Australian Municipal, Administrative, Clerical and Services Union
[2012] FWA 9025
•22 OCTOBER 2012
[2012] FWA 9025 |
|
REASONS FOR DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 5, Item 6 - Review of all modern awards (other than modern enterprise and State PS awards) after first 2 years
Australian Municipal, Administrative, Clerical and Services Union
(AM2012/100)
Contract Call Centres Industry | |
SENIOR DEPUTY PRESIDENT KAUFMAN | MELBOURNE, 22 OCTOBER 2012 |
Review of modern awards - application to vary Contract Call Centres Award 2010 - annualised salaries
Introduction
[1] The Australian Municipal, Administrative, Clerical and Services Union “ASU” has applied to vary the Contract Call Centres Award 2010 1(the Award). The application is made under Sch. 5, Item 6 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act) as part of the review of all modern awards which Fair Work Australia is required to conduct after the first two years of all modern awards coming into effect (the 2012 Review).
[2] The application seeks to delete clause 18.5 of the Award which has the effect that if employees in three of the higher classifications are remunerated by way of an annual salary they are taken to have been compensated for certain award entitlements for which they would otherwise have been paid. The Community and Public Sector Union (the CPSU) supported the variation. The Australian Industry Group (AiG) opposed the variation.
[3] Hearings were conducted in Melbourne with parties appearing by video link from Sydney. Mr J Nucifora appeared for the ASU, Ms G Vaccaro appeared for AiG, Mr A Nash appeared for the CPSU
[4] Clause 18.5 of the Award reads:
18.5 Annual salary arrangements for higher classifications
(a) The provisions of clause 18.5(b) will apply to the following classifications:
• Customer contact stream—Principal Customer Contact Leader;
• Clerical and administration stream—Clerical and Administration Employee-Level 5; and
• Contract Call Centre Industry Technical Associate
(b) Employees on annual salary arrangements will be compensated for any payments arising from the following award provisions in accordance with the provisions of clause 18.5(c):
• Clause 18.4—Higher duties;
• Clause 20—Allowances;
• Clause 22—Payment of wages;
• Clause 24—Ordinary hours of work, rostering and penalty rates;
• Clause 25—Breaks;
• Clause 26—Overtime;
• Clause 27.4—Annual leave loading;
• Clause 30.4—Payment for time worked on a public holiday.
(c) The following obligations apply to employers in relation to the higher classifications set out in clause 18.5(a):
(i) The ordinary hours of work of employees in those classifications set out in clause 18.5(a) should not exceed the ordinary hours of duty in the particular industry or sector of industry in which the employee is employed. Employers will compensate for:
• time worked regularly in excess of ordinary hours of duty;
• time worked on public holidays;
• time spent standing by in readiness for a call back;
• time spent carrying out duties outside of the ordinary hours of duty over the telephone or via remote access arrangements; or
• time worked on afternoon, night or weekend shifts;
(ii) either by:
• taking this factor into account in the fixation of annual remuneration;
• granting special additional remuneration;
• granting a special allowance or loading; or
• granting other compensation such as special additional leave.
(d) An employee must be advised in writing upon engagement, or in any other case upon a request being made in writing to the employer, of the method of compensation being used and the normal starting and finishing times in the relevant establishment. The methods of compensation are set out in clause 18.5(c)(ii). The provisions of clauses 18.5(c)(i) and (ii) are to be used as the basis for the calculation of the annual salary. If the employer is compensating the employee by a method identified in clause 18.5(c)(ii) the employer must identify the special additional remuneration, allowance or loading which is being paid.
(e) Salary review
An employee’s salary will be reviewed by the employer at least annually to ensure that the compensation is appropriate having regard to the factors in clause 18.5(c)(i).
(f) Transfers
Where an employee is transferred permanently from day work to shiftwork or from shiftwork to day work, such employee should receive at least one month’s notice. However, the employer and the employee may agree on a lesser period of notice.
(g) Reasonable time in excess of ordinary hours
(i) Subject to clause 18.5(g)(ii) an employer may require an employee to work a reasonable amount of time in excess of ordinary hours of duty. The method of compensation must be in accordance with clause 18.5(c)(ii).
(ii) An employee may refuse to work time in excess of ordinary hours of duty in circumstances where the working of such additional time would result in the employee working hours which are unreasonable having regard to:
• any risk to the employee’s health and safety;
• the employee’s personal circumstances including family responsibilities;
• the needs of the workplace or enterprise;
• the notice (if any) given by the employer of the additional time which is required to be worked and by the employee of their intention to refuse it;
• the employee’s compensation; and
• any other relevant matter.
(h) Payment of wages
(i) At the election of the employer, wages may be paid weekly or fortnightly or in accordance with existing practices.
