[2015] FWCFB 644
The attached document replaces the document previously issued with the above code on 11 February 2015.
The Housing Industry Association was incorrectly referred to as the Housing Industry Australia, and has been amended accordingly.
Katie Hossain
Associate to Justice Boulton, Senior Deputy President
Dated 12 February 2015.
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[2015] FWCFB 644 [Note: Judicial review of this decision [NSD 569 of 2015]; refer to the Federal Court decision dated 14 September 2015 [2015] FCAFC 131 for result of appeal.] |
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FAIR WORK COMMISSION |
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DECISION AND REASONS FOR DECISION |
Fair Work Act 2009
s.156 - 4 yearly review of modern
awards
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JUSTICE BOULTON, SENIOR
DEPUTY PRESIDENT |
SYDNEY, 11 FEBRUARY 2015 |
4 yearly review of modern awards - Common Issues - Transitional Provisions relating to accident pay, district allowances and redundancy - applications for removal of sunset provisions - modern awards objective - terms containing State-based differences - model transitional accident pay provision in awards - accident pay provision in the Black Coal Mining Industry Award 2010 - model transitional district allowance provision in awards relating to Western Australia and the Northern Territory - provision for Broken Hill allowance in some awards - deletion of obsolete provisions from awards.
[1] These matters concern the transitional provisions dealing with accident pay, district allowances and redundancy entitlements which were inserted into most modern awards pursuant to the decision of the Award Modernisation Full Bench in the Award Modernisation Decision 2008. 1 The transitional provisions were expressed to operate for a period until 31 December 2014 (the sunset provisions), during which time the parties would have the opportunity to give consideration to the future award regulation of those entitlements.2
[2] As part of the 4 yearly review of modern awards, the following applications were made in relation to the relevant transitional provisions:
[3] A background paper on the transitional provisions dealing with accident pay, district allowances and redundancy was prepared by the research area of the Fair Work Commission (the Commission) in June 2014. A series of conferences were convened by the President of the Commission regarding the Transitional Provisions Common Issues. 3 In July 2014 the above-mentioned applications were referred to the Full Bench for hearing and determination.
[4] A timetable was established for the filing of submissions and evidence in relation to the Transitional Provisions Common Issues. Written outlines of submissions, together with evidence and other material, were filed by interested parties, mainly in September 2014, and there were proceedings on 29 to 31 October 2014 before the Full Bench in which further submissions were presented by the parties.
[5] At the conclusion of the proceedings on 31 October 2014, the Full Bench announced its decision as follows:
“[4] Given the operative periods for the transitional provisions in modern awards, we consider that it is appropriate for the Full Bench to announce our decision, at least in relation to some of the matters before us, as early as possible.
[5] We have decided not to grant the ACTU application to delete the sunset provisions in the transitional Accident Pay and District Allowance provisions in modern awards. We do not consider that the case has been made out for the continuation of those transitional provisions having regard to the basis on which they were inserted by the Award Modernisation Full Bench in 2008 and to the submissions and material presented in the proceedings before us.
[6] In particular we note that no party has sought the inclusion in modern awards of a national standard on accident pay to apply to all award covered employees, as was anticipated by the Award Modernisation Decision 2008. 4 We also note that no substantive case has been advanced such that the allowances applying in Western Australia and the Northern Territory “should be a permanent feature of the awards and, if so, the basis for their fixation and adjustment.”5 We also refer to the requirement that the Commission have regard, in considering the ACTU application, to the modern awards objective in section 134 and the requirements of sections 139 and 154 of the Fair Work Act 2009.
[7] In relation to the CFMEU application regarding the Black Coal Mining Industry Award 2010, we have decided to delete clause 18.8 of that Award with effect from 31 December 2014. In this regard, we consider that the accident pay provision in the Award provides a clear national standard for the particular industry as described in the Award Modernisation Decision 2008. 6
[8] In relation to the AiG application to delete transitional arrangements relating to redundancy in modern awards, we have decided to vary the relevant awards with effect from 1 January 2015. In this regard, we note that the transitional redundancy provisions will by their terms cease to operate on 31 December 2014 and that no party has opposed the removal of these provisions from awards.
[9] We will publish the reasons for this decision, and our decision on the other applications relating to the Transitional Provisions Common Issues which were dealt with in the proceedings, in due course.”
[6] We now provide the further reasons and decisions in relation to the applications before the Full Bench.
The relevant transitional provisions
[7] The applications before the Full Bench relate to the transitional provisions dealing with accident pay, district allowances and redundancy entitlements which were inserted into most modern awards when they were first made.
[8] It is important at the outset of our consideration of the present applications to recognise the basis upon which the Award Modernisation Full Bench inserted the provisions relating to these matters on a transitional basis into modern awards.
(a) Accident Pay
[9] In relation to accident pay, the Award Modernisation Full Bench accepted that accident pay may be characterised as an allowance. 7 The Full Bench noted that accident pay entitlements can be found in a number of awards and other instruments and that, while there is a general pattern to the entitlements, there is a great diversity in the detail of the provisions.8 It was also noted that whilst accident pay is an allowable matter for the purpose of modern awards it was not an allowable matter under the Work Choices amendments to the previous legislation.9 The Full Bench observed that the cost of accident pay to employers and the value to employees was a function of both the level of the award entitlement and the level of benefits provided through the relevant workers’ compensation schemes.10
[10] The Full Bench concluded its consideration of accident pay as follows:
“[87]In light of these considerations we have decided to deal with accident pay on a transitional basis. Our intention is to preserve accident pay arrangements until 31 December 2014. We anticipate that in the period prior to that date an opportunity will arise to consider the formulation of a national standard to apply to all award covered employees. This task will be made considerably easier if uniformity is developed in relation to workers compensation schemes.
