OneSteel Wire Pty Limited v The Australian Workers' Union Newcastle, Central Coast and Northern Regions Branch

[2010] FWA 2055

Note: An appeal pursuant to s.604 (C2010/3251) was lodged against this decision - refer to Full Bench decision dated 3 June 2010 [[2010] FWAFB 4017] for result of appeal.

[2010] FWA 2055

FAIR WORK AUSTRALIA

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 26 - Application to resolve an issue between a transitional instrument and the National Employment Standards

OneSteel Wire Pty Limited and others
v
The Australian Workers' Union - Newcastle, Central Coast and Northern Regions Branch and others
(AG2010/6214, AG2010/6210, AG2010/6211, AG2010/6203, AG2010/6201, AG2010/6213)

SMORGON STEEL GROUP – REINFORCING AND STEEL PRODUCTS DIVISION – MANUFACTURING AND GRINDING MEDIA WARATAH – AWARD 2006
[AG870657]
ONESTEEL WIRE PTY LTD ROPES AWARD
[AN120396]
ONESTEEL WIRE PTY LTD NEWCASTLE FENCE POST PLANT AWARD
[AN120394]
ONESTEEL MANUFACTURING PTY LTD NEWCASTLE ROD AND BAR AWARD
[AN120392]
ONESTEEL WIRE PTY LTD NEWCASTLE WIREMILL AWARD
[AN120395]
ONESTEEL REINFORCING ENTERPRISE AGREEMENT 2005-2008
[AG842494]

JUSTICE BOULTON, SENIOR DEPUTY PRESIDENT SYDNEY, 19 MARCH 2010

Variation of transitional instruments as defined in item 2 of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 – public holidays

[1] These are applications by four companies in the OneSteel group with operations in the Newcastle and Lake Macquarie areas of New South Wales for the variation of award provisions dealing with public holidays.

[2] The relevant awards are transitional instruments as defined in item 2 of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (FW (TPCA) Act) and the applications have been made under item 26 of Schedule 3 of that Act. Item 26 enables a person covered by a transitional instrument to apply to Fair Work Australia (FWA) to resolve difficulties about the interaction between the transitional instrument and the National Employment Standards (NES).

[3] The applications relate to the way in which Newcastle Show Day (26 March 2010), which has been declared as a regional public holiday under the Banks and Bank Holidays Act 1912 (NSW), should be applied toemployees covered by the instruments.

Background

[4] The background to the applications may be briefly set out as follows. The public holidays provisions in the six transitional instruments are similar in that they provide for 10 named public holidays (New Year’s Day, Australia Day, Good Friday, Easter Saturday, Easter Monday, Anzac Day, the local Eight Hours Day, Queen’s Birthday, Christmas Day and Boxing Day) together with “special days appointed by proclamation as public holidays throughout the State.” They also provide for an additional public holiday each year to be taken on a day mutually agreed between the parties. In the past, the parties have agreed that the additional public holiday will be taken on various days (e.g. Easter Tuesday) but never on Newcastle Show Day. For 2010, it was agreed in relation to workers covered by four of the six transitional instruments that the additional public holiday would be taken on 25 January 2010.

[5] The NES in the Fair Work Act 2009 (FW Act) are minimum standards that apply to national system employees. The NES provisions came into operation on 1 January 2010 and must be complied with by national system employers (s. 44). The public holidays in the NES are defined in s.115(1) as 8 named days together with other days or part-days declared or prescribed under a law of a State or Territory to be observed generally, or within a region of the State or Territory, as a public holiday. Section 115(1) provides as follows:

“115 Meaning of public holiday

The public holidays

(1) The following are public holidays:

(a) each of these days:

(i) 1 January (New Year’s Day);

(ii) 26 January (Australia Day);

(iii) Good Friday;

(iv) Easter Monday;

(v) 25 April (Anzac Day);

(vi) the Queen’s birthday holiday (on the day on which it is celebrated in a State or Territory or a region of a State or Territory);

(vii) 25 December (Christmas Day);

(viii) 26 December (Boxing Day);

(b) any other day, or part-day, declared or prescribed by or under a law of a State or Territory to be observed generally within the State or Territory, or a region of the State or Territory, as a public holiday, other than a day or part-day, or a kind of day or part-day, that is excluded by the regulations from counting as a public holiday.”