(ii) Where agreement is reached with an individual employee, wages may be paid four-weekly or monthly. This agreement may be reached at the time when the employee commences employment, but is not limited to such time.
(i) Annual leave loading
In addition to the annual leave payments specified in the NES, employees must be paid an annual leave loading of 17.5%. However, where an employer, in determining the total remuneration of an employee can demonstrate that it has taken into account that an annual leave loading will not be paid to the employee because the total remuneration has been fixed having regard to this fact or because other benefits related to annual leave of equal value have been granted by the employer, an entitlement to the annual leave loading will not accrue.
[5] The ASU seeks to delete the clause in its entirety.
Legislation
[6] Sch. 5, Item 6 of the Transitional Act relevantly provides:
“(1) As soon as practicable after the second anniversary of the FW (safety net provisions) commencement day, FWA must conduct a review of all modern awards, other than modern enterprise awards and State reference public sector modern awards.
(2) In the review, FWA must consider whether the modern awards:
(a) achieve the modern awards objective; and
(b) are operating effectively, without anomalies or technical problems arising from the Part 10A award modernisation process.
...
(3) FWA may make a determination varying any of the modern awards in any way that FWA considers appropriate to remedy any issues identified in the review.
(4) The modern awards objective applies to FWA making a variation under this item, and the minimum wages objective also applies if the variation relates to modern award minimum wages.
[7] Section 134 sets out the modern awards objective:
“134 The modern awards objective
What is the modern awards objective?
(1) FWA must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:
(a) relative living standards and the needs of the low paid; and
(b) the need to encourage collective bargaining; and
(c) the need to promote social inclusion through increased workforce participation; and
(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and
(e) the principle of equal remuneration for work of equal or comparable value; and
(f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and
(g) the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards; and
(h) the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.
This is the modern awards objective.
...
[8] Section 138 limits the terms that a modern award may contain.
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.”
Approach of Fair Work Australia to the 2012 Review
[9] In June 2012, the 2012 Review Full Bench 2 published a decision3 (June Decision) addressing the legislative provisions applicable to the 2012 Review and the scope of the 2012 Review. The Full Bench observed:
“[63] Under sub item 6(3) of Schedule 5, the Tribunal has a broad discretion to vary any of the modern awards in any way that it considers necessary to remedy any issues identified in the Review. However, sub item 6(4) provides that in making such a variation the Tribunal must take into account the modern award objective in s.134 of the FW Act, and, if varying modern award and minimum wages, the minimum wages objective in s.284.”
[10] The 2012 Review Full Bench also made comments about the scope of the 2012 Review and the circumstances in which a variation might be made when such a variation seeks to revisit matters that had been dealt with and determined under the Part 10A process:
“[85] Two points about the historical context are particularly relevant. The first is that awards made as a result of the award modernisation process are now deemed to be modern awards for the purposes of the FW Act (see Item 4 of Schedule 5 of the Transitional Provisions Act). Implicit in this is a legislative acceptance that the terms of the existing modern awards are consistent with the modern awards objective. The second point to observe is that the considerations specified in the legislative test applied by the Tribunal in the Part 10A process is, in a number of important respects, identical or similar to the modern awards objective which now appears in s.136.
...
[86] Although the Tribunal is not, as a non-judicial body, bound by principles of stare decisis, as a matter of policy and sound administration it has generally followed previous Full Bench decisions relating to the issue to be determined, in the absence of cogent reasons for not doing so. In another context three members of the High Court observed in Nguyen v Nguyen:
“When a court of appeal holds itself free to depart from an earlier decision it should do so cautiously and only when compelled to the conclusion that the earlier decision is wrong. The occasion upon which the departure from previous authority is warranted are infrequent and exceptional and pose no real threat to the doctrine of precedent and the predictability of the law: see Queensland v The Commonwealth (1977) 139 CLR 585 per Aickin J at 620 et seq.”
[87] While the Tribunal is not a court, the public interest considerations underlying these observations have been applied with similar, if not equal, force to appeal proceedings in the Tribunal. In Re Dalrymple Bay Coat Terminal Pty Ltd a Full Bench summarised the position in relation to single members sitting at first instance as follows:
“There is not a developed system of stare decisis in this jurisdiction. However it is clearly desirable for members of the Commission sitting alone to adhere to Full Bench decisions which are relevant to the matter being determined. Such a policy aids consistent decision making which in turn provides the parties to Commission proceedings with greater certainty.”
[88] These policy considerations tell strongly against the proposition that the Review constitutes a “fresh assessment” unencumbered by previous Tribunal authority.