[88]Where the accident pay scheme applying in a particular industry is clear we shall include the terms of the scheme in the relevant modern award. Where there are a variety of schemes operating, whether on a State or sectoral basis, in the industry to be covered by a modern award we shall include a generally worded clause which is designed to preserve the operation of each of those schemes until the end of the transition period. The clause will be in the following form:
‘1.1 Subject to clause 1.2, an employee is entitled to accident pay in accordance with the terms of:
(a) a NAPSA that would have applied to the employee immediately prior to 1 January 2010 or an award made under the Workplace Relations Act 1996 (Cth) that would have applied to the employee immediately prior to 27 March 2006, if the employee had at that time been in their current circumstances of employment and no agreement made under the Workplace Relations Act 1996 (Cth) had applied to the employee; and
(b) that would have entitled the employee to accident pay in excess of the employee’s entitlement to accident pay, if any, under any other instrument.
1.2 The employee’s entitlement to accident pay under the NAPSA or award is limited to the amount of accident pay which exceeds the employee’s entitlement to accident pay, if any, under any other instrument.
1.3 This clause does not operate to diminish an employee’s entitlement to accident pay under any other instrument.
1.4 This clause ceases to operate on 31 December 2014.’ ”
(b) District Allowances
[11] In relation to district allowances applying in Western Australia and the Northern Territory, the Award Modernisation Full Bench noted that, although historically the allowances were related to the cost of living in the relevant geographic areas, if such provisions were to be part of the modern award system there would need to be a consistent and fair national basis for their fixation and adjustment. 11 The Full Bench decided as follows:
“[81]In relation to the allowances in NAPSAs and pre-reform awards operating in Western Australia, it is appropriate that those should be maintained in modern awards until there is a proper opportunity to consider whether they should be a permanent feature of the awards and, if so, the basis for their fixation and adjustment. We do not intend to provide for any automatic adjustment at this stage. Because of the nature of the Northern Territory allowance, it cannot be maintained for more than five years and, because of the decision of the Full Bench, it should not be adjusted during that period. We shall provide that the district, locality or remote area allowances, described generally as district allowances, applying in Western Australia and the Northern Territory be preserved for a period of five years in a transitional provision. Most of the modern awards contain the following standard clause:
‘1.1 Northern Territory
An employee in the Northern Territory is entitled to payment of a district allowance in accordance with the terms of an award made under the Workplace Relations Act 1996 (Cth):
(a) that would have applied to the employee immediately prior to 1 January 2010, if the employee had at that time been in their current circumstances of employment and no agreement made under that Act had applied to the employee; and
(b) that would have entitled the employee to payment of a district allowance.
1.2 Western Australia
An employee in Western Australia is entitled to payment of a district allowance in accordance with the terms of a NAPSA or an award made under the Workplace Relations Act 1996 (Cth):
(a) that would have applied to the employee immediately prior to 1 January 2010, if the employee had at that time been in their current circumstances of employment and no agreement made under that Act had applied to the employee; and
(b) that would have entitled the employee to payment of a district allowance.
1.3 This clause ceases to operate on 31 December 2014.’
[82]In order to assist those covered by the award, administrative arrangements will be made to prepare and publish a list of the relevant allowances. There can be a full examination of all the matters relevant to the allowances sometime after 1 January 2010 either on application or as part of the review contemplated by the Fair Work Bill.”
(c) Redundancy
[12] In relation to redundancy provisions, the Award Modernisation Full Bench considered several matters relating to the maintenance of a fair minimum safety net for employees. The Full Bench decided that as a general rule the small business exemption determined in the Termination, Change and Redundancy decisions of 1984 12 should be maintained.13
[13] The Full Bench also decided that differentials in some awards based on redundancy pay schemes in State awards and legislation should be included on a transitional basis in modern awards. The Full Bench said:
“[61]There are a number of different redundancy pay schemes in State awards and legislation which are reflected in NAPSAs. These schemes sometimes include provisions which are more beneficial for employees than those contained in the NES. Provisions in this category include more generous redundancy pay scales, redundancy pay for employees of small businesses, different calculations for base pay and so on. It is appropriate that these interstate differentials be taken into account in transitional provisions. Most awards will contain a transitional provision as follows:
‘1.1 Subject to clause 1.2, an employee whose employment is terminated by an employer is entitled to redundancy pay in accordance with the terms of a NAPSA:
(a) that would have applied to the employee immediately prior to 1 January 2010, if the employee had at that time been in their current circumstances of employment and no agreement made under the Workplace Relations Act 1996 (Cth) had applied to the employee; and
(b) that would have entitled the employee to redundancy pay in excess of the employee’s entitlement to redundancy pay, if any, under the NES.
1.2 The employee’s entitlement to redundancy pay under the NAPSA is limited to the amount of redundancy pay which exceeds the employee’s entitlement to redundancy pay, if any, under the NES.
