WA Local Government Association (WALGA)
[2010] FWA 6393
•20 AUGUST 2010
[2010] FWA 6393 |
|
DECISION |
Fair Work Act 2009
s.158 - Application to vary or revoke a modern award
WA Local Government Association (WALGA)
(AM2010/32)
Local government administration | |
VICE PRESIDENT LAWLER | SYDNEY, 20 AUGUST 2010 |
Application to vary the Local Government Industry Award 2010.
[1] This is an application the Western Australian Local Government Association (applicant) to vary the Local Government Industry Award 2010 by changing the allowance for Level 3 Adverse Working Conditions in clause 15.8(b)(iii) of that modern award from 100% to 50%.
[2] It is clear that the application is supported by the local government associations of other States, including the Queensland Local Government Association who appeared at the hearing. The application is opposed by the Australian Municipal, Administrative, Clerical and Services Union (ASU) and the Liquor, Hospitality and Miscellaneous Union (LHMU).
[3] At the hearing the advocate for the applicant confirmed that the application was made under s.158 of the Fair Work Act 2009 (FW Act) in reliance on the power in s.157(1). Reliance on s.160 (power to vary to remove ambiguity or uncertainty or to correct error) was expressly disclaimed. Section 157(1) provides:
(1) FWA may:
(a) make a determination varying a modern award, otherwise than to vary modern award minimum wages; or
(b) make a modern award; or
(c) make a determination revoking a modern award;
if FWA is satisfied that making the determination or modern award outside the system of 4 yearly reviews of modern awards is necessary to achieve the modern awards objective.
Note 1: FWA must be constituted by a Full Bench to make a modern award (see subsection 616(1)).
Note 2: Special criteria apply to changing coverage of modern awards or revoking modern awards (see sections 163 and 164).
Note 3: If FWA is setting modern award minimum wages, the minimum wages objective also applies (see section 284).
[4] An application to vary under s.157(1) can be dealt with by a single member because there is no provision requiring such an application to be dealt with by a Full Bench. This is also implicit in Note 1 to s.157(1).
[5] The modern awards objective is specified in s.134:
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.
[6] There is no contest that the applicant is eligible under s.158 to make an application for a variation of the modern award pursuant to s.157.
[7] Clause 15.8 of the Local Government Award 2010 relevantly provides:
15.8 Adverse working conditions
(a) Operational and trade employees engaged in Levels 1 to 5 of this award will be paid an additional hourly allowance at the rate specified in clause 15.8(b) for all time worked by direction under adverse working conditions as defined in clause 15.8(c) provided that in all cases, in addition to the payment of this allowance, the employer will supply all appropriate protective clothing and equipment for working in the particular adverse conditions.
(b) An employee will be paid an additional hourly allowance for each hour in which work under adverse working conditions is performed as follows:
(i) Level 1 working conditions—3.5% of the standard rate; or
(ii) Level 2 working conditions—5% of the standard rate; or
(iii) Level 3 working conditions—100% of the standard rate.
(c) Definition of adverse working conditions definition
...
(iii) Level 3 working conditions
The Level 3 working conditions allowance compensates for the nature of extremely obnoxious, offensive or dirty work in septic and sewerage treatment services, which typically includes:
• working in digestion tanks at sewerage treatment works;
• entering and cleaning aeration ponds or wet wells at sewer pump stations;
• working in live sewers; and
• cleaning septic tanks, septic closets and/or chemical closets by other than mechanical means.
[8] When it made the Local Government Industry Award 2010 and the Water Industry Award 2010 the Full Bench of the Australian Industrial Relations Commission (AIRC) noted the historical linkages between the industries covered by those awards and determined that it was appropriate to adopt substantially identical classification structures and allowances in both awards. Each of those awards when made contained an identical allowance for Adverse Working Conditions.
