Fair Work Act 2009
s.156 - 4 yearly review of modern awards

s.156 4 yearly review of modern awards - common issue – annual leave – timing of taking of leave – Maritime Industry awards – insertion of model terms

1. Introduction

[1] This decision finalises a number of outstanding matters in relation to the variation of annual leave terms in modern awards. It should be read in conjunction with previous decisions issued on 11 June 2015 1 (the June 2015 decision), 15 September 20152 (the September 2015 decision), 23 May 20163 (the May 2016 decision) and 24 June 20164 (the June 2016 decision).

[2] The outstanding issues we deal with in this decision fall into two categories:

(i) whether the excessive model term should be included in certain modern awards and whether particular existing terms that provide for the taking of annual leave should be retained; and

(ii) the annual leave provisions in a number of awards in the Maritime industry.

2. Timing of taking annual leave

[3] The June 2016 decision finalised the excessive leave model term. One of the issues to be determined in the present proceedings is whether that excessive leave model term should be inserted into some 20 modern awards which contain existing provisions which require accrued annual leave to be taken within a certain period of time. In its written submission of 7 December 2015, Ai Group submitted that these existing award terms ‘appear to have been crafted to prevent an excessive accrual of paid annual leave; or would at least have that effect’. 5 At that time Ai Group submitted that these terms should be retained, thereby eliminating the need to insert the model excessive leave term.6

[4] The 20 modern awards identified by Ai Group fall into two categories:

(i) 13 modern awards that currently include a term which requires annual leave to be taken within 18 months of accrual:

● Aquaculture Industry Award 2010 – clause 23.4;
● Asphalt Industry Award 2010 – clause 25.5;
● Broadcasting and Recorded Entertainment Award 2010 – clause 23.6;
● Cement and Lime Award 2010 – clause 24.5;
● Gardening and Landscaping Services Award 2010 – clause 24.4;
● Gas Industry Award 2010 – clause 25.4;
● Horse and Greyhound Training Award 2010 – clause 23.4;
● Premixed Concrete Award 2010 – clause 24.5;
● Quarrying Award 2010 – clause 29.5;
● Racing Clubs Events Award 2010 – clause 30.4;
● Racing Industry Ground Maintenance Award 2010 – clause 24.3;
● Silviculture Award 2010 – clause 29.4;
● Sporting Organisations Award 2010 – clause 25.4.

(ii) 7 modern awards that contain terms which are, in effect, substantially similar to those which provide for accrued leave to be taken within a specified period of time:

● Ambulance and Patient Transport Industry Award 2010 – clause 30.8;
● Architects Award 2010 – clause 20.2;
● Black Coal Mining Industry Award 2010 – clause 25.4;
● Mobile Crane Hiring Award 2010 – clause 25.2(a);
● Nursery Award 2010 – clause 27.8(a);
● Nurses Award 2010 – clause 31.2;
● Security Services Industry Award 2010 – clause 24.3.

[5] For completeness we note that Ai Group identified a third category – airline industry awards – which, because of the particular employment arrangements in that industry, ‘may not be amenable to insertion of the model excessive leave term’. 7 The two awards in this category are the Air Pilots Award 2010 (clause 2.74) and the Aircraft Cabin Crew Award 2010 (clause 25.5). In the May 2016 decision8 we decided to defer our consideration of the insertion of the excessive leave model term into those two modern awards in order to give Ai Group and other interested parties an opportunity to make further relevant inquiries. This matter will be the subject of further proceedings later this year.

[6] Each of the 20 modern awards set out above (at paragraph [4]) were the subject of a conference before Hampton C on 1 July 2016. The outcome of that conference 9 was summarised in a Statement issued on 8 July 201610 as follows:

• In each of the modern awards, the relevant Unions confirmed that they are seeking the insertion of the model excessive leave term as determined by the Full Bench.
• The insertion of the model excessive leave term would necessitate the replacement of (or substantial alteration to) the existing provisions dealing with the taking of annual leave.
• The employer organisations participating in the conference expressed concerns that the present provisions do more than deal with excessive leave and their removal may also have consequences that are not appropriate given the circumstances of the industries involved. The employer organisations with an interest in the Black Coal Mining Industry Award 2010 confirmed their intention to oppose the adoption of the excessive leave model term.
• There would appear to be some tension between the existing provisions, which generally refer to leave being taken within a period referenced to the accrual of the entitlement or an entitlement becoming due, and the National Employment Standards which are based upon the concept of annual leave accruing progressively.
• It is appropriate to enable the employer organisations to further consult their members and confirm whether they intend to resist the adoption of the model term and/or seek an alternative provision and to provide the basis upon which these modern awards require a provision other than the model term.
• All persons and organisations with an interest in these modern awards should be afforded an opportunity to make a contribution before the issues are determined by the Full Bench.

[7] On 8 July 2016 Directions 11 were issued directing the employer organisations with an interest in these 20 modern awards to confirm whether they opposed the insertion of the model excessive leave term in the relevant modern awards. Directions were also issued concerning the filing of written submissions.

[8] No interested party objected to the insertion of the model term in the 18 modern awards set out below:

Ambulance and Patient Transport Industry Award 2010;
Architects Award 2010;
Asphalt Industry Award 2010;
Broadcasting and Recorded Entertainment Award 2010;
Cement and Lime Award 2010;
Gardening and Landscaping Services Award 2010;
Gas Industry Award 2010;
Horse and Greyhound Training Award 2010;
Mobile Crane Hiring Award 2010;
Nursery Award 2010;
Nurses Award 2010; 12
Premixed Concrete Award 2010;
Quarrying Award 2010;
Racing Clubs Events Award 2010;
Racing Industry Ground Maintenance Award 2010;
Security Services Industry Award 2010;
Silviculture Award 2010;
Sporting Organisations Award 2010.

[9] In a Statement 13 issued on 8 September 2016, we said that absent any submissions to the contrary at the hearing to be held on 13 September 2016, the Full Bench would vary the 18 modern awards set out above to insert the excessive leave model term. No contrary submissions were made at the hearing on 13 September 2016 and we propose to give effect to the view expressed in our earlier Statement and vary these awards.

[10] The basis for the variation of these 18 modern awards is that we have concluded that the existing terms which require annual leave to be taken within a specified period of time after accrual do not provide a fair and relevant minimum safety net of terms and conditions of employment and, accordingly, do not satisfy the modern awards objective. Further, we are satisfied that the variation of these 18 modern awards to delete the existing terms relating to the taking of annual leave within a specified period and to insert the model excessive leave term is necessary to ensure that each of these awards achieves the modern awards objective.

[11] We rely on the findings set out in the June 2015 decision 14 and the observations made in the May 2016 decision.15 As to the matters in s.134(1)(a)–(h), insofar as they are relevant, we are satisfied that the insertion of the model term in these awards will promote flexible work practices and the efficient and productive performance of work (s.134(1)(d)) and will assist business in managing excessive leave accruals (s.134(1)(f)). We are also satisfied that such variations are consistent with the objects of the Fair Work Act 2009 (Cth) (the FW Act).

[12] We note that the model term to be inserted into the Nurses Award 2010 will require modification given the quantum of annual leave specified in clause 31.1 of that award. As foreshadowed in the May 2016 decision 16, the model term to be inserted in the Nurses Award 2010 will be amended to provide for a definition of excessive leave accrual of 10 weeks or 12 weeks’ if applicable, as follows:

An employee has an excessive leave accrual if the employee has accrued more than 10 weeks’ paid annual leave (or 12 weeks’ paid annual leave for a shiftworker, as defined by clause 31.1(b)).

[13] Draft variation determinations will be published shortly and interested parties will have 7 days within which to comment.

[14] The two modern awards which were the subject of continuing objections are the Black Coal Mining Industry Award 2010 (the BCMI Award) and the Aquaculture Award 2010 (the Aquaculture Award). Before turning to the specific submissions advanced in respect of these modern awards we propose to set out the provisions of the FW Act which relate to annual leave.

[15] The modern awards objective, in s.134, provides that modern awards, together with the NES, are intended to provide a fair and relevant minimum safety net of terms and conditions of employment. The NES are minimum standards that apply to the employment of national system employees and are set out in Part 2-2 of the Act, Division 6 of which (ss.86–94) deals with annual leave.

[16] Part 2-1 of the Act provides that the NES cannot be excluded by modern awards or enterprise agreements. Section 55 deals with the interaction between the NES and a modern award or enterprise agreement:

“55 Interaction between the National Employment Standards and a modern award or enterprise agreement

National Employment Standards must not be excluded

(1) A modern award or enterprise agreement must not exclude the National Employment Standards or any provision of the National Employment Standards.

Terms expressly permitted by Part 2–2 or regulations may be included

(2) A modern award or enterprise agreement may include any terms that the award or agreement is expressly permitted to include:

(a) by a provision of Part 2–2 (which deals with the National Employment Standards); or

(b) by regulations made for the purposes of section 127.

Note: In determining what is permitted to be included in a modern award or enterprise agreement by a provision referred to in paragraph (a), any regulations made for the purpose of section 127 that expressly prohibit certain terms must be taken into account.

(3) The National Employment Standards have effect subject to terms included in a modern award or enterprise agreement as referred to in subsection (2).

Note: See also the note to section 63 (which deals with the effect of averaging arrangements).

Ancillary and supplementary terms may be included

(4) A modern award or enterprise agreement may also include the following kinds of terms:

(a) terms that are ancillary or incidental to the operation of an entitlement of an employee under the National Employment Standards;

(b) terms that supplement the National Employment Standards;

but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the National Employment Standards.

Note 1: Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:

(a) under which, instead of taking paid annual leave at the rate of pay required by section 90, an employee may take twice as much leave at half that rate of pay; or

(b) that specify when payment under section 90 for paid annual leave must be made.

Note 2: Supplementary terms permitted by paragraph (b) include (for example) terms:

(a) that increase the amount of paid annual leave to which an employee is entitled beyond the number of weeks that applies under section 87; or

(b) that provide for an employee to be paid for taking a period of paid annual leave or paid/personal carer’s leave at a rate of pay that is higher than the employee’s base rate of pay (which is the rate required by sections 90 and 99).

Note 3: Terms that would not be permitted by paragraph (a) or (b) include (for example) terms requiring an employee to give more notice of the taking of unpaid parental leave than is required by section 74.

Enterprise agreements may include terms that have the same effect as provisions of the National Employment Standards

(5) An enterprise agreement may include terms that have the same (or substantially the same) effect as provisions of the National Employment Standards, whether or not ancillary or supplementary terms are included as referred to in subsection (4).

Effect of terms that give an employee the same entitlement as under the National Employment Standards

(6) To avoid doubt, if a modern award includes terms permitted by subsection (4), or an enterprise agreement includes terms permitted by subsection (4) or (5), then, to the extent that the terms give an employee an entitlement (the award or agreement entitlement) that is the same as an entitlement (the NES entitlement) of the employee under the National Employment Standards:

(a) those terms operate in parallel with the employee’s NES entitlement, but not so as to give the employee a double benefit; and

(b) the provisions of the National Employment Standards relating to the NES entitlement apply, as a minimum standard, to the award or agreement entitlement.

