[2017] FWCFB 2690

The attached document replaces the document previously issued with the above code on 6 July 2017.

All references to the “2004 AIRC Decision” have been amended to read “the 2005 AIRC Decision” to reflect the correct publication date of 13 January 2005 of the decision of the AIRC in PR954938.

Ingrid Stear

Associate to Vice President Hatcher

Dated 11 January 2017

Fair Work Act 2009
s.302 - Application for an equal remuneration order

Application by United Voice, Australian Education Union and Independent Education Union of Australia for an Equal Remuneration Order
(C2013/5139 and C2013/6333)

Equal remuneration - Children's services and early childhood education industry.

Background

[1] United Voice and the Australian Education Union (the Unions) have made an application to the Commission for an equal remuneration order pursuant to s.302(3)(b) of the Fair Work Act 2009 (FW Act) in relation to the children’s services and early childhood education industry. A separate application was subsequently made by the Independent Education Union of Australia (IEU). These applications are being heard concurrently and are collectively referred to as the Equal Remuneration Case.

[2] The Unions are seeking an equal remuneration order for “… employees who perform work in a long day care centre or preschool(s)” covered by the Children’s Services Award 2010; the Educational Services (Teachers) Award 2010; or the Educational Services (Schools) General Staff Award 2010. 1 The IEU is seeking an equal remuneration order for “early childhood teachers (including early childhood teachers appointed as directors) who perform work in a long day care centre or preschool covered by the Educational Services (Teachers) Awards 2010”2, other than those employed by a state or territory government.3

[3] Early in the course of proceedings it was identified that there would be some value in the Commission addressing and clarifying a number of legal and conceptual issues prior to considering the evidentiary case of the parties. One of these issues was whether a male comparator group was required in order to establish a case for an equal remuneration order under s.302. A Full Bench decision issued on 30 November 2015 4 (Preliminary Decision) addressed these preliminary issues, including the jurisdictional prerequisites to be met prior to the making of an equal remuneration order. The Full Bench’s conclusion concerning the comparator issue was as follows:

“[290] In summary, in order for the jurisdictional prerequisite for the making of an equal remuneration order in s.302(5) to be met, the Commission must be satisfied that an employee or group of employees of a particular gender to whom an equal remuneration order would apply do not enjoy remuneration equal to that of another employee or group of employees of the opposite gender who perform work of equal or comparable value. This is essentially a comparative exercise in which the remuneration and the value of the work of a female employee or group of female employees is required to be compared to that of a male employee or group of male employees. We do not accept that s.302(5) could be satisfied without such a comparison being made. Section 302(5) could not be satisfied on the basis that an employee or group of employees of a particular gender are considered not to be remunerated in accordance with what might be considered to be the intrinsic or true value of their work. In this respect, we accept the submission made by the Victorian Government (and broadly supported by the Commonwealth and NSW Government and the various employer groups) concerning the first step in the process of analysis required by s.302, and we do not accept the submissions of the various unions to the contrary. We emphasise that in adopting this approach, we are not, as United Voice and AEU put it in their submissions, ‘confin[ing] the evidentiary means by which the jurisdictional fact may be demonstrated’, but determining what the jurisdictional prerequisite or fact actually is on the basis of the text of the statute. In reaching this conclusion, we respectfully depart from the decision in the SACS Case No 1, in which the issue was not treated as one primarily of statutory construction. We consider that there are cogent reasons for doing so.

[291] It is not necessary for the purpose of this decision to attempt to prescribe or establish guidelines in respect of how an appropriate comparator might be identified. It will ultimately be up to an applicant for an equal remuneration order to bring a case based on an appropriate comparator which permits the Commission to be satisfied that the jurisdictional prerequisite in s.302(5) is met. It is likely that the task of determining whether s.302(5) is satisfied will be easier with comparators that are small in terms of the number of employees in each, are capable of precise definition, and in which employees perform the same or similar work under the same or similar conditions, than with comparators that are large, diverse, and involve significantly different work under a range of different conditions. But in principle there is nothing preventing the comparator groups consisting of large numbers of persons and/or persons whose remuneration is dependent on particular modern awards.”