1.3 This clause does not operate to diminish an employee’s entitlement to redundancy pay under any other instrument.
1.4 This clause ceases to operate on 31 December 2014.’ ”
[14] It is clear that the Award Modernisation Full Bench anticipated that there would be further developments and consideration given by the parties during the five-year transitional period as to whether and if so in what form provisions relating to accident pay and district allowances should be included in modern awards as part of the safety net. However it is noted that no applications were made for the variation or review of these provisions until after the commencement of the current 4 yearly review of awards.
[15] We now turn to deal with the applications for award variations before us.
The ACTU applications
[16] The ACTU applications seek the deletion of the sunset provisions which provide that the transitional clauses dealing with accident pay and district allowances cease to operate on 31 December 2014. In making the applications, the ACTU noted that some of its affiliates might seek to deal with substantive aspects of the ACTU's claims in relation to accident pay and district allowances in the relevant award by award stage of the four-yearly review.
(a) Accident Pay
[17] In support of the applications relating to accident pay, the ACTU submitted that:
[18] The ACTU submitted that it is necessary to deal with all other aspects of accident pay, apart from the removal of the sunset provisions, on an award by award basis during the award stage of the 4 yearly review. In this regard the ACTU indicated that its affiliated unions may seek to insert varying accident pay provisions dealing with matters such as quantum, time limits and the relationship with leave entitlements into their relevant modern awards.
[19] The applications to delete the sunset provisions in the accident pay clauses in modern awards were opposed by the employer groups which participated in the proceedings. The main submissions were put on behalf of the Australian Chamber of Commerce and Industry (ACCI) and the Ai Group.
[20] The ACCI submitted that:
[21] The ACCI referred to the accident pay clause in the Graphic Arts, Printing and Publishing Award 2010 15 as illustrating the complexity involved for employers in the interpretation and application of the current accident pay transitional provisions in modern awards. This complexity was a further reason for rejecting the ACTU's applications.
[22] The Ai Group submitted that the ACTU applications should be rejected for the following reasons:
[23] The other employer groups which appeared in the proceedings 16generally supported the submissions of the ACCI and the Ai Group.
[24] Having considered the submissions presented, we decided to reject the ACTU's application to delete the sunset provisions in the transitional accident pay provisions in modern awards. 17
[25] There are two main reasons for the rejection of the ACTU application.
[26] First, we do not consider that the case has been made out for the continuation of the transitional accident pay provisions having regard to the basis on which they were inserted into modern awards. In this regard we note that no party has sought the inclusion in modern awards of a national standard on accident pay to apply to all award covered employees, as was anticipated by the Award Modernisation Decision 2008. Further we note that it has not been demonstrated in the proceedings before us that the accident pay entitlements which would continue to operate if the sunset provisions are removed would provide a clear national accident pay scheme applying under the relevant modern awards. 18
[27] In these circumstances, we do not consider that we should depart from the position determined by the Award Modernisation Full Bench in 2008 that the continuation in modern awards of the diverse accident pay arrangements applying under pre-modern awards and NAPSAs should be for a limited period only.
[28] Second, in our view the removal of the sunset provisions, and therefore the determination that the current transitional accident pay provisions should continue to apply, is not appropriate having regard to the modern awards objective in s.134 of the Act (see also s.138).
[29] Whilst we do not rule out the possibility that accident pay provisions may be necessary and appropriate in some modern awards in order to provide a fair and relevant minimum safety net of terms and conditions, we do not consider that the current transitional accident pay provisions can continue to be included in awards consistent with the modern awards objective. This is because, as submitted by the employer groups, the transitional provisions are complex and both difficult to understand and apply. The application of the provisions is to be ascertained having regard to the relevant terms of pre-reform awards and instruments, most if not all of which are no longer in operation. We agree with the submission of the ACCI that as a general principle it is undesirable to express terms and conditions in modern awards by reference to external instruments and documents.
[30] The maintenance of accident pay provisions in modern awards in the terms of the current transitional provisions would not contribute towards ensuring that Australia has "a simple, easy to understand, stable and sustainable modern award system" (s.134(1)(g)) and would have adverse impacts in terms of the regulatory burden on business (s.134(1))f)). Further those provisions do not meet the requirement that any allowance included in a modern award must be "clearly identified" in the award (see s.139(2)).
[31] For these reasons we determined that the ACTU application which simpliciter sought the deletion of the sunset provision in the model accident pay clauses in modern awards should be refused.
[32] The submissions of most of the employer groups included a submission to the effect that the preservation or continued operation of the existing accident pay provisions in modern awards would be contrary to s.154 of the Act. Section 154 provides that a modern award must not contain a term that is determined by reference to State or Territory boundaries or is expressed to operate in one or more, but not every, State or Territory.
[33] For present purposes, the relevant parts of s.154 are subsections (1) and (2) which provide as follows:
“154 Terms that contain State-based differences
General rule--State-based difference terms must not be included
(1) A modern award must not include terms and conditions of employment (State-based difference terms) that:
(a) are determined by reference to
State or Territory boundaries; or
(b) are
expressed to operate in one or more, but not every, State and Territory.