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.

Terms permitted by subsection (4) or (5) do not contravene subsection (1)

(7) To the extent that a term of a modern award or enterprise agreement is permitted by subsection (4) or (5), the term does not contravene subsection (1).

Note: A term of a modern award has no effect to the extent that it contravenes this section (see section 56). An enterprise agreement that includes a term that contravenes this section must not be approved (see section 186) and a term of an enterprise agreement has no effect to the extent that it contravenes this section (see section 56).”

[17] A term of a modern award or enterprise agreement has no effect to the extent that it contravenes s.55 of the FW Act.

[18] Relevantly, for the purpose of s.55(2), Part 2-2 provides that a modern award is expressly permitted to include terms:

• providing for the cashing out of annual leave (ss.93(1) and (2));



• requiring an employee, or allowing for an employee to be required, to take paid annual leave in particular circumstances, but only if the requirement is reasonable (s.93(3)); and



• otherwise dealing with the taking of paid annual leave (s.93(4)).

[19] We return to the terms of s.93 shortly.

[20] Section 87 deals with the entitlement to annual leave. Subsections 87(1) and (2) are relevant for present purposes and they state:

Amount of annual leave

(1)  For each year of service with his or her employer, an employee is entitled to:

(a)  4 weeks of paid annual leave; or
(b)  5 weeks of paid annual leave, if:

(i)  a modern award applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards; or
(ii)  an enterprise agreement applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards; or
(iii)  the employee qualifies for the shiftworker annual leave entitlement under subsection (3) (this relates to award/agreement free employees).

Note: Section 196 affects whether the FWC may approve an enterprise agreement covering an employee, if the employee is covered by a modern award that is in operation and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards.
Accrual of leave
(2)  An employee’s entitlement to paid annual leave accrues progressively during a year of service according to the employee’s ordinary hours of work, and accumulates from year to year.
Note:  If an employee’s employment ends during what would otherwise have been a year of service, the employee accrues paid annual leave up to when the employment ends.

[21] Subsection 87(1) provides that employees are entitled to a period of paid annual leave (4 or 5 weeks depending on whether or not they are a ‘shiftworker’) for ‘each completed year of service’. Importantly, however, an employee does not need to complete a year of service before they accrue an entitlement to paid annual leave. So much is clear from s.87(2), which provides that an employee’s entitlement to paid annual leave ‘accrues progressively during a year of service according to the employee’s ordinary hours of work’. This has implications for the annual leave terms in the BCMI Award and the Aquaculture Award and we will return to this issue later.

[22] The FW Act does not require an employee to take their accrued paid annual leave within any particular timeframe. Section 88, which deals with the taking of annual leave, states:

“88 Taking paid annual leave

(1) Paid annual leave may be taken for a period agreed between an employee and his or her employer.

(2) The employer must not unreasonably refuse to agree to a request by the employee to take paid annual leave.”

[23] Sections 93 and 139(1) are relevant insofar as they deal with the terms which may be included in a modern award.

[24] Subsections 93(3) and (4) are particularly relevant to our consideration of the matters presently before us and provide as follows:

“Terms about requirements to take paid annual leave

(3) A modern award or enterprise agreement may include terms requiring an employee, or allowing for an employee to be required, to take paid annual leave in particular circumstances, but only if the requirement is reasonable.

Terms about taking paid annual leave
(4) A modern award or enterprise agreement may include terms otherwise dealing with the taking of paid annual leave.” (emphasis added)

[25] Section 139(1)(h) provides that a modern award may include terms about any of the following matters:

“(h) leave, leave loadings and arrangements for taking leave.” (emphasis added)

[26] Subject to the requirement to take leave being reasonable, it seems to us that a modern award term which provides that an employee can be required to take a period of annual leave to reduce the employee’s excessive level of accrued paid annual leave is a term of the type contemplated by s.93(3) of the Act. We are fortified in this conclusion by the terms of the Explanatory Memorandum to the Fair Work Bill 2008 which states:

“Subclause 93(3) permits terms to be included in an award or agreement that require an employee, or that enable an employer to require or direct an employee, to take paid annual leave in particular circumstances, but only if the requirement is reasonable. This may include the employer requiring an employee to take a period of annual leave to reduce the employee’s excessive level of accrual or if the employer decides to shut down the workplace over the Christmas/New Year period.” 17

[27] As to s.93(4), the words “otherwise dealing with the taking of annual leave” refer to a term for dealing with the taking of annual leave other than a term of the type contemplated by s.93(3). The relevant extract from the Explanatory Memorandum provides as follows:

“Subclause 93(4) enables an award or agreement to include other terms about the taking of paid annual leave – e.g., the taking of paid annual leave in advance of accrual.” 18

[28] It seems to us that ss.93(3) and (4) provide the jurisdictional basis for the insertion of terms in modern awards which deal with excessive paid annual leave accruals.

[29] We also note that different arrangements apply in relation to award/agreement free employees in ss.94(5) and (6) but these provisions are not relevant for present purposes.

[30] A modern award term which provides that an employee can be required to take a period of annual leave to reduce the employee’s excessive level of accrued paid annual leave is a term of the type contemplated by s.93(3) of the FW Act. Importantly, this type of term is subject to the legislative direction that any such requirement to take leave ‘is reasonable’. The Explanatory Memorandum to the Fair Work Bill 2008 provides some guidance as to subclause 93(3) of the assessment of what is reasonable in this context, it states:

‘In assessing the reasonableness of a requirement or direction under this subclause it is envisaged that the following are all relevant considerations:

• the needs of both the employee and the employer’s business;



• any agreed arrangement with the employee;



• the custom and practice in the business;



• the timing of the requirement or direction to take leave; and



• the reasonableness of the period of notice given to the employee to take leave.’ 19

[31] The Full Bench decision in Australian Federation of Air Pilots v HNZ Australia Pty Ltd 20 observed that in assessing the reasonableness of any employer requirement to take leave, ‘all relevant considerations needed to be taken into account including those which are set out in paragraph [382] of the Explanatory Memorandum to the Fair Work Bill 2008’.21

[32] Plainly, the assessment of whether a requirement to take paid annual leave is ‘reasonable’ within the meaning of s.93(3) is not viewed solely through the perspective of the employer.

[33] We now turn to the particular provisions and submissions in respect of the two specific awards under consideration.

Black Coal Mining Industry Award 2010

[34] Clause 25 of the BCMI Award deals with annual leave. Subclauses 25.3, 25.4 and 25.10 are relevant for present purposes. Subclause 25.3 deals with the accrual of annual leave and provides as follows:

25.3 Accrual of annual leave
Employees, other than casual employees, accrue annual leave at the following rate:

For employees who would be entitled to annual leave of:	Hours of annual leave for each completed week of employment:
175 hours (5 weeks)	3.3654
210 hours (6 weeks)	4.0385

[35] Clause 25.4 deals with the taking of annual leave, it states:

25.4 When annual leave can be taken

(a) An employee with an annual leave entitlement, who wishes to take all or part of that entitlement will, unless otherwise agreed between the employee and the employer, give the employer at least 28 days’ notice in writing of the amount of leave to be taken. The employer will grant that leave unless, in the employer’s opinion, the operations of the mine will be affected.

(b) Unless otherwise agreed, annual leave will be taken within 12 months of the date the employee received the annual leave entitlement.

(c) The employer may direct an employee to take all or part of an annual leave entitlement provided at least 28 days’ notice in writing is given to the employee.

[36] Subclause 25.10 deals with the taking of annual leave during the shutdown of all or part of an employer’s operations, it provides as follows:

25.10 Shutdown

(a) An employer that shuts down all or any part of its operation must give employees at least 28 days’ notice of the shutdown or such shorter period as agreed between the employer and the employees affected.

(b) Employees directly affected by the shutdown who have an entitlement to annual leave may take all or part of that entitlement during the shutdown period.

(c) Employees who are directly affected by the shutdown and who are not yet entitled to sufficient annual leave may, during the shutdown period, take any annual leave accrued in accordance with clause 25.8.

[37] The Coal Mining Industry Employer Group (CMIEG), representing a group of employers in the black coal mining industry, oppose the insertion of the excessive leave model term into the BCMI Award and submits that current clauses 25.4 and 25.10 adequately deal with the matter of excessive annual leave and should be retained. 22 CMIEG relies on submissions and materials filed on 26 October 2015, 21 December 2015, 8 February 2016, 29 July 2016 and 26 August 2016.

[38] In its submission of 26 October 2015 the CMIEG sets out the reasons why it contends that the model excessive leave term should not be inserted into the BCMI Award. The reasons advanced may be summarised as follows:

(i) Clause 25.4 operates satisfactorily and provides a ‘fair balance of rights of both the employee and the employer to cause the taking of annual leave’.

(ii) Including the model term is unnecessary, would cause confusion if not give rise to conflicting rights and obligations concerning the taking of annual leave.

(iii) There is no excessive accrued leave problem to be fixed by the variation of the BCMI Award to insert the model term.

(iv) Black coal mines generally operate on a continuous 24 hour 7 days per week basis and the rostering of employees takes account of entitlements to take annual leave.

(v) Current clauses 25.4 and 25.10 meet the practical operational needs of the mines at which they apply and the removal of either clause would cause practical problems for employers and employees in a number of operational circumstances.

(vi) Employees covered by the BCMI Award can be distinguished from employees covered by most other modern awards by the fact that they are entitled to five or six weeks annual leave (clause 25.2) and long service leave at the rate of 13 weeks for each 8 years of service (Coal Mining Industry (Long Service Leave) Administration Act 1992 (Cth). Employees who wish to ‘save up’ leave are able to utilise their comparatively generous long service leave entitlement for that purpose.

(vii) There is a high incidence of enterprise agreements in the black coal mining, industry and, to the extent that there are concerns that the provisions of the BCMI Award may not be appropriate or sufficient in dealing with the taking of leave, those concerns can be addressed by an enterprise agreement.

[39] The CMIEG’s earlier submission in respect of clause 25.4(b) (see (i) in paragraph [38] above) was modified during the course of oral argument at the hearing on 13 September 2016. We deal later with CMIEG’s submissions on this issue.

[40] The Construction, Forestry, Mining and Energy Union, Mining and Energy Division (the CFMEU) submits that the excessive leave model term should be inserted in the BCMI Award, subject to varying the definition of excessive leave having regard to the level of annual leave entitlements under the award. 23

[41] The Commission issued a Background Paper on 8 July 2016 setting out some data on the amount of annual leave taken by employees in various industries, including mining. Table 9 in the Background Paper is relevant for present purposes and is set out below. The table presents data on non-casual employees in the Mining industry. Relative to all industries:

● the proportion that took a period of paid annual leave was relatively similar to the average across all years from 2010 to 2012, while a lower proportion took a period of paid annual leave in 2013 and a higher proportion in 2014; and
● the average number of paid annual leave days was lower across each year, except in 2013.