[4] Importantly the Full Bench went on to say:

“[292] Our conclusion that Part 2–7 requires a comparator group of the opposite gender does not exclude the capacity to advance a gender-based undervaluation case under the FW Act. We see no reason in principle why a claim that the minimum rates of pay in a modern award undervalue the work to which they apply for gender-related reasons could not be advanced for consideration under s.156(3) or s.157(2). Those provisions allow the variation of such minimum rates for ‘work value reasons’, which expression is defined broadly enough in s.156(4) to allow a wide-ranging consideration of any contention that, for historical reasons and/or on the application of an indicia approach, undervaluation has occurred because of gender inequity. There is no datum point requirement in that definition which would inhibit the Commission from identifying any gender issue which has historically caused any female-dominated occupation or industry currently regulated by a modern award to be undervalued. The pay equity cases which have been successfully prosecuted in the NSW and Queensland jurisdictions and to which reference has earlier been made were essentially work value cases, and the equal remuneration principles under which they were considered and determined were likewise, in substance, extensions of well-established work value principles. It seems to us that cases of this nature can readily be accommodated under s.156(3) or s.157(2). Whether or not such a case is successful will, of course, depend on the evidence and submissions in the particular proceeding.”

[5] In the Unions’ second further amended application filed on 3 September 2015 (before the Preliminary Decision was issued), the grounds stated in support of the making of the equal remuneration order sought included the following contentions:

“Pay in the Sector

33. The majority of employees in the Sector are award reliant. Award reliance in the Sector is significantly higher than in the workforce overall.

34. The award wages are minimum rates and, for the majority of employees in the Sector, particularly those covered by the CS Award [Children’s Services Award], are the actual rates of pay received by employees.

35. The creation of the CS Award and associated pay structure has occurred with limited assessment of work value.

36. While there has been some assessment and recognition of work value through previous pay equity decisions which were incorporated into the CS Award during the award modernisation process, these gains have been eroded or stagnated over time.

. . .

GENDER BASED UNDERVALUATION

46. The wages paid to employees in the Sector do not adequately reflect the:

a. skills, responsibilities and qualifications required to perform the work;

b. environment in which the work is performed; and

c. social and economic benefit arising from the work, when compared to work requiring equal or comparable skills and responsibilities in other occupations and/or other industries.

47. This is caused by factors including:

a. structural undervaluation of the work;

b. changes to the work value which have not been recognised in wages because of the Employees' poor bargaining position and failure of the industrial landscape to keep pace with increased skills and responsibilities required by government regulation of the work; and

c. loss of the outcomes of previous equal remuneration orders.

Structural undervaluation

48. The undervaluation of the work performed in the Sector has been caused by a variety of structural factors that result from the predominance of women working in the Sector including:

a. social undervaluation of the skills and responsibilities required to perform the work as:

i) "soft" skills;

ii) an extension of the unpaid work performed by women in the domestic sphere;

iii) skills that "naturally" occur in women rather than are learnt or developed;

b. a history of industrial regulation characterised by consent awards without adequate assessment of work value or correction of external award relativities; and

c. limited bargaining power of employees in the Sector to achieve recognition of the skills, responsibilities, qualifications and benefit of the work through enterprise bargaining.

Changes to work value

49. Previous work value assessments of the work in the Sector only addressed the work value issues identified at the time of those assessments.

50. The Sector has undergone significant changes since those assessments. The current wages and conditions do not reflect the changes to the value of the work over time.”

[6] The second amended application further particularised the Unions’ case that there had been changes in work value which had occurred but were not reflected or properly valued in the modern awards in question. It is apparent that it was a case of this nature which the Full Bench was adverting to in paragraph [292] of the Preliminary Decision as capable of being entertained under s.156(3) or s.157(2) of the FW Act.

[7] Notwithstanding this, some ten months after the Preliminary Decision was delivered, the Unions filed a third further amended application, dated 28 September 2016. The principal amendment was (relevantly) to add the following paragraphs to the application:

“A COMPARATOR FOR THE SECTOR

46. Section 302 of the Act provides that the Fair Work Commission (“FWC”) may make any order (an equal remuneration order) it considers appropriate to ensure that, for employees to whom the order will apply, there will be equal remuneration for work of equal or comparable value.

47. The Act defines the expression ‘equal remuneration for work of equal or comparable value’ as meaning equal remuneration for men and women workers for work of equal or comparable value.

