[2021] FWCFB 5577

The attached document replaces the document previously issued with the above code on 7 September 2021.

References to clauses 31.2(c) and (d) in paragraphs [117], [118], [146] and [150] have been changed to refer to the correct clauses which are 31.2(d) and (e).

Associate to Vice President Catanzariti

Dated 8 September 2021

[2021] FWCFB 5577

FAIR WORK COMMISSION

DECISION

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

4 yearly review of modern awards — Hair and Beauty Industry Award 2010
(AM2017/40)

Hair and Beauty
VICE PRESIDENT CATANZARITI DEPUTY PRESIDENT ASBURY COMMISSIONER LEE	SYDNEY, 7 SEPTEMBER 2021

4 yearly review of modern awards – Hair and Beauty Industry Award 2010 – award specific penalty rates claims.

Introduction and background

[1] On 7 January 2020 we issued a decision (January 2020 decision) 1 regarding a claim to vary the Hair and Beauty Industry Award 2010 (the Hair and Beauty Award). The claim was made by Australian Industry Group (Ai Group) on behalf of Hair and Beauty Australia (HABA).

[2] HABA sought to vary the Hair and Beauty Award to reduce the Sunday penalty rates from “[a] 100% loading” to “150% of the minimum hourly rate”, and to reduce the public holiday penalty rate from "double time and a half” to “225% of the minimum hourly rate” for full-time, part-time and casual employees.

[3] The claims were opposed by The Australian Workers’ Union and the Shop, Distributive and Allied Employees Association (the Unions).

[4] At paragraphs [1] to [6] of the January 2020 decision we set out the background to the matter and at [11] to [25] we set out the relevant legislative context, including the observations of the Full Bench in the Penalty Rates decision 2 in relation to the considerations under s.134 of the Fair Work Act 2009 (the Act), and general principles set out by the Full Bench which apply to the Commission’s task in the 4 yearly review of modern awards (the Review). At [25] we said we would apply those principles to our decision.

[5] In the January 2020 decision we found that the Penalty Rates decision was determined in the same legislative context that HABA’s application was made. We noted that while the Penalty Rates decision deals with applicable penalty rates in the retail and hospitality industries, the decision does not provide any detailed consideration of the penalty rates contained in the Hair and Beauty Award. 3

[6] We considered HABA’s proposed variation in light of the considerations under s.134 and decided that while there were some s.134 considerations which lent support to the application, there was insufficient evidence before us to support the granting of the claim. Accordingly, we refused the claim and dismissed the application.

[7] HABA proposed that should the Commission be minded to refuse its application set out above, it maintained a position in the alternative, that the penalty rates for casual employees be reduced from “[a] 100% loading” to “175% (inclusive of the casual loading)” for work on a Sunday and be retained at “250% (inclusive of the casual loading)” for work on a public holiday.

[8] In the January 2020 decision we noted that the Full Bench in the Penalty Rates decision found that the existing penalty rates applicable to casual employees required review. 4 We stated that whilst HABA’s claim to reduce Sunday and public holiday penalty rates was dismissed we are still required to review the penalty rates applicable to casual employees.

[9] We noted that the Full Bench in the Penalty Rates decision stated that:

“Casual loadings and weekend penalty rates are separate and distinct forms of compensation for different disabilities. Penalty rates compensate for the disability (or disutility) associated with the time at which work is performed…

In our view, the casual loading should be added to the Sunday penalty rate when calculating the Sunday rate for casual employees.” 5

[10] We stated that the present Hair and Beauty Award provisions are not consistent with the views expressed by the Full Bench. However, we also said that there is insufficient material before us to establish a case for change.

[11] In the January 2020 decision at paragraph [216], we invited parties to provide further materials to the Commission in relation to the Saturday and Sunday penalty rates applicable to casual employees covered by the Hair and Beauty Award and stated that the matter would then be listed for further direction.

Procedural history following January 2020 decision

[12] In response to the January 2020 decision, the Unions provided notice that they wished to provide further materials in relation to the payment of the casual loading and the weekend penalty rates for casual employees.

[13] Following directions issued, the Unions filed a draft determination identifying the changes sought. 6

[14] Directions were subsequently issued instructing the Unions to file materials and submissions in support of the application by 26 March 2021. Opposing parties were invited to file materials and submissions in response by 12 July 2021. The Unions were directed to file any materials and further submissions in reply by 22 July 2021.

[15] The following submissions and materials were received from the Unions:

• Submission and witness statements (26 March 2021); 7

• Amended submission and expert witness report of Dr Martin O’Brien (12 April 2021). 8

[16] HABA filed a submission in reply on 12 July 2021. 9

[17] The Unions subsequently filed a submission in reply on 19 July 2021. 10

[18] It its submission in reply and correspondence HABA advised the Commission that the parties reached an agreed position that is jointly proposed to the Commission. 11

[19] On 20 July 2021 the Unions filed a revised draft determination incorporating the agreed position. 12 The Unions advised the Commission that there is agreement between the parties as to the terms of the draft determination and the timetable for its implementation.

[20] A telephone mention was held on 21 July 2021 where parties agreed that the draft determination should be adopted in resolution of the outstanding issues.

[21] On 23 July 2021 the Commission received a document from the AWU identifying the evidence and submissions in this matter relied upon by the parties. 13 The AWU also filed an amended draft determination correcting two typographical errors.14 The AWU noted that both documents had been agreed upon between the Unions and HABA.

[22] No other party has filed comments or other materials in relation to this matter.

[23] Having regard to the material filed we are content to determine the matter on the papers without the need for a hearing.