Table 9: Use of paid annual leave by non-casual employees in Mining, 2010–2014

Source: HILDA survey, Waves 10–14.

[42] CMIEG makes the following submission in respect of the information in Table 1.

‘(a) The information in the Background Paper provides data concerning the “mining Industry” and is not limited to the “black coal mining industry”. It is apparent that the ANZIC1 mining division encompasses coal mining (including brown coal mining), oil and gas extraction, metal ore mining and services to mining. The information in the Background Paper concerns the proportion of employees taking annual leave in the mining industry in particular years, rather than the accrued but untaken annual leave of those employees which is the relevant issue. In any event, the information demonstrates that the proportion of employees who took annual leave in the mining industry in each year was relatively similar across each year from 2010 to 2012, and was close to the "all industries" figure in each of those years.

(b) The data which has been provided by the CMIEG on 21 December 2015 (Annexure 1 of its submissions) is particular to the black coal mining industry, deals with accrued but untaken annual leave (rather than leave taken) which is the relevant issue, and is recent in time (being from 2015). The data provided by the CMIEG should be preferred to the information contained in the Background Paper.’ 24

[43] We accept that data in the Background Paper concerns the ‘mining industry’ and is not limited to the ‘black coal mining industry’, whereas the data referred to in paragraph (b) of the above submission (attached as Annexure 1 to CMIEG’s submission of 21 December 2015) is information is based on data provided by 12 employers in the black coal mining industry.

[44] The BCMI Award provides for 6 weeks’ annual leave per annum for continuous shiftworkers and 5 weeks for other employees. The CMIEG data shows the numbers of employees with leave accruals in five bands: 0–5, 5–10, 10–15, 15–20 and 20 plus weeks and what the number of employees in each band represent as a percentage of all employees.

[45] The table below is an extract from Annexure 1 to the CMIEG’s submission of 21 December 2015 and sets out the annual leave accruals as at December 2015 for the employees of 12 employers in the black coal mining industry:

[46] The CMIEG submits that the data supports its contention that accrual of annual leave is not at a level that is problematic in the industry.

[47] Two points may be made about the CMIEG data. The first concerns the extent of excessive leave accruals shown by this data.

[48] In this regard the model term defines ‘excessive leave accrual’ as more than 8 weeks’ paid annual leave or 10 weeks’ paid annual leave in the case of a ‘shiftworker’ (as defined in the modern award for the purposes of the additional week of annual leave provided for in the NES). The 8 week threshold reflects 2 years of accrued paid annual leave for most employees and is consistent with s.236(6) of the former Workplace Relations Act 1996 and with the majority of current modern award clauses which contain excessive leave provisions.

[49] Applying the same general approach to the BCMI Award, employees in black coal mining could be said to have an excessive leave accrual if:

• in the case of continuous shiftworkers, they had accrued more than 12 weeks’ paid annual leave; or



• in the case of other employees, they had accrued more than 10 weeks’ paid annual leave.

[50] The data provided by CMIEG does not differentiate between continuous shift work employees and other employees. Nor does the data identify the number of employees with more than 12 weeks’ accrued paid annual leave – it provides data in five bands, one of which is 10–15 weeks’ accrued annual leave.

[51] If it is assumed that most of the employees represented in the data are continuous shiftworkers entitled to six weeks’ paid annual leave per year 25 and a mid point is selected for the 10 to 15 weeks’ band range, then the data shows that some 1,973 employees employed by these 12 black coal mining industry employers (or about 9.5% of the employees) had an ‘excessive leave accrual’ within the meaning of the model term.

[52] Contrary to the submission advanced by the CMIEG we think that such a level of ‘excessive’ paid annual leave accruals is problematic and supports an inference that a significant proportion of these employees are not taking a reasonable portion of their paid annual leave. In the June 2015 decision 26 the Full Bench canvassed the evidence on the impact of not taking accrued annual leave, and by implication, the impact of excessive accruals of paid annual leave. The Full Bench27 concluded that the evidence supported the following findings:

‘(i) Not taking a reasonable portion of leave can give rise to a serious threat to the health and safety of the employees concerned.

(ii) Excessive annual leave accruals are a significant issue for employers. Such accruals represent a significant financial liability and can give rise to cash flow problems (particularly for small businesses) when paid out on termination.

(iii) The taking of accrued paid annual leave can have mutual benefits for employees and employers:

(a) Taking paid annual leave provides employees with a period of rest and recovery from work and has significant positive implications for employee health and wellbeing. As well as providing an opportunity for rest and recovery, taking paid annual leave also provides employees with the time and opportunity to attend to their family and other commitments and to engage in social, community and personal interests.

(b) While the evidence on whether taking paid leave improves productivity appears to be somewhat mixed and inconclusive, there is evidence that absenteeism is reduced after a period of leave and of a strong correlation between workplace stress and anxiety and not taking leave breaks. A period of paid leave is also likely to reduce fatigue at work and improve workplace health and safety.’

[53] We note the CMIEG submission that there is a cohort of employees in black coal mining who attach themselves to a particular mine and that it might be expected that over the course of time a residual amount of their annual leave entitlement will accrue each year and build up over time, despite the fact that they take the vast majority of their entitlement each year. 28 No evidence was advanced in support of this assertion and the size of the cohort referred to by the CMIEG is unknown, but the general proposition advanced was uncontested and on that basis we accept that there are some employees in black coal mining in the category referred to by the CMIEG. But even so, these employees are not taking their full paid leave entitlement each year and they do have excessive leave accruals. Further, the fact the level of paid annual leave entitlements in this award is higher than that provided in the NES and in modern awards generally is beside the point. It has plainly been thought necessary to prescribe a higher entitlement in this award, no doubt to provide employees covered by the award with a longer period of rest and recovery, given the nature of the work undertaken. No party in the present proceedings is contending that the level of paid annual leave entitlement be reduced.

[54] The second observation to be made about the data is that the level of excessive leave accruals has occurred in a context where the existing award provisions provide employers in this industry with a power to direct employees to take all or part of an annual leave entitlement on the provision of 28 days’ notice in writing (see clauses 25.4(c) and 25.10(a)). The extent of existing excessive leave accruals suggests that these existing award terms are not working. During the course of oral argument counsel for the CMIEG accepted that this ‘may be the case … but the solution may not be the model term’. 29

[55] We now turn to the terms of the existing provisions in the BCMI Award which are said to address the issue of excessive paid annual leave accruals. We turn first to clause 25.4(b) which provides that ‘annual leave will be taken within 12 months of the date the employee received the annual leave entitlement’, unless otherwise agreed.

[56] It will be recalled that the entitlement to paid annual leave in the NES is not dependent upon the completion of a particular period of service, rather that entitlement accrues progressively during a year of service according to the employees ordinary hours of work. So, for example, an employee whose ordinary hours of work are 38 hours per week accrues an entitlement to about 2.92 hours paid annual leave for each week of completed service. As the entitlement accrues progressively throughout the year a provision such as clause 25.4(a) is simply impractical. This is so because a requirement to take annual leave ‘within 12 months of the date the employee received the annual leave entitlement’ may mean that an employee could be required to take a period of accrued paid leave each week as further leave is accrued.

[57] As counsel for the CMIEG acknowledged during the course of oral argument, clause 25.4(b) appears to be a vestige of predecessor awards that provided for annual leave entitlements to be credited on the anniversary date of the commencement of an employee’s employment. 30 Clause 25.4(b) is a term which may have been appropriate in times past when the entitlement to any paid annual leave was dependent upon the completion of 12 months’ service, but in the context of the NES it is an anachronism.

[58] The CMIEG and the CFMEU both acknowledged that given the progressive accrual of paid annual leave provided in the NES, clause 25.4(b) could not be retained in its current form.

[59] The CMIEG submitted that the subclause required ‘significant redrafting’ so as to provide that an employee should not accrue an annual leave entitlement equivalent to two years’ of accrued leave. In the context of this award such a provision would mean that employees should not accrue more than 10 or 12 weeks’ paid annual leave. If it were possible to draft such a clause then that was the CMIEG’s ‘preferred approach’. 31 The CMIEG acknowledged that a redrafted clause in the terms described may be characterised as ‘aspirational’, giving rise to the criticism that it has no real work to do. The CMIEG acknowledged that the alternatives open to the Commission in respect of clause 25.4(b) were to redraft it in the terms proposed or delete it.

[60] The CFMEU also acknowledged that clause 25.4(b) was problematic and that the options were either to vary it to make it consistent with the NES, or delete it. The CFMEU was content with either course and advanced the same submission in respect of the entirety of clause 25.4. 32

[61] The modern awards objective is to ‘ensure that modern awards, together with the NES, provide a fair and relevant minimum safety net of terms and conditions’. Clause 25.4(b) is neither fair nor relevant and should be deleted from the BCMI Award. It is a vestige of past methods of annual leave accrual and does not sit conformably with the NES. Further, we see very little utility in varying clause 25.4(b) in the manner proposed by the CMIEG. An award clause in the terms proposed would be rightly seen as merely aspirational and would have little or no work to do. In our view the most appropriate course is to simply delete clause 25.4(b).

[62] We now turn to subclause 25.4(c) which provides that the employer ‘may direct an employee to take all or part’ of their annual leave entitlement on the giving of 28 days’ notice in writing.

[63] As mentioned earlier, s.93(3) provides the jurisdictional basis for a modern award term requiring an employee to take paid annual leave in particular circumstances. Clause 25.4(c) of the BCMI Award is such a term and no party contended otherwise. Importantly, this type of term is subject to the legislative direction that any such requirement to take paid annual leave ‘is reasonable’ and the assessment of whether such a requirement is ‘reasonable’ within the meaning of s.93(3) is not viewed solely through the perspective of the employer.

[64] The CMIEG submits that it could be inferred that in exercising any rights under a modern award a party would act reasonably in doing so, even in the absence of express words to that effect. 33 In the alternative, it submits that some additional words could be added to the end of the subclause such as: ‘and the direction to the employee is reasonable’. The CMIEG submits that with the addition of these words subclause 25.4(c) would meet the requirements of s.93(3) and that in the event of a dispute as to whether a direction was reasonable the employee concerned could utilise the dispute settlement process in the award.

[65] The CMIEG’s first point would require the importation of a general obligation to act reasonably when exercising an award right. Reference was made to the implied good faith obligations in respect of exercising rights under commercial contracts, in support of the proposition advanced.