48. Section 302(5) provides however, that the FWC may make the equal remuneration order only if it is satisfied that, for the employees to whom the order will apply, there is not equal remuneration for work of equal or comparable value.

49. In the Equal Remuneration Order – Jurisdictional Decision [2015] FWCFB 8200 at [290] the Full Bench stated: [quotation not reproduced]

50. On 13 January 2005 a Full Bench of the Australian Industrial Relations Commission (constituted by Vice President Ross, Senior Deputy President Marsh and Commissioner Deegan) determined applications to vary the Childcare Industry (Australian Capital Territory) Award 1998 and the Children’s Services (Victoria) Award 1998 in relation to wages, classification structure, new allowances and the award title (see print PR954938).

51. As part of the above applications the Commission concluded at [367]-[368]:

“The second broad conclusion concerns the proper fixation of rates for the key classification levels in the child care awards. In our view the rate at the AQF Diploma level should be linked to the C5 level in the Metal Industry Award. Further, it is appropriate that there be a nexus between the CCW level 3 on commencement classification in the ACT Award (and the Certificate III in the Victorian Award), and the C10 level in the Metal Industry Award. We accept that aligning these key classifications in the manner proposed will, of itself, result in significant wage increases.”

52. The above conclusion was arrived at having regard to the work value of the respective positions.

53. The determination made in the above decision, to align the Certificate III rate in the Children’s Services (Victoria) Award with the C10 rate in the Metal Industry Award has continued since that time. An employee presently engaged in classification 3.1 of the Children’s Services Award 2010 is paid at the same minimum hourly wage as a person employed in classification C10 in the Manufacturing and Associated Industries and Occupations Award 2010.

54. Employees in the Sector (as defined at 2 above) are overwhelmingly female.

55. Employees employed under the Manufacturing and Associated Industries and Occupations Award 2010 are overwhelmingly male.

56. In the circumstances set out at paragraphs 46 – 55 above a proper comparator for the Diploma level and Certificate III classifications under the Children Services Award are the C5 and C10 classifications respectively in the Manufacturing and Associated Industries and Occupations Award 2010, with consequential adjustment for other classifications.”

[8] It is clear that the addition of a comparator in the third amended application by the Unions was intended to permit the application to continue to be maintained under s.302 of the FW Act in a manner consistent with paragraph [290] of the Preliminary Decision.

[9] In correspondence accompanying the third further amended application, the Unions sought the “timetabling of a hearing to determine a preliminary question as to whether the comparator proposed in the amended application satisfies paragraph [290]” of the Preliminary Decision. In draft directions filed on 18 October 2016, the proposed preliminary question was expressed in the following terms:

“Are the C5 and C10 classifications under the Manufacturing and Associated Industries and Occupations Award 2010 a suitable comparator in this application for the purposes of section 302 of the Fair Work Act 2009 (Cth)?”

[10] This decision is concerned with whether the Commission (as currently constituted) should conduct the preliminary hearing proposed by the Unions.

Submissions

[11] In support of its application for a preliminary hearing, the Unions filed written submissions filed on 26 October 2016. The Unions submitted in summary:

•  its proposed comparators were established as appropriate in the Full Bench decision of the Australian Industrial Relations Commission (constituted by then Vice President Ross, Senior Deputy President Marsh and Commissioner Deegan) in applications to vary the Childcare Industry (Australian Capital Territory) Award 1998 and the Children’s Services (Victoria) Award 1998 Print PR954938, 13 January 2005 (2005 AIRC Decision);

•  the relevant conclusion in the 2005 AIRC Decision was an assessment made in the context of the Commission having considered the skill, responsibility and the conditions under which the work is performed, comparable classification levels and the conditions under which the work of child care workers was performed;

•  since the 2005 AIRC Decision the C5 and C10 classifications in the Manufacturing and Associated Industries and Occupations Award 2010 have been paid at the same rates as the Diploma Level and Certificate III classifications in the Children’s Services Award 2010 respectively;

•  employees who perform work in a long-day care centre or pre-school covered by the awards the subject of the application are overwhelming female and employees under the Manufacturing and Associated Industries and Occupations Award 2010 are overwhelmingly male;

•  the holding of the proposed preliminary hearing would be more efficient and save the parties and the Commission time and expense, and avoid the potential for a long and complex and potentially unnecessary hearing;

•  the preliminary question could be dealt with in a hearing of one day, without the need for extensive evidence; and

•  the preliminary question did not require an assessment of all of the evidence comparing the work value of the Children’s Services Award 2010 and the Manufacturing and Associated Industries and Occupations Award 2010, because the necessary work value assessment had already occurred in the 2005 AIRC Decision.