The proposed variations

[24] The Unions and the HABA (collectively ‘the Parties’) have agreed upon proposed variations to clause 31.2(c) and (d) of the Hair and Beauty Award. The amended draft determination filed on 23 July 2021 outlines the parties agreed position. 15

[25] At the date of amended draft determination, clause 31.2 of the Hair and Beauty Award provided as follows:

‘31.2 Overtime and penalty rates

...

(c) Saturday work

A loading of 33% will apply for ordinary hours of work for full-time, part-time and casual employees within the span of hours on a Saturday.

(d) Sunday work

A 100% loading will apply for all hours of work for full-time, part-time and casual employees on a Sunday.’

[26] The Parties propose to add a 25% loading (‘casual loading’) to the weekend penalty rates for casual employees by deleting clause 31.2(c) and (d) and replacing them with the following:

‘(c) Saturday work

(i) a loading of 33% will apply for ordinary hours of work for full-time and part-time employees within the span of hours on a Saturday.

(ii) subject to clause 31.2(e)(i), a loading of 58% (including casual loading) will apply for ordinary hours of work for casual employees within the span of hours on a Saturday.

(d) Sunday work

(i) a loading of 100% will apply for all hours of work for full-time and part-time employees on a Sunday.

(ii) subject to clause 31.2(e)(ii), a 125% (including casual loading) will apply for all hours of work for casual employees on a Sunday.’

[27] The Parties also propose to renumber clause 31.2(e) as clause 31.2(f) and insert new clause 31.2(e) as follows:

(e) Phased-in implementation of weekend loadings for casual employees

(i) the weekend loading for casual employees referred to in clause 31.2(c)(ii) shall be subject to a phased implementation timetable as follows:

Date	Loading
DD MM 2021 to 30 January 2022	33%
31 January 2022 to 29 April 2022	38%
30 April 2022 to 30 December 2022	43%
31 December 2022 to 29 April 2023	48%
30 April 2023 to 30 December 2023	53%
From 31 December 2023	58%

(i) the weekend loading for casual employees referred to in clause 31.2(d)(ii) shall be subject to a phased implementation timetable as follows:

Date	Loading
DD MM 2021 to 30 January 2022	100%
31 January 2022 to 29 April 2022	105%
30 April 2022 to 30 December 2022	110%
31 December 2022 to 29 April 2023	115%
30 April 2023 to 30 December 2023	120%
From 31 December 2023	125%

[28] It should be noted that clause 31.2 of the Hair and Beauty Award was varied on 9 August 2021 16 following a decision by the Overtime for Casuals Full Bench (AM2017/51) on 2 August 2021 to re-insert, at clause 31.2, an entitlement for casual employees to receive a penalty rate for work performed outside the spread of hours specified in clause 28.2, except Sundays.17 The term was previously provided at clause 13.3 but was inadvertently removed by the Full Bench following its decisions of 18 August 202018 and 30 October 202019. The wording and numbering of clause 31.2 was also amended by the determination giving effect to the Full Bench’s 2 August 2021 decision.

[29] Clause 31.2 now provides as follows in relation to Saturday and Sunday penalty rates:

‘31.2 Overtime and penalty rates

...

(d) Saturday work

For all ordinary hours worked on a Saturday within the spread of hours specified in clause 28.2(a), a full-time, part-time and casual employee will be paid at 133% of the ordinary hourly rate for a full-time employee.

(e) Sunday work

All ordinary and overtime hours of work for full-time, part-time and casual employees on a Sunday will be paid at the rate of 200% of the ordinary hourly rate for a full-time employee.

Legislative context

[30] As noted above, in the January 2020 decision at [11] to [25] we outlined the legislative context of the Review. At [17] we also set out the modern awards objective as follows:

‘[17] As detailed above, the Review function is found in Part 2 – 3 of the Act and involves the performance or exercise of the Commission’s “modern award powers” (see s.134(2)(a)). It follows that the ‘modern awards objective’ in s.134 applies to the Review. Section 134 states:

“134 The modern awards objective

What is the modern awards objective?

(1) The FWC must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:

(a) relative living standards and the needs of the low paid; and

(b) the need to encourage collective bargaining; and

(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and

(da) the need to provide additional remuneration for:

(i) employees working overtime; or

(ii) employees working unsocial, irregular or unpredictable hours; or

(iii) employees working on weekends or public holidays; or

(iv) employees working shifts; and

(e) the principle of equal remuneration for work of equal or comparable value; and

(f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and

(g) the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards; and

(h) the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.

This is the modern awards objective.

When does the modern awards objective apply?

(2) The modern awards objective applies to the performance or exercise of the FWC’s modern award powers, which are:

(a) the FWC’s functions or powers under this Part; and

(b) the FWC’s functions or powers under Part 2–6, so far as they relate to modern award minimum wages.

Note: The FWC must also take into account the objects of this Act and any other applicable provisions. For example, if the FWC is setting, varying or revoking modern award minimum wages, the minimum wages objective also applies (see section 284).”

[18] The modern awards objective is very broadly expressed. Each of these matters, insofar as they are relevant, must be treated as a matter of significance however no particular primacy is attached to any of the above considerations and not all will necessarily be relevant in the context of a particular proposal to vary a modern award.

[19] It is not necessary to make a finding that the award fails to satisfy one or more of the s.134 considerations as a prerequisite to the variation of a modern award. Rather, as observed in the Penalty Rates Decision, while the Commission ‘must take into account the s.134 considerations, the relevant question is whether the modern award, together with the NES, provides a fair and relevant minimum safety net of terms and conditions.’