[66] It may be accepted that some courts have held that there is a duty of good faith in the performance of employment contracts reflecting the obligation found in commercial contracts, while other courts have held no such duty is implied. 34 We note in this context that in Commonwealth Bank of Australia v Barker35 the plurality left open the question whether there is a general obligation to act in good faith in the performance of contracts and the related questions whether contractual powers and discretions may be limited by good faith and rationality requirements analogous to those applicable in the sphere of public law.36 As observed by Irving in ‘The Contract of Employment’ the law in this area is ‘currently in a state of flux’.37

[67] In any event it is not immediately obvious how the debate on implied contractual terms assists in the interpretation of the terms of a modern award. The general approach to the construction of instruments such as modern awards was set out in the judgement of French J, as he then was, in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union: 38

‘The construction of an award, like that of a statute, begins with a consideration of the ordinary meaning of its words. As with the task of statutory construction regard must be paid to the context and purpose of the provision or expression being construed. Context may appear from the text of the instrument taken as a whole, its arrangement and the place in it of the provision under construction. It is not confined to the words of the relevant Act or instrument surrounding the expression to be construed. It may extend to “...the entire document of which it is a part or to other documents with which there is an association”. It may also include “... ideas that gave rise to an expression in a document from which it has been taken” - Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518 (Burchett J); Australian Municipal, Clerical and Services Union v Treasurer of the Commonwealth of Australia [1998] FCA 249; (1998) 80 IR 345 (Marshall J).”

[68] To this we add the oft-quoted observations of Madgwick J in Kucks v CSR Limited, 39 that a narrow pedantic approach to interpretation should be avoided, a search of the evident purpose is permissible and meanings which avoid inconvenience or injustice may reasonably be strained for, but:

‘. . . the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some interiorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.’ 40

[69] The observation of Madgwick J in Kucks tells against the general proposition put by the CMIEG in these proceedings and we were not referred to any authority in support of the proposition advanced. Further, as a contextual point, various terms of the BCMI Award expressly condition the exercise of particular award rights. For example, clause 12.1(a) provides that an employee ‘must perform work as reasonably required by the employer’ (emphasis added). The express conditions on the exercise of certain award rights also tells against the implication of such conditions elsewhere in the award. On the basis of the limited argument put we are not persuaded by the CMIEG’s primary submission.

[70] In support of its alternate proposition the CMIEG relied on the following observation in the September 2015 decision:

‘It seems to us that two different approaches might be taken in crafting an award term to deal with requirements to take leave in a way that satisfies s.93(3).
The first and perhaps most obvious approach would be to expressly require in the award term itself that any employer direction to take leave must be reasonable, taking into account all relevant considerations, including those identified in the Explanatory Memorandum...’ 41

[71] The above observation needs to be placed in context. Importantly, the Full Bench went on to say:

‘… However, that approach would give rise to significant uncertainty and potential disputation, as the status of any employer direction would be open to challenge on the basis that the individual needs and circumstances of the employee had not properly been considered and that the direction was not reasonable.
The better approach, it seems to us, is the one adopted in the provisional model term. The model term establishes a number of procedural requirements for any direction to take leave (that the parties first seek to confer, that the direction be in writing etc.) and broad constraints on the quantum and timing of the directed leave. These procedural requirements and constraints go some way to ensuring that any direction to an employee to take excessive accrued leave will be reasonable in terms of s.93(3), but they will not necessarily ensure proper consideration of the individual needs and circumstances of the employee so far as the timing of the directed leave is concerned. In order to address that issue, the model term enables the employee to make a subsequent request to take some or all of the leave covered by the direction at a different time or times (and the employer may not unreasonably refuse such a request). This approach provides greater certainty than the alternative approach outlined above as it minimises the scope for disputes as to the reasonableness of the direction. This is because, pursuant to the model term, the employee must comply with a direction to take excessive accrued leave meeting the requisite procedural requirements and constraints unless:

• the employee makes a subsequent request for leave;



• that request is agreed to by the employer; and



• taking both the directed leave and the agreed leave would at any time reduce the employee’s accrued leave balance below six weeks (taking into account any other leave that is also to be taken).




Under the terms of the provisional model term, an employee to whom a direction has been given may make a request to take paid annual leave as if the direction had not been given, and if that leave is agreed and the direction would then result in the employee’s remaining accrued entitlement to paid annual leave at any time being less than six weeks, the direction will be deemed to have been withdrawn. Giving primacy to the right of an employee to request to take accrued annual leave (and not to have that request unreasonably refused by the employer) over the right of an employer to direct that leave be taken, provides a means of ensuring that the personal needs and circumstances of the employee are taken into account. ...’ 42

[72] Similarly, in the context of the BCMI Award the adoption of the approach proposed by the CMIEG would give rise to significant uncertainty and potential disputation. The status of any employer direction would be open to challenge on the basis that the individual needs and circumstances of the employee had not properly been considered and that the direction was not reasonable. Nor would utilising the dispute resolution term in the BCMI Award (clause 9) necessarily provide a mechanism for conclusively determining such disputes. The Commission may only deal with a dispute by arbitration if expressly authorised to do so (see ss.595 and 739) and clause 9.3 of the BCMI Award contains no such express authorisation. Subclause 9.3 simply says:

‘The parties may agree on the process to be utilised by the Fair Work Commission including mediation, conciliation and consent arbitration.’

[73] It is apparent from a comparison of clause 25.4(c) with the model term that the existing award term differs from the model term in a number of respects, in particular:

(i) The existing award term does not provide a mechanism, subject to appropriate limitations, for employees to ultimately require that their employer give them a period of paid annual leave. It makes no provision for the circumstance where an employee accrues excessive paid annual leave but no employer direction is made.
(ii) The existing award term does not contain a requirement that the minimum length of any period of employer directed paid annual leave be one week. Such a provision would avoid the circumstance where an employee may be required to take their paid annual leave in a series of single days or small clusters of single days – thereby denying the employee the benefits associated with taking a longer period of leave. As the Full Bench said in the September 2015 decision:
‘It is desirable that some minimum period of leave be prescribed in circumstances where the employee concerned has an excessive leave accrual and may not have had the benefit of any paid annual leave for a period of more than two years.’ 43
We note that clause 25.6 provides that absent agreement annual leave is to be ‘given and taken in not more than three periods, one of which must be at least three weeks’ duration’. The intended interaction between clauses 25.4(c) and 25.6 is unclear.
(iii) The existing award term provides that an employer can direct an employee to take a period of accrued paid annual leave by giving the employee 28 days’ notice in writing. The model term requires that employees be given 8 weeks’ notice of the commencement of employer directed leave. The provision of 8 weeks’ notice ensures that the employee has a reasonable amount of time to make arrangements for activities during the leave period and/or to coordinate their leave with family members.
(iv) The existing award term does not place any limitation on the amount of accrued paid annual leave that an employer may direct an employee to take. The model term provides that an employer direction must not result in the employees’ remaining accrued entitlement to paid annual leave being less than 6 weeks. As the Full Bench said in the June 2015 decision:
‘Maintenance of a six week minimum is consistent with s.236(6) of the former WR Act and with the majority of current modern award clauses which limit the amount of accrued paid annual leave that an employer can direct an employee to take. It also accommodates the circumstance of an employee seeking to accrue leave so that he or she can take a reasonable extended holiday.’ 44
Further, the existing award term provides that an employer may direct an employer take ‘all or part of an annual leave entitlement’. The model term provides that a direction can only be made where an employee has accrued 8 weeks’ paid annual leave. The adoption of a lower threshold unfairly limits the capacity for employees to accrue leave for a later, longer, holiday.

(v) The existing term does not require an employer to enter into any dialogue with an employee before directing them to take part of their annual leave. The employer is under no obligation to discuss the issue of excessive annual leave accrual with the employee or to seek to reach an agreement with the employee about the time when such leave will be taken. The model term includes such a provision on the basis that it is plainly preferable that these matters be resolved by agreement between the employer and employee, without the need for a direction.

[74] The above comparison reinforces the deficiencies in the existing award term.

[75] In support of the retention of clause 25.4(c) the CMIEG also submits that the utility of the clause extends beyond the management of excessive leave accruals:

‘There are a number of practical operational exigencies affecting black coal mines that are met by the current clauses 25.4 and 25.10 of the BCMI Award.
Some examples of these are as follows:
(a) Geological or geotechnical circumstances may require that one or more sections of a mine cease operation for a period. As a result, if coal is not being produced, part of the mining workforce and the employees operating the coal handling and preparation plant at the mine may have no useful work for a period. In these circumstances, the employer or the employee may sensibly see the taking of annual leave as the best course. The alternative of standing down employees without pay may be available but would be onerous and reasonably avoided by the granting and taking of annual leave.
(b) There have been instances where mines have had to stop because of a underground longwall shearing machine being put out of action by being buried due to the collapse of the strata in the coal seam. This is another circumstance in which the taking of leave in accordance with clause 25.4 of the BCMI Award, at the instance of the employee or employer, is reasonable and practicable while the longwall shearing machine is recovered.
(c) Market considerations including the cyclical nature of black coal markets, may cause a mine operator to choose to shut down all or part of an operation for a period. A prime recent example of this was the shutting down of a number of Glencore group mines for a three week period in December 2014 and January 2015, due to oversupply of coal in the market. Such action can be distinctly beneficial to employees, in so far as it may mitigate the need for an employer to reduce workforce numbers through retrenchment.
(d) Another circumstance that can arise is that the product coal stockpile at a mine reaches full capacity, and the extraction of coal therefore needs to be stopped or slowed. In these circumstances, an employee or employer may exercise rights under clause 25.4 (or clause 25.10).
In each example situation, clauses 25.4 and 25.10 meet the reasonable needs of employees and employers in the black coal mining industry. Inclusion of the model term and removal of either clause 25.4 or 25.10, would be less beneficial. These terms of the BCMI Award are already "mutually beneficial" (see June 2015 decision [2015] FWCFB 3406 at [214]; September 2015 decision [2015] FWCFB 5771 at [175]).’ 45 (footnotes omitted)

[76] We make two points in relation to this aspect of the CMIEG’s submission. First, we acknowledge that clause 25.4(c) could be utilised in the circumstances described – but that misses the point. Clause 25.4(c) is a term allowing for an employee to be required to take annual leave. The power to include such a term in a modern award is s.93(3), which provides that the requirement to take paid annual leave must be ‘reasonable’. An award term whereby an employee can be directed to take all of part of their accrued paid annual leave on the provision of 28 days’ notice in writing without other considerations and requirements is not ‘reasonable’ within the meaning of s.93(3).

[77] The second point is that the circumstances identified in the CMIEG’s submission could also be addressed by utilising clause 25.10 of the BCMI Award and we note the uncontested assertion by the CFMEU’s advocate that in such circumstances:

‘the parties get together, they sit down and they sort it out. That’s what has happened in the past. That is what happened when Glencore, I think last year, shut down for a week. Presumably, that is what will happen in the future.’ 46

[78] It would also be open to the parties to address these issues in enterprise bargaining and we note the following submission contained in the CMIEG’s written submission of 26 October 2015, at paragraph 37:

‘There is a high incidence of enterprise agreements in the black coal mining industry and, to the extent that there are concerns that the provisions of the BCMI Award are not appropriate or sufficient in dealing with the taking of leave, those concerns can be addressed by an enterprise agreement.’