[12] The application for a preliminary hearing was opposed in written submissions filed by Australian Business Lawyers on behalf of the Australian Childcare Alliance, Australian Business Industrial, the Australian Chamber of Commerce and Industry and the New South Wales Business Chamber (ABL submissions); and in the written submissions of Community Connections Solutions Australia, the Chamber of Commerce and Industry of Western Australia and the Australian Federation of Employers and Industries. It is not necessary to refer to all of these submissions, since they advanced broadly similar propositions. The ABL submissions advanced the following propositions:

•  the choice of a comparator was entirely a matter for the Unions;

•  the Unions were in substance seeking an advisory opinion from the Commission to help it frame its case, and even if the proposed preliminary question was answered in the negative it would not prevent the Unions from trying again with another proposed comparator; and

•  evidence would be required to determine whether the proposed comparator groups were of different genders, were performing work of equal of comparable value, and were being remunerated differently; these issues could not be determined in a “hypothetical vacuum”.

[13] The Australian Government did not directly oppose the Unions’ application but identified a number of difficulties in their proposed approach in written submissions filed on 2 November 2016. The Australian Government advanced the following propositions:

•  reliable evidence and a rigorous approach was necessary to determine whether there was unequal remuneration between the comparator groups, whether they were of opposite gender and whether they performed work of equal or comparable value;

•  the imprecision associated with the Unions’ proposed preliminary question meant that the preliminary hearing would be of limited utility, including because of the lack of clarity as to the scope of the Unions’ third further amended application, which classifications would be the subject of the preliminary determinations and how the purported comparative C5 and C10 classifications in the Manufacturing and Associated Industries and Occupations Award 2010 would apply to all of the classifications within the scope of the application; and

•  the Australian Government supported the determination of any preliminary issue if it would assist in the efficient running of the proceedings, but the lack of clarification of any of these issues by the Unions meant that the Australian Government was unable to assist the Commission in determining whether the proposed approach would be a worthwhile exercise.

[14] In written submission in reply filed on 7 November 2016, the Unions submitted that:

•  the relevant effect of the Preliminary Decision was that the comparator had become the cornerstone of the Unions’ case;

•  the early determination of the question of comparators had, before the Preliminary Decision was issued, been supported by a number of employer parties; and

•  whether the proposed preliminary hearing should occur could be tested by asking whether, if one of the respondents sought to challenge the amended application on the basis that the alleged comparator did not meet the test in the legislation, the Commission would put the parties and itself to the trouble and expense of conducting the whole case before ruling on the cornerstone issue of the case.

[15] The transcript of the hearing before the currently-constituted Full Bench on 16 May 2017 discloses three submissions of significance advanced by senior counsel for the Unions. First, how the equality or comparability of work value as between the two comparator groups might be demonstrated at the preliminary hearing was articulated in the following way:

“MR BORENSTEIN:  The position which we have adopted, and we've articulated in our submissions is that there has been a work value comparison done between employees under the award that covers our clients' members and particular levels in the Metal Trades Award, back in 2005 and the Full Bench in that hearing took evidence and made a decision about the comparable work value of people at a particular level in the Metal Trades Award and the particular level in the awards we're dealing with here.  And so we have identified that as a finding of the Commission of a comparator for the purposes of the exercise we're engaged in, in this proceeding.  In the reply submissions, at least with one of the other parties, an issue was raised about whether the validity of that work value comparison still stands today because of the various changes to which reference is made, and that may be a matter that that party wishes to ventilate in the course of the preliminary hearing.  For our part, we would start from the proposition that the comparative work value assessment has been made and stands, based on the decision of the Full Bench in 2005 and depending on what objection is taken to that proposition by other parties there may be a need to some degree or another to venture into an examination of the work value considerations that need to be adjusted from 2005.” 5

[16] Second, the Unions explained that the necessary inequality of remuneration between the comparator groups was not intended to be dealt with at the preliminary hearing:

