Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers' Union (AMWU) and National Union of Workers

[2013] FWC 8080

[2013] FWC 8080

FAIR WORK COMMISSION

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

Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers' Union (AMWU) and National Union of Workers
(AM2012/89)

FOOD, BEVERAGE AND TOBACCO MANUFACTURING AWARD 2010
[MA000073]

Food, beverages and tobacco manufacturing industry
COMMISSIONER HAMPTON	ADELAIDE, 8 NOVEMBER 2013

Modern Award Review 2012 - joint application to vary unapprenticed junior minimum wages - whether necessary for cogent reasons to be established - Full Bench determined the existing provisions - earlier decision directly challenged - cogent reasons required - major consideration is whether present provisions an anomaly arising from the award modernisation process or not meeting modern awards objective - alteration of pre-existing provisions not an anomaly within the meaning of the Act - grounds of application not otherwise established - application dismissed.

1. The application and its intended result

[1] The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers’ Union (AMWU) and the National Union of Workers (NUW) (the applicant unions) have jointly applied to vary clause 24 of the Food, Beverage and Tobacco Manufacturing Award 2010 (the FBT award) dealing with minimum rates for junior employees.

[2] The application has been made as part of the review of modern awards being conducted by the Fair Work Commission in accordance with the Fair Work (Transitional Provisions and Consequential Amendments)Act 2009 (the Transitional Provisions Act) (the Transitional Review).

[3] The application is opposed by the employer organisations appearing in the matter.

[4] Clause 24 of the FBT award presently provides as follows:

“24. Unapprenticed junior minimum wages

The minimum wages for an unapprenticed junior are:

Age % of Level 2

Under 16 years of age 60

At 16 years of age 70

At 17 years of age 80

At 18 years of age 90”

[5] The application as amended 1 would result in clause 24 reading as follows:

“24. Unapprenticed junior minimum wages

24.1 (a) The minimum wages for a junior employee (other than a baking production employee) are the following:

Age % Level 2

Under 16 years of age 60

At 16 years of age 70

At 17 years of age 80

(b) Junior employees employed on any classification higher than Level 2 must be paid the appropriate adult rate for such classifications.

24.2 The minimum wages for baking production employees are the following:

Age % Level 2

Under 16 years of age 60

At 16 years of age 70

At 17 years of age 80

At 18 years of age 90”

[6] The effect of the proposed variation is threefold and would provide that:

● Junior employees (other than baking production employees) up to 18 years of age employed in classification Levels 1 and 2 are to be paid a percentage of the Level 2 (adult) rate. Junior employees of 18 years of age or higher in those classifications would be paid the relevant adult rate;
● Junior employees (other than baking production employees) employed in any classification higher than Level 2 are to be paid the relevant adult rate; and
● Junior baking production employees will continue to be paid on the same basis as the present award provision; with proportionate rates paid until the age of 19 at which point the adult rate applies.

[7] Without going into great detail, the classification levels referred to in clause 24 are set out in Schedule B—Classification Structure and Definitions of the FBT award. They involve a series of levels primarily based upon experience and competence. The Level 3 classification, which would under the application automatically involve the payment of adult rates, involves the following:

“B.2.3 Level 3 (87.4% relativity to the tradesperson)

(a) An employee at Level 3 is an employee who has either:

(i) completed an Australian Qualifications Framework (AQF) Certificate 1 in Food Processing; or

(ii) has equivalent recognised enterprise or industrial experience, training or prior learning experience and/or skills to Level 3.

(b) Competencies

An employee at Level 3 performs a range of duties including specialised work, and:

(i) may exercise judgment within defined procedures;

(ii) works under general supervision;

(iii) may undertake structured training to enable the employee to work at Level 4;

(iv) is responsible for the quality of the employee’s own work within the limits of Level 3;

(v) assists in the provision of on-the-job training in conjunction with tradespersons and supervisor/trainers or an accredited training provider.”