[9] In Re Victorian Chamber of Commerce and Industry 1a seven member Full Bench of the AIRC allowed an application to vary the Water Industry Award 2010 to reduce the Level 3 Adverse Working Conditions Allowance from 100% to 50%. The Full Bench observed:
[3] … In preparing the exposure drafts for the industries of both local government and water (water, sewerage and drainage) the Full Bench adopted drafts prepared by the combined local government associations (LGAs) which had, relevantly, common allowances clauses. This was at a time when the LGAs had a substantial interest in award modernisation for both industries and they were the only party on the employer side to propose draft awards in either of those industries. As the Full Bench has already noted, local government is still a significant provider of water, sewerage and drainage services and the LGAs’ interest arose because they could not be sure that the Full Bench would accede to submissions that all activities of local government, including the provision of water, sewerage and drainage services, be placed wholly within the coverage of a modern award for local government. The LGAs’ drafts set the Level 3 rate at 50% of the standard rate. The submission made to us by LGAQ suggests that in the consultations which followed the publication of the exposure drafts, the LGAs supported the 5% rate in the exposure drafts. However, in a conference of the major parties with Vice President Lawler the representatives of the LGAs recognised that the rate in the exposure drafts was an error and agreed that the 50% rate in their proposed draft awards was still accepted by the LGAs as appropriate. In making the modern award the Full Bench acknowledged that the inclusion of the figure of 5% in the exposure drafts was an error.
[4] In its decision setting out its general approach to applications to vary modern awards filed in the period to 31 December 2009, the Full Bench observed that:
“Applications to vary the substantive terms of modern awards will be considered on their merits. It should be noted, however, that the Commission would be unlikely to alter substantive award terms so recently made after a comprehensive review of the relevant facts and circumstances including award and NAPSA provisions applying across the Commonwealth. Normally a significant change in circumstances would be required before the Commission would embark on a reconsideration.”
[5] While there is no significant change of circumstances identified in the submissions of VECCI, AEFI or LGAQ, we are persuaded that we should revisit the Level 3 rate in both the Local Government Industry Award 20106 and the modern award.
[6] We accept the submission of AFEI that the level of the allowances in the underlying awards and NAPSAs in the water industry does not support a Level 3 rate of 100% of the standard rate. This is not conclusive because the Full Bench determined that the historical origins of the water industry in local government and the continuing role of local government in the provision of water, sewerage and drainage services justified an approach of substantial commonality in the classification structure and allowances for both industries. That approach is reflected in the terms of the modern awards made for the two industries. We are not persuaded that we should depart from that approach at this stage.
[7] Consistent with that approach, in its decision on the making of the modern awards for the industries in Stage 4, the Full Bench did not deal separately with issues relating to classifications and allowances for the water industry but, rather, simply noted that these issues had been addressed in its comments on the Local Government Industry Award 2010.7 In those comments the Full Bench stated:
“We agree with the ASU submission that most of the main awards and NAPSAs [in local government] contain an allowance at a rate of 100% for working in such conditions. We adopt that rate.”
[8] The LGAQ correctly points out that the proposition that “most of the main awards and NAPSAs [in local government] contain an allowance at a rate of 100%” is wrong: it overstates the position. The allowances provided in those awards for work affected by the disability to which the Level 3 allowance is directed vary substantially. The industry NAPSA in New South Wales provides for a rate of 100% (and 200% for working in septic tanks). The main pre-reform award in Tasmania provides for a rate of 100%. The industry NAPSA in Queensland provides for a rate of 50%. The relevant rates in the other States are monetary amounts and translate to much lower percentages. As the schedule to the submissions of AFEI demonstrates, the pre-reform awards and NAPSAs in the water industry have only modest allowances for the relevant disability.
[9] A case is made out for reduction of Level 3 rate. Upon a review of the underlying awards and NAPSAs for the industries of local government and water, we think that the rate of 50% originally proposed by the LGAs is the rate that strikes the appropriate balance. We appreciate that a rate of 50% is still significantly higher than the prevailing rates in the underlying awards and NAPSAs for the water industry. However, in addition to considerations arising from the desirability of maintaining the alignment between local government and water, we are concerned that the relevant allowances in the awards and NAPSAs in the water industry are in fact too low. In this context, it needs to be remembered that Level 3 working conditions are extremely obnoxious and essentially involve working in sewage or in septic tanks or sewers in direct contact with sewage. The allowance will be payable to relatively few employees and is payable only in respect of the time that they spend working in these extremely obnoxious conditions.