[89] In circumstances where a party seeks a variation to a modern award in the Review and the substance of the variation sought has already been dealt with by the Tribunal in the Part 10A process, the applicant will have to show that there are cogent reasons for departing from the previous Full Bench decision, such as a significant change in circumstances, which warrant a different outcome.”
[References omitted]
[11] Where, on the making of a modern award, an evidentiary case has been presented, direct submissions have been made and Fair Work Australia has made a determination about the relevant award provision on the basis of that material, cogent reasons will need to be advanced for departing from the award provision in the 2012 Review.
[12] On the issue of the application of s.138 of the Act to the 2012 Review, the 2012 Review Full Bench stated:
“[33] We are satisfied that s.138 is relevant to the Review. The section deals with the content of modern awards and for the reasons given at paragraph [25] of our decision it is a factor to be considered in any variation to a modern award arising from the Review. We also accept that the observations of Tracey J in SDAEA v NRA (No.2), as to the distinction between that which is “necessary” and that which is merely desirable, albeit in a different context, are apposite to any consideration of s.138.
[34] While s.138 is relevant to the Review there is still the question of the extent of its impact and the circumstances in which it will have on an application to a variation determination. The supplementary submissions revealed a diversity of views about these issues. We are not persuaded that these issues have been the subject of sufficient debate at this stage. The precise impact of s.138 is a question best considered in the context of a particular application. We agree with the RCAV’s supplementary submission that “the nature of the evidence and the facts as found arising from that evidence will condition the exercise of power and the ultimate outcome required to be determined by the review.”
[13] It is apparent that those seeking a variation to a modern award in the 2012 Review must demonstrate that the award is not achieving the modern awards objective, or that it is not operating effectively, without anomalies or technical problems arising from the Part 10A award modernisation process. Further, it follows, that the variation sought must address one or both of these defects, or that there are other cogent reasons for making the variation as part of the 2012 Review.
Background
[14] The Award was made at the conclusion of the award modernisation process which was conducted by the Australian Industrial Relations Commission (AIRC) under Part 10A of the Workplace Relations Act 1996. The Part 10A process was completed in four stages, with each stage focussing on different industries and occupations. All stakeholders and any other interested parties were invited to make submissions on what should be included in modern awards.
[15] Separate consultations were conducted individually by members of the award modernisation Full Bench in respect of each modern award that was to be created to allow parties the opportunity to make submissions and raise any matters of concern.
[16] It is desirable to outline how the Award, which was dealt with in Stage 2 of the Part 10A award modernisation process, came into existence. Both parties have referred to the history of its making in their written submissions, upon which I draw.
[17] The AiG outlined the history thus:
2.3. During the Part 10A award modernisation process it was agreed by the major industrial parties with an interest in the industry, namely Ai Group, the ACTU, the ASU, the CPSU and the NUW that the conditions of the predecessor award, being the 2003 CC Award, would be replicated in the Modern Award.
2.4. A relevant extract from Ai Group’s Award Modernisation Stage 2 Pre-Exposure Draft Submission (31 October 2008) follows:
“Contract Call Centre Industry Award 2010
90. Ai Group has prepared a modern Contract Call Centre Industry Award 2010, based upon the terms of the existing Contract Call Centre Industry Award 2003...
91. The negotiations and AIRC proceedings between June 2000 and August 2003 relating to the development of the Contract Call Centre Industry Award 2003 were very length
and complicated.
92. Most of the contract call centre companies involved in the matter are members of Ai Group and we negotiated the terms of the award with the ACTU, ASU, CPSU and NUW
93. The contract call centre industry operates in an environment of intense cost and
competitive pressures. Companies in the industry compete with Australian firms as well as competitors in low-cost overseas locations.
94. The 2003 award is a relatively modern and flexible award which caters for the needs of employers and employees in the contract call centre industry. In addition to incorporating relevant existing award terms, the draft modern award...
95. Ai Group has discussed the draft modern award... with the ACTU, ASU, CPSU and NUW. Ai Group understands that the unions agree with the proposed scope and classifications, and agree that the content should be based upon the 2003 award. The parties intend to have further discussions over the next few weeks with the aim of reaching as much agreement as possible on the content.”
2.5. On 10 December 2008, following negotiations between Ai Group, the ASU, the CPSU and the NUW, the four parties filed a joint draft modern award with the Tribunal. Clause 20.5 – Annualised Salary Arrangements for Higher Classifications, was identified as an agreed clause in the joint draft award. This clause became Clause 18.5 in the Modern Award.
Relationship between the Telecommunication Services Industry Award 2002 and the 2003 CC Award
2.6. The 2003 CC Award was the subject of extensive negotiations between Ai Group, the ACTU, the ASU, the CPSU and the NUW, and Australian Industrial Relations Commission (AIRC) proceedings between 2000 and 2003.