2. The history of the award provision

[8] The FBT award was considered and made by the Australian Industrial Relations Commission (AIRC) as part of Stage 3 of the award modernisation process. In making the award, the Full Bench of the AIRC was dealing with the circumstances of employers and employees who were subject to approximately 92 pre-reform awards and Notional Agreements Preserving State Awards (NAPSAs).

[9] On 6 March 2009, The Australian Industry Group (AiG) filed a draft award proposing that the junior minimum wage provisions be inserted into the FBT award consistent with the Manufacturing award. I note that this draft contemplated, in general terms, graduated age-based junior rates being used until the age of 21, where the adult rate would be applied.

[10] The AMWU also supplied a draft award to the AIRC and this did not contain junior rates. 2

[11] Business SA filed submissions 3 supporting the establishment of junior rates in the FBT award and during the course of hearings concerning the making of the FBT award before the AIRC, the different approach of the parties to that issue was discussed.4

[12] On 22 May 2009, the AIRC published the exposure draft of the FBT award with a provision in the same terms as what is now clause 24. In June 2009, Business SA filed submissions contending that the exposure draft contained junior provisions that were substantially higher than those set out in the existing NAPSAs applying in South Australia and that this would threaten employment in the relevant industries covered.

[13] It is evident that in issuing the exposure draft of the FBT award, the AIRC was influenced by the core provision of the Manufacturing and Associated Industries and Occupations Award 2010 (the Manufacturing award) that had been largely finalised by that time. 5

[14] The final FBT award was made on 4 September 2009 6 and the junior rates provisions as set out in the exposure draft were confirmed in the terms found in clause 24. There was no express mention made of the junior rates issue in the final decision, however the Full Bench did comment that:

“[103] Other changes in terms and conditions arising from the making of this award may be dealt with through the transitional provisions for this award.” 7

[15] The transitional provisions in Schedule A of the FBT award extend to circumstances where the minimum wage for a junior employee under the former instruments prior to 1 July 2010 was higher 8 or lower9 than the provisions operating as part of the modern award. These transitional arrangements remain in place and will apply until 1 July 2014.

3. The basis of the application

[16] This is a joint application and for the most part, the AMWU and NUW made common submissions and relied upon common material. The contentions underpinning the case presented in support of the application are as follows:

● There was no substantive consideration given to the issue of unapprenticed junior minimum wages at the time the Award was made. For this reason, it is not a case where the so-called “cogent reasons” test is required to be applied;
● The current unapprenticed junior minimum wage clause is an anomaly arising from the award modernisation process in that it provides lower rates when compared to the federal pre-modern awards or the pre-modern award provisions that covered the critical mass of relevant employees;
● The proposed amendment is necessary having regard to the modern awards objective, in particular s.134(1)(f)-(g)of the Fair Work Act 2009 (the FW Act), and the minimum wage objectives, in particular s 284(1)(e); and
● The proposed amendment comes within the Commission’s discretion under the Transitional Provisions Act to vary any of the modern awards in any way it considers (appropriate).

[17] In the alternative, the AMWU contends that should the cogent reasons test apply, there were three cogent reasons for the “anomalous nature of the current award clause 24 to be corrected”; namely:

● The failure of the rationalised award to reflect the principal pre-modern awards;
● The failure of the award to reflect the critical mass of provisions applying to relevant employees at the time; and
● The failure of the award to reflect well-established industry minimum standards.

[18] In terms of the alleged anomaly, the AMWU submits that there was “a manifest failure of the award to adequately rationalise the previous awards during the award modernisation process.” 10 That is, the AIRC in making the FBT award had not adequately recognised that both the preponderance of Federal awards applying in the industry at the time, and the critical mass of existing conditions, involved junior rates at 18 years of age.

[19] Further, the AMWU submits that the “the inexplicable reduction of the minimum wages provision for unapprenticed juniors in the Award, compared to its predecessor awards, is an anomaly” 11 arising out of the award modernisation process for the purposes of the Transitional Review and thus should be rectified.