[6] On 30 November 2009 the NSW Minister for Industrial Relations declared under the Banks and Bank Holiday Act 1912 that 26 March 2010 would be observed as a public holiday in the Lake Macquarie City Council and Newcastle City Council areas. By virtue of the operation of the NES provisions, which include regional public holidays, the employees of the OneSteel companies would be entitled to 26 March 2010 (Newcastle Show Day) as a public holiday. Under the transitional instruments, which only include proclaimed holidays which apply throughout the State, the OneSteel employees have not in the past been entitled to such regional holidays.

[7] There was correspondence and discussions between the OneSteel companies and the unions regarding the way in which the regional public holiday on 26 March 2010 should be applied to OneSteel employees. As no agreement was reached, the companies made the current applications. In effect, the applications seek to align the provisions of the instruments with the NES such that employees will retain a general entitlement to 11 public holidays each year. This will be achieved by varying the public holiday provisions in the instruments so that the Newcastle Show Day holiday will be treated as the additional public holiday under the instruments. This would ensure that employees will continue to receive 11 public holidays each year, but not 12 public holidays to which the combined operation of the NES and the instruments might otherwise entitle them.

Legislation

[8] The applications by the OneSteel companies are made under item 26 of Schedule 3 of the FW(TPCA) Act which relates to difficulties regarding the interaction between transitional instruments and the NES. Item 26 provides as follows:

“26 Resolving difficulties about application of this Division

(1) On application by a person covered by a transitional instrument, FWA may make a determination varying the transitional instrument:

(a)to resolve an uncertainty or difficulty relating to the interaction between the instrument and the National Employment Standards; or

(b) to make the instrument operate effectively with the National Employment Standards.

(2) A variation of a transitional instrument operates from the day specified in the determination, which may be a day before the determination is made.”

[9] The general scheme of the Fair Work legislation relating to the interaction between the new minimum entitlements in the NES and awards and agreements may be described as follows. The NES provide minimum entitlements which, together with modern awards and national minimum wage orders, provide a safety net of terms and conditions for employees. The NES also provide a benchmark for bargaining and underpin enterprise agreements. Modern awards and enterprise agreements can “build on” the NES by including terms that supplement, or are ancillary or incidental to, the NES. However an award or agreement cannot be detrimental to an employee in any respect when compared to the NES (see paragraphs 231-233, Explanatory Memorandum to the Fair Work Bill 2008).

[10] The way in which the NES apply in relation to employees covered by transitional instruments is dealt with by Division 1 of Part 5 of Schedule 3 of the FW (TPCA) Act. The overriding obligation in the FW Act is that national system employers must not contravene a provision of the NES (s.44 of the FW Act). For present purposes, the key provisions are in item 23 of Division 1 which sets out the “no detriment” rule to be applied. Item 23 provides as follows:

“23 The no detriment rule

(1) To the extent that a term of a transitional instrument is detrimental to an employee, in any respect, when compared to an entitlement of the employee under the National Employment Standards, the term of the transitional instrument is of no effect.

Note 1: A term of a transitional instrument that provides an entitlement that is at least as beneficial to an employee as a corresponding entitlement of the employee under the National Employment Standards will continue to have effect.

Note 2: Division 3 (which contains other general provisions about how the FW Act applies in relation to transitional instruments) is also relevant to how the National Employment Standards apply in relation to employees to whom transitional instruments apply.

Note 3: References to the National Employment Standards include a reference to the extended parental leave provisions and the extended notice of termination provisions (see sections 746 and 761 of the FW Act).

(1A) If there is a dispute about the application of this item which must be resolved by FWA in accordance with item 26, FWA may compare the entitlements which are in dispute:

(a) on a ‘line-by-line’ basis, comparing individual terms; or

(b) on a ‘like-by-like’ basis, comparing entitlements according to particular subject areas; or

(c) using any combination of the above approaches FWA sees fit.

(2) Subitem (1) does not affect a term of a transitional instrument that is permitted by a provision of the National Employment Standards as it has effect under item 24.

(3) The regulations may make provisions that apply to determining, for the purpose of this item, whether terms of a transitional instrument are, or are not, detrimental in any respect when compared to entitlements under the National Employment Standards.”

[11] The general rule in subitem 23(1) is that a term of a transitional instrument will be of no effect if it is detrimental to an employee in any respect when compared to the NES. A note to the subitem explains that a term of a transitional instrument that provides an entitlement at least as beneficial as the entitlement under the NES will continue to have effect.

