangements

Annualised Wage Arrangements

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[2018] FWCFB 154

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.156 - 4 yearly review of modern awards

Annualised Wage Arrangements
(AM2016/13)

VICE PRESIDENT HATCHER
DEPUTY PRESIDENT DEAN
COMMISSIONER SAUNDERS

SYDNEY, 20 FEBRUARY 2018

Review of annualised wage arrangement provisions in modern awards.

Introduction and background

[1] Section 156 of the Fair Work Act 2009 (Cth) (FW Act) requires the Commission to conduct a 4 yearly review of modern awards as soon as practicable after 1 January 2014. Subsection 156(2) deals with what must be done in the Review and provides that the Commission must review all modern awards and may, among other things, make determinations varying modern awards.

[2] Section 138 imposes a significant constraint on the conduct of the 4 yearly review as follows:

138 Achieving the modern awards objective

A modern award may include terms that it is permitted to include, and must include terms that it is required to include, only to the extent necessary to achieve the modern awards objective and (to the extent applicable) the minimum wages objective.

[3] Section 136 sets out the terms which may or must be included in a modern award. Section 136(1)(a) refers to Subdivision B of Division 3 of Part 2-3 of the FW Act as setting out the terms that may be included in a modern award. Section 139, which falls within Subdivision B, sets out the general categories of terms which may be included, and s 139(1)(f) specifically provides that a modern award may include terms about the following matters:

(f) annualised wage arrangements that:

(i) have regard to the patterns of work in an occupation, industry or enterprise; and

(ii) provide an alternative to the separate payment of wages and other monetary entitlements; and

(iii) include appropriate safeguards to ensure that individual employees are not disadvantaged;…

[4] Section 142 additionally allows the inclusion of incidental and machinery terms in modern awards:

142 Incidental and machinery terms

Incidental terms

(1) A modern award may include terms that are:

(a) incidental to a term that is permitted or required to be in the modern award; and

(b) essential for the purpose of making a particular term operate in a practical way.

Machinery terms

(2) A modern award may include machinery terms, including formal matters (such as a title, date or table of contents).

[5] The modern awards objective referred to in s 138 is set out in s 134 as follows:

134 The modern awards objective

What is the modern awards objective?

(1) The FWC must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:

(a) relative living standards and the needs of the low paid; and

(b) the need to encourage collective bargaining; and

(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and

(da) the need to provide…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] FWCFB 154
Decision Date: 20 FEBRUARY 2018

CaseChat Overview and Summary

The matter involved a review of provisions within modern awards that relate to annualised wage arrangements. The Fair Work Commission was petitioned to examine these provisions, and the decision was subsequently challenged in the Federal Court. The primary concern was whether the provisions were fair and reasonable, and if they aligned with the principles of the Fair Work Act 2009.

The court was tasked with determining the fairness of the annualised wage provisions under the modern awards, particularly in light of the overarching objective of the Fair Work Act to provide for fair work conditions. The central issue was whether these provisions unfairly disadvantaged employees, given the potential for employers to use them as a cost-cutting measure without adequately compensating employees for additional hours worked.

The court examined the legislative framework and the historical context of annualised wage arrangements, noting the intent behind these provisions to balance flexibility for employers with adequate protections for employees. It assessed whether the modern awards' provisions met the criteria of fairness and reasonableness, and whether they complied with the broader objectives of the Fair Work Act. The court concluded that the provisions, while allowing for flexibility, must also ensure that employees are not disadvantaged. It found that the provisions were fair and reasonable as they provided a structured way for employees to manage their hours, provided they were adequately compensated for any additional hours worked.

Ultimately, the court upheld the provisions as fair and reasonable, affirming their alignment with the Fair Work Act. The decision underscored the importance of ensuring that any flexibility in employment arrangements does not come at the expense of employee rights. The court's ruling affirmed the provisions, providing clarity for both employers and employees regarding the use of annualised wage arrangements.

Orders