[20] The AMWU also contends that the proposed amendment was necessary to provide an appropriate and fair safety net for junior employees, and would have a low impact on business given the relatively small numbers of junior employees covered by the award and the established industry practice of paying adult rates at 18 years of age.

[21] The AWMU led evidence from Ms Jennifer Dowell, National Secretary of the Food & Confectionery Division of the union, and provided statistical material drawn from ABS sources.

[22] The NUW adopts and supports the position of the AMWU and made submissions drawing upon the circumstances of those particular awards applying to its members prior to the award modernisation process. It also contends that there was no evidence that the variation would cause difficulties for the employers. 12

[23] In terms of the decision made by the AIRC to make the FBT award in its present terms, the NUW contends that “it's simply that this matter was not given sufficient consideration and the decision from the Full Bench doesn't elaborate on why the particular junior rates are adopted.” 13

4. The basis of the objections

[24] The three employer organisations appearing in the matter each opposed the application, largely on common grounds.

[25] AiG contends that the application should not be granted because:

● Clause 24 is operating effectively without any anomalies or technical problems arising from the Part 10A process;
● Clause 24 was duly considered during the making of the FBT Award and no cogent reasons exist to depart from the AIRC Full Bench to insert the clause as it currently operates within the award;
● Clause 24 is not in any way causing the FBT Award to not meet the modern awards objective as set out in section 134 of the FW Act; and
● The variation sought in the joint application is not necessary for the FBT Award to meet the modern awards objective.

[26] AiG also contends that the joint application would have significant negative impacts upon the employment of young people in the sector, and that this was inconsistent with the need for modern awards to promote social inclusion through increased workplace participation. 14

[27] In terms of the approach to be adopted to the Transitional Review, Australian Business Industrial (ABI) noted that a Full Bench of the Fair Work Commission (the Commission) has stated that it was “unlikely to revisit issues considered as part of the Part 10A award modernisation process unless there are cogent reasons for doing.” ABI contends that this requires the Commission to make a determination on the basis of evidence in this particular case. However, it further contends that the Full Bench decision should not be construed so to exclude applications or matters from consideration at a preliminary stage or otherwise.

[28] Furthermore, ABI has submitted that whatever was intended by the use of the reference “cogent reasons” by the Full Bench, the Commission must for each modern award exercise its jurisdiction in accordance with Item 6(2) of Schedule 5 of the Transitional Provisions Act, which requires the Commission to consider whether the modern award achieves the modern awards objective and is operating effectively without anomalies or technical problems arising from the Part 10A award modernisation process.

[29] ABI also contends that the nature and extent of the evidence provided by the applicant unions was not sufficient to support the application, particularly given that it would, in effect, lead to increases in junior rates ranging from at least 16% to almost 30% at Levels 1 and 2.

[30] The South Australian Employers Chamber of Commerce and Industry, trading as Business SA (Business SA) contends that the approach adopted by the AIRC to junior rates was set out in its first award modernisation decision in the following terms:

“[71] The federal awards and NAPSAs with which we are dealing contain a very wide range of rates for junior employees and apprentices. The relevant instruments fix percentages of the adult wage for juniors and apprentices based on a host of historical and industrial considerations, most of which can only be guessed at. It is not possible to standardise these provisions on an economy-wide basis, at least not at this stage. We have adopted the limited objective of developing new rates which constitute a fair safety net for each of the modern awards based on the terms of the relevant predecessor awards and NAPSAs. We have attempted to strike a balance as between, in some cases, wildly varying provisions. In the case of junior employees the rates will be expressed as a percentage of the rate for the relevant adult classification. In the case of apprentices the rates will generally be expressed as a percentage of the relevant trade rate.” 15

[31] Business SA also contends that under this application the increase in rates for “junior” employee engaged in classifications above Level 2 would be in the order of between $88.00 and $171.00 per week. This, it suggested, would not be consistent with the modern awards objective and would discourage the employment of young people.