[10] VECCI based its application, in part, on the cost consequences of a Level 3 rate of 100% for water industry employers. As the ASU notes, VECCI’s submissions in this regard are a matter of assertion not supported by any testable material. A particular example of increased costs is given without identifying the employer or relevant context. It is our understanding that most employers in the water industry are subject to statutory collective agreements. Moreover, to the extent that this is not so and the modern award applies to an employer, any increase in the allowance payable in respect of the disability to which the Level 3 rate is directed can be phased in over the period to the end of 2014. The quantum of the Level 3 rate can be revisited on the review of the modern award which is due to occur in 2012.
[11] We will vary the modern award to reduce the Level 3 rate from 100% of the standard rate to 50%. In the absence of an application to vary the Local Government Industry Award 2010 it would not be appropriate to make any further comment in relation to the relevant allowance in that award.
[10] The ASU made the following factual submissions:
9. Water and waste water services have been provided wholly or largely by local government in Queensland, NSW and Tasmania. In Tasmania, the work has now been taken from local government and vested in a number of water authorities. However, when this work was covered by the Local Government Award, the allowance for live sewerage work was 100% - see Attachment B.
10. In NSW, the work is shared between local government and water authorities. Under the NSW Local Government Award the allowance for this type of work is double or treble time, as previously advised to the Commission in the award modernisation proceedings - see Attachment B.
11. In Queensland, local government is the major provider of water and waste water services. Under the white collar employees award the rate is 100%. Under the blue collar award, the rate is 50%. This is the only relevant award where the rate is 50% - see Attachment B.
12. In Victoria, the water and waste water work is carried out by metropolitan and regional waste water authorities. The Local Government Award will not apply to this work.
13. In SA, the work is not performed by local government.
14. The same situation applies in WA and the NT - on whose behalf WALGA claims to be acting.
15. In the NT, water and waste water is provided not by local government but by the NT Power and Water Authority. In WA, the Water Corporation and regional water corporations provide the overwhelming bulk of water and waster water services. See Attachment C - extracts from the websites of the relevant authorities.
[11] Subject to the following matter, the applicant does not challenge these factual submissions and I proceed on the basis that they are correct. The one area of contest was in relation to the assertion that “[i]n the NT, water and waste water is provided not by local government but by the NT Power and Water Authority”. The applicant contends that local government bodies provide sewerage services to about 50 remote communities as contractors to the NT Power and Water Authority. The ASU was given an opportunity to determine whether it wished to challenge this assertion. A letter from the NT Branch Secretary of the ASU was received that stated:
I hereby confirm that water and sewerage is not a local government responsibility in the Northern Territory and nor is it a normal function carried out by local government as part of their core work.
[12] I do not see that as a contradiction of the applicant’s contention and proceed on the basis that local government bodies in the Northern Territory provide sewerage services in a number of remote communities as contractors to the NT Power and Water Authority.
[13] The ASU accepted the applicant’s submission that the relevant local government pre-reform awards and NAPSAs in the Northern Territory and Western Australia do not contain the 100% allowance included in the Local Government Award 2010 but observed, I think correctly, that:
17. This is not surprising since the work has not been covered by these awards in the past and there has been no need for this type of allowance. ...
18. The allowances referred to by WALGA in the WA and NT awards are not allowances which would cover work in live sewerage. They are the general industry/climatic allowances which appear in all other relevant Local Government awards which are supplemented by specific disability allowances where necessary and appropriate.
[14] The application in Re Victorian Chamber of Commerce and Industry was an application under s.576H of the Part 10A of the Workplace Relations Act 1996 (WR Act) made before 1 January 2010 which was dealt with by FWA pursuant to item 14 of schedule 5 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act). Item 14 was added by the Fair Work Legislation Amendment Regulations 2009 (No.2) and provides:
14 Variation of modern award
(1) FWA may make an order varying a modern award if FWA considers that the variation is necessary to give effect to the award modernisation request as it was in effect immediately before 1 January 2010.
(2) However, FWA may make the order only:
(a) if:
(i) the Australian Industrial Relations Commission had received an application before 1 January 2010 to vary a modern award to give effect to the award modernisation request; and
(ii) the Commission did not make a decision on the application before 1 January 2010; or
(b) on its own initiative.
(3) For subitem (2):
(a) FWA must have regard to the terms of the award modernisation request and the matters to which the Commission was required to have regard, immediately before 1 January 2010, in conducting the award modernisation process; and
(b) FWA must have regard to submissions made to the Commission during the award modernisation process, if FWA considers that it is appropriate to do so.