[12] The provisions dealing with the interaction between transitional instruments and the NES are not as detailed as those in the FW Act dealing with the interaction between the NES, modern awards and enterprise agreements – see e.g. s. 55(6) of the FW Act which deals with the continued operation of more beneficial terms of a modern award or enterprise agreement, but not so as to give an employee double benefits. The legislative note to that sub-section gives the following example:

“Note: For example, if the award or agreement entitlement is to 6 weeks of paid annual leave per year, the provisions of the National Employment Standards relating to the accrual and taking of paid annual leave will apply, as a minimum standard, to 4 weeks of that leave.”

[13] Given the range and complexity of issues that might arise in relation to the interaction between transitional instruments and the NES, it is understandable that provision is made for FWA to resolve difficulties about the application of the rules about interaction. Where application is made to FWA to exercise this function, a determination may be made under item 26 varying the transitional instrument to resolve an uncertainty or difficulty or to make the instrument operate effectively with the NES. In the exercise of this power, FWA may compare the entitlements which are in dispute by looking at individual terms on a “line-by-line” or by looking at entitlements according to particular subject areas on a “like-by-like” basis or by using any combination of these approaches (subitem 23(1A)).

[14] In the course of the proceedings, reference was made to the Parliamentary debates regarding the insertion of subitem 23(1A) into the FW (TPCA) Bill. The amendment was moved in the Senate by Senator Xenophon who explained the reason for it as follows:

“The first amendment is an approach giving Fair Work Australia the power to compare entitlements in dispute on a line-by-line basis—which compares individual terms, and is the approach of the government—or, alternatively, on a like-by-like basis, comparing entitlements according to particular subject areas or, thirdly, using any combination of the above approaches that Fair Work Australia sees fit. This amendment seeks to enable Fair Work Australia to use its discretion to ensure that the rights of both employers and employees are protected when entitlements are in dispute…

A like-by-like approach, in essence, groups similar subjects, such as leave, and enables comparisons to be made to ensure that employees are either equal to or better off under the NES so that there is still a firm no detriment approach…

Further, should there be any difficulty in taking this approach then Fair Work Australia is empowered to use the best approach for the particular situation. It has that flexibility and, far from telling the independent umpire how it should act, this amendment guides Fair Work Australia and provides it with greater flexibility to achieve outcomes that balance employer/employee entitlements without any detriment to the employees.” (Senate Hansard, 16 June 2009, pp 3413-3414)

Evidence and submissions

^[15]    The OneSteel companies submitted that the instruments should be varied to deal with the issue raised by the combined operation of the NES and the public holiday provisions in the instruments. It was said that historically the employees covered by the instruments have been entitled to 11 public holidays each year and that the provision of an additional public holiday would impose significant additional costs on the companies. This would apply in 2010 and potentially in 2011 as the instruments, which are in the nature of agreements, remain in force until August 2011.

[16] Evidence was given in the proceedings by Mr Geoff Dunleavy, the Employee Relations Manager for the OneSteel Limited businesses in Australia. He explained that the awards for five of the OneSteel sites in the Newcastle area were originally State enterprise awards under the NSW Industrial Relations Act 1996, that they were later taken to be NSW enterprise agreements and that when the Federal Work Choices reforms came into effect, the agreements became “preserved State agreements” under the Workplace Relations Act 1996 (WR Act). The OneSteel Reinforcing Enterprise Agreement 2005-2008 was a federal agreement with the status of a pre-reform certified agreement under the WR Act. The Work Choices public holiday provisions in Division 2 of Part 12 of the WR Act (commencing at s.611) did not apply to any of the abovementioned OneSteel agreements (see item 15F of Schedule 8 and item 30A of Schedule 7 of the WR Act). Subsection 611(b) of the WR Act is in similar terms as s.115 (1)(b) of the FW Act and includes regional holidays declared under State or Territory law.

[17] Mr Dunleavy explained the practice whereby agreement has been reached at the various OneSteel sites in the Newcastle area as to the day on which the additional public holiday provided under the instruments is to be taken. He also explained that the instruments for the sites were extended and varied by the Australian Industrial Relations Commission around February/March 2009 to give effect to the 2008-2009 OneSteel Wages Agreement. The discussions and negotiations for that agreement were concluded about November 2008. He said that at that time the NES were not in force and the difficulties which have given rise to the current applications had not arisen. Mr Dunleavy referred to another OneSteel agreement, namely the OneSteel ATM Newcastle Union Collective Agreement 2008-2011 (the ATM Agreement), which applies at another site in the Newcastle area. This agreement was negotiated in the context of the Work Choices reforms and the application of s.611 of the WR Act. As it was recognised that the combined operation of the agreement and s.611 might result in a twelfth public holiday with Newcastle Show Day, there were negotiations between the company and the unions. It was explained that the unions agreed with amendments to the public holidays provisions in that Agreement to maintain the entitlement to 11 public holidays. It was said that the variations sought in the current applications will make the instruments expressly consistent with the ATM Agreement. Mr Dunleavy also gave evidence about the costs to the OneSteel businesses of granting an additional public holiday in 2010.