[32] The employer organisations all dispute the notion that the critical mass of parties leading into the award modernisation process were subject to the pre-reform awards now relied upon by the unions. They also reject the notion that particular consideration should be given to the “principal awards” now relied upon by the applicant unions.

5. Consideration

5.1 What must be established to warrant a variation as part of the Transitional Review?

[33] The legislative context for the Transitional Review is principally set out in Item 6 of Schedule 5 of the Transitional ProvisionsAct:

“6 Review of all modern awards (other than modern enterprise awards and State reference public sector modern awards) after first 2 years

(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.

Note: The review required by this item is in addition to the annual wage reviews and 4 yearly reviews of modern awards that FWA is required to conduct under the FW Act.

(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.

(2A) The review must be such that each modern award is reviewed in its own right. However, this does not prevent FWA from reviewing 2 or more modern awards at the same time.

(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.

Note: Any variation of a modern award must comply with the requirements of the FW Act relating to the content of modern awards (see Subdivision A of Division 3 of Part 2-3 of the FW Act).

(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.

(5) FWA may advise persons or bodies about the review in any way FWA considers appropriate.

(6) Section 625 of the FW Act (which deals with delegation by the President of functions and powers of FWA) has effect as if subsection (2) of that section included a reference to FWA’s powers under subitem (5).”

[34] The modern awards objective is set out in s.134 of the FW Act:

“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

(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.”

[35] The minimum wages objective is established in s284 of the FW Act as follows:

“284 The minimum wages objective

What is the minimum wages objective?

(1) The FWC must establish and maintain a safety net of fair minimum wages, taking into account:

(a) the performance and competitiveness of the national economy, including productivity, business competitiveness and viability, inflation and employment growth; and

(b) promoting social inclusion through increased workforce participation; and

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

(d) the principle of equal remuneration for work of equal or comparable value; and

(e) providing a comprehensive range of fair minimum wages to junior employees, employees to whom training arrangements apply and employees with a disability.

This is the minimum wages objective.

When does the minimum wages objective apply?

(2) The minimum wages objective applies to the performance or exercise of:

(a) the FWC’s functions or powers under this Part; and

(b) the FWC’s functions or powers under Part 2-3, so far as they relate to setting, varying or revoking modern award minimum wages.

Note: The FWC must also take into account the objects of this Act and any other applicable provisions. For example, if the FWC is setting, varying or revoking modern award minimum wages, the modern awards objective also applies (see section 134).

Meaning of modern award minimum wages

(3) Modern award minimum wages are the rates of minimum wages in modern awards, including:

(a) wage rates for junior employees, employees to whom training arrangements apply and employees with a disability; and

(b) casual loadings; and

(c) piece rates.

Meaning of setting and varying modern award minimum wages

(4) Setting modern award minimum wages is the initial setting of one or more new modern award minimum wages in a modern award, either in the award as originally made or by a later variation of the award. Varying modern award minimum wages is varying the current rate of one or more modern award minimum wages.”

[36] The legislative context for the Transitional Review was comprehensively dealt with in a Full Bench decision 16 of 29 June 2012 (the June 2012 Full Bench decision). The Full Bench in Modern Awards Review 2012 - Penalty Rates17further observed as follows:

“[8] The June 2012 Full Bench decision construed Item 6 according to its terms, having regard to the context and legislative purpose. Part of that context was the award modernisation process conducted by the former Australian Industrial Relations Commission under Part 10A of the Workplace Relations Act 1996 (Cth) (the WR Act). We deal with the award modernisation process in section 2 of this decision.

[9] The June 2012 Full Bench decision observed that two points about this historical context were 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...”

