David Owens, Raymond Zak, Noel Leonard, Gary Owens and Ian Ross

[2016] FWC 1884

[2016] FWC 1884

FAIR WORK COMMISSION

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Items 9 and 13B Sch. 5—Take-home pay

David Owens, Raymond Zak, Noel Leonard, Gary Owens and Ian Ross
(C2015/4711, C2015/4712, C2015/4716, C2015/4726, C2015/4754)

DEPUTY PRESIDENT KOVACIC MELBOURNE, 29 MARCH 2016

Applications for take home pay orders – applicants have not suffered suffered a modernisation-related reduction in take-home pay as per Item 8(3) of Schedule 5 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (TPCA Act) nor is it appropriate to make the take-home pay orders sought under clause 2.4 of the Security Services Industry Award 2010 as provided for in Item 13B of Schedule 5 of the TPCA Act – applications dismissed.

[1] Messrs David Owens, Raymond Zak, Noel Leonard, Gary Owens and Ian Ross (the Applicants) each made applications which were received by the Fair Work Commission (the Commission) over the period 9 to 14 July 2015 under Items 9 and 13B of Schedule 5 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the TPCA Act) seeking take home pay orders to remedy a reduction in pay they suffered as a result of the operation of the transitional provisions in the Security Services Industry Award 2010 1 (the Award.

[2] By way of background, the Applicants are employed as security guards by Secom Australia Pty Ltd (Secom – the Respondent) and work at the Deep Space Station at Tidbinbilla in the ACT. The Applicants are employed under the Award.

[3] The applications were heard by the Commission on 30 July 2015. At the hearing, Mr Gary Owens, one of the Applicants, appeared on behalf of the Applicants, while Mr Sam Gillani, Secom’s Human Resources Manager, appeared with Mr Mark Izzard, Secom’s General Manager Protective Services, for the Respondent.

[4] For the reasons set out below, I am not satisfied that the Applicants have suffered a modernisation-related reduction in take-home pay as per Item 8(3) of Schedule 5 of the TPCA Act. As such, there is no basis for the Commission to make the take-home pay orders sought under Item 9 of Schedule 5 of the TPCA Act. Further, I do not consider it appropriate to make the take-home pay orders sought under clause 2.4 of the Award as provided for in Item 13B of Schedule 5 of the TPCA Act.

Background

[5] When the Award was made it included a number of transitional provisions, one of which concerned the Space Tracking Station Allowance (the Allowance). The Applicants were paid the Allowance in accordance with the Award. The Allowance ceased to operate on 31 December 2014 as a result of the operation of the Award’s transitional provisions. The relevant Award provisions are set out below:

“2. Commencement and transitional

2.4 Neither the making of this award nor the operation of any transitional arrangements is intended to result in a reduction in the take-home pay of employees covered by the award. On application by or on behalf of an employee who suffers a reduction in take-home pay as a result of the making of this award or the operation of any transitional arrangements, the Fair Work Commission may make any order it considers appropriate to remedy the situation.

Schedule B—Additional Transitional Provisions

B.3 Space tracking station allowance

An employee engaged at the Deep Space Station, Tidbinbilla, A.C.T., must be paid an allowance of 12.5% of the standard rate per week.

This allowance is payable when an employee is on annual leave, sick leave and/or public holidays but is not to be used in calculating other extra payments prescribed by this award.

B.7 This schedule ceases to operate on 31 December 2014.

[6] The Applicants were advised by Secom by letter dated 26 May 2015 that the Allowance ceased to operate on 31 December 2014 and would therefore no longer be paid. Secom did not seek to recover the Allowance payments made to the Applicants during 2015.

[7] The Applicants unsuccessfully sought to resolve their concerns with Secom, with the Commonwealth Scientific and Industrial Research Organisation (CSIRO), which manages the Tidbinbilla complex and to which Secom is contracted, also unsuccessfully attempting to mediate a resolution of the matter. At the time that the Allowance ceased to operate, it was worth just under $95.00 per week. The Applicants are employed as Security Officer Level 1 employees, with the minimum weekly rate specified in the Award for that classification at the time of their applications being $738.10 per week.