2.7. At the same time as the negotiations and AIRC proceedings for the contract call centre industry were taking place, negotiations between Ai Group, the CPSU and the CEPU, together with AIRC proceedings were underway concerning an award for the telecommunications services industry2.8. In 2002, the Telecommunication Services Industry Award 2002 (TSI Award) was made by consent between Ai Group, the CPSU and the ASU.
2.9. In Global Telesales Pty Ltd (927484, 10 February 2003) and (PR931316, 15 May 2003) a Full Bench of the AIRC held that many of the provisions of the TSI Award were an appropriate safety net for employees of Global Telesales performing contract call centre work.
2.10. Following the Global Telesales Full Bench decision, Ai Group, the ASU, the CPSU and the NUW agreed to largely adopt the terms of the TSI Award for the 2003 CC Award.
2.11. The TSI Award contained an exemption clause which allowed the payment of annualised salary for employees within the higher classifications of that award (see clause 8.2).
2.12. Mr John Nucifora of the ASU expressed concern about the terms of the annualised salary clause in the TSI Award, despite the fact that the clause contained various protections for employees and had been agreed between Ai Group, the CPSU and the CEPU. An annualised salary clause with more protections for employees than Clause 8.2 in the TSI Award was negotiated between Mr Nucifora of the ASU and Mr Stephen Smith of Ai Group, and the clause was inserted by consent into the 2003 CC award.
The making of the Modern Award
2.16. In its Award Modernisation Decision [2009] AIRCFB 800 (2 September 2009) the Full Bench also said:
“Information and communication technology group
[152] The awards in this group, the Telecommunication Services Award 2010, the Business Equipment Award 2010, the Contract Call Centres Award 2010, and the Market and Social Research Award 2010, generally follow existing federal instruments. In extending the application of the awards there is some impact on some existing minimum terms and conditions. From the submissions of the parties it appears that the impact is generally not significant. In our view the model transitional provision adequately addresses the matters raised by the parties.”
(Emphasis added)
2.17. The consent position reached between the parties included the annualised salary provision which appeared in the 2003 CC Award and now appears in the Modern Award.
[18] On 3 April 2009, the award modernisation Full Bench published the Award in its final form. It contained the annualised salaries clause. The Award was published with three other modern awards in the Information and Communications Technology group. The Full Bench said:
[158] We publish four modern awards. They are the:
Business Equipment Award 2010
Contract Call Centres Award 2010
Market and Social Research Award 2010
Telecommunications Services Award 2010
[159] We also publish a varied Clerks Modern Award.
[160] These industries are of relatively recent origin and their growth is important to the Australian economy. We published two exposure draft awards covering market and social research operations and telecommunications services and proposed amendments to the Clerks Modern Award to cover call centre operations. A number of parties representing both employers and employees requested that additional awards be made covering the business equipment industry and the contract call centre industry. We have decided to accede to these requests.
[161] It appears that there is an industry of selling and/or leasing business equipment of various types including computers, photocopiers and printers. Businesses involved in such activities are also involved in the installation and servicing of that equipment. It is not in the nature of a manufacturing, retail or electrical contracting business. The AiGroup proposed an award which effectively amalgamated three awards currently covering the servicing, clerical and sales activities of employers in the business equipment industry. The result is a comprehensive modern award covering all award-covered employees in this industry which largely reflects the terms of existing awards. In the modern award we have replicated the exemption provisions in the existing awards. The modern award makes minor changes in the draft submitted by AiGroup. The changes we have made provide greater clarity, reduce some of the prescription and conform to other modern awards. Nevertheless we are concerned at the length and complexity of the award. There is scope to revise it further in future award modernisation exercises.
[162] Parties to the existing Contract Call Centre Industry Award 2003 (CCC Award 2003) supported the making of a separate award for contract call centres in preference to establishing call centre flexibilities within the Clerks Modern Award. In our view there should not be disparate safety net provisions for call centres. Flexibilities which reflect the needs of the industry while enhancing competitiveness and employment growth prospects should be generally available. We will make a CCC Modern Award based on the CCC Award 2003 – amended to reflect the Commission’s standard approach to certain modern award provisions. We will also make amendments to the Clerks Modern Award to reflect appropriate call centre flexibilities.
[163] Minor changes have been made to exposure drafts of the telecommunications services and market and social research awards to reflect certain non-contentious matters raised by the parties.
Submissions of the parties
[19] The ASU, in its written submissions, after setting out s 134, stated:
9. The ASU submits that the inclusion of an annualised salary arrangements clause in the CCC Award prevents it from meeting a number of modern awards objectives. Primarily, it does not “provide a fair and relevant minimum safety net of terms and conditions” with respect to minimum rates for employees in the following higher classifications:
(a) Customer contact stream – Principal Customer Contact Leader
(b) Clerical and administration stream – Clerical and Administration
Employee - Level 5; and
(c) Contract Call Centre Industry Technical Associate.