[10] The June 2012 Full Bench decided that two other textual considerations were also relevant. The first is that subitem 6(2)(b) of Schedule 5 directs specific attention to whether modern awards ‘are operating effectively, without anomalies or technical problems arising from the Part 10A award modernisation process.’ No such legislative direction is reflected in the provisions which deal with the 4 yearly review of modern awards (s.156 of the Act).

[11] The second textual consideration is that, Item 6 does not prescribe how the Commission is to be constituted for the purpose of conducting the Transitional Review. This may be contrasted with the 4 yearly reviews provided in s.156 and the award modernisation process under Part 10A of the WR Act, both of which are to be conducted by a Full Bench. The fact that the Transitional Review of a modern award may be conducted by a single member also suggests that the legislature contemplated that the Transitional Review would be more confined in scope that the 4 yearly reviews in s.156.

[12] These considerations led the June 2012 Full Bench to conclude as follows:

“[91] It is important to recognise that we are dealing with a system in transition. Item 6 of Schedule 5 forms part of transitional legislation which is intended to facilitate the movement from the WR Act to the FW Act. The Review is a “one off” process required by the transitional provisions and is being conducted a relatively short time after the completion of the award modernisation process. The transitional arrangements in modern awards continue to operate until 1 July 2014. The fact that the transition to modern awards is still occurring militates against the adoption of broad changes to modern awards as part of the Review. Such changes are more appropriately dealt with in the 4 year review, after the transition process has completed. In this context it is particularly relevant to note that s.134(1)(g) of the modern awards objective requires the Tribunal to take into account:

“the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia . . .”

[99] To summarise, we reject the proposition that the Review involves a fresh assessment of modern awards unencumbered by previous Tribunal authority. It seems to us that the Review is intended to be narrower in scope than the 4 yearly reviews provided in s.156 of the FW Act. In the context of this Review the Tribunal is unlikely to revisit issues considered as part of the Part 10A award modernisation process unless there are cogent reasons for doing so, such as a significant change in circumstances which warrants a different outcome. Having said that we do not propose to adopt a “high threshold” for the making of variation determinations in the Review, as proposed by the Australian Government and others.

[100] The adoption of expressions such as a “high threshold” or “a heavy onus” do not assist to illuminate the Review process. In the Review we must review each modern award in its own right and give consideration to the matters set out in subitem 6(2). In considering those matters we will deal with the submissions and evidence on their merits, subject to the constraints identified in paragraph [99] above.”

[13] We now return to Item 6 of Schedule 5.

[14] Under subitem 6(3) the Commission has a broad discretion to vary any of the modern awards in any way it considers necessary to remedy any issues identified in the Transitional Review. However, subitem 6(4) provides that in making such a variation the Commission must take into account the modern awards objective in s.134 of the Act, and, if varying modern award minimum wages, the minimum wages objective in s.284.”

[37] The Full Bench in that decision also stated:

“[118] In assessing the evidence in these matters we have also been mindful of the approach adopted by the Full Bench in Victorian Employers’ Chamber of Commerce and Industry. Although in a different statutory context, the following observation is apposite to our task:

“[13] In National Retail Association Limited (2010) 199 IR 258) a Full Bench upheld a decision of Vice President Watson rejecting an application under s.157(1) on the basis that there was insufficient evidence to establish that the variation sought was necessary to achieve the modern awards objective.

[14] That is also the case with the evidence here. Although the rules of evidence do not apply to Fair Work Australia that means only that there is less constraint on Fair Work Australia, than exists in the Courts, on the range of evidence that it may admit. The Tribunal nevertheless requires evidence (or uncontested submission - R v Commonwealth Conciliation and Arbitration Commission and Others; Ex parte The Melbourne and Metropolitan Tramways Board (1965) 113 CLR 228 at 243 (per Barwick CJ) and 252 (per Menzies J)) sufficient to allow it to make any jurisdictional findings that condition the exercise of power sought in the originating application.”