[20] The Full Court set out the task before us in Shop, Distributive and Allied Employees Association v The Australian Industry Group (Penalty Rates Review):

‘What must be recognised, however, is that the duty of ensuring that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions itself involves an evaluative exercise. While the considerations in s134(a)-(h) inform the evaluation of what might constitute a “fair and relevant minimum safety net of terms and conditions”, they do not necessarily exhaust the matters which the FWC might properly consider to be relevant to that standard, of a fair and relevant minimum safety net of terms and conditions, in the particular circumstances of a review. The range of such matters “must be determined by implication from the subject matter, scope and purpose of the” Fair Work Act (Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 at 39-40).’

[21] What is necessary to achieve the modern awards objective in a particular case involves an evaluative judgement taking into account the s.134 considerations to the extent that they are relevant having regard to the context, including the circumstances pertaining to the particular modern award, the terms of any proposed variation and the submissions and evidence.’

[31] Section 138 of the Act emphasises the importance of the modern awards objective:

‘138 Achieving the modern awards objective

A modern award may include terms that it is permitted to include, and must include terms that it is required to include, only to the extent necessary to achieve the modern awards objective and (to the extent applicable) the minimum wages objective.’

[32] As noted above, in the January 2020 decision we set out a summary of observations made by the Penalty Rates decision Full Bench in relation to the s.134 considerations, as expressed by the Full Bench in the 4 yearly Review of Modern Award – Penalty Rates (General Retail Industry Award 2010) decision. 20 We further set out the general propositions which apply to the Commission’s task in the Review as stated by the Full Bench in the Penalty Rates decision.

[33] We adopt those observations and principles in this decision.

Submissions

The Unions

[34] The Unions rely on their amended outline of submissions of 12 April 2021 and their submissions in reply of 19 July 2021.

[35] The Unions submit that the variations sought would correct the existing anomaly in the Award whereby casual employees do not receive the casual loading in addition to penalty rates and receive inadequate compensation for weekend work. 21 They submit that the variations would entitle casual employees to Saturday and Sunday penalty rates consistent with the penalty rates that are currently payable to permanent employees.22

[36] The Unions submit that the result of the status quo is that casual employees do not receive the benefit of both the causal loading and penalty rates for weekend or public holiday work because the 25% casual loading is expressed in clause 13.2 as being payable only for work performed within ordinary hours on weekdays. 23

[37] The Unions submit that the casual loading and penalty rates have distinct purposes and are forms of compensation for different disabilities. They submit that the casual loading is paid as compensation for entitlements which casual employees do not receive and for the effects of casual employment. 24 They submit that for as long as the status quo remains casual employees will not receive compensation for both weekend and public holiday work.25

[38] The Unions further submit that it is manifestly unfair that casuals in the hair and beauty industry are working side by side with permanent employees and effectively receiving inferior penalty rates. 26 They submit that the variations will rectify unjust anomalies in the Award in a manner consistent with the principle recognised in the Retail and Hospitality Penalty Rates Decision at [896].

[39] The Unions submit that the proposed variations will be obvious as a matter of industrial merit but have filed probative evidence in support of the proposed variations which they state should fortify the Commission in arriving at the conclusion that the variations ought to be made. 27

[40] In their reply submission the Unions added that the variation sought corrects an anomaly which was identified by the Commission itself in the January 2020 decision in that the current provisions of the Award insofar as they do not provide for the payment of a casual loading in addition to weekend penalty rates for casual employees are not consistent with the conclusion earlier reached by the Full Bench in the Retail and Hospitality Penalty Rates Decision. 28 They submit that the Full Bench considered that it did not have sufficient material before it at that time to establish a case for change, but submit that that is no longer the position.29 The Unions submit that the evidentiary case submitted by the Unions for correcting the position in the Award conforms with the Full Bench’s conclusions as considered and applied in relation to counterpart provisions in the former General Retail Industry Award 2010.30

[41] It is to be noted that in their submissions the Unions sought to increase public holiday penalty rates for casual employees under the Hair and Beauty Award in addition to weekend penalties. 31 However, HABA stated in its reply submission that as part of the agreement reached between the Parties, the Unions have agreed to withdraw the public holiday penalty rate claim.32 The Unions have not objected to this assertion.

HABA

[42] In its reply submission HABA submits that the parties have agreed that the 25 per cent higher remuneration for casuals who work on weekends under the HBI Award should be phased in over a 2.5 year period up to 31 December 2023. HABA set out in its reply submission the transitional arrangements agreed upon between HABA and the Unions.

[43] HABA submits that the agreed phasing-in arrangements take into account the difficulties that businesses in the hair and beauty industry are currently facing as a result of the pandemic, as recognised by the Expert Panel in the Annual Wage Review 2020-21 Decision. 33

[44] HABA submits that hair and beauty businesses are currently struggling due to the effects of the COVID-19 pandemic and Government measures to slow the transmission of COVID-19. 34 It submits that businesses in the hair and beauty industry have experienced numerous government orders to temporarily close and have, at times, had onerous restrictions placed upon their operations in various states.35 HABA refers to a number of government imposed restrictions at the time of its submission including the New South Wales Public Health (COVID-19 Temporary Movement and Gathering Restrictions) Order 2021 of 26 June 2021 of which HABA states “ordered the closure of ‘business premises that are hairdressers, spas, nail salons, beauty salons, waxing salons, tanning salons, tattoo parlours or massage parlours’ in Greater Sydney between 26 June 2021 and midnight on 9 July 2021’ and ‘was subsequently extended until midnight on 16 July 2021’.36