[18] Evidence was also given in the proceedings by Ms Melissa Pond, Industrial Officer in the Newcastle Regional Office of the Australian Manufacturing Worker’s Union (AMWU). She gave evidence regarding the negotiations for the OneSteel agreements, including the ATM Agreement. She said that the negotiations for the various agreements took place around the same time and that OneSteel sought variations to the public holidays provision in the ATM Agreement because of the operation of s. 611 of the WR Act. She said that employees had accepted the changes proposed by OneSteel, although AMWU members voted against them. In relation to the observance of Newcastle Show Day, Ms Pond said a majority of AMWU workshops in the Newcastle area observe this day as a public holiday.

[19] In the course of the proceedings, reference was made to various decisions, including decisions relating to the establishment of the standard of 11 public holidays in the steel industry in NSW and the application of gazetted public holidays to employees covered by awards, including cases relating to Newcastle Show Day and applications by unions to have this included as a State award entitlement. For example, see Re Shop Employees’-Newcastle Show Day-Award (unreported, 25 February 1994, Industrial Relations Commission of New South Wales, Glynn J, Maidment J and Connor CC).

[20] Reference was also made to the decision of the Chief Industrial Magistrate’s Court in Trunk v Waratah Engineering (unreported, 12 December 2008). That case involved a consideration of the application of s. 611(b) of the WR Act and relevant federal award provisions in relation to a declaration under the New South Wales Banks and Bank Holidays Act 1912 that Newcastle Show Day on 11 April 2008 was to be a public holiday in the Newcastle region. It was decided in that case that the applicant employees were entitled to the holiday either by virtue of s. 611(b) which provided for the adoption of additional public holidays that are proclaimed to have effect within a State or Territory or a region of a State or by virtue of clause 7.5.1(f) of the Federal Metal, Engineering and Associated Industries Award 1998 which provided for additional public holidays which are proclaimed “to be observed generally by persons throughout that State or Territory or locality thereof.”

[21] The unions (AWU, AMWU, CFMEU and CEPU) opposed the applications by the OneSteel companies. It was submitted that there is no uncertainty or difficulty relating to the interaction between the NES and the instruments or a need to vary the instruments so that they operate effectively with the NES. It was said that the entitlements under the instruments and the NES are clear and that the employees of the OneSteel companies should have the benefit of both the additional public holiday and the proclaimed regional holiday on 26 March 2010 (Newcastle Show Day). It was said that the NES do not refer to any specific number of public holidays – they provide for 8 named days and additional days as declared under State or Territory laws. It was submitted that simply because OneSteel does not like the combined effect of the NES and the awards is not a sufficient basis for making the variations sought. If the OneSteel companies sought a different result, they should have addressed the issue in negotiations as with the ATM Agreement. Further it was said that merely because additional costs would be incurred by OneSteel as a result of the application of the Newcastle Show Day holiday does not to warrant making variations to the instruments. Parliament recognised in the passage of the Fair Work Bill that additional entitlements under the NES might impose costs on employers (see Explanatory Memorandum to the Fair Work Bill 2008, r 11).

Consideration

[22] The applications by the OneSteel companies are pursued under item 26 of Schedule 3 of the FW (TPCA) Act, which gives FWA a discretionary power to make a determination varying a transitional instrument in certain circumstances. The power is directed at resolving difficulties concerning the application of the rules set out in Division 1 about the interaction between transitional instruments and the NES.

[23] In considering the applications, I have had regard to the general scheme of the Fair Work legislation relating to the NES and to the specific provisions dealing with the interaction between transitional instruments and the NES. The NES are minimum entitlements which may be improved upon through negotiation and agreement and/or in the context of the application of existing awards and agreements. It is clear from the legislation and explanatory memoranda that employees can continue to have the benefit of comparable and more favourable terms and conditions in transitional instruments after the NES applies. In some instances, the way in which this shall be applied is clear (e.g. where an employee is entitled under an instrument to 6 weeks annual leave). In other cases, the way in which the more beneficial entitlements should be preserved may be less clear cut. However the general rule is that the entitlements under an instrument must not be detrimental to employees in any respect when compared with the NES.