[119] The need to advance probative evidence in support of an application to vary a modern award is particularly important in the context of the Transitional Review. The Transitional Review does not involve a fresh assessment of modern awards unencumbered by previous Tribunal authority, and, as we set out in section 2 of this decision, many of the aspects of the applications before us were the subject of consideration by the AIRC in the award modernisation process. It is also important to recognise that we are dealing with a system in transition. The transitional arrangements in modern awards continue to operate until 1 July 2014. The fact that the transition to modern awards is still occurring militates against the adoption of broad changes to modern awards as part of the Transitional Review. Such changes are more appropriately dealt with in the 4 year review, after the transition process has completed. As we have indicated the Transitional Review is narrower in scope than the 4 yearly reviews provided in s.156 of the Act and, as the June 2012 Full Bench stated, in the context of the Transitional Review:

‘...the Tribunal is unlikely to revisit issues considered as part of the Part 10A award modernisation process unless there are cogent reasons for doing so, such as a significant change in circumstances which warrants a different outcome.’ ”

[38] As outlined earlier, the terms of clause 24 were considered and included by the AIRC as part of the Part 10A award modernisation process.

[39] The AMWU contends that the following approach as adopted by the Commission in “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Australian Business Industrial[2013] FWCFB 580 should be applied:

“[12] The principle said to be misapplied is a statement of a Full Bench in the Modern Awards Review that an applicant will have to show that there are cogent reasons for departing from a previous Full Bench decision, such as a significant change in circumstances which warrant a different outcome. The AMWU accepts that the following formulation in the review of the Oil Refining and Manufacturing Award 2010 makes the same point:

“Where an evidentiary case has been presented, direct submissions have been made and the tribunal has made a determination about the relevant award provisions on the basis of that material, cogent reasons will need to be advanced for departing from the award provision.” 18

[40] This was subsequently considered by a Full Bench in Modern Award Review 2012 - Award Flexibility [2013] FWCFB 2170 in the following terms:

“[11] In our view, this statement does not accurately reflect the approach adopted by the June 2012 Full Bench decision. The relevant passage from the June 2012 Full Bench decision states that in the context of the Transitional Review:

“the Tribunal is unlikely to revisit issues considered as part of the Part 10A award modernisation process unless there are cogent reasons for doing so, such as a significant change in circumstances which warrants a different outcome.” [emphasis added]

[12] The approach posited by the June 2012 Full Bench decision is not qualified by reference to those instances ‘where an evidentiary case has been presented’. The reason for such an omission is that evidentiary cases were rarely presented in the Part 10A award modernisation process. To adopt such a precondition to the requirement to establish cogent reasons for a particular variation materially changes the intent of the June 2012 Full Bench decision.”

[41] For my part, I consider that it is appropriate to consider whether there are cogent reasons to support a variation of this particular kind as part of the Transitional Review. This is a case where the AMWU has directly put in issue whether the AIRC Full Bench failed in its making of the award to recognise relevant pre-existing award conditions and to act consistently with the statutory scheme. There were competing proposals on junior rates and the FBT award was issued with terms that modified many of the pre-existing award provisions. The application of the normal principles of stare decisis 19 would, in any event in these particular circumstances, require good reason for a single member of the Commission to alter the Full Bench’s award.

[42] However, although most of the Full Bench decisions referred to above have noted the relatively narrow scope of the Review, each has in effect emphasised that a broad discretion is established by Item 6. Importantly, although cogent reasons are required, it is fundamentally the considerations of the Transitional Provisions Act that must be applied in that regard; namely, whether the award is achieving the modern awards objective and is operating effectively, without anomalies or technical problems arising from the Part 10A award modernisation process.

[43] Where, as in this case, the proposed variation impacts upon minimum wages in a modern award, the Commission must also take into account the minimum wages objective in s.284 of the FW Act.

5.2 Is the FBT award not meeting the modern awards objective and/or is it operating with technicalities or anomalies resulting from the award modernisation process relevant to this application?