When State-based difference terms may be included
(2) However, a modern award may include State-based difference terms if the terms were included in the award:
(a) in the award
modernisation process; or
(b) in accordance with
subsection (3);
but only for up to 5 years starting on the day on which the first modern award that included those terms came into operation.”
[34] We were not given a detailed explanation in the proceedings of the operation of particular accident pay clauses in each of the relevant modern awards and the extent to which the entitlements would contravene s.154 of the Act. We do, however, accept that when determining the accident pay entitlement under a modern award flowing from the model clause it is necessary to have regard to the relevant terms of the predecessor awards and instruments and that some of the pre-reform instruments contain terms which limit the application of the relevant accident pay scheme by reference to State boundaries. In this regard, we note that the Award Modernisation Full Bench did not determine that the model clause preserving the accident pay entitlements in the pre-reform awards and instruments would be contrary to s.576T of the Workplace Relations Act 1996, the precursor provisions to s.154 of the Act. However the Full Bench did limit the operation of such terms to a period of 5 years – the term contemplated by s.576T for the operation of modern award terms containing State-based differences.
[35] In these circumstances we cannot make any overall assessment as to whether the model accident pay clauses as they apply in the relevant modern awards would offend s.154 of the Act. This would require an analysis of the operation of the accident pay provisions in each of the relevant modern awards. Such an analysis was not undertaken by the parties in the present proceedings. In any event it is not necessary for us to make a final ruling on this matter as we have, for the reasons given above, decided to reject the ACTU applications seeking the deletion of the sunset provision in the model accident pay clause in the relevant modern awards.
[36] There were submissions in the proceedings about the possibility of crafting modern award terms that would maintain the previously applicable State-based accident pay schemes in a manner that would not contravene s.154 of the Act. In this regard there was some reference to the different costs to employers in different States as a result of differential entitlements of workers under the State workers’ compensation schemes. It was submitted by the Ai Group inter alia that accident pay provisions would contravene s.154 of the Act because the entitlement will fluctuate based on the level of payments available under State workers’ compensation schemes. It was said that to the extent that these schemes are State-based the provisions will have force either within or referable to State boundaries and in that sense will contravene s.154 of the Act. 19
[37] We doubt that the mere fact that the cost of accident make-up pay to an employer in any individual case may differ from employee to employee and from State to State would mean that the accident pay provision could be said inherently to offend s.154. The differences and inconsistencies in such circumstances would be the result of differences which exist between the State workers’ compensation schemes rather than differences relating to any general entitlement of employees covered by a modern award to accident make-up payments.
[38] These are matters which will need to be considered by the parties in the context of the further proceedings before the Full Bench regarding applications for the inclusion of accident pay provisions into modern awards.
(b) District Allowances
[39] The ACTU submitted that district allowances should be retained in awards as they are relevant to the circumstances of workers living and working in geographically remote areas and are needed in order to compensate them for the disadvantages involved. It was also submitted that district allowances are necessary to ensure that modern awards are meeting the modern awards objective.
[40] It was said that the majority of district allowances which apply in Western Australia have a consistent basis for their setting and that there was extensive work done to develop the indices that determine the level and nature of the allowances. In this regard, reference was made to the General Order made by the Western Australian Industrial Commission in Court Session in May 1980 20 and to subsequent decisions of the Western Australian Commission in adjusting district allowances. It was said that the allowances were determined using a consistent process that incorporates isolation, climatic conditions and regional price differences and that these considerations remain relevant in contemporary circumstances. The ACTU submitted that the aim of consistency and fairness would be best met by allowing the current entitlements to district allowances to remain through the removal of the sunset provision and by allowing for parties who wish to extend the entitlements to seek to do so in the award stage of the 4 yearly review.
[41] The ACTU submitted that district allowances are able to be included as terms of modern awards and are not contrary to s.154 of the Act. The Explanatory Memorandum makes it abundantly clear that s.154 permits modern awards to contain district allowances:
“597. It is not intended that clause 154 would prohibit modern awards including terms that have differing practical operation in different States and Territories, provided that they are capable of applying in each State or Territory. For example, a modern award could contain a provision that allowed for the payment of a remote location allowance or tropical allowance to address a particular degree of remoteness or particular climatic conditions.” 21
[42] The ACTU acknowledged that district allowances are confined to particular locations. However it was said that these locations are not set by State or Territory boundaries and they do not discriminate on a State or Territory basis in terms of where they operate. District allowances operate in locations which justify additional payments for a variety of reasons and their operation is independent of State or Territory boundaries.
[43] In relation to the modern awards objective, the ACTU submitted that the deletion of the sunset provision and the continued operation of the district allowance provisions would ensure that the relative living standards of the low paid are not reduced (s.134(1)(a)) and may encourage industrial parties to bargain for other terms and conditions of employment which benefit employees in locations which are subject to district allowances (s.134(1)(b)). The failure to retain district allowances could in some cases have the effect of acting as a disincentive for employees in remote locations to seek employment or to remain in the workforce, given the additional payments available under some social security income support schemes to residents of remote areas (s.134(1)(c)). Generally it was put that employers and employees understand the existing district allowance provisions and that it would be unfair for workers in remote localities to lose these entitlements.