10. The ASU further submits that the annualised salary arrangements clause prevents the CCC Award from achieving the following modern award objectives:
s134(1)(b) – the need to encourage enterprise bargaining.
There is no option for employees at the higher classifications to bargain about the award provisions listed in Clause 18.5(b) rather they must accept an individual annualised salary arrangements flexibility arrangement whether or not they agree or it suits their circumstances. In such circumstances where employers are permitted to unilaterally introduce annualised salary arrangements clauses there is no incentive for the employer to bargain.
S134(1)(c) – the need to promote social inclusion through increased workforce participation.
In the paper Social Inclusion: Outlining economic implications of social inclusion/exclusion, the Department of Education, Employment and Workplace Relations (DEEWAR) broadly defines social inclusion as focus on social relations and “the extent to which people are able to participate in social affairs and attain power to influence decisions that affect them.” This includes participation in the labour market. There is no opportunity for employees in the higher classifications to participate in the determination of essential award conditions. The greater majority of employees covered by the award are female and non-unionised and are therefore already under-represented in the labour market in regard to both participation and the ability to have a say in the terms and conditions of their work.
s134(1)(g) - the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards;
Individual flexibility clauses are included by statute in all modern awards and are intended to provide the appropriate safeguards for an employer and employee to negotiate and genuinely agree to a salary arrangement that will benefit both parties. An annualised salary arrangements clause circumvents this process and can create confusion about whether the award flexibility clause or the annualised salary arrangements provision should apply.
11. FWA must also consider whether, pursuant to subitem 6(2)(b), the CCC Award operates effectively without anomalies or technical problems arising from the Part 10A award modernisation process. The ASU submits that the CCC Award does not meet this objective while it contains an annualised salary arrangements provision and an Award Flexibility provision. This creates an anomaly where the Award Flexibility clause and its protections, otherwise available to all employees covered by the award, are not available to employees in the highest classifications where an annualised salary arrangements arrangement is compulsory.
12. Employees in the highest classifications are simultaneously expressly entitled to the provisions of the Award Flexibility clause and implicitly denied access to the same clause via the operation of the annualised salary arrangements clause. That is to say, employees at the highest classifications of the CCC Award are denied the right to negotiate arrangements to meet the “genuine individual needs of the employer and the employee” around when work is performed; overtime rates; penalty rates; allowances; and leave loading via operation of the annualised salary arrangements clause. This right for an employee to agree on an individual arrangement was the clear intention of the Minister’s award modernisation request.
[References deleted]
[My emphasis]
[20] It should be observed that the ASU’s submission is somewhat misconceived. There is only one modern awards objective, that stated in s 134(1): “FWA 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:” the matters set out in sub-paragraphs (a) to (h).
[21] I will treat the ASU submission as being that the variation sought should be made because the inclusion of the annualised salary arrangements clause in the CCC Award prevents it from meeting the modern awards objective in that it “does not provide a ‘fair and relevant minimum safety net of terms and conditions’ with respect to the minimum rates for employees” in the three classifications to which the clause applies, taking account of:
- the need to encourage collective bargaining [s 134(1)(b)];
- the need to promote social inclusion though increased workforce participation [s 134(1)(c)]; and
- the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards [s 134(1)(g)].
[22] The ASU further submits that the Award does not meet item 6(2)(b) of Schedule 5 of the Transitional Act in that, whilst it contains both an annualised salary arrangements provision and an Award Flexibility provision, the Award does not operate effectively without anomalies or technical problems arising from the Part 10A award modernisation process.
[23] As to the need to encourage collective (“enterprise” is the word used by the ASU) bargaining, the ASU submits that the employees in the three classifications the subject of cl 18.5 have no ability to bargain about the award provisions for which the annualised salary arrangements clause is required to compensate them.
[24] This submission cannot be correct. The mere fact that an annualised salary, with the various award entitlements absorbed into it, is paid does not prevent bargaining about whether an enterprise agreement should contain an annualised salary arrangements clause. Nor does it prevent bargaining about what entitlements of the nature of those set out in cl 18.5(b) should be included in any enterprise agreement, the quantum of any such allowances or which of them should be the subject of any annualised salary arrangements clause.
[25] As to the need to promote social inclusion through increased workforce participation the ASU submits:
In the paper Social Inclusion: Outlining economic implications of social inclusion/exclusion, the Department of Education, Employment and Workplace Relations (DEEWAR) broadly defines social inclusion as focus on social relations and “the extent to which people are able to participate in social affairs and attain power to influence decisions that affect them.” This includes participation in the labour market. There is no opportunity for employees in the higher classifications to participate in the determination of essential award conditions. The greater majority of employees covered by the award are female and non-unionised and are therefore already under-represented in the labour market in regard to both participation and the ability to have a say in the terms and conditions of their work.