[45] HABA also submits that the challenges that are currently being experienced by hair and beauty businesses were recognised by the Expert Panel in the Annual Wage Review 2020-21 Decision at [48]-[49], [245]-[247] and [279]-[280]. 37 It submits that given these factors, the phasing-in of the higher weekend penalty payments for casuals over a 2.5 year period, with the first increase being delayed until January 31 has obvious merit.38

[46] HABA submits that the proposed transitional arrangements are not inconsistent with the approach that the Commission has taken when penalties and loadings for casuals have been increased under the Award and in other awards. 39

[47] HABA stated that during the Award Modernisation proceedings under Part 10A of the Workplace Relations Act 1996 (Cth), the Australian Industrial Relations Commission (AIRC) decided to pursue a consistent approach to the phasing-in of the increases and decreases in penalties and loadings that arose from the implementation of modern awards. It noted that in a decision issued on 2 September 2009, the Full Bench of the AIRC said (emphasis added): 40

[28] We have decided that phasing should apply both to increases in the specified wages and conditions and reductions in those wages and conditions and in most cases will be in five equal instalments. We have decided to utilise five instalments because that number was the one most commonly selected by parties who supported phasing. It also appears to us to be simpler on the balance to divide differential amounts or percentages by five, yielding five amounts of 20%, than to utilise any other figure. We have also decided to provide for 12 months between instalments. This will spread the impact of changes over almost the whole of the five year period permitted by s.576T of the WR Act.

[48] HABA submits that higher weekend penalty rates for casuals were phased-in over 4.5 years, between 2 January 2010 and 30 June 2014. 41 It submits that the phasing-in schedule (Schedule A) is still included in the Award.

[49] HABA referred to the decision of the Expert Panel in the Annual Wage Review 2015-16 Decision 42 to increase the casual loading in the Business Equipment Award 2010 (Business Equipment Award) incrementally by one per cent from 1 July 2016 and one per cent in each subsequent year until it reached 25 per cent in 2020.43 HABA submits that the Expert Panel’s decisions to phase-in the five per cent increase in the casual loading under the Business Equipment Award over five years demonstrates the approach that the Commission has often taken in exercising significant caution when increasing penalties and loadings in modern awards. It contends that such a cautious approach is necessary, considering the adverse impact that a sudden increase in employment costs would have upon businesses and the potential for businesses to be forced to reduce employees’ hours and/or reduce staffing levels.44

[50] HABA further submits that in a decision of 27 September 2018 45, the Commission determined to increase the weekday evening penalty for casual employees under the General Retail Industry Award 2010 (GRIA) from 25% to 50% and the Saturday penalty for casual employees from 35% to 50% (GRIA Decision). It submits that the Full Bench concluded that there was a need for “appropriate transitional arrangements” in order to ameliorate any adverse impact upon employers and cited paragraphs [281] to [283] of the GRIA Decision.46

[51] HABA submits that the Commission determined to increase the relevant loadings by five per cent at a time, leaving roughly half year increments between each increase. It submits that such increases were timed to avoid coinciding with Annual Wage Review increases. HABA contends that it is relevant in the current proceedings that the quantum of the proposed increase is the same as that awarded in the GRIA Decision. 47

[52] The Unions confirmed in their reply submission of 10 July 2021 that the phased-in timetable is agreed upon. 48

[53] The Unions submit that in relation to the matters upon which HABA relies in its submissions to support a phased-in implementation of the casual loading on weekends, that they note the submissions made by HABA as to why a phased-in implementation is appropriate.

[54] The Unions submit that the phased-in implementation can be considered as consistent with the approach of the Commission in other proceedings in which corresponding rates have been increased. The Unions further submit that the reasons relied upon by the Commission to conclude that such a phased-in implementation was consistent with the modern awards objective in those proceedings are equally apposite in the present proceedings. 49

The evidence

Expert evidence – Dr Martin O’Brien

[55] The Unions commissioned Dr Martin O’Brien, a labour economist and Associate Professor at the University of Wollongong, to provide expert opinion on the following matters 50:

• The likely effects, if any, of the cost of labour in the Hair and Beauty sector, in the event that the variations to the Award proposed by the Union parties are made.

• The likely effects, if any, on aggregate employment in the Hair and Beauty sector, in the event that the variations to the Award proposed by the Union parties are made.

[56] Dr O’Brien’s report on the above matters (‘report’) dated 9 April 2021was submitted to the Commission by the AWU. 51 The specific variations analysed in the report were an increase to penalty rates on Saturdays and Sundays for casual employees by 25 percentage points, as proposed by the Unions.52

[57] In his report, Dr O’Brien explains that the methodology employed in his report largely follows that of the ‘Borland Report’, 53 a submission in the Commission’s 4 yearly review of the General Retail Industry Award 2010.54 The Borland Report provides a formula to calculate the maximum potential impact of changes to penalty rates on total weekly labour costs, as well as a discussion of economic factors relevant to potential changes to aggregate industry employment. Dr O’Brien explains that he has modified this methodology to incorporate data driven inputs to the basic cost formula and documented and analysed several factors that may cause upward biases to the cost estimate.55

[58] The formula to estimate maximum change in weekly total cost of labour was applied separately for 3 different types of Hair and Beauty Services business: strip shopping, smaller shopping centres and extended strip shopping, and larger shopping centres. Labour force data from the calendar year of 2019 was used as the time period for analysis. 56

[59] Dr O’Brien’s report concludes that the maximum impact of the proposed penalty rate changes on labour costs in Hair and Beauty Services estimate varies between 0.83 to 1.91%, depending on the specific costing method employed and the specific type of business model analysed. 57