[44] The Shop, Distributive and Allied Employees’ Association (SDA) supported the ACTU's submissions. The Western Australian Branch of the SDA submitted that the benefits of existing district allowances should be preserved until the conditions imposed by the Award Modernisation Full Bench have been met, namely that there is an enquiry into whether district allowances should become a permanent feature of awards and, if so, how they should be fixed and adjusted. It was said that such an enquiry is likely beyond the scope of the current proceedings but that such an enquiry would satisfy the Commission that there exists a rational system for the inclusion of district allowances in modern awards – applicable on a national basis and consistent and fair in relation to fixation and adjustment. It was submitted that modern awards should provide for the payment of an allowance, applicable in all States and Territories, to compensate employees for disabilities associated with the performance of work in harsh climatic conditions and/or remote locations. An interim order should be made preserving the benefit of district allowance clauses until such time that the enquiry can be completed.
[45] The employer parties opposed the ACTU applications in relation to district allowances.
[46] The ACCI submissions in relation to district allowance clauses were similar to what was put in relation to accident pay provisions. In particular, it was submitted that the ACTU applications offend ss.139(2) and 154 of the Act and cannot be included in modern awards as part of the minimum safety net. It was said that the case against the continued operation of the district allowance clauses is stronger than in relation to accident pay provisions having regard to the text included in modern awards which provides that district allowance entitlements only apply to employees in the Northern Territory and Western Australia. This clearly offends s.154(1)(b) as being “expressed to operate in one or more, but not every, State or Territory".
[47] The ACCI provided an analysis of the awards covered by the ACTU applications. It was said that only 58 of the 98 modern awards are linked to transitional instruments providing an entitlement to a district allowance. It was therefore said that district allowances are not a generally accepted industrial benefit. It was also said that the granting of the ACTU applications would result in a complex, difficult to understand and unstable set of entitlements to district allowances being left in modern awards. Those entitlements will need to be determined by reference to instruments that no longer operate and which are difficult to locate. It was also unclear from the ACTU applications how it was proposed that such allowances would be varied in the future. In relation to the other 40 awards the ACCI submitted that the continuation of the transitional district allowance provisions past 31 December 2014 would serve no purpose.
[48] The Chamber of Commerce and Industry of Western Australia (CCIWA) supported the submissions made by ACCI and provided further analysis of district allowances applicable in Western Australia. The CCIWA referred to the methodology regarding the calculation of district allowances in Western Australia adopted in 1980 and the approach of the Western Australian Industrial Relations Commission in updating the cost of living component of the allowances. It was submitted that there have been substantial changes both in terms of economic development and living standards within regional areas of Western Australia since the allowances were established and that the allowances and the adjustment mechanism do not reflect the current circumstances of employees working in those areas.
[49] The Ai Group also opposed the ACTU applications. It was submitted that the district allowance provisions cannot be retained past 31 December 2014 having regard to s.154 of the Act. It was also put that such provisions should not be included in modern awards as they are not necessary to achieve the modern awards objective (s.138). In relation to the Northern Territory allowances, the Ai Group referred to the decision of a Full Bench of the Australian Conciliation and Arbitration Commission in 1984 which considered the continuing relevance of the allowances having regard to changes and developments in the Territory. 22 The Full Bench in that case determined that, although having regard to its conclusions it could be argued that the allowances should be abolished or phased out, the proper course was to retain the district allowances at their existing level but without further adjustment by indexation or otherwise. The Full Bench said that: "In this way the allowances will lose their significance over time." The Ai Group submitted that the matters which the allowances sought to address, namely factors going to isolation and climate, are no longer relevant in relation to the Northern Territory and that the allowances with respect to employees in Western Australia, Broken Hill and Queensland are similarly no longer relevant.
[50] The Ai Group also referred to the complex task which was involved for employers in determining whether an employee is eligible for a district allowance under the current provisions. It was submitted that the retention of the district allowance clause in its present form would be contrary to the modern awards objective as it requires ongoing reference to a range of pre-reform instruments which vary in their coverage, structure and the quantum of allowances (s.134(1) (f) and (g)).
[51] The other employer groups which appeared in the proceedings generally supported the submissions of the ACCI and the Ai Group.
[52] Having considered the submissions presented, we decided to reject the ACTU's applications to delete the sunset provisions in the transitional district allowance provisions in modern awards. 23
[53] The main reason for this decision is simply that the current transitional district allowances provisions cannot be retained in awards consistent with s.154 of the Act. By the terms of those provisions, they operate only in respect of Western Australia and the Northern Territory. Subsection 154(1)(b) provides that a modern award must not include terms that "are expressed to operate in one or more, but not every, State or Territory." In these circumstances, it would be inappropriate to remove the sunset provisions and thereby purport to continue in operation the current district allowance provisions.
[54] Apart from this, we do not consider that those provisions can be retained in awards consistent with the modern awards objective (ss.134 and 138). In particular, we consider that the provisions in their present form are complex, difficult to understand and apply and contrary to what is sought to be achieved through the modern award system (see s.134(1)(f) and (g)).