[Reference deleted]
[26] This submission is untenable. Whether or not there is an “opportunity for employees in the higher classifications to participate in the determination of award conditions” says nothing about participation in the labour market, has no demonstrated connection with the fact that there is an annualised salary arrangements clause in the Award and ignores the fact that it is the ASU that represented clerical employees in the making of the Award. Further, those employees are not excluded from the coverage of the Award.
[27] Further, I do not consider that the annualised salary arrangements clause is relevant to the need to promote social inclusion, which is one of the matters to be taken into account in ensuring that modern awards provide a fair and relevant minimum safety net of terms and conditions (the modern awards objective).
[28] As to the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards, the ASU submits:
Individual flexibility clauses are included by statute in all modern awards and are intended to provide the appropriate safeguards for an employer and employee to negotiate and genuinely agree to a salary arrangement that will benefit both parties. An annualised salary clause circumvents this process and can create confusion about whether the award flexibility clause or the annualised salary provision should apply.
[29] Clause 7 of the Award deals with award flexibility and applies to all employees covered by the Award. Clause 18.5 only applies to the three highest classifications in the Award. The existence of cl 18.5 does not circumvent the ability of any employee to vary the application of the terms referred to in cl 7. Arguably, in the case of the three highest classifications, the entitlements for which those of them on annual salary arrangements are compensated for by the salary arrangements clauses, 20, 24 and 27.4, could nonetheless be the subject of an individual flexibility agreement. I do not accept the ASU’s submission that these employees are implicitly denied access to the individual flexibility clause, or that they are denied the right to negotiate arrangements to meet their individual needs around when work is performed, overtime rates, penalty rates, allowances and leave loading. No evidence was adduced to the effect that the coexistence of clauses 7 and 18.5 creates “confusion about whether the award flexibility clause or the annualised salary provision should apply.” Each has separate work to do and they are not inconsistent with each other.
[30] Even if I am wrong about ability of the employees in the three highest classifications to negotiate such arrangements, that does not go to the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards. Section 134(1)(g) speaks of unnecessary overlap of modern awards, not of terms within a modern award.
[31] As to the ASU’s submission that whilst the Award contains both an annualised salary arrangements provision and an award flexibility provision, the Award does not operate effectively without anomalies or technical problems arising from the Part 10A award modernisation process, the ASU largely makes the same argument that it does in relation to s 134(1)(g). There is no evidence to support the ASU’s assertions.
[32] As well as submitting that the Award, whilst containing cl 18.5 does not meet the modern awards objective, the ASU submits that there are cogent reasons for its removal and that the provision was not adequately considered by the Australian Industrial Relations Commission “when compared to the consideration given to the Award Flexibility provision.”
The cogent reasons for its removal are said to be “based on the principles of equity, fairness and changed circumstances”, which are that the provision is:
- Inherently inequitable and discriminatory as it applies only to employees in the
- higher classification levels;
- Inherently unfair as no employee agreement is required;
- No longer necessary for employers now that all modern awards have compulsory award flexibility provisions; and
- More appropriate in Enterprise Agreements where actual pay rates apply and annualised pay arrangements can be agreed, monitored and more reliably reviewed by employees.”
[33] In my view, none of these matters is made out, let alone is has the ASU demonstrated that there is a cogent reason for the removal of the clause. By its nature it is more appropriately applied to employees in the higher classifications. It is not unfair merely because no employee agreement is required. Most award clauses apply absent employee or employer agreement. The award flexibility clause does not do the same work as that done by cl 18.5. I do not accept that such a clause is more appropriate in an enterprise agreement, and whether or not it is, is probably irrelevant to the review.
[34] In opposing the ASU’s application to vary the Award by removing cl 18.5 AiG submits that insofar as the ASU submits that cl 18.5 is not necessary for the Award to achieve the modern awards objective, the submission is misconceived.
[35] AiG further contends that:
- Removal of the clause is not necessary to achieve the modern awards objective;
- It is necessary for the industry to remain globally competitive and that the clause assists in the achievement of that aspiration;
- The flexibility term is not an appropriate vehicle to deal with the issue of wages and salaries as an alternative to the annualised salaries provision; and
- The Award is operating effectively, without anomalies or technical problems arising from the Part 10A award modernisation process and that therefore the ASU has not demonstrated a cogent reason for the removal of the clause;
- The application is an attempt by the ASU to revisit an issue that was considered under the Part 10A process and the ASU has not established any cogent reasons for departing from the 2009 Full Bench Award Decision;
- there is no cogent reason or basis to vary the Award having regard to the matters which Fair Work Australia is required to consider, namely the achievement of the modern awards objective or the effective operation of the Award. The mere fact that the “variation sought...might be allowable, or not unlawful, is not a sufficient basis for the Tribunal to make the variation.”