[60] The report notes than individual businesses may experience inflated or deflated changes to labour costs compared to the aggregate estimates and discusses a number of assumptions used in the formula as they relate to the Hair and Beauty Services sector, and their likely impact. 58 In particular, the report notes that the impact to labour costs would be noticeably less if Hair and Beauty Services businesses adapted to the change by substituting casual employees with other types of workers.59

[61] The report observes that, in the Personal Care Services ANZSIC Group, almost all of which is comprised by the Hair and Beauty Services subset, casual employees constitute 44% of total employees. Accordingly, the report notes that there appears to be ample capacity for substitution within the sector, with any substitution of casual employees on Saturdays and Sundays effectively bypassing the penalty rate increase, resulting in a lower impact on weekly labour costs. 60

[62] The report states the impact to weekly labour costs may also be noticeably less than the estimate if it is assumed the change is applicable to employees working under the Award only, noting that some casual employees in the sector are not working under the Award, and thus would not be subject to the increase. 61

[63] Dr O’Brien’s report states that in his opinion, even using the maximum labour cost estimates, any impact on aggregate employment (persons or hours) should be minimal; to any extent that casual labour is substituted with other types of labour, aggregate employment should be unaffected; and that reductions in industry output emanating from increased costs that may impact employment would appear unlikely. 62

Nathan Drinnan

[64] Nathan Drinnan has been involved in the beauty industry for 7 years, primarily in skincare and makeup. He currently works as a casual employee at two beauty salons in New South Wales and is employed under the Hair and Beauty Award. 63

[65] Mr Drinnan states that he generally works from Wednesday to Saturday, and regularly works on public holidays. He will usually work around 20 hours per week. 64 He states that in the make-up industry everyone has to work on weekends as this is where most of the money is. He states that he has given up on attending many family events and seeing friends nearly every weekend and public holiday for the past six years.65

[66] Mr Drinnan states that he receives the casual loading on ordinary weekdays, but not on weekends or public holidays. 66 He also states that receiving the casual loading on weekends and public holidays would make a huge different for him. He currently spends most of his income on paying for essentials. He states that receiving the loading and would allow him not just to get by but to have the opportunity to save money for his future.67

[67] Mr Drinnan considers that is it extremely unfair that he makes the same amount of money on weekends and public holidays as his full-time and part-time colleagues. He states that he does not receive the same benefits as them, and he thought that the casual loading was there to compensate him for this. 68

Joanne Thompson

[68] Joanne Thompson is beauty therapist who works at a Day Spa on a casual basis. She has worked there for around four years and is employed under the Hair and Beauty Award. 69

[69] Ms Thompson states that she usually works from Wednesday to Saturday, as well as around two Sundays per month, but does not work on public holidays. On average she works from 9am to 6pm. 70

[70] Ms Thompson states that she is paid in line with the Award but is not paid the casual loading on weekends. 71

[71] Ms Thompson states that the Hair and Beauty industry is particularly unstable as it is appointment based, subject to common client cancellations and seasonal changes that can result in business dropping off, particularly during winter months and she states that due to this, working on weekends is crucial. She states that weekends are the busiest day for the spa and she usually has a full day of bookings and no cancellations. 72

[72] Ms Thompson asserts that she has sacrificed a huge part of her life by working every weekend year in year out, and that she misses out on many family and social events. She adds that she believes there is a negative stigma attached to casual employment in the hair and beauty industry, where people think that as a casual, she does not have a genuine career. Not receiving the casual loading on weekends makes her feel undervalued as an employee. 73

[73] Ms Thompson states that she supports the proposed changes which would be a great help to her financially, and that rises in her costs of living aren’t matched by her wages. She states that she often struggles to make ends meet when unexpected expenses such as medical emergencies arise. 74

Carly Watts

[74] Carly Watts has worked in the hairdressing industry for 20 years, at all different levels. She states that she has been working as a casual at a hair salon in Queensland since July 2020. 75

[75] Ms Watts states her hours of work vary from between 18 to 32 hours per week, and usually around 25 hours per week. She regularly works on Saturdays, but she does not work on Sundays or public holidays as the salon is closed. She is paid the minimum rate under the Hair and Beauty Award. 76

[76] Ms Watts states that hairdressers are expected to work on Saturdays as this is the industry standard. 77

[77] Ms Watts states that she has made significant personal sacrifices for her job, and that every weekend she misses out on important family events. 78

[78] Ms Watts considers that it is really unfair that she does not receive a casual loading on weekends. She considers that as a casual, she misses out on job security, regular confirmed hours, paid sick leave and annual leave. She states that she does not understand why the casual loading is not paid on weekends, as the hardship of casual work does not stop on weekends. 79

[79] Ms Watts gave evidence that receiving the casual loading on Saturdays would help her make ends meet and be able to save to take a day off from time to time. 80

Rachael Yarwood

[80] Rachael Yarwood is a hairdresser, who since completing her apprenticeship in 2014, has worked at many different hairdressing salons. She commenced casual employment with a hairdresser in New South Wales in July 2019 and is employed under the Hair and Beauty Award. 81

[81] Ms Yarwood states that as she was a casual employee employed for less than 12 months at 1 March 2020, she was ineligible to receive JobKeeper and as a result spent 3 months away from work in 2020. 82

[82] Ms Yarwood states that she usually works on Mondays, Wednesdays and Thursdays, but that her hours of work can vary from 5 to 40 hours per week. She adds that she stopped regularly working weekends since having children, but that she works around 1 to 2 weekends per month. 83

[83] Ms Yarwood states that she receives the casual loading on weekdays, but not on weekends. 84 She states that she was appalled when she found out she was paid the same amount on weekends as permanent hairdressers and considers this grossly unfair.85

[84] Ms Yarwood states that she and her partner currently live week to week, and the payment of the casual loading on weekends would make a difference to her financial stability. She adds that missing out on holiday and sick pay means that making ends meet when she or her son is unwell is scary. 86

[85] Ms Yarwood states that weekends are the only quality time she gets with her children. She states that hairdressing is a female dominated industry in which many mothers miss out on spending time with their children on weekends. Ms Yarwood claims that when she was regularly working on weekends, there were many first birthdays, christenings and weddings that she couldn’t attend. 87

Consideration

[86] As mentioned in the January 2020 decision, in exercising its modern award powers, s.134 of the Act requires that the Commission ensure that “modern awards, together with the NES, provide a fair and relevant minimum safety net of terms and conditions” taking into account each of the matters listed at ss.134(1)(a) – (h).