[55] Further, we do not consider that a proper case has been made out in the present matter for this Full Bench to depart from the decision taken by the Award Modernisation Full Bench in 2008, namely that the district allowances operating in Western Australia should be preserved in modern awards for a transitional period only and "until there is a proper opportunity to consider whether they should be a permanent feature of the awards and, if so, the basis for their fixation and adjustment." 24 As we noted in our decision, no substantive case was advanced in the proceedings before us for the retention of the allowances applying in Western Australia. In this regard, it has been indicated that the ACTU and affiliated unions will seek to have provisions inserted into various modern awards which provide compensation for employees working in remote localities and/or under harsh conditions and which are drafted having regard to the relevant provisions of the Act. This may provide the opportunity for the “full examination of all matters relevant to the allowances” to be undertaken, as contemplated by the Award Modernisation Full Bench.
[56] The position regarding the Northern Territory allowances is somewhat different. We note that there were very limited submissions put to us which specifically addressed these allowances. Given the history of the allowances and the decisions taken by industrial tribunals regarding their nature and continuing relevance, we do not envisage that these allowances could be retained in modern awards.
[57] In relation to the ACTU applications, there are four awards which contain provision for Broken Hill allowance in the district allowance clause. 25 The provision for the allowance is in the following terms:
“Broken Hill
An employee in the County of Yancowinna in New South Wales (Broken Hill) will in addition to all other payments be paid an allowance for the exigencies of working in Broken Hill of 4.28% of the standard rate.”
[58] The sunset provision in the district allowance clause in the awards applies in relation to the whole clause, including to the Broken Hill allowance.
[59] There was little put by way of submission in the proceedings as to what should be the position regarding the Broken Hill allowance. The ACTU applications sought the removal of the sunset provision which would leave the Broken Hill allowance, together with the district allowances in Western Australia and the Northern Territory, in operation. We have rejected the ACTU applications for the removal of the sunset provisions so far as they relate to district allowances in Western Australia and the Northern Territory. We must however decide whether this should be the result also in relation to the Broken Hill allowance in the four modern awards.
[60] Little or no attention was given to this matter by most parties to the proceedings. The South Australia, Northern Territory and Broken Hill Branch of the SDA submitted that the maintenance of the allowance meets the modern awards objective and in particular provides entitlements under the relevant awards for low-paid workers who would be adversely affected by the removal of the allowance.
[61] The Ai Group in its applications sought the deletion from modern awards of the transitional provisions relating to district allowances on the basis that such clauses would be obsolete after 31 December 2014 and are no longer necessary to achieve the modern awards objective (s.138). It was submitted that the district allowances with respect to employees in Western Australia, Broken Hill and Queensland were, in a similar way as the allowances in the Northern Territory, no longer relevant.
[62] We note that the Broken Hill allowance is in different terms to the transitional provisions relating to district allowances in Western Australia and the Northern Territory. The entitlement to the allowance is specified in the four awards and is expressed as a percentage figure of the standard rate under the award. It does not require reference to any other instruments. The calculation of the allowance is therefore straightforward and the allowance is not a term or condition of employment determined by reference to State or Territory boundaries.
[63] In these circumstances, we cannot conclude on a similar basis as in relation to the district allowances in Western Australia and the Northern Territory that the Broken Hill allowance should not be maintained as part of the safety net for workers covered by the relevant awards. On the basis of the limited material before us, we are satisfied that the maintenance of the Broken Hill allowance in the awards is appropriate having regard to the modern awards objective (ss.134 and 138) and other relevant considerations. The allowance will therefore be retained in the awards.
[64] In so deciding, we note that some of the unions in the proceedings have made application for the inclusion of nationally applicable remote allowance provisions in modern awards and that the SDA has indicated its support for these claims. It may therefore be appropriate for the parties to the awards to revisit the Broken Hill allowance having regard to the outcome of such claims.
The Black Coal Mining Industry Award 2010
[65] The CFMEU sought the deletion of the sunset provision (clause 18.8) from the accident pay clause in the Black Coal Award.
[66] The clause in the Black Coal Award is not in the same terms as the model accident pay clause inserted into most modern awards by the Award Modernisation Full Bench. Clause 18 of the Black Coal Award sets out the accident pay entitlement in substantially the same terms as in the award it was intended to supersede 26 and applies to all employees within the coverage of the award. However a sunset provision was included in the modern award when it was made.
[67] Clause 18 of the Black Coal Award provides as follows:
An employee in receipt of weekly payments under the provisions of applicable workers compensation legislation will be entitled to receive accident pay from the employer subject to the following conditions and limitations:
18.1 Payment to be made during incapacity
An employer must pay, or cause to be paid, accident pay during the incapacity of the employee, within the meaning of the applicable workers compensation legislation:
(a) until such incapacity ceases; or
(b) until the expiration of a
period of 78 weeks from the date of injury;
whichever event will first occur, even if the employer terminates the
employee’s employment within the period.
18.2 Meaning of accident pay
For the purposes of this clause accident pay means:
(a) For the initial period of 39 weeks from the date of injury, a weekly payment representing the difference between the weekly amount of compensation paid to the employee under the applicable workers compensation legislation and the weekly amount that would have been received by virtue of this award had the employee been on paid personal leave at the date of the injury (provided the latter amount is greater than the former amount).
(b) For a further period of 39 weeks a weekly payment representing the difference between the weekly amount of compensation paid to the employee under the applicable workers compensation legislation and the rate prescribed from time to time for the classification of the incapacitated employee at the date of the injury (provided the latter amount is greater than the former amount).
18.3 Pro rata payments
In respect of incapacity for part of a week the amount payable to the employee as accident pay will be a direct pro rata.