[36] AiG’s submission continued:
2.18. In its Award Modernisation Statement [2008] AIRCFB 717 (12 September 2008) the Full Bench explained the circumstances in which annualised salary provisions would be appropriately included in a modern award. The Modern Award fits these circumstances:
“Annualised Wage and Salary Arrangements
[26] A number of parties suggested that annualised wage and salary arrangements be included in modern awards. Such arrangements are provided for in the Act. 9 No substantial case was put for inclusion of these arrangements on a general basis and we have considered the situation award by award. We do not consider that such provisions should be included in modern awards as a matter of course. Where there are similar arrangements in a relevant pre-reform award or NAPSA, where there is a consensus, or where there is a case on the merits based on the nature of the industry or patterns of work the situation may be different. Most of the exposure drafts do not contain such arrangements.”
2.19. In the context of the Clerks - Private Sector Award 2010, the Full Bench of the AIRC said in Award Modernisation Decision [2008] AIRCFB 1000 (19 December 2008):
“[70] As indicated we have decided not to adopt a standard provision for annualised wages and salaries in modern awards. Where such provisions already exist in relevant awards we have maintained them. The matter could be revisited in one of the regular award reviews which have been foreshadowed. We also note that the Clerks—Private Sector Award 2010 will include an overtime exemption provision which will go part of the way to addressing claims for annualised salaries in that award. We deal with this later. The parties to the Rail Industry Award 2010 agreed that the award should contain an annualised wage and salary provision but could not agree on all of the terms. We deal with that matter later also.”
2.20. The Australian Government also supported the retention of annualised salary clauses and exemption clauses in modern awards in industries where such clauses had applied in the past. In the Minister’s revised Award Modernisation Request of 8 May 2009, the Minister expressed the following view on behalf of the Government:
“2. The creation of modern awards is not intended to:
…
(f) exempt or have the effect of exempting employees who are not high income employees, from modern award coverage or application, unless there is a history of exempting employees from coverage across a wide range of pre-reform awards and NAPSAs in the relevant industry or occupation.”
[37] In submitting that the proposed variation is not necessary to achieve the modern awards objective and, implicitly, that the Award, containing cl 18.5 achieves it, AiG referred to the history of a similar provision in the Clerks - Private Sector Award 2010. It is useful to set out AiG’s submissions:
3.4. The ASU also submits that clause 18.5 is preventing the Modern Award from meeting the modern awards objective. We strongly reject this assertion.
3.5. In fact the Fair Work Act contemplated that modern awards would contain annualised wage and salary arrangements. For example, section 576J(1) of the Fair Work Act says: “576J Matters that may be dealt with by modern awards
General
(1) A modern award may include terms about any of the following matters:
…
(f) annualised wage or salary 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, or salaries, and other monetary entitlements; and
(iii) include appropriate safeguards to ensure that individual employees are not disadvantaged;”
3.6. The existence of the annualised salary clause within the Modern Award is a clear indication that the Full Bench of AIRC was of the view that the clause was not contrary to the modern awards objective.
3.7. This view was reflected by the Full Bench of FWA, firstly in Australian Municipal, Administrative, Clerical and Services Union [2009] AIRCFB 922 (16 November 2009) and secondly in Australian Municipal, Administrative, Clerical and Services Union [2010] FWAFB 969 (23 February 2010).
3.8. The first case concerned an application by the ASU to remove the exemption rate from the Clerks – Private Sector Award 2010. The exemption rate had the effect of exempting all employees in receipt of a weekly wage in excess of $851.00. In that case the Full Bench of the AIRC considered the ongoing role for appropriately flexible employment arrangements and the existence of exemption or annual salary provisions in clerical awards and NAPSAs and eventually decided to replace the exemption rate with an annualised salary clause.4 The Full Bench said:
“[25] In all of the circumstances we consider that the exemption provision should be removed but that flexible working arrangements should be available with respect to clerical employment and that these should be subject to appropriate safeguards and processes to ensure that employees clearly understand and agree to any arrangements which may differ from base award entitlements. We propose to delete the exemption provision in cl.17. However, we propose to insert an annualised salaries clause. The wording of the clause is in line with clauses in some other modern awards. It provides for an alternative way to remunerate employees, safeguards against disadvantage and a formal process to establish and maintain the annualised salary arrangement….”