[87] The Unions submit that the proposed variations are necessary to achieve the modern awards objective, arguing that the existing Saturday and Sunday rates for casuals are neither fair nor relevant. 88

[88] In addition to being necessary to achieve the modern awards objective, the Unions contend that the variations will rectify unjust anomalies in the Award in a manner consistent with the principle recognised by the Commission in the Penalty Rates decision at [897]. 89

[89] In its reply submission HABA contends that the proposal agreed between the parties is consistent with the modern awards objective. 90

[90] HABA submits that in the 4 Yearly Review of Modern Awards – Penalty Rates – Transitional Arrangements decision 91, the Full Bench acknowledged that any transitional arrangements must meet the modern awards objective. It submits that the Full Bench stated that this is the overriding statutory requirement and accordingly it is the Commission’s ‘central focus’. HABA asserts that the Commission stated that it is required to perform its functions and exercise its powers in a manner which is ‘fair and just’ (s.577(a) of the Act) and must take into account the objects of the Act and ‘equity, good conscience and the merits of the matter’ (s.578).92

[91] HABA submits that for the purposes of setting a ‘fair and relevant minimum safety net’, ‘fairness’ is to be assessed from the perspective of both employees and employers covered by the award. 93

[92] HABA has put forward submissions in relation to the considerations in s.134(1)(a), (c) and (f). 94 We will deal with those submissions below.

[93] In the Penalty Rates decision, the Full Bench found that the existing penalty rates in the Hair and Beauty Award applicable to casual employees required review. 95 As we said in the January 2020 decision, while the Penalty Rates decision deals with applicable penalty rates in the retail and hospitality industries, the decision does not provide any detailed consideration of the penalty rates contained in the Hair and Beauty Award.

[94] The Parties’ proposed variations have the effect of adding the 25% casual loading to the penalty rates applicable on Saturday and Sunday for casual employees, albeit the casual loading is proposed to be phased-in over the course of two years. When the loading is payable in full, we would consider that the provisions of the Award are consistent with the views of the Full Bench in the Penalty Rates decision that we have set out at [9] above.

[95] At [42] to [51] above we summarised HABA’s submissions in support of the phased-in implementation of the casual loading to weekend penalty rates. We agree with the submissions of HABA in relation to the effects of the COVID-19 pandemic on the hair and beauty industry.

[96] As stated by HABA, the Expert Panel in the Annual Wage Review 2020-21 Decision recognised that ‘jobs that do not accord with social distancing requirements, such as hairdressing and beauty services’ have been broadly excluded from operation during ‘lockdown periods’ in particular regions in 2021.

[97] The Expert Panel also noted that restrictions imposed in each state and territory, and nationally, have been documented in the Commission’s information note throughout the pandemic. 96 The latest information note published on 26 July 2021 outlines a significant increase in COVID-19 cases in New South Wales from late June 2021 and a smaller increase in cases from June and July in other states. It also provides that:

‘On 21 June, the Australian Health Protection Principal Committee (AHPPC) released a statement on recent outbreaks of COVID-19 in Victoria, noting that due to the continued growth in confirmed cases overseas and the number of Australians still overseas who may return; as well as sporadic community transmission in Australia, that it remains probable that Australia will experience periodic outbreaks.’ 97

[98] As at the date of this decision the order by the New South Wales government for the closure of business premises that are hairdressers, spas, nail salons, beauty salons, waxing salons, tanning salons, tattoo parlours or massage parlours’ in Greater Sydney as referred to by HABA continues to be in force and is also now also applicable to Regional New South Wales. 98

[99] Government mandated restrictions forcing the closure or limited operation of businesses in the hair and beauty industry are also currently in force in other Australian jurisdictions. 99

[100] In light of this we are of the view that there is merit in considering a phased-in implementation of the casual loading as proposed by the Parties.

[101] We now turn to the s.134 considerations.

s.134(1)(a)

[102] Section 134(1)(a) requires that we take into account the ‘relative living standards and the needs of the low paid’. A threshold of two-thirds of median full-time wages provides a suitable benchmark for identifying who is ‘low paid’, within the meaning of s.134(1)(a).

[103] The Unions submit that employees covered by the Award are low paid within the meaning of the provision. 100 It has been accepted that the needs of the low paid are relevant to the consideration of the appropriate level of penalty rates.

[104] The Unions submit that their lay evidence demonstrates that increasing Saturday, Sunday and public holiday penalty rates will have a positive impact on casual employees covered by the Award by increasing their respective incomes and household budgets. They submit that this will have a positive effect on the living standards of casual employees covered by the Award and on their capacity to meet their needs. 101

[105] The Unions submit that the needs of the low paid is a consideration which weighs strongly in favour of granting the proposed variations. 102

[106] In its reply submission HABA submits that a significant increase in labour costs is likely to be met by reductions in expenditure in other areas if no appropriate transitional arrangements are implemented. This could include cutting hours of work for existing staff or decisions to engage fewer staff. HABA submits that the potential for employers to engage in various mitigation strategies if a significant increase was imposed without appropriate transitional arrangements should weigh heavily in favour of staggering the increase in weekend penalty rates over a significant period of time. 103

[107] We agree with the submissions of the Unions. The witness evidence tendered by the Unions supports the contention that the needs of the low paid will not be met if the proposed increase to weekend penalty rates for casual employees is refused.