18.4 When not entitled to payment
An employee will not be entitled to any payment under this clause in respect of any period of paid annual leave or long service leave, or for any paid public holiday.
18.5 Redemptions
In the event that an employee receives a lump sum in redemption of weekly payments under the applicable workers compensation legislation, the liability of the employer to pay accident pay as herein provided will cease from the date of such redemption.
18.6 Damages independent of the Acts
Where the employee recovers damages from the employer or from a third party in respect of the said injury independently of the applicable workers compensation legislation, such employee will be liable to repay to the employer the amount of accident pay which the employer has paid under this clause and the employee will not be entitled to any further accident pay thereafter.
18.7 Calculation of period
The 78 week period commences from the first day of incapacity for work, which may be subsequent to the date of injury. Intermittent absences arising from the one injury are to be cumulative in the assessment of the 78 week limitation.
18.8 Clause ceases to operate
This clause ceases to operate on 31 December 2014.”
[68] In support of its application, the CFMEU tendered a comprehensive statement by Mr Andrew Vickers, the General Secretary of the Mining and Energy Division of the CFMEU. The statement provided a detailed explanation of the history of accident pay provisions in the coal mining industry. It was said that accident pay has a long and largely uncontroversial history as an award provision in the coal mining industry and that the key decisions of industrial tribunals introducing or enhancing accident pay standards in the industry have had regard to the special characteristics of the industry and, in particular, its inherent safety hazards and associated high risk of injury to employees.
[69] It was submitted by the CFMEU that the accident pay provision in the Black Coal Award should be continued having regard to the long history of the provision and its characteristics. It was said that the accident pay clause has largely existed in its current form since 1980. It is simply drafted and easy to understand and is well understood by employees and employers in the coal mining industry. It was submitted that the clause is a necessary part of a fair and relevant minimum safety net of terms and conditions for workers in the coal mining industry, having regard to the matters referred to in s.134 of the Act. It does not offend s.154 as the accident pay entitlement under the award is uniform and not subject to inter-State differentials. It was said that it applies equally to every employee and employer covered by the award, regardless of the State or Territory in which the employer and employee are located.
[70] The CFMEU application was opposed by some employer groups. In its written submissions, the ACCI recognised that the Black Coal Award contains a substantive clause dealing with accident pay which operates in its own right without reference to award-based transitional instruments but which "curiously" contains a transitional end date of 31 December 2014. It was also submitted that the clause stands apart from the model transitional accident pay clause in other awards and does not suffer the "frailties" of s.139(2) or s.154 of the Act. 27 The ACCI did not consent or oppose the variation sought by the CFMEU. The Ai Group submitted that the accident pay clause in the Black Coal Award falls foul of s.154(1)(a) of the Act because the entitlement will fluctuate based on the level of payments under the relevant workers’ compensation schemes. It was said that to the extent that these schemes are State-based the provisions will have force either within or referable to State boundaries and in that sense will contravene s.154 of the Act.28 The Coal Mining Industry Employer Group supported the submissions of the Ai Group.29
[71] As stated in our decision, we consider that the accident pay provision in the Black Coal Award provides a clear national standard for the particular industry as described in the Award Modernisation Decision 2008.30 In this regard, there was a significant amount of material presented by the CFMEU in the proceedings regarding the history and application of the provision and relevant decisions of industrial tribunals. The application of the provision is understood in the industry and does not depend on reference to other industrial instruments. The provision does not in our view include State-based terms or conditions of employment contrary to s.154 of the Act. As stated above, we do not consider that the fact that the provision may operate in the context of different State workers’ compensation schemes, and that the level of make-up payments may therefore vary for workers in different States, would of itself lead to the conclusion that the provision contravenes s.154.
[72] For these reasons, we decided to remove the sunset provision in clause 18 of the Black Coal Award.
The Ai Group applications
[73] The Ai Group sought the deletion of the transitional provisions relating to accident pay, redundancy and district allowances in all modern awards which currently contain these provisions. The basis for the amendments proposed by the Ai Group was that the existing provisions would cease to operate on 31 December 2014 and would thereafter be obsolete. It was submitted that the deletion of obsolete provisions in awards has obvious merit and is consistent with the modern awards objective in s.134, particularly the need to ensure a simple and easy to understand award system (s.134(1)(g)).
[74] There was no opposition to the removal of the transitional redundancy provisions in modern awards and, in our decision of 31 October 2014, it was determined that these provisions would be deleted.
[75] In relation to the model transitional provisions dealing with accident pay and district allowances applying in Western Australia and the Northern Territory, it was submitted by the Ai Group that the only opposition to their removal was based on the ACTU's applications to remove the sunset provisions in the relevant award clauses.
[76] Given the decisions made in relation to the ACTU's applications for the removal of the sunset provisions, it is appropriate to remove from modern awards the model transitional accident pay and district allowances provisions which ceased to operate on 31 December 2014. It is our understanding that the deletion of these provisions, as sought by the Ai Group and in the light of the outcome of the ACTU's applications, was not opposed by any party. The deletion from modern awards of provisions which are no longer in operation is consistent with the modern awards objective (ss.134 and 138).