“The argument is that once you establish the comparator for the purpose of seeing whether there's work of comparable value, as we say was done in the 2005 decision, it is then a matter of determining what the remuneration or what the value is that's in the market that's now put on the two sets of workers in order to establish whether the workers in one group are indeed underpaid compared to the workers in the other group even though there's been a decision that the two are doing work of comparable value.  That will involve a survey of bargaining outcomes in the metal trades area and bargaining outcomes in the area we're dealing with to see how people are remunerated in the two segments and to see whether there is a significant difference that would then form an evidentiary base for the determination of the quantum of an equal remuneration order.  That too is not a small task.

Now all of these tasks are contingent on initially establishing that there is a relevant comparator for the purpose of the Act...” 6

[17] Third, the Unions accepted that if its proposed preliminary question was determined in the negative, the necessary consequence would be the dismissal of its current application:

“VICE PRESIDENT HATCHER:  All right.  Does it follow then that if we had the preliminary hearing and we determined that the proposed comparator was not appropriate that that's the end of the case, that is, your application will be dismissed?

MR BORENSTEIN:  The application that we presently have before the Commission as I understand it, yes.

VICE PRESIDENT HATCHER:  That is, you wouldn't be coming back with another go at a different comparator or – to try to run the case on a different basis, that would end the case?

MR BORENSTEIN:  That would end this case.  The Act doesn't preclude, and I'd simply want to say this so that there's no misunderstanding, the Act doesn't preclude an application being made by any party on different grounds and on a different basis at any time...” 7

Consideration

[18] The “comparative exercise” which is required as a jurisdictional prerequisite to the making of an equal remuneration order under s.302(5) to be carried out between the group of employees to be covered by the proposed order and an identified comparator group has three elements:

•  the two groups must perform work of equal or comparable value;

•  they must be of the opposite gender; and

•  they must be unequally remunerated.

[19] Once this jurisdictional prerequisite is demonstrated, the Commission has a discretion as to whether to make an equal remuneration order. The circumstances which may be relevant to the exercise of the discretion include:

•  the circumstances of the employees to whom the order will apply;

•  eliminating gender based discrimination;

•  the capacity to pay of the employers to whom the order will apply;

•  the effect of any order on the delivery of services to the community;

•  the effect of any order on a range of economic considerations, including any impact on employment, productivity and growth;

•  the effect of any order on the promotion of social inclusion by its impact on female participation in the workforce; and

•  the effect of any order on enterprise bargaining. 8

[20] As a general principle, the conduct of a preliminary hearing which has the potential to avoid the necessity for a lengthy hearing involving the consideration of a substantial amount of evidence is consistent with the requirement in s.577(b) of the FW Act for the Commission to perform its functions and exercise its powers in a manner that is quick, informal and avoids unnecessary technicalities. The question here is whether the preliminary hearing proposed by the Unions would achieve that objective. Relevant in that context is whether the preliminary hearing has the potential to bring the proceedings to an early end or at least allow a significant issue to be determined without the need for an extensive evidentiary hearing.

[21] As became clear at the hearing on 16 May 2017, the Unions’ proposed preliminary question would not dispose of the entirety of the jurisdictional prerequisite for the making of an equal remuneration order, but only the first of the three elements identified in paragraph [18] above - that is, the issue of equal or comparative work value. There is no doubt that that element of the jurisdictional prerequisite could be dealt with as a discrete issue. However, there is an issue as to whether it could be dealt with in a manner that might avoid the need for a lengthy evidentiary hearing. If it could not, there would in our view be no purpose in conducting a preliminary hearing.

[22] The Unions have made it clear that their case is that the 2005 AIRC Decision, and the alignment of rates in the comparator classifications since that decision, are sufficient to demonstrate equality or comparability in work value between those who would be covered by the equal remuneration order it seeks and its proposed comparator group. We express no view as to the merits of that case at this stage, but we consider it clear that, notwithstanding the Unions’ proposed approach, it would be open for any employer respondent to the proceedings to adduce evidence in order to demonstrate that in fact there is no equality or comparability in work value and that either the 2005 AIRC Decision was wrong and should not be followed, or that changes to work since that time have meant that the decision can no longer be relied upon. There has been a preliminary indication from the employer respondents that they would, given the opportunity, adduce such evidence. 9 It is easy to envisage that such evidence could well be extensive, since it might be concerned with a detailed analysis of the work performed at a variety of workplaces covered by the three awards affected by the application and the Manufacturing and Associated Industries and Occupations Award. If it was necessary to hear such evidence in a preliminary hearing, that would be sufficient to remove any procedural value in conducting such a hearing.