[79] We would make a similar observation – to the extent that a particular employer or enterprise is concerned that the award as varied will not provide sufficient flexibility to address the range of unforeseen events identified by the CMIEG, those concerns can be addressed by an enterprise agreement.

[80] We have considered the submissions advanced by the CMIEG but we have decided to delete clause 25.4(c) and to insert the model excessive leave term.

[81] We conclude our consideration of clause 25.4 by turning to subclause 25.4(a), which provides that on giving the requisite notice an employee request to take a period of paid annual leave will be granted ‘unless in the employer’s opinion the operations of the mine will be affected’. The CMIEG characterised clause 25.4 in general terms as providing a ‘fair balance of rights of both the employee and the employer to cause the taking of annual leave’ (see above at [38]). We take this submission to mean that clause 25.4(a) is the part of clause 25.4 which provides employees with rights to take annual leave.

[82] To the extent that clause 25.4 as a whole reflects a balance between the rights of employers and employees the deletion of two of the elements of the term (clauses 25.4(b) and (c)) is a factor favouring the deletion of clause 25.4(a). Further, the CFMEU pointed to circumstances where the right conferred by clause 25.4(a) had not operated effectively (from their perspective) in practice and was ambivalent as to whether the terms of clause 25.4 were varied conformably with the NES or simply deleted. We also note that s.88(2) will continue to apply to employee requests to take paid annual leave, despite the deletion of clause 25.4(a). In all the circumstances we have decided to delete clause 25.4(a), we are not satisfied that the term is necessary to achieve the modern awards objective.

[83] On the basis of the matters set out above we have concluded that the excessive leave term in the BCMI Award (i.e. clause 25.4(b) and (c)) does not provide a fair and relevant minimum safety net of terms and conditions of employment. On that basis the term does not meet the modern awards objective. We are also satisfied that the existing excessive leave term does not meet the requirements of s.93(3) of the FW Act. The existing award term provides that an employee may be required to take paid annual leave in particular circumstances and, having considered the terms of clause 25.4(c) that requirement is not reasonable. As that term in the BCMI Award does not meet the requirements of s.93(3) it follows it is not a term which may be included in a modern award. As to clause 25.4(a), we are not satisfied that it is necessary to meet the modern awards objective.

[84] We have concluded that clause 25.4 should be deleted in its entirety and that the award should be varied to insert the revised excessive leave model term, subject to a modification to the definition of ‘excessive leave’ having regard to the level of annual leave entitlements under the award. We rely on the findings set out in the September 2015 decision 47 and the matters to which we have referred in this decision.

[85] In concluding, we note that one of the issues raised by the CMIEG – in the event we decided to insert the model term in the BCMI Award – concerned the interaction between the model term and clause 25.10 ‘shutdown’. Counsel for the CMIEG referred to this issue during the course of oral argument, as follows:

‘… there might also be a question that arises if the excessive leave clause was to be inserted whether or not the provision in 25.10 shutdown was to be read in a particular way, that is, whether or not there ought to be catered for an interaction of, if an employee had, for example, given a direction they wished to take leave under the excessive leave clause, was that to be superseded in some way if the employer gave a direction about a shutdown…’ 48

[86] While not conceding that there was an interaction issue between clause 25.10 and the model term, the CFMEU acknowledged that any potential problem could be addressed by the insertion of some introductory words in clause 25.10 to make it clear that the shutdown term operates despite the terms of the excessive leave term. 49 We propose to add some introductory words to clause 25.10 to make it clear that the shutdown term operates independently of the excessive leave term. Interested parties will have an opportunity to comment on the draft variation determination.

Aquaculture Award 2010

[87] Clause 23.4 of the Aquaculture Industry Award 2010 provides that annual leave is to be taken within 18 months of accrual. It states:

23.4 Annual leave is to be taken within 18 months of the entitlement accruing. For the purpose of ensuring accrued annual leave is taken within that period, and in the absence of agreement as provided for in s.88 of the Act, an employer may require an employee to take a period of annual leave from a particular date provided the employee is given at least 28 days’ notice.

[88] Clause 23.3 of the Aquaculture Award is also relevant, it provides that employees may be directed to take annual leave where an employer ‘intends temporarily to close (or reduce the nucleus) the place of employment or a section of it’. Clause 23.3 states:

‘Where an employer intends temporarily to close (or reduce to nucleus) the place of employment or a section of it for the purpose, amongst others, of allowing annual leave to the employees concerned or a majority of them, the employer may give those employees one month’s notice in writing of an intention to apply the provisions of this clause. In the case of any employee engaged after notice has been given, notice must be given to that employee on the date of their engagement.’

[89] The NSW Farmers (Industrial) Association (NSW Farmers), which represents the interests of oyster producers in NSW, opposes the insertion of the model excessive leave term in the Aquaculture Award and seeks the retention of the existing award provision, clause 23.4. In the event that their primary submission is rejected and the Commission decides to insert the model term into the award then NSW Farmers seeks a variation to the model term which would add the following words to the end of clause 1.5(e):

‘except if the period of annual leave being requested falls within high season as advised by the employer previously.’

[90] The NSW Farmers’ submission of 26 August 2016 sets out some background information on the Australian oyster industry. There are around 814 licence holders that make up the industry, largely located in NSW, South Australia and Tasmania, and they are primarily ‘family owned, owner operated small businesses’. The particular features of oyster farming are referred to at paragraphs 21–23 of the NSW Farmers’ submission:

‘Oyster farming is a labour intensive and seasonal operation. Oyster growth is relative to water temperatures. Growers will handle oysters more when they are actively growing during summer. The demand for oysters is also seasonal, with the month leading up to Christmas and around Easter being the busiest.
It is during the Christmas and Easter holiday seasons that oyster farming is generally at its peak and oyster farming businesses require all employees to be available during these times to maximise capacity of production and fulfill (sic) sales demand.
The busiest period for oyster farming operation covers a popular holiday season and it is attractive for employees to take annual leave during this period. It is crucial for employers in the industry to retain the ability to refuse an annual leave application during their high season, even if the employee has accrued excessive leave.’

[91] NSW Farmers submit that clause 23.4 ‘sufficiently deals with the issue of excessive leave by discouraging annual leave accrual of more than 6 weeks’, while providing the ability for the employer and employee to agree to leave being taken at a later date if the employee wishes to take a longer holiday.

[92] It is also submitted that there is a ‘clear alignment’ between the operation of clauses 23.4 and 23.3, in that the two provisions require the same minimum notice period for an employer direction to take accrued annual leave. As to clause 23.3, it is submitted that the inclusion of the model excessive leave term would create practical difficulties in its interaction with the operation of clause 23.3 which would not be consistent with the provision of an award system that is simple and easy to understand (s.134(1)(g)). NSW Farmers provide the following example 50 of the difficulties that it submits would be caused by the interaction between clause 23.3 and the model term:

‘… in a shut down situation, an employer is required to give a minimum of one month notice. However if one of the employees in the operation being shut down has more than 8 weeks accrued annual leave, it is open for argument that a minimum of 8 weeks notice is triggered when the excessive leave model provision should not be affecting the mechanics of a shut down provision set out in the award.’

[93] NSW Farmers tendered three witnesses statements in support of their position: Mr Bruce Zippel 51; Mr Tony Troup52 and Mr Jonathan Poke53.

[94] Mr Zipple has been involved in oyster farming for 27 years and is based in South Australia. At paragraphs 4–6 of his statement Mr Zipple says:

‘4. Oyster farming is typically a small to medium family focussed business. Usually employing between 1 to 10 employees. Turnover usually less than $1 million for average sized business.

5. Oyster farming requires the continual handling of oysters from small sizes. Oysters are usually sold from about 18 months to 2.5 years for Pacific oysters or up to double that for Sydney Rock oysters. Growers will work their oysters more when they are actively growing in warmer months and all oyster farming states work hard to prepare their oysters for the difficulties of winter. Growers will work hard at differing times of the year to prepare stock for the heavy selling times.

6. It is understood that in excess of 25% of total annual oyster production is normally sold in the month leading up to Christmas. For some growers it can be as high as 50% as it is such a high demand time of the year. It is common for employers to insist that all staff are available for this very busy time of year.’

[95] Mr Troup has been involved in oyster farming for 36 years and is based in NSW, his business currently employs two permanent employees. At paragraphs 4–9 of his statement Mr Troup says:

‘4. Oyster production varies slightly throughout NSW but generally the peak periods for sales are Easter and Christmas. There are other busy periods for growers depending on their type of operation. For example, catching slats are put out in the early months of the year and timing of this can be critical for some growers.

5. In my own operation, down times in an oyster operation are during the winter months when oysters are not being sold and growth is slow so there is little grading to be done. During this period we catch up on maintenance and have some time off.

6. The summer months are the busiest period for our business. It is during this period when there is high sales volume to market and we have good growth so there is much grading to do to so oysters don’t get overstocked and start to die. The months around Christmas and Easter are particularly busy.

7. We only have a small team of employees and every member of staff counts. If there is an employee who takes leave during the busy period it will impact on our operation and the business profitability. Oyster growing is a seasonal operation and oysters can only be sold when they are in condition. We may miss opportunities to sell our oysters while they are still in condition and if we get behind in the grading then oysters can become overstocked and fouled with nuisance organisms creating much more work or even death of stock.

8. We don’t currently have any employee with annual leave accrual of more than 8 weeks at the moment, however in the past we did.

9. We try to avoid having to direct employees to take leave, and instead use the ability to convince employees to not take time off at inappropriate times.’

[96] Mr Poke has been involved in oyster farming for 37 years and is based in Tasmania, his business currently employs 22 permanent employees. At paragraphs 3–9 of his statement Mr Poke says:

‘3. Oyster farming is a very labour intensive operation. Oyster growth is relative to water temperatures so the majority of labour required for grading and rehousing is in the period from September through to June.

4. Oyster farming is very much dependent on weather condition and market demands. In periods where we have had storm damage or high sale volumes to deliver we may work some 12 hour shifts if necessary.

5. The highest volume of sales of oysters for consumption through the fresh fish market is from October through until May. The period of lowest labour requirements or our down time is from July through to September each year.

6. All staff members are required from the start of November through until the end of April. No leave is available during this period. Special consideration is given for extenuating circumstances.

7. If employees were to take leave during our high growth and sales periods and our stock is not graded on schedule, it can be ruined and be unsaleable.

8. We don't have any award covered employees who currently have more than 6 weeks of accrued annual leave.

9. The way we approach the issue is that every May or June we advise employees that leave is to be taken between particular period, usually from the start of July to the end of September, and they can complete a leave request form to take their leave between these dates. They are advised that there can be no more than 50% of the production staff on leave at any one time and it is first in has priority. We allow them to take leave in 2 blocks if they wish.’