[108] The needs of the low paid is a consideration which weighs towards granting the proposed variation in the context of the hair and beauty industry.

s.134(1)(b)

[109] Section 134(1)(b) requires that we take into account ‘the need to encourage collective bargaining’.

[110] The Unions submit that this consideration is a neutral consideration. 104 The Unions cite the January 2020 decision where we stated that:

‘A reduction in Sunday and public holiday penalty rates may increase the incentive for employees to bargain, but may also create a disincentive for employers to bargain. It is also likely that employee and employer decision-making about whether or not to bargain is influenced by a complex mix of factors, not just the level of penalty rates in the relevant modern award.’ 105

[111] In the January 2020 decision we also stated that s.134(1)(b) speaks of ‘the need to encourage collective bargaining’ and we were not persuaded that the proposed variations would ‘encourage collective bargaining’.

[112] We adopt the same view in this decision, however note that the higher penalty rates are likely to reduce the incentive for employees to bargain. From the perspective of employers we are not persuaded that the higher penalty rate for casual employees would significantly increase the incentive for employers to bargain, noting the expert opinion of Dr O’Brien of which we accept that the proposed variations are likely to cause minimal changes in labour costs.

[113] We conclude that this consideration does not provide support for the proposed variations.

s.134(1)(c)

[114] Section 134(1)(c) requires that we take into account ‘the need to promote social inclusion through increased workforce participation’. Obtaining employment is the focus of s.134(1)(c). 106

[115] The Unions refer to the expert evidence of Dr O’Brien that any impact on aggregate employment in the Hair and Beauty Industry will be minimal if the variations sought are made and submit that this consideration is a neutral consideration. 107

[116] Following on from its submission that a significant increase in labour costs is likely to be met by reductions in expenditure in other areas if no appropriate transitional arrangements are implemented, HABA submits that the significant risk of disemployment effects resulting from a sudden increase in labour costs for casual employees should factor into the Commission’s consideration of the need to promote social inclusion through increased workforce participation. 108 HABA submits that financial pressures resulting in staff reductions are likely to hit casual employees the hardest. It stated that the agreed transitional measures would assist in ensuring that employers are not disincentivised from engaging additional staff or retaining current casual employees.109

[117] We accept the analysis of Dr O’Brien in relation to aggregate employment and conclude that this is a neutral consideration in relation to the proposed increases under clauses 31.2(d) and (e) of the Hair and Beauty Award.

[118] However we agree with HABA’s submission and consider that s.134(1)(c) weighs in favour of a phased-in implementation of the proposed increases under clause 31.2(d) and (e).

s.134(1)(d)

[119] Section 134(1)(d) requires the Commission to take into account “the need to promote flexible modern work practices and the efficient and productive performance of work”.

[120] The Unions submit that is a neutral consideration as the proposed variations, which are increases in penalty rates to resolve an anomaly, naturally do not involve any “flexible modern work practices” or a proposal which could have any impact on the “efficient and productive performance of work.”

[121] The Unions further submit that in the Retail and Hospitality Penalty Rates Decision the Commission concluded that this consideration was neutral to the proposed cuts to Sunday penalty rates and public holidays that were in the controversy. They submit that as a matter of logic and consistent with this reasoning the Commission should conclude that this consideration is neutral to the proposed increases to weekend and public holiday penalty rates. 110

[122] There was no evidence before us that the proposed variations would result in the more efficient and productive performance of work. We agree with the submissions of the Unions and consider this a neutral consideration.

s.134(1)(da)

[123] Section 134(1)(da) requires that we take into account the ‘need to provide additional remuneration’ for, relevantly, ‘employees working unsocial, irregular or unpredictable hours’ or ‘employees working on weekends or public holidays’. An assessment of ‘the need to provide additional remuneration’ to employees working in the circumstances identified in ss.134(1)(da)(i)–(iv) requires a consideration of a range of matters, including:

(i) the impact of working at such times or on such days on the employees concerned (i.e. the extent of the disutility);

(ii) the terms of the relevant modern award, in particular whether it already compensates employees for working at such times or on such days (e.g. through ‘loaded’ minimum rates or the payment of an industry allowance which is intended to compensate employees for the requirement to work at such times or on such days); and

(iii) the extent to which working at such times or on such days is a feature of the industry regulated by the particular modern award.

[124] The Unions submit that the need to provide additional remuneration in such cases arises from the disruptive and harmful effects of working at the times and the circumstances identified in ss.134(1)(da)(ii) and (iii). 111

[125] The Unions rely on their lay evidence which they submit establishes that working on Sundays and public holidays has a detrimental effect on the social, community and family lives of employees and their families. 112

[126] The Unions submit that the need to provide additional remuneration as mandated by the consideration is not presently met in respect of casual employees who work on weekends or public holidays as such employees receive lesser penalty rates than permanent employees who work on weekends and public holidays. 113

[127] The Unions submit that this factor weighs strongly in favour of the proposed variations. 114

[128] The Unions’ lay witnesses provide support for the disutility of working on weekends. Further, as we mentioned in the January 2020 decision, the Hair and Beauty Award does not adequately compensate casual employees for working on weekends.