The Applicant’s case

[8] The Applicants stated in their applications that:

• while the security companies contracted to the CSIRO at the Tidbinbilla complex had changed periodically over time, it was common for security staff to transfer to the incoming contractor and remain at the site;



• Secom had been present at the Tidbinbilla complex for almost three years;



• their service at Tidbinbilla predates award modernisation;



• their duties had essentially remained unchanged since 2005, with the number of security staff having decreased over that period and the workload having increased as a result; and



• they will be significantly worse off in terms of take-home pay as a result of the Allowance ceasing to operate.

[9] At the hearing, the Applicants set out the background to their applications and reiterated much of what was stated in their applications. In addition, the Applicants submitted, among other things, Secom is likely to have factored in the cost of the Allowance in its tender for the Tidbinbilla contract. Assuming that was the case, the Applicants questioned why Secom was not passing on the amount to them. The Applicants also disputed key aspects of Secom’s submissions and expressed the view that they had been “fleeced” to the tune of about $5,000 per annum. The Applicants also highlighted that when Secom assumed the contract for provision of security services at the Tidbinbilla complex it had written to security guards on 5 September 2014 in the following terms:

“Due to the employment transferring between related entities, your service at Secom ACT will be recognized and counted towards continuity of leave entitlements …

Your employment remains subject to the Security Services Industry Award 2010 and the current conditions of employment will remain unchanged.” 2

[10] In conclusion, the Applicants submitted that the Commission should make an order requiring Secom to pay them an amount equivalent to the Allowance and emphasised that allowances can be included in a take-home pay order.

The Respondent’s case

[11] Secom contended in its Form F47D – Response to an application for a take-home pay order (multiple employees/outworkers) that there had been no reduction in take-home pay arising out of the introduction of the Award on 1 January 2010 and the first transitional increase occurred on 1 July 2014. Secom further contended that there was an increase in minimum rates arising from the introduction of the Award. In support of that contention, Secom pointed out that the rate of pay for a Security Officer Level 1 in the pre-reform Award, the Security Employees (A.C.T.) Award, 1998 3, was $582.90 per week prior to award modernisation, with the equivalent rate under the Award $614.46 per week – a difference of $31.56 per week. Secom also contended that the lower wage rate transitioned as per the Award until the two wage rates were aligned on 1 July 2014.

[12] Against that background, Secom submitted that the Applicants’ amount of take-home pay for working particular hours had not decreased and that their hourly rate of pay had increased.

[13] Beyond that, Secom stated in its Form F47D that the Allowance was not transitioned in the same way as other allowances in the Award, highlighting that the allowances specified in clause 15 of the Award continued to operate while the Allowance was not immediately removed from the Award but ceased to operate on 31 December 2014 as per the Award.

[14] At the hearing, Secom largely reiterated the above contentions and submitted that the Applicants were not worse off as a result of the making of the Award. In its oral submissions, Secom relied upon the decision in Bjoern Fisher v Glad Security Pty Ltd 4. With regard to the abovementioned letter of 5 September 2014 to security guards, Secom contended that it simply provided that the Applicants terms and conditions of employment continued to be governed by the Award and that it ceased paying the Allowance in accordance with the Award.

The statutory framework

[15] Part 3 of Schedule 5 of the TPCA Act deals with avoiding reductions in take-home pay. Specifically Items 8 and 9 of Schedule 5 of the TPCA Act provides as follows:

“Part 3—Avoiding reductions in take-home pay

8 Part 10A award modernisation process is not intended to result in reduction in take-home pay

(1) The Part 10A award modernisation process is not intended to result in a reduction in the take-home pay of employees or outworkers.

(2) An employee’s or outworker’s take-home pay is the pay an employee or outworker actually receives:

(a) including wages and incentive-based payments, and additional amounts such as allowances and overtime; but
(b) disregarding the effect of any deductions that are made as permitted by section 324 of the FW Act.

Note: Deductions permitted by section 324 of the FW Act may (for example) include deductions under salary sacrificing arrangements.