[97] It is apparent from the evidence of Messrs Zipple, Troup and Poke that labour requirements in oyster farming fluctuate throughout the year, as is commonly the case in primary production enterprises. In oyster farming the peak demand period for labour is in the warmer months, between November and April. Depending on the location of the business and the market it services, the periods around Christmas and Easter can be particularly busy. None of the three witnesses reported any current award covered employee with more than 8 weeks’ accrued annual leave, though Mr Troup notes ‘that in the past we did’.

[98] We turn first to the terms of the existing provisions in the Aquaculture Award which are said to sufficiently deal with the issue of excessive leave accruals. As we have mentioned, clause 23.4 provides that annual leave is to be taken ‘within 18 months of the entitlement accruing’. To ensure that annual leave is taken within 18 months of accrual, clause 23.4 provides that an employer may require an employee to take ‘a period of annual leave from a particular date’ provided the employee is given ‘at least 28 days’ notice’.

[99] In the course of oral argument the NSW Farmers’ advocate explained that the purpose of clause 23.4 was ‘to act as an instigator to have discussions with employees and to know that the ability is there if it is needed; however, it’s more to commence the discussion with employees, to encourage employees to take annual leave during the low season’. 54 It seems that leave issues are presently managed through direct discussions between the employer and employees55 and such a collaborative approach for the taking of leave ensures sufficient labour during peak periods.

[100] We accept what is said about how clause 23.4 may operate in practice – at least in respect of oyster growing – but the fact remains that clause 23.4 suffers from the same deficiencies we identified earlier in respect of clause 25.4(b) and (c) of the BCMI Award, namely:

• As the NES provides that the entitlement to paid annual leave accrues progressively throughout the year a provision such as clause 23.4 is simply impractical. A request to take annual leave ‘within 18 months’ of the entitlement accruing’ may mean that an employee could be required to take a period of accrued paid annual leave each week.



• The jurisdictional basis for that part of clause 23.4 that allows an employer to direct an employee to take paid annual leave, upon giving at least 28 days’ notice, is s.93(3), which provides that any such requirement must be ‘reasonable’. The assessment of whether such a requirement is ‘reasonable’ within the meaning of s.93(3) is not viewed solely from the perspective of the employer. In this regard we note that clause 23.4 differs from the model term in a number of respects, including those set out earlier at paragraph [73], in respect of clause 25.4(c) of the BCMI Award.

[101] On the basis of the matters set out above we have concluded that the excessive leave term in the Aquaculture Award (i.e. clause 23.4) does not provide a fair and relevant minimum safety net of terms and conditions of employment. On that basis the term does not meet the modern awards objective. We are also satisfied that the existing excessive leave term does not meet the requirements of s.93(3) of the FW Act. The existing award term provides that an employee may be required to take paid annual leave in particular circumstances and, having considered the terms of clause 23.4, that requirement is not reasonable. As that term in the Aquaculture Award does not meet the requirements of s.93(3) it follows it is not a term which may be included in a modern award.

[102] We now turn to consider whether the model excessive leave term should be inserted into the Aquaculture Award.

[103] We are not aware of any survey data on the usage or accrual of paid annual leave which specifically relates to employees covered by the Aquaculture Award. Table 1 in the May 2016 decision 56 uses HILDA Survey Data and shows the usage of paid annual leave by non-casual employees in the Agriculture, forestry and fishing industry compared with all industries between 2010 and 2014, as shown below.

Usage of paid annual leave by non-casual employees in Agriculture, forestry and fishing,

2010–2014

Source: HILDA survey, Waves 10–14

[104] While the data fluctuates over the period, it consistently shows that relative to ‘all industries’, a lower proportion of non-casual employees in Agriculture, forestry and fishing took a period of paid annual leave over the previous 12 months and a lower average number of paid annual leave days was taken by those who took paid leave.

[105] Hence, in each year over the period 2010–2014 a significant proportion of non-casual employees in the agriculture, forestry and fishing sector did not take any paid annual leave. Further, of those who did take paid annual leave, the average leave days taken was less than the annual accrued entitlement for full-time employees and less than the average leave taken for all industries.

[106] At an earlier stage of these proceedings Ai Group, ACCI and other employer bodies relied on a joint employer survey conducted in May 2014 about matters relating to annual leave (the Employer Survey).⁵⁷ The Employer Survey provided a basis for the finding made in the June 2015 decision that a significant proportion of employees have six weeks or more of accrued annual leave. 58 The data from the Employer Survey showed that some 2552 employers (about 68 per cent of all responses) had at least one employee with an accrued paid annual leave balance of six weeks or more. Of these employers, 683 reported that over 20 per cent of their employees had accrued paid annual leave balances of six weeks or more.59 The respondents to the Employer Survey included those from the ANZSIC industry division ‘Agriculture, forestry and fishing’.60

[107] Further, as we have mentioned, one of the three witnesses in these proceedings stated that in the past his business had employed an award covered employee with more than 8 weeks’ accrued annual leave.

[108] Taken as a whole the evidence supports the finding that excessive leave accruals are likely to be an issue for at least some employers and employees covered by this award. It is also relevant to note that a significant proportion of employers covered by the Aquaculture Award are small businesses. The employer evidence before the Commission in the June 2015 proceedings indicated that excessive leave accruals represent a significant financial liability and can give rise to cash flow problems (particularly for small businesses) when paid out on termination. On the material before us, we are satisfied that it is necessary to insert a term into the Aquaculture Award to deal with excessive annual leave accruals.

[109] As we have mentioned, in the event the Commission decided to insert an excessive leave term into the Aquaculture Award then NSW Farmers seeks a variation to the model term which would add the following words at the end of clause 1.5(c):

‘except if the period of annual leave being requested falls within high season as advised by the employer previously.’

[110] The June 2016 decision 61 finalised the plain language version of the excessive leave model term. The final version of the model term is set out at Attachment C to that decision. The model term provides employers with the right to direct an employee to take ‘excessive annual leave’ and also makes provision for the circumstance where an employee accrues excessive annual leave but no employer direction is made. In such circumstances clause 1.5 provides an avenue for an employee to exercise control over the time at which the leave is to be taken. It is this aspect of the model term which NSW Farmers seeks to vary, in respect of this award. Clause 1.5, with the proposed variation highlighted, provides as follows:

1.5 Excessive leave accruals: request by employee for leave

(a) If an employee has genuinely tried to reach agreement with an employer under clause 1.3(b) but agreement is not reached (including because the employer refuses to confer), the employee may give a written notice to the employer requesting to take one or more periods of paid annual leave.

(b) However, an employee may only give a notice to the employer under paragraph (a) if:

(i) the employee has had an excessive leave accrual for more than 6 months at the time of giving the notice; and

(ii) the employee has not been given a direction under clause 1.4(a) that, when any other paid annual leave arrangements (whether made under clause 1.3, 1.4 or 1.5 or otherwise agreed by the employer and employee) are taken into account, would eliminate the employee’s excessive leave accrual.

(c) A notice given by an employee under paragraph (a) must not:

(i) if granted, result in the employee’s remaining accrued entitlement to paid annual leave being at any time less than 6 weeks when any other paid annual leave arrangements (whether made under clause 1.3, 1.4 or 1.5 or otherwise agreed by the employer and employee) are taken into account; or

(ii) provide for the employee to take any period of paid annual leave of less than one week; or

(iii) provide for the employee to take a period of paid annual leave beginning less than 8 weeks, or more than 12 months, after the notice is given; or

(iv) be inconsistent with any leave arrangement agreed by the employer and employee.

(d) An employee is not entitled to request by a notice under paragraph (a) more than 4 weeks’ paid annual leave (or 5 weeks’ paid annual leave for a shiftworker, as defined by clause 1.x) in any period of 12 months.

(e) The employer must grant paid annual leave requested by a notice under paragraph (a) except if the period of annual leave being requested falls within high season as advised by the employer previously.

[111] During the course of oral argument the NSW Farmers’ representative highlighted that ‘the main concern for the industry is really the risk of not being fully staffed during the high season’. 62 This risk is said to arise in circumstances where you reach the point that employees are able to require the employer to approve their leave – under clause 1.5 of the model term.

[112] In considering the submission put it needs to be understood that under the model term an employee’s right to require that a period of paid annual leave be granted is subject to a number of limitations, including:

(i) the employee must have had an excessive leave accrual (i.e. 8 weeks’ for most employees 63) for more than 6 months;

(ii) the employee must seek to confer with the employer and genuinely try to agree on steps that will be taken to reduce or eliminate the employee’s excessive leave accrual;
(iii) the employee may only give a direction in circumstances where the employer has not given a direction that will eliminate the employee’s excessive leave accrual;
(iv) the employer must be given at least 8 weeks’ notice of the commencement of leave; and
(v) for most employees the maximum period of paid annual leave that may be the subject of a notice by an employee in any 12 month period will be 4 weeks’ leave.

[113] To these limitations we would add three additional considerations.

[114] First, in the event of a dispute about the taking of annual leave then either party may elect to have that matter referred to the Commission pursuant to the dispute resolution clause in the award.

[115] Second, as clarified in the May 2016 decision, 64 any variation determination inserting the model excessive leave term into a modern award will provide that the clause 1.5 of the model term will commence operation 12 months after the commencement of the balance of the model term. This is intended to provide employers with some additional time to address existing excessive leave balances before the provisions which permit employees to exercise greater control over the time they may take leave.

[116] Third, the arrangement for the taking of leave in at least the oyster farming sector covered by this award have been characterised by discussion and collaboration. There is no reason to believe that such a cooperative approach to the time at which leave is taken will not continue. In that regard, we note that the annual leave provisions as varied will continue to rely upon the provision of s.88 of the Act. That is, in general terms, paid annual leave may be taken as agreed between the employee and his or her employer, and the employer must not unreasonably refuse an employee request. The circumstances of a small business in a highly seasonal industry would, amongst other considerations, be relevant to the assessment of an employee request for leave.

[117] The revised model term facilitates the making of mutually beneficial arrangements between an employer and employee and provides an effective mechanism to address excessive annual leave accruals. It provides an employer with a reasonable opportunity to deal with an employee’s excessive leave accrual before the employee is able to issue a notice requiring that a period of paid annual leave be granted. The various safeguards incorporated into the revised model term seek to protect the interests of both employees and employers. It seems to us that the issues identified by NSW Farmers – seasonality, fluctuating business demands and a high proportion of small business operators – are also characteristics of a number of other award covered sectors (including the Agriculture Awards dealt with in the May 2016 decision 65). On the material before us we are not persuaded that the model term should be modified in the manner proposed by NSW Farmers.

[118] In the event that the insertion of the model term does in fact give rise to particular practical difficulties then a subsequent application may be made to vary the award to address such difficulties at that time.