[23] We consider that a preliminary hearing could only be of value if it were confined to the question of whether the 2005 AIRC Decision, and the subsequent alignment in rates, are capable alone of conclusively demonstrating equality or comparability of work value (and, as a corollary, that no evidence that might conceivably be adduced by any party could demonstrate otherwise). It seems to us that the preliminary question would need to be framed in that way in order for a separate hearing to be justifiable in procedural terms.

[24] We also consider that there is force in the Australian Government’s submission that there is a lack of precision as to how the comparative exercise is intended to operate with respect to all the classifications in the Children’s Services Award, the Educational Services (Teachers) Award and the Educational Services (Schools) General Staff Award. Any preliminary question should therefore be confined to the issue of a comparison between the C5 and C10 classifications in the Manufacturing and Associated Industries and Occupations Award and the Diploma Level and Certificate III classifications in the Children’s Services Award respectively. If the answer to the question is in the affirmative, then the question of how the jurisdictional prerequisite is then discharged for the other classifications in the Children’s Services Award may then be dealt with subsequently.

[25] For these reasons, we consider that a workable preliminary question would be expressed as follows:

Can the Commission be satisfied conclusively that the work performed by employees under the C5 and C10 classifications in the Manufacturing and Associated Industries and Occupations Award 2010 is of equal or comparable value to the work of employees under the Diploma Level and Certificate III classifications in the Children’s Services Award 2010 respectively solely on the basis of the decision of the Australian Industrial Relations Commission Full Bench decision of 13 January 2005 (Print PR954938) and the subsequent alignment in award rates for the respective classifications?

[26] We therefore reject the proposition that we should conduct a separate hearing to determine the preliminary question framed by the Unions, but we are prepared to conduct such a hearing on the basis of the question we have formulated (subject to any modifications agreed to by the parties). It would be necessary for the Unions to accept that the necessary consequence of a negative answer to the above question would be the dismissal of their application in accordance with the indication given by their counsel at the hearing on 16 May 2017.

[27] We will allow the Unions 21 days to provide written advice as to whether they wish to proceed to a hearing on the basis of the question we have formulated. If the response is in the affirmative, a directions hearing will be listed to program the conduct of the preliminary hearing. If the answer is in the negative, we will simply await further advice from the Unions as to how they wish to proceed with their application.

[28] We emphasise that nothing in this decision is intended to affect the IEU’s separate application. We await advice from the IEU as to how it wishes to proceed with its application.

VICE PRESIDENT

Appearances:

H. Bornstein QC and C. Dowling of Counsel for United Voice and Australian Education Union.

I. Taylor SC and M. Wright for the Independent Education Union.

N. Ward and M. Roucek for the Australian Childcare Alliance (NSW, VIC, QLD, SA, WA), Australian Business Industrial, Australian Chamber of Commerce and Industry, New South Wales Business Chamber Limited.

J. Gun for Community Connections Solutions Australia.

P. Moss for Chamber of Commerce and Industry WA.

K. Eastman SC and E. Raper for the Commonwealth of Australia, instructed by the Australian Government Solicitor.

Hearing details:

2017.

Sydney:

16 May.

 1   United Voice and the Australian Education Union, Further amended application by United Voice and the Australian Education Union, 27 November 2013, Further Amended Annexure A at paras 2A–3.

 2   Independent Education Union of Australia, Amended application by the Independent Education Union of Australia, 28 November 2013, Annexure B at para 2.

 3   Ibid, Annexure A at para 4.1.

 4  [2015] FWCFB 8200 at [291]

 5   Transcript 16 May 2017 PN28

 6   Transcript 16 May 2017 PNs 41-42

 7   Transcript 16 May 2017 PNs 63-66

 8   Preliminary Decision Summary (following [367]) at (16)

 9   Transcript 16 May 2017 PN86

Printed by authority of the Commonwealth Government Printer

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