3.9. Unhappy with the decision by the Full Bench of the AIRC to insert an annualised salary clause, the ASU made a second application to vary the Clerks – Private Sector Award 2010; this time to remove the annualised salary clause that had been inserted.
3.10. In dismissing the ASU’s application, the Full Bench of FWA said:
“[7] The Australian Industry Group, the Australian Federation of Employers and Industries and the Oil Industry Industrial Committee oppose the application. They contend that the matter has already been addressed by the Full Bench in the course of inserting the annualised salary clause into the award in lieu of the exemption rate which had been inserted previously. They contend that the ASU makes selective reference to the content of pre-existing awards and that the exemption provisions in awards and notional agreements preserving State awards (NAPSAs) applying in New South Wales, Western Australian and the Australian Capital Territory Award and the common law contractual position should also be considered. The employers submit that the clause approved by the Full Bench is consistent with the consolidated award modernisation request made by the Minister for Employment and Workplace Relations and caters fairly and effectively for the needs of private sector clerks and the businesses which employ them.
[8] Awards operate in conjunction with contracts of employment. It is generally accepted that clerical employees are commonly remunerated by way of annualised salaries whether the relevant award expressly provides for such arrangements or not. It is also generally accepted that if the salary is expressly paid in compensation of all award entitlements and the amount paid exceeds the amount due under the award then the arrangement is not inconsistent with the award. The intention of the ASU in making its application is that the only arrangements which can legally be entered into are those expressly provided for in the award.
[9] It is apparent that the terms of the relevant awards and NAPSAs were taken into account in formulating the annualised salaries clause in the Commission’s decision of 16 November 2009. We believe that the safeguards in the modern award are appropriate in the circumstances of clerical employment. Further, we are concerned that the variation sought by the ASU may reduce existing flexibility and require changes in practices which have operated for many years. The ASU has not made a case for imposing a limitation on existing arrangements.
3.11. The same sentiments can be echoed in respect of this application.
[38] I have set out paragraph [85] of the June decision and its observation that there is an implicit legislative acceptance that the terms of existing modern awards, albeit made under the WR Act, are consistent with the modern awards objective. Accordingly, where the subject matter of the variation sought has already been dealt with in the Part 10A process it is necessary to show that there are cogent reasons for departing from the previous Full Bench decision. The ASU has failed to demonstrate any cogent reasons for doing so.
[39] In the 2012 Review Fair Work Australia must consider whether the Award achieves the modern awards objective. If the Award fails to do so in any respect, then Fair Work Australia must consider whether the proposed variation would render the Award such that it does achieve that objective. In my view the ASU has not established that the Award, because it contains the annualised salaries clause, is not consistent with the modern awards objective. It follows that the deletion of the clause will not achieve, or better achieve, that objective.
[40] It is manifestly undesirable that an Award that resulted from the agreed adoption of the Contract Call Centres Award 2003, which itself was made by consent after lengthy negotiations involving not only the ASU and AiG, but with other unions as well as the ACTU, should not be disturbed in the 2012 Review without, Fair Work Australia being provided with very strong cogent reasons for so doing. This, the ASU has failed to do.
[41] Not only was the Award based on the Contract Call Centre’s consent award, but that award largely replicated another consent award to which the ASU was also a party - the Telecommunications Services Industry Award 2002.
[42] On 5 October 2012, I issued a statement seeking further submissions on the interaction between the common law in relation to offsetting payments against award provisions and the annualised salaries clause.
[43] At a further hearing on 19 October 2012, the ASU maintained its position that the clause should be deleted, as did the employers that it should be retained.
[44] Having heard the parties, I am further confirmed in my view that the clause should not be deleted. Whatever be the position at common law, the current clause provides the parties with certainty as to what may be offset if an annual salary is paid, what procedures must be followed, as well as providing certain safeguards to employees.
[45] In my view the deletion of clause 18 would cause confusion, particularly as to what, if anything, can be offset and as to whether employees could be paid by way of an annual salary at all. Its deletion would also, in my view, disadvantage the employees affected because, as a matter of law, they could be remunerated by way of annualised salaries without any of the protections provided by the clause.
[46] For the above reasons the application is dismissed.
SENIOR DEPUTY PRESIDENT
Appearances:
Mr J Nucifora appeared for the ASU
Ms G Vaccaro appeared for AiG
Mr A Nash appeared for the CPSU
Hearing details:
2012.
Melbourne
26 June, 13 September and 19 October
Final written submissions:
2012.
18 October.
1 MA000023.
2 The award modernisation Full Bench was reconstituted to undertake the 2012 Review.
3 [2012] FWAFB 5600.
Printed by authority of the Commonwealth Government Printer
<Price code C, MA000023, PR530507>
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