[44] The concept of an anomaly or technical problem for present purposes was discussed in the June 2012 Full Bench decision in the following terms:

“[40] There is a degree of overlap between the matters to which ss.159 and 160 are directed and what might be regarded as “anomalies or technical problems” within the meaning of subitem 6(2)(b) of Schedule 5. But in some respects the terms of subitem 6(2)(b) are more limited in that it directs attention to whether modern awards “are operating effectively, without anomalies or technical problems arising from the Part 10A award modernisation process. Hence the “anomalies or technical problems” referred to are those which have arisen from the Part 10A process. Sections 159 and 160 of the FW Act are not so confined.”

[45] There was considerable debate as to which pre-reform awards should be taken to represent the principal pre-modern awards and whether they should have been used as such during the award modernisation process. There was also conjecture as to whether the various awards relied upon by the applicant unions in this matter represented the critical mass of former conditions.

[46] It is sufficient for present purposes to note that many, but not all, of the pre-reform awards and NAPSAs applying in the industry provided for junior rates at 18 years of age. There were also many pre-reform awards and NAPSAs that provided for junior rates up to the age of 21 years.

[47] The concept of the critical mass arises from the decision in the Telstra Enterprise Award Modernisation decision, where the Full Bench stated:

“When the Australian Industrial Relations Commission examined the existing pre-reform awards it did so against the statutory criteria, and this gave rise to a consideration as to how best to resolve the differences contained in the various awards. It became clear that an appropriate approach to the modern award objective was to examine where the “critical mass” existed in any particular term and condition of employment.” 20

[48] Despite the valiant efforts of the AMWU and NUW to assess the likely coverage of the pre-reform awards and NAPSAs, it is not clear to me where the “critical mass” of junior rates provisions would have been at the time of the Division 10A process. In any event, the assessment of the critical mass of junior rates provisions was only one of the considerations to be examined by the AIRC when establishing the award given the various requirements of the award modernisation request 21 under which it was operating. These requirements also led to adoption of the “swings and roundabouts” approach described in many decisions of the Commission made as part of the Transitional Review.

[49] In addition, the AIRC introduced significant transitional arrangements to operate where the relevant terms of the modern award differed from the pre-existing conditions. It is also apparent that these were intended to deal with the consequences of the junior rates established in the FBT award, given that they were both higher and lower than those provided by many of the former instruments. 22

[50] In that light, I do not consider that the provision of a particular modern award condition, in this case clause 24 of the FBT award, that might be different to the provisions of many of the pre-reform awards and NAPSAs, could be said to be an anomaly arising from the Part 10A process.

[51] This approach is consistent with that adopted by the Full Bench in dealing with an application to consider the incorporation of certain public holiday provisions that were found in many pre-reform awards as part of the Transitional Review. The Full Bench concluded:

“[49] It is also relevant that the comparative schedules prepared by the AIRC for each stage of the Part 10A process included a range of public holiday clauses derived from a diversity of federal awards and NAPSA instruments.

[50] For our part we agree with ACCI’s submission that the fact that the Public Holiday Test Case decision was not inserted in all modern awards during the award modernisation process is not an anomaly within the meaning of Item 6(2)(b), as asserted by the ACTU, but rather a conscious decision on the part of the AIRC having regard to the various industrial instruments considered at that time.” 23

[52] Further, and in any event, given the swings and roundabout approach adopted by the AIRC, this Commission must be careful not to readily alter the terms of that package without good reasons. This is particularly so in circumstances where the variation would represent a significant change in minimum entitlements and obligations.

[53] The same Full Bench in dealing with the public holiday claims later concluded as follows:

“[64] The AIRC and FWA Full Benches did not apply all elements of the Public Holiday Test Case decisions to many of the modern awards during the award modernisation process. However, certain elements were included having regard to the former awards and NAPSAs applying in each industry and to the legislative framework at the time of the award modernisation process.