[119] We are satisfied that the variation of the Aquaculture Award to delete existing clause 23.4 and to insert the model excessive leave term is necessary to ensure that the award meets the modern awards objective. We rely on the findings set out in the June 2015 decision 66 and the observations we have made above. As to the matters in s.134(1)(a)–(h), insofar as they are relevant, we are satisfied that the insertion of the model term in this award will promote flexible modern work practices and the efficient and productive performance of work (s.134(1)(d)) and will assist business in managing excessive leave accruals (s.134(1)(f)). We are also satisfied that such variations are consistent with the objects of the FW Act. 67

[120] We raise one final matter in concluding. As we have mentioned, clause 23.3 of the Aquaculture Award provides a means by which employers may direct employees to take a period of paid annual leave during a partial or full closedown of the employer’s business. It appears that the provision is not widely utilised in practice. One reason for the limited use of the clause may be the manner in which it is drafted. We propose to redraft clause 23.3 – in plain language and to make it clear that it operates where seasonal factors reduce labour requirements – in order to make the provision more accessible for small business operators.

[121] The variation to clause 23.3 will be included as part of the draft variation determination giving effect to our decision and interested parties will have an opportunity to comment.

3. Maritime awards

[122] An issue arising from the May 2016 decision is whether the six modern awards in the Maritime industry (the Maritime Industry Awards) should be varied to include some or all of the model annual leave terms. The Maritime Industry Awards are as follows:

Dredging Industry Award 2010;
Marine Towage Award 2010;
Maritime Offshore Oil and Gas Award 2010;
Ports, Harbours and Enclosed Water Vessels Award 2010;
Professional Diving Industry (Industrial) Award 2010; and
Seagoing Industry Award 2010.

[123] A Background Paper and directions 68 were issued by the Commission prior to the hearing on 1 July 2016. At the hearing, MIAL, AMMA and the MUA were granted an adjournment to provide further submissions and evidence in support of their position. The parties were requested to provide a consolidated submission, replacing earlier submissions, addressing the issues set out in paragraphs [233]–[238] of the May 2016 decision69. Therefore, we do not propose to consider, in detail, any earlier submissions in this decision.

[124] On 8 July 2016 a Statement and directions 70 were issued setting out timeframes for the submissions. The Statement also provided that the matter would be finalised on the basis of submissions filed, without a further hearing. AMMA and MIAL filed a joint submission on 12 August 2016 (the AMMA/MIAL joint submission). The MUA filed a separate submission on the same day.

[125] The AMMA/MIAL joint submission deals with the six Maritime awards in three categories, as follows:

(i) The Marine Towage Award 2010; the Maritime Offshore Oil and Gas Award 2010; and the Seagoing Industry Award 2010: the insertion of each of the model terms is opposed in respect of each of these awards.
(ii) The Professional Diving Industry (Industrial) Award 2010: the insertion of the model terms is partly opposed.
(iii) The Dredging Industry Award 2010 and the Ports, Harbours and Enclosed Water Vessels Award 2010 71: AMMA/MIAL do not oppose the insertion of the model terms in these awards.

[126] The Maritime Union of Australia (MUA) also filed a submission on 12 August 2016 72 in which it did not oppose the insertion of any of the annual leave model terms into the Maritime Industry Awards.

[127] As noted above, there is no longer any opposition to the insertion of the excessive leave, leave in advance and cashing out model terms into the Dredging Industry Award 2010 and the Ports, Harbours and Enclosed Water Vessels Award 2010. We propose to vary these two awards to insert the three model terms.

[128] We are satisfied that the variation of these two awards to insert the model terms is necessary to ensure that these awards achieve the modern awards objective. We rely on the findings set out in the June 2015 decision 73 and the September 2015 decision. As to the matters in s.134(1)(a)–(h), insofar as they are relevant, we are satisfied that:

• the insertion of the excessive leave model term in these awards will promote flexible work practices and the efficient and productive performance of work (s.134(1)(d)) and will assist business in managing excessive leave accruals (s.134(1)(f));



• the insertion of the cashing out model term in these awards will promote flexible work practices (s.134(1)(d)), reduce employment costs and the regulatory burden on business (s.134(1)(f)); and



• the insertion of the leave in advance model term in these awards is consistent with the considerations in s.134(1)(a), (c), (d), (f) and (g). 74

[129] There is one further matter in relation to the Ports, Harbours and Enclosed Water Vessels Award 2010. Clause 22.4 of that award contains the following provision in relation to the requirement to take leave:

Requirement to take annual leave
[22.4 varied by PR994513 from 01Jan10]
Annual leave must be taken within six months of the entitlement accruing. An employer may require an employee to take a period of annual leave provided the employee is given at least 14 days’ notice.

[130] For the reasons we have expressed for deleting clause 25.4(b) and (c) of the BCMI Award, we have formed the provisional view that clause 22.4 of the Ports Harbours and Enclosed Water Vessels Award 2010 should also be deleted.

[131] We now turn to the three awards in category (i) above (at [125]).

[132] In the Seagoing Industry Award 2010, clause 20.1 provides, broadly speaking, that an employee is entitled to 0.926 days’ leave for each day of duty on a vessel (or travelling to or from a vessel). This ‘leave factor’ is intended to incorporate the following:

(a) leave with pay for weekends and public holidays worked;
(b) annual leave with pay of five weeks per year;
(c) personal/carer’s leave;
(d) compassionate leave; and
(e) a 35 working week.

[133] Clause 20.3 deals with the ‘taking of leave’:

Taking of leave
The taking of leave will, as far as practicable, be correlated with the running of the vessel in which the employee is engaged. The period of leave granted will approximate as closely as possible both to the actual amount of leave due to the employee and to the date and time when the employee can most conveniently return to duty.

[134] Clause 20.4 deals with ‘leave in advance’, it states:

Leave in advance
(a) Where an employee’s leave has expired, an employer may require an employee to take up to 14 days of leave in advance. An employee will not be required to take more than 14 days of leave in advance unless:

(i) there has been prior consent by the employee; or
(ii) a swing cycle agreement applying to the employee provides otherwise.

(b) The giving and taking of leave will be arranged having regard to:

(i) avoidance of delays to a vessel’s schedule, the voyaging pattern of the employee’s regular vessel and exigencies of the employer’s service;
(ii) the need to correct imbalances in leave and duty periods;
(iii) the employee’s home port;
(iv) the need to reduce costs of travel; and
(v) whether the employee has a right to accumulate leave under clause 20.5.

(c) Unless otherwise agreed between the employer and the employee, the leave to which an employee is entitled under this clause will be granted by the employer and taken by the employee not later than eight months after it has commenced to accrue.

[135] The Maritime Offshore Oil and Gas Award 2010 and the Marine Towage Award 2010 also contain ‘leave factor’ provisions, though differently expressed. 75

[136] Clause 19.3 of the Maritime Offshore Oil and Gas Award 2010 also deals with the taking of leave, it states:

Taking of leave
(a) Any extended period of time off (i.e. outside of the normal swing) is to be taken at a mutually agreed time, having regard to the operational necessity of ensuring that only part of the permanent crew members in each department on the vessel take such time off at any one time, to ensure the continued operational efficiency of the vessel.
(b) When proceeding on an extended period of time off, it will be the responsibility of the employee to ensure that they have sufficient entitlements due to enable them to draw continuous pay up to the day of the regular crew change when they are due to rejoin the vessel.
(c) The extent to which time off granted is more or less than that due will be debited or credited to the employee as less or additional time off to be granted; provided that the employee may not be required to take more than seven days of leave in advance.

[137] Clause 19.2(d) of that award is also relevant, it states:

The maximum time off an employee may accrue under this clause is 105 days. Unless agreement has been reached between the employee and employer, an employee will be required to take time off to ensure that the maximum of 105 days is not exceeded. Provided that where an employee who is scheduled on the basis of four weeks on, four weeks off, the maximum accrual will be 84 days.

[138] Clause 23.4 of the Marine Towage Award 2010 deals with the taking of leave from duty:

23.4 Employers will consult with their employees and prepare a roster providing for the taking of leave from duty. Where practicable, the roster should provide for predictability to the taking of 140 days of leave from duty in each year (or the proportion of the employee’s entitlement to rostered leave days in a year that 140 bears to 168).

[139] The AMMA/MIAL joint submission asserts that the existing award terms give employers ‘the necessary flexibility to manage rosters by working in sync with the ‘swing system’ eg four or five weeks on duty followed by four or five weeks off duty’ and that ‘annual leave cannot be accommodated for employees during the on duty period’.

[140] It seems to us that the operation of the swing system in these awards is likely to minimise excessive paid annual leave accruals and on that basis we do not propose to vary these awards to insert the excessive leave model term. We now turn to the question of whether these awards are varied to insert the cashing out and leave in advance model terms.

[141] None of these awards presently provide for the cashing out of annual leave. The AMMA/MIAL joint submission opposes the insertion of the cashing out model term essentially on the basis that employer would need to individually calculate each of the components of the accrued leave factor every time that an employee wanted to cash out a period of annual leave and this would be ‘an unduly complex administrative burden on employers’. Two observations may be made in response to the submission put.

[142] First, earlier in these proceedings the Employer Group sought to insert a standard ‘cashing out of paid annual leave’ term in 120 modern awards – including all of the Maritime Awards. The Employer Group submission in the June 2015 proceedings was advanced on the basis that the variations would ensure that the awards subject to the claim achieved the modern awards objective. Implicit in such a submission is the proposition that those awards did not meet the modern awards objective.

[143] AMMA is a member of the Employer Group. It is difficult to reconcile AMMA’s opposition to the insert of the cashing out model term in those awards which were the subject of the Employer Group claims, with its previous submission (as part of the Employer Group) that these awards be varied to include standard terms dealing with these issues. Further, during the course of the proceedings on 1 July 2016 76 AMMA was expressly asked to address this issue in submissions to be filed by 12 August 2016 but the AMMA/MIAL joint submission does not address this issue at all.

[144] The second point is that the cashing out model term is a facilitative provision – it facilitates the making of an agreement between an employer and employee to cash out a particular amount of accrued paid annual leave by the employee. There is no obligation on the employer to enter into such an agreement. Given the facilitative nature of this model term the ‘administrative burden’ argument is overstated. If the model term was inserted into these awards it would be a matter for an employer to weigh the benefits of agreeing to a cashing out request against any administrative difficulties. Absent the insertion of the model term employees and employers would be denied the opportunity of considering the option of cashing out an amount of accrued paid leave.

[145] Our provisional view is that these three awards should be varied to insert the cashing out model term.

[146] Similar considerations arise in respect of the leave in advance model term. The Maritime Offshore Oil and Gas Award 2010 was among the modern awards which were the subject of the Employer Group claim to insert a standard leave in advance term and the model term is a facilitative provision. There is no obligation on the employer to provide ‘leave in advance’.