Note: For the purpose of making the variation, FWA may inform itself in such manner as it considers appropriate. FWA will be able to seek, and have regard to, new submissions.
(4) Subitems (1) to (3) cease to have effect at the end of 31 March 2010.
[15] The present application was not made until after 1 January 2010 and is made under s.158 in reliance on s.157(1) of the FW Act. The power to vary under s.157(1) is significantly narrower than the power in s.576H.
[16] The question I have to answer is whether the variation sought by the applicant “outside the system of 4 yearly reviews of modern awards is necessary to achieve the modern awards objective”, that is, whether the variation is necessary to “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 specified in s.134(a) to (h). There was little evidence or submission directed to those matters. The applicant’s case proceeded on the basis that because the award modernisation Full Bench of the AIRC had
(i) established a linkage between the industries of local government and water such as to include effectively identical classifications and allowances in the modern awards for those industries; and
(ii) varied the Level 3 Adverse Working Conditions allowance in the Water Industry Award 2010 on the basis that the level included in that award as made was incorrectly assessed,
a variation to that same allowance in the Local Government Award 2010 is available and appropriate under s.157(1). The ASU’s opposition to the application focussed on whether the Full Bench had erred in finding that the level of the allowance was incorrectly assessed rather than contending that, even if this were so, there was no power under s.157(1) to make an equivalent variation to the Local Government Award 2010 outside the four yearly reviews referred to in that section (or the special first review provided for in item 6 of schedule 5 to the Transitional Act).
[17] It is not in dispute that the variation sought by WALGA will have very limited practical application. It will apply to employees of some local government bodies in the Northern Territory that provide services to remote communities as a contractor to NT Power and Water. It may also affect a number of local councils in Western Australia to the extent that they are constitutional trading corporations although it would seem that the provision of water and sewerage services in Western Australia is substantially the preserve of the Water Corporation, 2 which is not affected by the present application. The variation will not directly affect the entitlements of employees in local government in New South Wales, Queensland and Tasmania, the states where relevant pre-reform awards and NAPSAs had allowances in excess of the 50% for the sort of work to which the Level 3 Adverse Working Conditions allowance applies. On the material before me, the small number of employees who will be adversely affected by the variation will not be prejudiced when compared to the award entitlements they enjoyed prior to the making of the Local Government Award 2010.
[18] The essence of the ASU’s case is that the Full Bench in Re Victorian Chamber of Commerce and Industry simply erred in the proper assessment of the critical mass in relation to the rate of relevant allowances in the underlying pre-awards and NAPSAs. Given the material on which the ASU relies (which, in terms of pre-reform awards and NAPSAs, is not relevantly different to the material on which it relied in Re Victorian Chamber of Commerce and Industry), I do not regard it as appropriate as single member of the FWA to conclude that the Full Bench made the error for which the ASU contended.
[19] The decision of the Full Bench in Re Victorian Chamber of Commerce and Industry provides, for me as a single member, an authoritative guide as what is a “fair and relevant minimum safety net” in relation to an allowance for working in the conditions specified in clause 15.8(c)(iii) of the Local Government Award 2010 and, accordingly, I am satisfied that the variation sought by WALGA is necessary to achieve the modern awards objective. The ASU will have an opportunity to persuade another Full Bench as to the error for which it contends during the 2012 review provided for in item 6 of schedule 5 to the Transitional Act.
[20] In all the circumstances I do not think that the variation should operate retrospectively. It is more likely than not that the cost impact for affected employers will be modest. An order giving effect to the variation has issued in conjunction with this decision.
VICE PRESIDENT
Appearances:
S. White and A. Malloch-Smith for the Western Australian Local Government Association.
S. Cooney for the Local Government Association, Queensland.
K. Harvey for the Australian Municipal, Administrative, Clerical and Services Union.
C. Pullen for the Liquor, Hospitality and Miscellaneous Workers Union.
Hearing details:
2010.
Melbourne, Perth, Brisbane (video hearing):
May 12.
1 [2010] FWAFB 957
2 See the extract from Trouble Waters: Confronting the Water Crisis in Australia’s Cities in Attachment A to the ASU submission of 7 May 2010.
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