(3) An employee suffers a modernisation-related reduction in take-home pay if, and only if:

(a) a modern award made in the Part 10A award modernisation process starts to apply to the employee when the award comes into operation; and
(b) the employee is employed in the same position as (or a position that is comparable to) the position he or she was employed in immediately before the modern award came into operation; and
(c) the amount of the employee’s take-home pay for working particular hours or for a particular quantity of work after the modern award comes into operation is less than what would have been the employee’s take-home pay for those hours or that quantity of work immediately before the award came into operation; and
(d) that reduction in the employee’s take-home pay is attributable to the Part 10A award modernisation process.

(4) …

9 Orders remedying reductions in take-home pay

Employees
(1) If the FWC is satisfied that an employee, or a class of employees, to whom a modern award applies has suffered a modernisation-related reduction in take-home pay, the FWC may make any order (a take-home pay order) requiring, or relating to, the payment of an amount or amounts to the employee or employees that the FWC considers appropriate to remedy the situation.

Outworkers
(2) If the FWC is satisfied that an outworker, or a class of outworkers, to whom outworker terms in a modern award relate has suffered a modernisation-related reduction in take-home pay, the FWC may make any order (a take-home pay order) requiring, or relating to, the payment of an amount or amounts to the outworker or outworkers that the FWC considers appropriate to remedy the situation.

General provisions
(3) The FWC may make a take-home pay order only on application by:

(a) an employee or outworker who has suffered a modernisation-related reduction in take-home pay; or
(b) an organisation that is entitled to represent the industrial interests of such an employee or outworker; or
(c) a person acting on behalf of a class of such employees or outworkers.

(4) If the FWC is satisfied that an application for a take-home pay order has already been made in relation to an employee or a class of employees, or an outworker or a class of outworkers, the FWC may dismiss any later application that is made under these provisions in relation to the same employee or employees, or the same outworker or outworkers.”

[16] Regulation 3B.04 of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 (the TPCA Regulations) amends Schedule 5 of the TPCA Act by inserting Part 3A after Part 3. The relevant items in Part 3A are set out below.

“Part 3A––Avoiding reductions in take-home pay from modern award or transitional arrangements

13A Modern award terms giving FWA power to make take-home pay orders

(1) A modern award may include terms that give FWA power to make an order (a take-home pay order) remedying a reduction in take-home pay suffered by an employee or outworker, or a class of employees or outworkers, as a result of the making of a modern award or the operation of any transitional arrangements in relation to the award (whether or not the reduction in take-home pay is a modernisation-related reduction in take-home pay).

(2) An employee’s or outworker’s take-homepayis the pay an employee or outworker actually receives:

(a) including wages and incentive-based payments, and additional amounts such as allowances and overtime; but
(b) disregarding the effect of any deductions that are made as permitted by section 324 of the FW Act.

Note: Deductions permitted by section 324 of the FW Act may (for example) include deductions under salary sacrificing arrangements.

(3) This Part applies to an employee or outworker, or a class of employees or outworkers, to whom a modern award applies if the employee, employees, outworker or outworkers are likely to suffer a reduction in take-home pay attributable to the making of a modern award or the operation of any transitional arrangements in relation to the award.

13B  Orders remedying reductions in take-home pay

(1) If FWA makes a take-home pay order under the terms of a modern award it must do so in accordance with this Part.

(2) Without limiting the kind of take-home pay order that may be made under the terms of a modern award, one or more of the following orders may be made:

(a) an order compensating a reduction in take-home pay that has already been suffered;
(b) an order requiring the payment of an amount of take-home pay;
(c) an order preventing a reduction in take-home pay from occurring.

(3) FWA may make a take-home pay order only on application by:

(a) an employee or outworker who has suffered a reduction in take-home pay; or
(b) an organisation that is entitled to represent the industrial interests of such an employee or outworker; or
(c) a person acting on behalf of a class of such employees or outworkers.

(4) If FWA is satisfied that an application for a take-home pay order has already been made in relation to an employee or outworker, or a class of employees or outworkers, FWA may dismiss any later application that is made in relation to the same employee, employees, outworker or outworkers.”