[147] We note that clause 20.4 of the Seagoing Industry Award 2010 deals, in part, with ‘leave in advance’. However, the existing term deals with the circumstances where an employer may require an employee to take leave in advance. The model leave in advance term is directed at the circumstances where the employer and employee ‘agree in writing to the employee taking a period of paid annual leave before the employee has accrued an entitlement to the leave’.

[148] Our provisional view is that these three awards should be varied to insert the leave in advance model term and that clause 20.4 of the Seagoing Industry Award 2010 should be retitled ‘leave in advance: employer direction’.

[149] We now turn to the last of the Maritime Awards – the Professional Diving (Industrial) Industry Award 2010. This award provides different entitlements for inshore and offshore during operations. In respect of offshore diving it is submitted that the award effectively contains a ‘leave factor’ of one paid day off duty for each on-duty day. Subclauses 22.1 and 22.2 state:

22.1 Leave accrual
For each on-duty day worked employees, other than casual employees, will receive one paid off-duty leave day.
22.2 Rosters
The employer will establish a regularly recurring roster of equal on-duty and off-duty periods for each work site. The on-duty and off-duty periods will each be of 14 days’ duration, provided that other equal periods may be worked by agreement between the parties.

[150] The leave provisions in respect of inshore divers are those provided in the NES (see clause 25.1).

[151] The AMMA/MIAL joint submission does not oppose the variation of the award to insert the annual leave model terms in respect of inshore divers, but does oppose the application of those model terms to offshore divers.

[152] We do not propose to deal now with whether the excessive leave model term should be inserted into this award. It seems to us that there are a number of drafting issues with clause 22 which need to be addressed before this matter can be determined. For example, what are the matters which are intended to be compensated for by the ‘leave factor’ in clause 22.1? We will return to the excessive leave model term issue once this award has been reviewed in the award stage of the Review.

[153] As to the cashing out and leave in advance model terms, our provisional view is that the Professional Diving (Industrial) Industry Award 2010 should be varied to insert these model terms and they should not distinguish between inshore and offshore divers. As we have mentioned, these model terms are facilitative only and, further, differentiating between inshore and offshore divers in the way proposed in the AMMA/MIAL joint submission would add an unnecessary level of complexity to the award.

3. Next steps

[154] The 18 modern awards set out at paragraph [8] will be varied to delete the existing provisions dealing with the taking of annual leave within a specified period and to insert the excessive leave model term. Draft variation determinations will be issued shortly and interested parties will have 7 days within which to comment.

[155] The BCMI Award will be varied in the manner set out a paragraphs [84]–[86] of this decision. A draft variation determination will be issued shortly and interested parties will have 28 days within which to comment.

[156] The Aquaculture Award will be varied in the manner set out at paragraphs [119]–[121] of this decision. A draft variation determination will be issued shortly and interested parties will have 28 days within which to comment.

[157] The Dredging Industry Award 2010 and the Ports, Harbours and Enclosed Water Vessels Award 2010 will be varied to insert the excessive leave, leave in advance and cashing out model terms. Draft variation determinations will be issued shortly and interested parties will have 7 days within which to comment.

[158] As to the other Maritime Industry Awards, interested parties will have until 5.00pm (AEST) Friday 7 October 2016 to notify the Commission (at amod@fwc.gov.au) if they wish to contest the Full Bench’s provisional views in respect of the deletion of clause 22.4 of the Ports, Harbours and Enclosed Water Vessels Award 2010 (see paragraph [130] above) and the variation of the Marine Towage Award 2010; the Maritime Offshore Oil and Gas Award 2010; the Professional Diving (Industrial) Industry Award 2010; and the Seagoing Industry Award 2010 to insert the cashing out and leave in advance model terms (see paragraphs [145], [148] and [153]. If any person notifies the Commission by the specified date that they wish to contest the Full Bench’s provisional view in respect to one or more of these awards then we will issue further directions for the hearing and determination of the issue. If no notifications are received by the specified date we will vary these awards in accordance with the provisional views set out above.

[159] Finally, as mentioned in the May 2016 decision, 77 the insertion of the excessive leave model term in the Air Pilots Award 2010; the Aircraft Cabin Crew Award 2010 and the Textile, Clothing, Footwear and Associated Industries Award 2010 will be the subject of further consideration later this year. Directions in respect of these awards will be issued in the coming weeks.

PRESIDENT

Appearances:

P Sebbens for Coal Mining Industry Employer Group

G Kusuma for New South Wales Farmers Industrial Association

A Thomas for Construction, Forestry, Mining and Energy Union - Mining and Energy Division

T Pacey for Professionals Australia Collieries Division

S Crawford for Australian Workers’ Union

S Barklamb for Australian Mines and Metals Association

Hearing details:

2016.

Sydney, Melbourne (video hearing):

September 13.

Printed by authority of the Commonwealth Government Printer

<Price code G, PR585700>

 1   [2015] FWCFB 3406

 2   [2016] FWCFB 5771

 3   [2016] FWCFB 3177

 4   [2016] FWCFB 3953

 5   Ai Group further submission, 7 December 2015 at para 13

 6   Ibid at para 15

 7   Ibid at para 73

 8   [2016] FWCFB 3177at para [126]

 9   Transcript – 1 July 2016

 10   [2016] FWCFB 4525 at para [9]

 11   Ibid

 12   The model term to be inserted into the Nurses Award 2010 will require modification given the quantum of annual leave specified in cl 31.1

 13   [2016] FWCFB 6442

 14   See [2015] FWCFB 3406 at paras [116] and [138]

 15   See [2016] FWCFB 3177 at paras [89]–[117]

 16   [2016] FWCFB 3177 at para [192]

 17   At para [381]

 18   Ibid at para [383]

 19   Ibid at para [382]

 20   [2015] FWCFB 3124

 21   Ibid at para [25]

 22   In the case of clause 25.4(b) CMIEG conceded during the course of oral argument that this subclause required ‘significant redrafting’, see Transcript 13 September 2016 at para [56]. AMMA generally supported the CMIEG’s submissions.

 23   Professionals Australia, Collieries Division supported the CFMEU’s submissions

 24   CMIEG submission dated 26 August 2016 at para [6(b)]

 25   See Transcript 13 September 2016 at paras [194]–[196]

 26   [2015] FWCFB 3406 at paras [117]-[137]

 27   Ibid at para [138]

 28   Transcript 13 September 2016 at para [101]

 29   Transcript 13 September 2016 at para [143]

 30   Transcript 13 September 2016 at paras [35]–[37]

 31   Transcript 13 September 2016 at para [56]

 32   Transcript 13 September 2016at paras [183]–[185]

 33   Transcript 13 September 2016 at para [67]

 34   Compare Downe v Sydney West Area Health Service (No 2) (2008) 71 NSWLR 633 at paras [320]–[328] and Walker v Citigroup Global Markets Pty Ltd (2005) 226 ALR 114 at paras [203]–[204]

 35   (2014) 253 CLR 169 at paras 195-196

 36   See for example Paterson (2009) ‘Implied Fetters on the Exercise of Discretionary Contractual Powers’, Monash University Law Review, Vol. 35, No. 45 at pp. 59–73

 37   Irving M (2012) ‘The Contract of Employment’, Lexis Nexis Butterworths at [8.28]; also see Regulski v Victoria [2015] FCA 206 at para [219]

 38   (2006) 153 IR 426 at para 438

 39   (1966) 66 IR 182

 40   Ibid at para 184

 41   [2016] FWCFB 5771 at paras [93]–[94]

 42   [2016] FWCFB 5771 at paras [94]–[96]

 43   [2016] FWCFB 5771at para [71]

 44   [2015] FWCFB 3406 at para [200]

 45   CMIEG submission 26 October 2015 at paras [26]–[28]

 46   Transcript 13 September 2016 at para [210]

 47   [2016] FWCFB 5771at paras [134]–[138]

 48   Transcript 13 September 2016 at para [116]

 49   Transcript 13 September 2016at paras [199]–[208]

 50   At para [17] of the NSW Farmers’ submission of 26 August 2016

 51   Exhibit NSW Farmers 1

 52   Exhibit NSW Farmers 2

 53   Exhibit NSW Farmers 3

 54   Transcript 13 September 2016 at para [235]

 55   Ibid at paras [283]–[284]

 56   [2016] FWCFB 3177 at para [158]

⁵⁷ Ai Group submission and witness statements 20 June 2014, Witness statement of Mr Ben Waugh, Attachment A

 58   [2015] FWCFB 3406 at para [116]

 59   Ai Group submission and witness statements, 20 June 2014, Witness statement of Mr Ben Waugh, Attachment E at p. 25

 60   Witness Statement of Mr Ben Waugh, 20 June 2014

 61   [2016] FWCFB 3953

 62   Transcript 13 September 2016 at para 248

 63   The threshold amount for shiftworkers is 10 weeks

 64   [2016] FWCFB 3177 at [83]–[88]

 65   [2016] FWCFB 3177 at [128]–[164]

 66   See [2015] FWCFB 5771 at [134]–[138]

 67   By providing workplace relations laws that are fair to working Australians and are flexible for businesses (s.3(a)); ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the NES and modern awards (s.3(b)); assisting employees to balance their work and family responsibilities by providing for flexible working arrangements (s.3(d)); and acknowledging the special circumstances of small and medium-sized businesses (s.3(g)). In respect of s.3(g), as relatively few employees employed in small businesses are covered by a collective agreement, a modern award variation of the type proposed would ensure that all such businesses have capacity to deal with excessive leave accruals.

 68   [2016] FWCFB 4332

 69   Transcript 1 July 2016 at paras 57–64

 70   [2016] FWCFB 4525

 71   Ibid at para 9

 72   Submission 12 August 2016

 73   [2015] FWCFB 3406

 74   See June 2015 decision [2015] FWCFB 3406 at para [414]

 75   The ‘leave factor’ in the Maritime Offshore Oil and Gas Award 2010 is 1.153 days’ leave for each day of duty (or travelling to or from a vessel or place of work) – see clause 19.1(a) and is intended to incorporate:

● Leave with pay for weekends and public holidays worked;

● Annual leave with pay of five weeks per year;

● Personal/carer’s leave; and

● Time spent travelling in off duty time (clause 19.2(a)).

The ‘leave factor’ in the Marine Towage Award 2010 is set out in clause 23.2:

(a) A permanent full-time employee will be entitled to 168 days free of duty in each year, or to proportionate leave for any continuous service of less than a year.

(b) A part-time employee’s entitlement to days free of duty will be determined in accordance with clause 10.2.

(c) The leave prescribed in clause 23.2(a) above includes:

(i) 104 days of leave, being instead of weekends;

(ii) five weeks of paid annual leave for shiftworkers under the NES. Employees under this award are considered to be shiftworkers for the purposes of the NES;

(iii) public holiday entitlements under the NES; and

(iv) an additional 28 days’ leave, to give effect to a 35 hour week.

 76   Transcript 1 July 2016 at paras [57]–[86]

 77   [2016] FWCFB 3177 at [93]–[95] and [123]–[126]