[65] The Penalty Rates Full Bench decision comprehensively considered the award modernisation process and its consequences for the Transitional Review. This included the ‘swings and roundabouts’ approach having regard to the terms of awards and NAPSAs applying in the relevant industries and the need for parties seeking to change the modern awards to demonstrate cogent reasons for such. Those observations are apposite to the matters presently before us.” (footnotes omitted)

[54] It is also important to recognise that in this case, there was little evidence directed to whether, as a matter of substantive merit, employees under this award should be paid adult rates at 18 years of age and whether those employees in classification above Level 2 should all be paid such rates. The evidence was largely directed at the former instruments and the arrangements applying under Enterprise Agreements in this sector where the AMWU was a party.

[55] The evidence that went to the circumstances of the “junior” employees and their responsibilities is relevant but very limited 24 and certainly not sufficient to provide the foundation for a change of this significance during the Transitional Review. This is particularly so given that there are some competing considerations arising from the minimum wages objective, including the need to provide a comprehensive range of fair minimum wages to junior employees, and the promotion of social inclusion through employment.25

[56] I would also be concerned about what would, in effect, be the further modification of the soon to expire transitional provisions in the FBT award. This would follow if the application was granted and the award junior rates provisions modified. The introduction of further change in this regard is a factor militating against the application being granted at this juncture, given the absence of a cogent reason for so doing.

6. Conclusions

[57] I am not persuaded that clause 24 of the FBT award is failing to meet the modern awards objective or that the award is operating with technicalities or anomalies resulting from the award modernisation process relevant to this application. Accordingly, I am not satisfied that sufficient grounds have been demonstrated to warrant the modification of this provision as part of the Transitional Review.

Appearances:

K Veleso for the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers’ Union (AMWU).

D Mujkic for the National Union of Workers.

H Wallgren with S West for the South Australian Employers Chamber of Commerce and Industry, trading as Business SA.

G Vaccaro for The Australian Industry Group.

M Roucek, with permission,for Australian Business Industrial.

Hearing details:

2013

Sydney with video links to Melbourne and Adelaide

October 10.

 1   The original application was amended to delete claims relating to other matters.

 2   Draft supplied to AIRC 13 March 2009.

 3   Submission dated 6 March 2009.

 4   Proceedings before Acton SDP on 16 March 2009.

 5   [2009] AIRCFB 450 at [87].

 6   PR988932.

 7   [2009] AIRCFB 826.

 8   Clause A3.

 9   Clause A2.

 10   AMWU written submissions, 4 September 2013.

 11   AMWU written submissions, 4 September 2013 at 5.13.

 12   NUW written submissions, 2 September 2013.

 13   Transcript PN534.

 14 S.184(1)(c) and s.284(1)(b) of the FW Act.

 15   [2008] AIRCFB 1000.

 16   Modern Awards Review 2012 [2012] FWAFB 5600.

 17   [2013] FWCFB 1635.

 18   [2012] FWA 7212 at [20].

 19   The policy of Courts and Tribunals to abide by or adhere to principles established by decisions in earlier cases.

 20   Telstra Corp Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2012] FWAFB 5401 at [44].

 21 The award modernisation process was governed by Part 10A of the Workplace Relations Act 1996 (Cth) (the WR Act). Section 576C of Part 10A required award modernisation to be conducted in accordance with an award modernisation request made by the Minister for Employment and Workplace Relations. The Minister made a request, pursuant to s.576C(1) of the WR Act, on 28 March 2008. The request was subsequently amended by the Minister, pursuant to s.576C(4) of the WR Act, on a number of occasions.

 22   [2009] AIRCFB 826 at [103].

 23   Modern Awards Review 2012 - Public Holidays [2013] FWCFB 2168.

 24   The evidence of Ms Dowell included reference to her observations about the productivity of “junior” employees in the industry and the rationale for certain provisions in Enterprise Agreements involving the AMWU.

 25   See the findings on the application of this consideration in Annual Wage Review 2012–13 [2013] FWCFB 4000 at [39].

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