Consideration of the issues

[17] Item 8(3) of Schedule 5 of the TPCA Act sets out when an employee suffers a modernisation-related reduction in take-home pay. An analysis of the material before the Commission, drawing primarily on the Applicant’s contentions and submissions, indicates that:

• the Award, which was made as part of the award modernisation process, applied to the Applicants from when it came into operation; and



• the Applicants are employed in the same positions as they were employed in immediately before the Award came into operation; and



• the Applicants’ take-home pay for working particular hours or for a particular quantity of work after the Award came into operation was not less than their take-home pay for those hours or that quantity of work immediately before the Award came into operation as they continued to be paid the Allowance until around mid-2015.

[18] Against that background, I am not satisfied that the Applicants have suffered a modernisation-related reduction in take-home pay as per Item 8(3) of Schedule 5 of the TPCA Act and as required by Item 9(1) of Schedule 5. Accordingly, there is no basis for the Commission to make the take-home pay orders sought under Item 9(1) of Schedule 5 of the TPCA Act.

[19] The question then becomes whether the Commission can make the take-home pay orders sought under the transitional provision at clause 2.4 of the Award. By way of background, clause 2.4 of the Award was determined by a Full Bench of the then Australian Industrial Relations Commission (the award modernisation Full Bench). In its decision 5 the award modernisation Full Bench had the following to say regarding the model transitional provision:

“[20] We deal next with the possibility of reductions in take-home pay. The provisions of Part 3 of Schedule 5 to the Transitional Act are concerned with the maintenance of take-home pay. They deal with what happens when an employee suffers a reduction in take-home pay as a result of a modern award coming into operation. It is to be implied that the provisions do not apply to employees who commence employment after the modern award has come into operation. So while the provisions are concerned with what happens when the modern award comes into operation, they do not deal with the potential for reductions in take-home pay resulting from the operation of the transitional provisions. As will be seen, the model provisions permit a phased reduction in pre-modern award conditions if they were more beneficial for employees than the modern award. For that reason we think it is important to provide protection for new employees from reductions in take-home pay which otherwise might result from the operation of the transitional provisions. The model provision specifies that neither the making of the award nor the operation of the transitional provisions is intended to result in a reduction in take-home pay. It also indicates that Fair Work Australia may make an order to remedy a reduction in take-home pay. This provision will complement the power to make take-home pay orders in item 9 of Schedule 5 to the Transitional Act. The model provision reads:

“Neither the making of this award nor the operation of any transitional provision is intended to result in a reduction in the take-home pay of employees covered by the award. On application by or on behalf of an employee who suffers a reduction in take-home pay as a result of the making of this award or the operation of any transitional provision, Fair Work Australia may make any order it considers appropriate to remedy the situation.” (Underlining added)

[20] As can be seen from the above extract, the model provision was intended “to provide protection for new employees from reductions in take-home pay which otherwise might result from the operation of the transitional provisions” (underlining added) as a result of “a phased reduction in pre-modern award conditions if they were more beneficial for employees than the modern award.” As previously noted, the Applicants stated in their applications that their service at Tidbinbilla predates award modernisation. In other words, the circumstances in this case fall outside the circumstances in which the award modernisation Full Bench envisaged the Commission making a take-home pay order to address any reduction in take-home pay resulting for the operation of the transitional provisions.

[21] The above analysis supports a finding that it would be inappropriate to make the take-home pay orders sought under Item 13B of Schedule 5 of the TPCA Act as to do so would be inconsistent with the award modernisation Full Bench’s intent in inserting clause 2.4 in the Award.

Conclusion

[22] For all the above reasons, I am not satisfied that the Applicants have suffered suffered a modernisation-related reduction in take-home pay as per Item 8(3) of Schedule 5 of the TPCA Act. As such, there is no basis for the Commission to make the take-home pay orders sought under Item 9 of Schedule 5 of the TPCA Act. Further, I do not consider it appropriate to make the take-home pay orders sought under clause 2.4 of the Award as provided for in Item 13B of Schedule 5 of the TPCA Act as to do so would be inconsistent with the award modernisation Full Bench’s intent in inserting the model transitional provision in modern awards, including the Award.

[23] Accordingly, the applications will be dismissed.

Appearances:

G. Owens on behalf of the Applicants.

S. Gillani and M. Izzard for the Respondent.

Hearing details:

2015.

Canberra:

July 30.

 1   MA000016

 2   Exhibit O1

 3   AP796056

 4   [2010] FWA 3678

 5 (2009) 187 IR 146

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