Orders
[77] Orders will be made varying the relevant modern awards to give effect to the decisions reached by the Full Bench. The Ai Group should prepare and file draft orders to vary the relevant awards by removing obsolete provisions relating to accident pay, redundancy and district allowances. The SDA should prepare and file draft orders in relation to the four awards containing provision for Broken Hill allowance. The draft orders should be filed within 14 days of this decision. The determination varying the Black Coal Award has already been made. 31
SENIOR DEPUTY PRESIDENT
Appearances:
T. Clarke, J. Dolan for the Australian Council of Trade Unions (ACTU).
A. Bukarica, A. Thomas for the Construction, Forestry, Mining and Energy Union (CFMEU) - Mining and Energy Division.
S. Maxwell for the CFMEU - Construction Division.
R. Reed for the CFMEU - Forestry Division.
K. Harper for the Association of Professional Engineers, Scientists and Managers Australia (APESMA).
M. Moretta for the Shop, Distributive and Allied Employees Association (SDA) - Victorian Branch.
S. Millman, D. Rafferty for the SDA - Western Australia Branch.
B. Cagney for the SDA - South Australia, Northern Territory and Broken Hill Branch.
M. Nguyen for “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU).
L. Weber for the AMWU - Vehicle Division.
J. Knight for the Australian Municipal, Administrative, Clerical and Services Union (ASU).
J. Blaxland forThe Australian Workers’ Union (AWU).
V. Wiles for the Textile, Clothing and Footwear Union of Australia (TCFUA).
J. Murphy for the United Firefighters Union of Australia (UFUA).
A. McCarthy for the Australian Nursing and Midwifery Federation (ANMF).
N. Ward for Australian Chamber of Commerce and Industry (ACCI), Australian Business Industrial (ABI), the NSW Business Chamber Ltd, Restaurant and Catering Australia (R&CA), the Accommodation Association of Australia (AAA), Motor Inn Motels and Accommodation Association, Master Plumbers and Mechanical Services Association of Australia (MPMSAA), Printing Industries Association of Australia (PIAA), the Australian Federation of Employers and Industries (AFEI), the Victorian Automotive Chamber of Commerce (VACC), Master Builders Australia.
B. Ferguson, R. Bhatt for The Australian Industry Group (Ai Group).
M. Adler for the Housing Industry Association (HIA).
S. McKinnon, G. Kusuma for the National Farmers’ Federation (NFF).
G. Johnston, K. McKell for the Australian Meat Industry Council (AMIC).
P. Moss for the Chamber of Commerce and Industry of Western Australia (CCIWA).
Hearing details:
2014
Sydney
29 October.
30 October.
31 October.
2 Ibid at [87].
3 The conferences were held on 5 February, 26 February, and 3 June 2014.
4 [2008] AIRCFB 1000 at [87].
5 Ibid at [81].
6 Ibid at [88].
7 Ibid at [83].
8 Ibid at [84].
9 Ibid at [85].
10 Ibid at [86].
11 Ibid at [80].
12 Print F6230, (1984) 8 IR 34, 2 August 1984 and Print F7262, (1984) 9 IR 115, 1, 14 December 1984.
13 [2008] AIRCFB 1000 at [60].
14 ‘4 Yearly Review of Modern Awards: Preliminary Jurisdictional Issues’ [2014] FWCFB 1788.
16 The Housing Industry Association (HIA), the National Farmers’ Federation (NFF), the Australian Meat Industry Council (AMIC), and the Chamber of Commerce and Industry of Western Australia (CCIWA).
18 [2008] AIRCFB 1000 at [88].
19 Transcript at PN1293 and 1317-1323.
20 60 WAIG 1141. We note that in its decision the Commission in Court Session stated that they thought it was undesirable that there should be a permanent general prescription for district allowances and suggested that the matter be looked at on an award by award basis with regard to the nature of the employment in question under each award (see at page 1152). See also comments of the Commission in Court Session in matters 241 and 280 of 1991 (decision 16 April 1991 making annual adjustments to location allowances in the General Order).
21 Explanatory Memorandum to the Fair Work Bill 2009 at [597]. Further, the Second Reading Speech provided that the restrictions imposed on modern awards containing state-based differences would ‘not prevent the Commission including in awards terms and conditions that are appropriate and based on objectively ascertainable regional circumstances and on the evidence of the parties that such a term or condition is necessary to ensure a fair minimum safety net.’ Julia Gillard MP, Second Reading Speech, Workplace Relations Amendment (Transition to Forward with Fairness) Bill 2008, House of Representatives Hansard, 17 March 2008, 1851.
22 Decision - District Allowance Clauses - Northern Territory Awards, Print F4832, 10 April 1984.
24 [2008] AIRCFB 1000 at [80].
25 Fast Food Industry Award 2010, MA000003, clause 19.9(c); General Retail Industry Award 2010, MA000004, clause 20.13(c); Hair and Beauty Industry Award 2010, MA000005, clause 22.3; and Pharmacy Industry Award 2010, MA000012, clause 19.7(c).
26 Coal Mining Industry (Production and Engineering) Consolidated Award 1997.
27 Transcript at PN1216-1222, 1224.
28 Transcript at PN1293 and 1317-1323.
29 Written submission by the solicitors for the Coal Mining Industry Employer Group dated 5 September 2014.
30 [2008] AIRCFB 1000 at [88].
31 PR559442, 19 December 2014.
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