[24] The issue between the parties in the present matters concerns the extent to which employees covered by the OneSteel instruments will retain the benefit of more favourable terms and conditions in the instruments relating to public holidays as well as the NES entitlements. In some respects, it is an issue as to whether the employees under the instruments should have “the best of both worlds” or something less.

[25] The present entitlement in the instruments is for 11 public holidays each year. This entitlement is in certain respects more beneficial than the entitlement under the NES, as the entitlement to the eleventh day is not dependent upon a declaration of a local public holiday under the NSW legislation. Such a declaration has been made in relation to Newcastle Show Day in 2010, but was not made, for example, in 2007. The combined operation of the public holiday entitlements in the instruments and the NES would result in the employees having at least 12 public holidays in 2010 and perhaps in 2011. This would impose considerable additional costs on the OneSteel companies which might not be addressed until the next round of negotiations between the parties. The circumstances in which the current agreements were negotiated and the awareness of the parties as to the possible application of new employment standards in the Fair Work legislation were the subject of evidence in the proceedings. In my view it is understandable that the possible issues regarding local public holidays were not addressed by the parties in those negotiations as the relevant legislation was then still under consideration.

[26] In all the circumstances of the present applications, I have come to the conclusion that a determination should be made varying the transitional instruments as sought by the OneSteel companies. The variations are appropriate to make the instruments operate effectively with the NES. They will also resolve issues and difficulties which have arisen between the parties relating to the interaction between the instruments and the NES and the continued application of ‘above NES’ entitlements.

[27] If the instruments are not varied then the employees covered by them will be entitled to the benefit of both the additional proclaimed public holiday for the Newcastle area (26 March 2010) and the additional public holiday provided under the instruments. The comparison of the public holiday entitlements in the NES and the instruments on a like-by-like basis is that there would be an entitlement under both to 11 public holidays in 2010 (given the proclamation of Newcastle Show Day as a regional public holiday). The variations sought by the OneSteel companies will ensure that in the present circumstances there is no detriment to the employees concerned in comparison to the NES and that they will have the benefit of a guaranteed additional public holiday each year regardless of whether Newcastle Show Day and/or any other days are proclaimed under the NSW legislation as additional holidays. However, the overall public holiday entitlement of 11 paid public holidays each year will be maintained for the employees of the OneSteel companies (unless any further additional public holidays are proclaimed).

[28] In my view, such variations are appropriate to ensure that the instruments operate effectively with the NES. In some respects, they will preserve the current public holiday entitlements so that they can be addressed by the parties in the next round of enterprise negotiations and agreement making. The variations will also mean that the NES operate as a proper safety net of minimum entitlements to public holidays that can be improved upon through bargaining and agreement between the parties. In this way, the variations ensure the integrity of the NES and the application of the “no detriment” rule whilst taking into account the interests of all parties.

[29] In this regard, it is noted that Newcastle Show Day has not been extended or applied to the OneSteel employees covered by the instruments in the past and that the variations are in similar terms to what was agreed in relation to the ATM Agreement and the application of s. 611(b) of the WR Act. It is also noted that the Manufacturing and Associated Industries Award 2010, which is the modern award replacing the Metal, Engineering and Associated Industries Award 1998, does not contain the “one additional public holiday” which has been included in federal awards for a considerable time. This is relevant to but not determinative of the present applications which relate to instruments of a different character. However it illustrates the way in which the interaction with the NES has been determined in relation to modern awards.

[30] It should be added that, in deciding these matters, I have not reached any conclusion as to the merits of extending the Newcastle Show Day public holiday to employees in the Newcastle area generally or to the employees of the OneSteel companies. Rather the enquiry in these matters has been primarily directed at a consideration of the interaction between the instruments and the NES and determining an appropriate way in which the issues which have arisen between the parties might be resolved.

[31] Accordingly, the transitional instruments shall be varied as sought by the OneSteel companies.

SENIOR DEPUTY PRESIDENT

Appearances:

D. Lloyd and M. Alexander for the Applicant companies.

D. Rampling for the Australian Workers’ Union.

A. Walkaden for the Australian Manufacturing Workers’ Union.

R. Raju for the Construction, Forestry, Mining and Energy Union.

A. McKinnon for the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia.

Hearing details:

2010

Sydney:

March, 9.

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