[129] In relation to matter (iii), three of the Union’s lay witnesses provided evidence that they worked on Saturdays. In addition, Ms Thompson stated that she works ‘around two Sundays per month’. We note that Dr O’Brien’s report indicates that according to ABS data in 2019 64.3% of Personal Care Services employees were employed on Saturday, and 10.5% of Personal Care Services employees worked on Sundays presumably due to many businesses not trading on this day, with 99% of Personal Care Services employees working in the ‘Hair and Beauty Service ANZSIC Class’. 115

[130] We consider this factor to weigh in favour of granting the proposed variations in relation to Saturday penalty rates. However we consider that there is not enough evidence to indicate that Sunday work is a common feature of the hair and beauty industry and therefore we conclude that this is a neutral consideration in relation to the proposed variations to Sunday penalty rates.

s.134(1)(e)

[131] Subsection 134(1)(e) requires that the Full Bench take into account the principle of equal remuneration for men and women ‘for work of equal or comparable value’. Any increase in weekend or public holiday penalty rates for casual employees would apply equally to men and women workers. Section 134(1)(e) is neutral to our consideration of the proposed variations.

s.134(1)(f)

[132] Subsection 134(1)(f) requires the Commission to take into account the likely impact of the exercise of modern award powers on business, including productivity and employment costs.

[133] The Unions refer to Dr O’Brien’s expert opinion that the maximum impact of proposed penalty rate changes on labour costs (or employment costs) in Hair and Beauty Services varies between 0.83 to 1.91%, depending on the specific costing method employed and the specific type of businesses analysed and contend that there is no basis to submit that any additional regulatory burden is imposed by the variation. 116

[134] The Unions further submit that it should be taken into account that not granting the proposed variations could exacerbate the skills shortage that the Australian government has recognised in the labour market for hairdressers by making the occupation even less attractive to employees. They submit that this would be a detrimental impact on business and thus ought to be taken account. 117

[135] The Unions submit that the Commission should conclude that on the balance this factor weighs in favour of the proposed variations. 118

[136] In its reply submission HABA submits that it would be unfair to employers if significant increases to weekend penalty rates for casuals are implemented without appropriate transitional arrangements. It submits that such an approach would impose a cost impost on employers that would not have been factored into periodic budgeting. HABA stated that the impact of any exercise of modern award powers on business, particularly with regard to employment costs, weighs heavily in favour of ensuring adequate transitional arrangements are put in place. 119

[137] As mentioned above, we have found there to be insufficient evidence before us as to the prevalence of Sunday work in the hair and beauty industry, as such we consider that this s.134(1)(f) is a neutral consideration in relation to the proposed variations to Sunday penalty rates.

[138] Whilst we accept the analysis of Dr O’Brien indicating that increased labour costs caused by the proposed variations would be minimal, we note that the data used by Dr O’Brien pre-dates the COVID-19 pandemic. We agree with the submissions of HABA in relation to the effects of the COVID-19 pandemic on the hair and beauty industry and consider s.134(1)(f) weighs in favour of a phased-in casual loading to weekend penalty rates.

s.134(1)(g)

[139] Subsection 134(1)(g) requires that the Full Bench take into account the need to provide a simple, easy to understand, stable and sustainable modern award system that avoids unnecessary overlap of modern awards. This is a neutral consideration. 120

s.134(1)(h)

[140] Subsection 134(1)(h) requires that the Full Bench take into account the likely impact on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.

[141] The Unions refer to Dr O’Brien’s expert opinion that variations proposed will have a minimal impact on aggregate employment. The unions submit that as such it follows that the variations proposed will have no impact on inflation and the sustainability, performance and competitiveness of the national economy. 121

[142] The Unions submit that not granting the proposed variations could exacerbate the skills shortage that the Australian government has recognised in the labour market for hairdressers and this would be a detrimental impact on employment growth and thus ought to be taken into account. 122

[143] The Unions submit that the Commission should conclude that on balance this factor weighs in favour of the proposed variations. 123

[144] We accept the conclusion of Dr O’Brien that to the extent that casual labour is substituted with other types of labour, aggregate employment should be unaffected. We also accept Dr O’Brien’s conclusion that reductions in industry output emanating from increased costs that may impact employment would appear unlikely. 124

[145] The Unions have not presented evidence to support the proposition that not granting the proposed variations could exacerbate a skills shortage in the labour market for hairdressers.

[146] As such we consider s.134(1)(h) to be a neutral consideration in relation to the proposed variations to clauses 31.2(d) and (e).

[147] However as mentioned above, we agree with the submissions of HABA in relation to the negative effects of the COVID-19 pandemic on the hair and beauty industry and consider that s.134(1)(h) would weigh in favour of granting a phased-in implementation of an increase to rates payable to casual employees on weekends.

[148] Each of these matters, in so far as they are relevant, must be treated as a matter of significance however no particular primacy is attached to any of the above considerations and not all will necessarily be relevant in the context of a particular proposal to vary a modern award.

[149] 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’, taking into account the particular considerations identified in paragraphs 134(1)(a)–(h). We have taken into account those considerations insofar as they are relevant to the matter before us and are of the view that on balance there is support in granting the variations as proposed.

[150] We agree that there is merit in staggering the implementation of the casual loading to the rates payable to casual employees under clauses 31.2(d) and (e). The effects of the COVID-19 pandemic are as such that we consider that the phased-in rates as proposed by the parties are necessary to meet the modern awards objective.

Draft Determination

[151] As the draft determination prepared by the parties is not in the usual format currently adopted by the Commission, we have circulated to the parties a further draft determination for their consideration. We invite comments in relation to the revised draft to be made within 14 days.

al of the Fair Work Commission with member's signature,